Taiwan loses Central American ally after Panama establishes formal diplomatic ties with China

President of Panama Juan Carlos Varela (centre), walking with the President of China LandBridge Group Ye Cheng (left), to participate in the act of the first shovel for the construction of a container harbour in Colon, Panama, on June 7, 2017. PHOTO: EPA
Taiwan's President Tsai Ing-wen and Panamanian President Juan Carlos Varela during a welcome ceremony at the Presidential Palace in Panama, on June 27, 2016. PHOTO: REUTERS

TAIPEI - Taiwan has lost one of its 21 diplomatic allies after the Central American nation of Panama announced that it will establish official diplomatic ties with China, the second nation to do so after President Tsai Ing-wen was sworn into office in May last year.

Panamanian President Juan Carlos Varela announced the move in a televised address on Tuesday (June 13), after Panama newspaper La Estrella de Panamá first broke the news.

He said that Panama was upgrading its commercial ties with China and establishing full diplomatic links with the second bigger user of the Panama Canal,a key shipping canal. "I'm convinced that this is the correct path for our country," Mr Varela said.

"We have taken a historic step," he said, adding: "Both countries opt for the connection of a world that is more and more integrated, which creates a new era of opportunities for a relationship that we are starting today."

At the same time, Mr Valera called Taiwan a "great friend" and said he hoped for a constructive reaction.

Ms Tsai said on Tuesday China's move to establish diplomatic ties with Panama has affected the current stable situation across the Taiwan Strait.

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Panama establishes diplomatic ties with China and breaks relations with Taiwan in a major victory for Beijing.

"Taiwan's people cannot accept it," Tsai read in a brief statement during a news briefing.

The announcement came after Beijing began construction last week of a container port with natural gas facilities in Panama's northern province.

Speaking at a press conference on Tuesday morning, Foreign Minister David Lee said the Taiwanese government "deeply regrets and condemns" the move.

Mr Lee added that Taiwan will terminate its relations with Panama to "maintain its national dignity".

He also criticised China for putting pressure on Taiwan's allies. He said Taiwan will not compete with China in "dollar diplomacy", adding that the island will continue to find its voice in the international space.

In a statement, Taiwan's Ministry of Foreign Affairs said it will "cease bilateral cooperation and assistance, and to evacuate the embassy and technical personnel" in Panama.

Panama's decision to establish official ties with Beijing leaves Taiwan with 20 diplomatic allies, many of them small and impoverished nations in Latin America, Africa and the Pacific that have benefited from the financial aid that Taiwan provides.

The move is widely seen as China tightening the diplomatic noose around Taiwan by pressuring the island's diplomatic allies to sever ties with it.

Taiwan's circle of diplomatic allies has been shrinking since it lost its United Nations seat to Beijing in 1971. The next two decades saw most major states switching diplomatic recognition from Taiwan to China, with Japan doing so in 1972 and the United States in 1979.

In March last year, Beijing re-established relations with Gambia, a former Taiwanese partner in West Africa.

In December, the West African island of Sao Tome and Príncipe cut relations with Taiwan and restored ties with China.

China considers the self-governed island as part of its territory. Tensions between the two rivals have rapidly worsened since Ms Tsai, who leads the Beijing-sceptic and independence-leaning Democratic Progressive Party, took office last year.

  • Countries that still have diplomatic ties with Taiwan

  • East Asia and Pacific

    Republic of the Marshall Islands
    Republic of Palau
    Solomon Islands


    Burkina Faso
    Kingdom of Swaziland


    Holy See

    Latin America and Caribbean

    Dominican Republic
    El Salvador
    Republic of Guatemala
    Republic of Honduras
    The Federation of Saint Christopher and Nevis
    St. Lucia
    Saint Vincent and the Grenadines

Panama is one of Taiwan's oldest friends, with ties dating back to 1912, but some analysts and Taiwanese diplomats have said before that the Central American country could become the next to break ties.

After she was sworn into office, Ms Tsai met her Panamanian counterpart Varela during the opening of the expanded Panama Canal in June last year. Panama's deputy foreign minister Luis Miguel Hincapie also said in an interview last December that relations with Taiwan are good and "in excellent condition as always".

China's Foreign Minister Wang Yi met his counterpart from Panama, Isabel de Saint Malo, in Beijing on Tuesday and signed a joint communique establishing ties, reported Reuters.

"This is a historic moment. China- Panama relations have opened a new chapter," Mr Wang said, describing Panama's decision as in "complete accordance" with its people's interests and "in keeping with the times".

"The two countries' governments agreed to develop good friendly relations on the principles of mutual respecting sovereignty and territorial integrity, non-aggression, mutual non-interference in internal affairs, mutual benefit, and peaceful coexistence," China's Foreign Ministry said in a statement on its website.

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