When Panama severed diplomatic relations with Taiwan and recognized China in 2017, Beijing achieved one of its most important diplomatic victories in Central America.
However, nearly a decade later, Panama is demonstrating that diplomatic recognition does not necessarily eliminate Taiwan from a country’s political system.
Panama and Taiwan had diplomatic relations for more than 100 years and the goodwill between the countries was displayed last week when Panama’s National Assembly established an interparliamentary exchange group with the Legislative Yuan.
Forty-five of the assembly’s 71 lawmakers joined the group, representing more than 60 percent of the legislature. Its members include National Assembly President Shirley Castanedas and both vice presidents, Manuel Cohen and Manuel Cheng.
The significance of the new alliance extends beyond the number of lawmakers involved. Panama formally recognizes Beijing and accepts its “one China” policy, yet a clear majority of its elected legislature has created an institutional mechanism for maintaining exchanges with Taiwan.
That exposes a weakness in China’s strategy of diplomatically isolating Taiwan: Beijing can persuade governments to withdraw formal recognition, but it cannot necessarily prevent other democratic institutions within those countries from maintaining relationships with Taipei.
The process did not begin with the creation of the friendship group. More than 20 Panamanian lawmakers have visited Taiwan over the past six months. In November last year, a nine-member cross-party delegation traveled to Taiwan, the first delegation from Panama’s National Assembly to do so since 2017.
Panamanian President Jose Raul Mulino stressed that foreign policy was the responsibility of the executive branch and said the lawmakers’ visit had not been authorized by his administration.
Meanwhile, the Panamanain Ministry of Foreign Affairs accused the Chinese embassy of interfering in the country’s internal affairs after Chinese officials reportedly pressured lawmakers to cancel the trip.
The dispute illustrated the limits of diplomatic recognition in a democratic political system.
Mulino’s government controls Panama’s formal diplomatic relations and has given no indication that it intends to restore recognition of Taiwan, but the National Assembly is an independent branch of government. Its lawmakers can travel, establish parliamentary groups and develop political relationships that do not necessarily correspond perfectly with the foreign policy preferences of the executive.
For decades, Beijing’s campaign against Taiwan’s diplomatic allies has been built around a relatively binary proposition: A country recognizes either Beijing or Taipei. Once a government switches recognition to China, Taiwan closes its embassy, formal cooperation programs are terminated and Beijing expects the political relationship with Taipei to largely disappear.
However, a country can recognize China while legislators maintain exchanges with Taiwan. Those exchanges can potentially create relationships involving universities, businesses, local governments and civil society without immediately challenging formal diplomatic recognition.
For Taiwan, that could provide an alternative strategy in countries that have already switched recognition to Beijing.
Rather than treating the loss of diplomatic relations as the end of meaningful engagement, Taipei could expand parliamentary diplomacy and gradually rebuild relationships below the level of formal recognition. Such a strategy would not require governments to immediately choose between China and Taiwan.
US President Donald Trump has repeatedly expressed concern about Chinese influence surrounding the Panama Canal. US Secretary of State Marco Rubio chose Panama as the first destination of his first overseas trip after joining the White House and pressed Panamanian officials over Chinese involvement in the country.
Soon afterward, Panama announced that it would leave China’s Belt and Road Initiative, which led China to accuse the US of interference. Panama was the first Latin American country to join the initiative in 2017, only months after establishing diplomatic relations with Beijing.
The decision did not mean Panama was preparing to abandon relations with China, but it did demonstrate that decisions once presented as evidence of Panama’s long-term alignment with Beijing can be reversed when domestic interests and geopolitical circumstances change.
Taiwan’s expanding parliamentary relationship should be understood within this environment.
Panama is not restoring diplomatic relations with Taiwan, but the political space available to Taipei is clearly larger than it was several years ago. More importantly, the space is being created by Panamanian institutions themselves.
Honduras, which severed diplomatic relations with Taiwan in 2023, is experiencing a different but related process. Honduran President Nasry Asfura campaigned on reconsidering the decision to recognize China and argued that Honduras had been better off economically when it maintained formal relations with Taiwan.
Since taking office, his government has been reviewing agreements signed with Beijing before making what Asfura has described as a final decision regarding Honduras’ relationships in Asia.
The Honduran National Congress has also become increasingly involved. Lawmakers have requested reviews of agreements signed with China, while congressional leaders have publicly questioned whether the diplomatic switch delivered the benefits that had been promised.
Panama and Honduras are following different paths, but both challenge the assumption that establishing diplomatic relations with China permanently removes Taiwan from a country’s political landscape.
Honduras is reconsidering the economic and political rationale behind its diplomatic switch. Panama is demonstrating that even without reconsidering formal recognition, elected institutions can rebuild direct relationships with Taiwan.
Taiwan has only a small number of formal diplomatic allies and competing with China financially for recognition would be extraordinarily difficult. Parliamentary diplomacy offers a different approach because it does not require Taiwan to immediately win the diplomatic contest.
If lawmakers visit Taiwan, universities establish exchanges, businesses identify opportunities and civil society organizations cooperate, relationships can develop before diplomatic recognition ever becomes part of the discussion.
That does not guarantee that Panama, Honduras or any other country would eventually restore relations with Taiwan. Beijing retains enormous economic and diplomatic leverage, and governments would have to consider substantial consequences before making such a decision.
However, Panama’s new parliamentary group demonstrates that diplomatic recognition is not necessarily the final stage of the competition.
China can convince a government to recognize Beijing. Preventing Taiwan from rebuilding relationships with the democratic institutions inside that country might prove considerably more difficult.
Juan Fernando Herrera Ramos is a Honduran journalist based in Taipei. His work on Taiwan-China-Latin America relations has been published in Nikkei Asia, The Diplomat and the Taipei Times.
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