China’s attempts to flex its increasing international clout scored a major victory earlier in December when the strategic Central American nation of Panama became the first in the region to officially agree to take part in Beijing’s Belt and Road Initiative.

During a bilateral meeting between China’s President Xi Jinping and his Panamanian counterpart Juan Carlos Varela on December 3, the countries, which only established diplomatic relations in 2017, announced 19 separates deals that saw China formally commit to providing several substantial loans for strategic investment in Panama, as well as other deals on tourism, trade, banking, and education.

China’s interest in the country lies squarely in its ability to have unfettered access to the Amercian-built Panama Canal  – considered one of the world’s most strategic waterways. By enticing the Varela government into playing a major role in a Chinese-led and funded project, the Communist government in Beijing will now have greater economic and strategic reach in Latin America and the Caribbean.

The Varela government, however, is likely to face reprisals from the US, whose companies are the primary users of the Canal.