Panama established official diplomatic ties with China last Tuesday, thereby renouncing its ties to Taiwan. This decision comes as a major political victory for China as it seeks to further isolate Taiwan and strengthen vital economic partnerships in Latin America.

A joint statement issued by representatives of both countries said that Panama recognizes “only one China” and that the “government of the People’s Republic of China is the only legitimate government representing all China and Taiwan is an inalienable part of the Chinese territory.”

And then there were 20: Taiwan’s isolation solidifies

Panama’s decision leaves Taiwan with just 20 international allies. Many are just small countries or islands in Latin America and the Pacific (its only European ally is Vatican City), yet every loss to China further secludes the island nation.

Both Beijing and Taipei require foreign countries to decide whether to forge diplomatic relationships with either the People’s Republic of China (China) or the Republic of China (Taiwan)–never both.

In recent decades, as China’s global economic influence has grown, many countries have found it more advantageous to build ties with China. The latest country to switch its allegiance in favor of China was São Tomé and Príncipe, which announced the move in December.

Taiwan severed its ties to Panama on Wednesday, one day after Panama’s announcement. Taiwan’s foreign ministry said it felt “anger and regret” over the “very unfriendly” diplomatic turn by Panama, which it deemed “yielded to economic interests by the Beijing authorities.”

Beijing has increased its pressure on Taiwan after Tsai Ing-wen was elected president last year. Her liberal democratic party views have regularly heightened tensions with China. She did not endorse the “One China” policy, after she took office, a common practice between the two countries, which agree to endorse the policy but hold different interpretations of what it means.

Then in January, after Donald Trump’s inauguration, Tsai called him to offer her congratulations. China took offense to the fact that the U.S. took the call and because it saw the potential for the two countries to get closer.

Tsai has tried to foster that possibility. She stopped in the U.S. in January, en route to Central America for diplomatic visits, and made a point to visit politicians such as Senators Ted Cruz (R-TX) and Marco Rubio (R-FL.).

Tsai, who visited Panama just last June, emphasized the years of friendship between the two countries in a speech she gave on Tuesday. She maintained that Taiwan would not engage in “a diplomatic bidding war” with China, despite the fact that China continues to “pressure Taiwan’s international space.”

“We are a sovereign country,” Tsai said. “This sovereignty cannot be challenged nor traded.”

An important play for Panama

China is currently the Panama canal’s second biggest user and it’s clear this new relationship will give China an economic advantage over the historically U.S.-controlled Panama canal.

China was funding a $50 billion alternative to the Panama Canal in Nicaragua. However, financial struggles and environmental critiques have halted construction before it even started. Though that project has largely fallen through, China can now comfortably rely on Panama’s canal to circulate its goods.

The Panama Canal Authority also just announced it will be looking for contractors and customers to modify infrastructure surrounding the canal later this year, further providing China with strong potential business opportunities.

Asia-based political risk analyst Ross Feingold said that “enhanced communication channel between the Panamanian and Chinese governments following diplomatic recognition can only be a positive for Chinese logistics and infrastructure companies that operate in the canal zone.”

However, China may not be the only party to benefit from this alliance. In the last few years, two of Panama’s main economic drivers, the canal and its status as a fiscal sanctuary, have taken a hit.

In late 2013, President Xi Jinping announced the Maritime Silk Road plan, a development strategy aimed at integrating and coordinating trade between Eurasian countries. This plan completely excluded North and South America. In 2015, the Suez canal, perhaps the Panamanian canal’s main competitor, underwent a renovation, which allows it to accommodate larger ships and ease congestion.

China’s renewed interest in Panama through this diplomatic relationship can be seen as an indicator that Panama and its canal will not be cast away in favor of newer, more convenient options.

New Chinese direct investments are also an opportunity for Panama to revive its financial and fiscal image, which had taken a toll after last year’s “Panama Papers” revelations.

At the time, many officials had complained that the shorthand used by international media outlets for the Mossack Fonseca case hurt the country’s reputation.

“It’s not about Panama, it’s about one company. Nobody called it the Texas fraud when Enron [went] bankrupt,” vice-minister of the economy Ivan Zarak said at the time. “It’s unjust. You are holding accountable the whole country for the actions of one company,”

A renewed relationship with China could indeed help the nation re-boot. In a televised speech given last week, Panamanian President Juan Carlos Varela, who actually met with President Donald Trump earlier today, said he was “convinced that this is the correct path for [the] country.”

Celia Heudebourg

Celia Heudebourg is an editorial intern for Law Street Media. She is from Paris, France and is entering her senior year at Macalester College in Minnesota where she studies international relations and political science. When she’s not reading or watching the news, she can be found planning a trip abroad or binge-watching a good Netflix show. Contact Celia at Staff@LawStreetMedia.com.

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With the United States losing to Jamaica in the semifinals of the CONCACAF Gold Cup the final was projected to be Panama vs. Jamaica. The  regional soccer tournament between the countries in Central America, North America, and the Caribbean is held every two years and draws millions of viewers. However, the success of the Gold Cup this year may have been corrupted by the allegations of inappropriate refereeing to ensure that the final game featured Mexico.

The finals were scheduled to be played in Philadelphia, which is home to many Mexicans. For revenue purposes, it would have been ideal to host a final including Mexico rather than  a Panama-Jamaica final. With the U.S. losing in the semifinals, placing at least one soccer power house, most likely Mexico, in the final was imperative for TV viewership as well. It’s within this context that questionable referee calls took place in the quarterfinal against Costa Rica and  the semifinal against Panama which ultimately granted Mexico a spot in the finals. The head referee of the calls in the semifinals, Mark Geiger, along with CONCACAF, are receiving serious backlash, as many critics, soccer players, and countries feel that there were third member parties involved which made it possible for Mexico to win. Although Geiger apologized for his calls, and CONCACAF admitted mistakes were made, an investigation is pending to truly determine what went wrong.

There were two clear instances in which observers are claiming that the calls made on behalf of Mexico were amiss. The Mexican-Costa Rican semifinal game ended with a winning penalty kick for Mexico, yet the nature of the foul that led to the kick was very much disputed. Many feel that Mexico was given a clear advantage in that game and that the actions embodied by the ref showcased an ulterior motive. Then, the Mexico vs. Panama game shocked athletes and fans around the world. Panama lost a man after a foul call, then a second controversial call allowed Mexico to tie up the game. Mexico then moved onto the final game against Jamaica and won the Gold Cup.

In the moments following the Panama game, spectators and members of the Panamanian Soccer Federation alike were quick to accuse Mexico of fixing the game. Allegations were also made about third party members being involved and paying off the referees. Panama’s federation demanded the removal of CONCACAF’s referee selection panel after describing the officiating in the loss as “insulting and embarrassing.” The statement also accused the match officials of favoring Mexico in a “vulgar and shameless way.” While there may not be any clear answers for some time, if there was any cheating involved, it does not appear to involve the Mexican players. “I didn’t celebrate because that penalty call left me with a bad taste,” said Mexican player Andres Guardado after he scored the controversial penalty kick which ultimately propelled them into the final.

This isn’t the first time CONCACAF has been accused of shady behavior. There was recently a massive investigation which resulted in several lawsuits against individuals working with FIFA and the organization as a whole. Amidst the disaster, two former CONCACAF presidents Jack Warner and Jeffrey Webb were accused of bribery by the United States Justice Department. The United States Department of Justice alleged that for more than two decades, sports-marketing executives paid more than $150-million dollars in kickbacks and bribes to high-ranking soccer officials. The charges are an indication and direct representation of corrupt practices at the highest level of the world’s most popular sport; secret meetings, hidden cash, and bank accounts in Panama and the Cayman Islands were discovered as part of the investigation.

Most recently, CONCACAF acting President Alfredo Hawit announced a review of the refereeing in the Gold Cup. This review will hopefully shed light on the events of the two controversial games. While it may have been more profitable to have Mexico in the finals, it’s important that the integrity of the game remains intact.

Symon Rowlands

Symon Rowlands is a member of the University of Miami Class of 2016 and was a Law Street Media Fellow during the Summer of 2015. Symon now blogs for Law Street, focusing mostly on politics. Contact Symon at staff@LawStreetMedia.com.

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