When ships from the Pacific drive into the Panama Canal, they pass right at the beginning of the Islas Calzada de Amador. Until 1977, a US military base was here.

More than 40 years later, a new, explosive project was discussed for the four interconnected islands: China wanted to install its new embassy here. A Chinese flag was supposed to blow at the entrance to the Panama Canal. In the end, Panama's President Juan Carlos Varela withdrew the offer under pressure from the United States. That was a few months ago.

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The case is symbolic of a growing conflict between Washington and Beijing in Latin America: as China and Panama expand their relationship, the US fears for its influence in the region, its economic supremacy in its own backyard. So will the two world powers on Sunday to look at the small Panama. Then the country elects a new national assembly and a new president.

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Panama before the election: dispute over influence on the canal

Laurentino Cortizo, the leading candidate of the opposition center-left-oriented Democratic Revolutionary Party, is clearly ahead in the polls. The new president is also expected to develop relations with China.

But the process could be delayed. In the dispute over the message Cortizo indicated his nationalist attitude. "The flag of Panama is the only flag that should blow in the Panama Canal," said the 66-year-old. It goes without saying that Cortizo resigned from the government under Martín Torrijos in 2005 as Minister of Agricultural Development. He did not want to sign a free trade agreement with the US, which in his view was not good enough for Panama. A sell-out of Panama in favor of China should not be feasible with Cortizo.

He also wants to enforce more transparency. Corruption is currently a prevalent issue in Panama. Among other things, it is the Brazilian construction company Odebrecht, which is said to have paid more than one hundred million US dollars (90 million euros) bribes to past governments, according to the Prosecution for Combating Anticorruption. And projects of the Varela government are investigating the authority.

Panama as a logistics center of China

The promise of greater transparency is a danger for China, says Günter Maihold of the Science and Politics Foundation. In some cases, the question arises, "whether the simple assignment" would suffice. According to the motto: "One has discussed this with China and that's why Chinese companies win the contract." For example, projects could be re-tendered and new tenders take longer. But even under such tighter conditions, China's influence is likely to remain high.

Panama is interesting for Beijing for several reasons:

  • Even if economic growth declined slightly in the past year (to 4.3 percent): in hardly any other country in Latin America is the economy so strong as in Panama, with just 4.1 million inhabitants.
  • The country has a stable democracy , which by far does not apply to all states in the region. In the 2018 Democracy Index, Panama ranks fifth in Latin America and the Caribbean and 45th in the world.
  • Above all, the country's central, strategic location and the Panama Canal are attractive. "The Chinese see Panama as a logistics center," says Detlef Nolte from the Giga Institute for Latin American Studies.

Panama also benefits the new partner Beijing: the opportunity for "diversification in external relations, investment and possibly also in the service sector," says Maihold. Panama was the first Latin American country to join Beijing's gigantic trade and infrastructure project, the New Silk Road.

NICOLAS ASFOURI / POOL / EPA-EFE / REX

Chinese President Xi Jinping welcomes his guests to the "Silk Road" summit in Beijing

The diplomatic relations between Panama City and Beijing are still young. Only in 2017 Panama turned away from Taiwan, which sees China as an inseparable part of the People's Republic, to establish contacts with Beijing instead. The Dominican Republic and El Salvador followed suit. Last December, China's President Xi Jinping visited Panama and signed numerous agreements with President Varela. The countries are also working on a free trade agreement.

A Chinese consortium recently won the Panamanian government's bid for a $ 1.4 billion project: the construction of a fourth bridge across the Panama Canal. In addition, major Chinese banks are active in Panama.

China fills a gap left by the US

All this worries Washington. The US continues to be by far the most important user of the Panama Canal. 69 percent of the goods transported by the waterway come from or go to the USA. China is in second place with 16 percent. It is in Washington's interest that this number does not rise. But the US is doing too many mistakes under President Donald Trump.

Leah Millis / REUTERS

Donald Trump offers Latin America no concrete alternatives to China

"There is no consistent Trump Latin America policy that could provide positive momentum," says expert Maihold. "The free trade agreements are not developed further, there are no large investment projects, which are driven by the USA." Instead, the government warns Latin American countries to keep a distance from Beijing. Washington is emerging as a protective power - ultimately representing its own economic interests.

Trump is leaving a gap that China wants to fill. Beijing has already exchanged views on its ambassador with presumptive new president Cortizo. Nevertheless, according to Nolte after the election: China will "play a patient, slow strategy", but could afford that: "This is the advantage of the political system, that one thinks there in decades rather than the next term."

Since the United States can not keep up.