Panama has always punched above its weight. A country of just over four million people controls a waterway that handles 5 percent of global trade and 40 percent of U.S. container traffic between coasts. But geographic advantages can quickly become geopolitical liabilities, and in President José Raúl Mulino’s Panama, this has been more apparent than ever during his first year in office.
What is emerging from Panama City is not just another small-state foreign policy—it is something more systematic. Call it the Mulino Doctrine: the idea that strategic autonomy in an era of great power competition requires active management, not passive hope.
The Strategic Recalibration
When Mulino took office in 2024, he inherited a complex strategic situation. His predecessors had signed onto China’s Belt and Road Initiative without extensive public debate, approved opaque port concessions to Hong Kong-based, but Chinese-owned, companies, and left the country’s strategic position unclear just as U.S.-China tensions were intensifying. Then President Trump started talking about “taking back” the canal.
The conventional response for President Mulino would have been defiant rhetoric—the kind that plays well domestically and costs nothing upfront. Instead, Mulino did something more calculated and interesting. He began systematically recalibrating Panama’s relationships without abandoning anyone entirely.
Withdrawal from the Belt and Road Initiative (BRI) came first, announced after Secretary of State Marco Rubio’s February 2025 visit. Critics called it capitulation. But this assessment misses the deeper strategic calculus. Mulino’s administration had been evaluating withdrawal from the BRI as a policy option before Rubio’s February visit. More revealing still, this was not Mulino’s first strategic move toward the United States. On his very first day in office—July 1, 2024—he signed a migration repatriation memorandum with the Biden administration, committing to crack down on migration through the Darién Gap with U.S. financial support. This was months before Trump’s election victory, demonstrating that Mulino’s strategic recalibration was not about appeasing a particular U.S. president, but about positioning Panama for productive cooperation with the United States regardless of who occupied the White House.
The substance of what Panama sacrificed with the BRI withdrawal reveals the strategic calculation: a vague memorandum of understanding that had generated more headlines than infrastructure. “I do not know what the intention was of those who signed this agreement with China. What has it brought to Panama all these years?,” Mulino asked pointedly at a press conference in February (author’s translation from Spanish). In return, Panama deepened its security cooperation with the United States while maintaining commercial relationships with China where they made economic sense.
Testing Strategic Patience
The real test came with the security cooperation memorandum signed with the Pentagon in April 2025. The agreement was modest—essentially formalizing consultation mechanisms that had existed informally for decades. No bases, no troop deployments, nothing that fundamentally altered Panama’s defense posture.
Yet the protests were significant. Thousands of Panamanians took to the streets denouncing U.S. “militarization.” Many opposition figures who had previously overseen Chinese infrastructure deals repositioned themselves as defenders of sovereignty, representing a notable shift in political positioning.
The strategic logic underlying the security memorandum, however, addressed a different concern: The memorandum was not about inviting U.S. dominance. It was about creating institutional buffers against future coercion from any direction. Small states do not preserve independence by refusing to engage with great powers—they lose it by engaging carelessly.
The Politics of Strategic Repositioning
The opposition to Mulino’s approach reflects broader patterns in Panamanian politics. Many critics represent what could be termed strategic orphans—politicians whose previous great power bets did not yield expected results. Some had embraced Chinese investment promises that delivered less than advertised. Others had assumed that Trump’s first presidency was an aberration that would not return.
These political figures now find themselves caught between their past decisions and present realities, attempting to rebrand themselves as sovereignty purists. This represents a familiar pattern in Panamanian politics: When foreign policy strategies fail to deliver, political actors often wrap themselves in nationalist rhetoric and accuse successors of compromising national interests.
The challenge is that sovereignty is not a slogan—it is a practice. And effective practice requires making difficult choices about which relationships to prioritize and how to manage competing pressures.
Beyond Binary Choices
What makes the Mulino approach strategically significant is its rejection of the binary thinking that dominates discussions about U.S.-China competition. Panama is not “choosing sides” in a grand geopolitical struggle. It is doing something more sophisticated: selectively engaging with different powers on different issues while maintaining its core strategic partnerships.
This is not neutrality in the Swiss sense—Panama is too important and too vulnerable for that kind of detachment. It more closely resembles what Singapore has practiced for decades: clear-eyed assessment of interests combined with careful relationship management.
The Chinese port audit currently underway exemplifies this approach. Rather than dramatic confrontation or passive acceptance, Panama is subjecting these arrangements to legal and financial scrutiny. If they meet Panamanian standards, they continue. If not, they get renegotiated or terminated. This represents technical, methodical work—exactly the kind that effective statecraft requires.
Communication and Strategy
Where Mulino’s government has encountered difficulties is in explaining its strategy to the public. The security memorandum controversy could have been avoided with better advance consultation and clearer messaging about what the agreement did and did not entail.
This matters because successful foreign policy in a democracy requires some degree of public understanding and support. The Mulino team often operates as if sound policy should speak for itself. But in an era of social media and political polarization, even well-crafted policy requires effective communication.
The opposition’s ability to frame routine security cooperation as U.S. “militarization” succeeded precisely because the government had not made its case first. In politics, as in strategic planning, late messaging usually means lost narrative control.
A Strategic Hedge Model
Stepping back from specific controversies, a pattern emerges. Panama is attempting to position itself as what international relations scholars call a “strategic hedge”—maintaining multiple relationships to avoid dependence on any single partner.
This approach has precedents. Cold War Austria managed to stay neutral while remaining economically integrated with the West. Modern Singapore maintains close security ties with the United States while conducting substantial business with China. What these cases share is institutional sophistication and strategic patience.
Panama’s challenge is that it has less room for error than Austria or Singapore. And China is an actual global revisionist power with real stake in the international system. The canal makes the country too important to ignore and too valuable to leave undefended–even if that defense stems only from geopolitical thinking. Every major power maintains strong opinions about who should control what happens there.
Doctrine in Development
The Mulino Doctrine is still evolving, but its core elements are becoming clear: selective engagement rather than blanket alignment, institutional hedging rather than dramatic confrontation, and strategic patience rather than reactive nationalism.
This approach will not satisfy all stakeholders. Opposition politicians will continue demanding more theatrical displays of independence. Some in Washington will want clearer demonstrations of loyalty. Beijing will keep probing for openings to restore its influence.
But for a small state navigating great power competition, the Mulino approach offers something valuable: a model for maintaining autonomy through active management rather than passive resistance.
Whether it succeeds will depend partly on external factors—how patient great powers prove to be with Panama’s hedging, how regional politics evolve, how the global economy develops. But it will also depend on Panama itself: whether its political class can resist the temptation to treat foreign policy as a campaign prop, and whether its public can accept that sovereignty sometimes requires uncomfortable compromises.
The stakes extend beyond Panama. If the Mulino Doctrine works—if a small state can successfully navigate great power competition through strategic selectivity rather than binary choices—it could offer lessons for other countries facing similar pressures.
That would make Panama’s current experiment more than just another episode in isthmian politics. It would make it a test case for sovereignty in the twenty-first century.
Carlos Ruiz Hernández is a senior associate (non-resident) with the Americas Program at the Center for Strategic and International Studies in Washington, D.C.
