Panama has emerged as an unexpected beneficiary of the US–China rivalry over the Panama Canal, gaining geopolitical leverage that could attract new investment and modernize its economy.

Axar.az, citing Bloomberg, reports that President Donald Trump’s push to “reclaim” the canal for the US — and his warnings about Chinese influence — have spurred infrastructure plans, including a $1.5 billion reservoir to address water shortages, port expansions, and a proposed pipeline.

While the US is moving to limit China’s footprint, President José Raúl Mulino is aiming to maintain ties with both powers, likening Panama’s role to a Western Hemisphere version of Singapore.

The strategic spotlight comes amid Panama’s post-pandemic recovery, social unrest, and debates over reviving a shuttered copper mine.

Analysts say the canal’s role could be the cornerstone of a new, more inclusive economic model.