In the past decade, as U.S. investment and diplomatic engagement in Central America waned, China has strategically bolstered its presence in Panama, providing a lifeline for another major U.S. adversary — the Islamic Republic of Iran. Assisted by Panama’s lax regulatory oversight, Iran circumvents international sanctions by smuggling oil, a key revenue source for its nuclear-weapons program, and support to its proxy terror groups such as Hamas, Hezbollah, and the Houthis. The United States must confront this dynamic by holding Panama accountable for enabling the ongoing flow of Iranian oil under its watch.
In November 2020, there were 70 foreign vessels suspected in the illicit transfer of Iranian crude oil and petroleum products. Three and a half years later, that number surged to a staggering 364. Many of the vessels identified employ a deceptive tactic known as “flag-hopping,” whereby seacraft involved in criminal activities change their registered flag to obscure their origins and destinations. While Panama receives an influx of foreign investment from China — by far the top purchaser of Iranian oil — nearly half of all tankers transporting illicit Iranian oil fly the Panamanian flag.
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