• President Jose Raul Mulino announced that Panama would not be renewing the agreement to participate in China’s Belt and Road Initiative (BRI) which the country had signed onto under a previous administration.

• The decision follows the visit of US Secretary of State Marco Rubio earlier this week to Panama, a close US partner in Latin America, and pressured the country over its ties with China.

• Panama was the first Latin American country to officially endorse the Belt and Road Initiative in November 2017

• The Chinese infrastructure plan has faced controversy, with some partner nations bemoaning the high cost of projects and struggling to repay loans. 

• Italy withdrew from the initiative in 2023 under US pressure over concerns about Beijing's economic reach.

• The US argues that Beijing uses the scheme for “debt trap diplomacy” to cement its global influence.

What is the Belt and Road Initiative (BRI)?

• China’s President Xi Jinping launched multi-billion dollar BRI in 2013 to undertake big infrastructure projects in the world which in turn would also enhance Beijing’s global influence. 

• It aims to link Southeast Asia, Central Asia, the Gulf region, Africa and Europe with a network of land and sea routes.

• China has become a major trading partner for more than 140 countries and regions, it leads the world in total volume of trade in goods, and it is a major destination for global investment and a leading country in outbound investment. 

• As a collaborative endeavour, the BRI has been welcomed by the international community both as a public good and a cooperation platform, President Xi, who has aggressively promoted the BRI, said in a report he presented to the 20th National Congress of the Communist Party of China last month.

• The BRI is seen as an attempt by China to further its influence abroad with infrastructure projects funded by Chinese investments all over the world.

• The $60 billion China-Pakistan Economic Corridor (CPEC), which connects Gwadar Port in Balochistan with Xinjiang province, is the flagship project of Xi's ambitious BRI.

• The 3,000-km long CPEC is a collection of infrastructure and other projects under construction throughout Pakistan since 2013. 

Why India opposes CPEC?

• India has been vocally objecting to China over the CPEC as it is being laid through the Pakistan Occupied Kashmir (PoK). 

• The Indian government has conveyed its concerns to the Chinese side about their activities in areas illegally occupied by Pakistan in the Union Territories of Jammu & Kashmir and Ladakh and has asked them to cease such activities.

• Further, the government is of the firm belief that connectivity initiatives must be based on universally recognised international norms. They must follow principles of openness, transparency and financial responsibility and must be pursued in a manner that respects sovereignty, equality and territorial integrity of other nations.

• Beijing for its part is playing down India’s objections, saying it is an economic initiative and has not affected its principled stand on the Kashmir issue.

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