Beijing’s brokering of a historic peace deal between Iran and Saudi Arabia last year marked a significant shift in China’s engagement with the Middle East. The agreement was seen as a landmark achievement, positioning China as a mediator in one of the world’s most volatile regions.

For Tehran, facing economic and geopolitical pressure from the Biden administration, the deal was a diplomatic breakthrough. It also offered a chance to reduce isolation with Beijing’s support.

However, the recent overthrow of Bashar al-Assad in Syria and the setbacks faced by Hamas and Hezbollah in their conflict with Israel have fragmented Iran’s regional influence. These developments, coupled with growing threats from Israel, pose significant challenges to Tehran’s strategic position.

Experts suggest that the return of a hawkish U.S. administration under Donald Trump could strengthen the China-Iran alliance. Shared pressures may push both nations toward closer cooperation, reshaping the region’s diplomatic dynamics.

Chinese analysts caution, however, that Beijing’s ability to sustain its mediation role may be at risk. Rising tensions between Tehran and other regional powers could jeopardize the peace China’s diplomacy has fostered. Such conflicts would not only test Beijing’s influence but also challenge its long-term strategic interests in the Middle East.

Fan Hongda, a professor at the Institute of Middle East Studies at Shanghai University of International Studies, notes that U.S. pressure on Iran is unlikely to wane. “Coupled with Israel’s strikes and the destruction of Iranian-backed forces such as Hamas and Hezbollah last year, this will compel Iran to favor closer cooperation with other powers, including China and Russia,” Fan remarked.

Iran’s economic woes date back to the Trump administration’s withdrawal from the Iran nuclear deal and the imposition of stricter sanctions under the “maximum pressure” campaign. These sanctions continue to hinder Tehran’s economy, influencing its strategic partnerships and regional policies.

U.S. President-elect Donald Trump asserted on Saturday that the Panama Canal imposes “exorbitant prices and tolls” on U.S. Navy and merchant ships, threatening to demand its return if the fees are not reduced. His comments, shared on the Truth Social platform, reignited debates over the canal’s strategic and economic significance.

“The fees charged by Panama are ludicrous, especially given the extraordinary generosity bestowed on Panama by the United States. This complete ‘theft’ from our country will be stopped immediately,” Trump stated.

The United States, the canal’s largest customer, accounts for approximately 75% of its annual cargo transit. However, prolonged droughts have disrupted operations, exacerbating supply chain challenges. National Economic Council Director Lael Brainard linked these disruptions to inflationary pressures in a statement last week.

Despite its financial contributions, the Panama Canal Authority reported a $2.47 billion contribution to Panama’s treasury in fiscal 2024, marking a consecutive annual decline. Deepwater transits also dropped by 21% in 2024 compared to 2023 due to water conservation measures.

Built by the U.S. and completed in 1914, the 51-mile-long canal was handed over to Panama in 1999 as part of a 1977 treaty signed by President Jimmy Carter—a move Trump called “stupid.”

Trump raised concerns over the canal “falling into the wrong hands,” implying Chinese influence. China is the second-largest user of the canal, and a Hong Kong-based company manages two of the five ports on its flanks. Panama severed diplomatic ties with Taiwan in 2017 and established relations with China, further solidifying Beijing’s economic footprint in the country.

“It was not given for the benefit of others, but only as a demonstration of cooperation between us and Panama,” Trump declared, urging Panamanian authorities to respect the canal’s original intent.

Panama President José Raúl Mulino dismissed Trump’s claims, reaffirming that the Panama Canal and its adjacent areas remain under Panamanian sovereignty. “The sovereignty and independence of our country are non-negotiable,” Mulino asserted.

He defended the canal’s fee structure as being market-driven and aligned with operational and modernization costs. The canal remains a critical economic engine for Panama, contributing billions annually. Its fees are based on metrics such as tonnage and vessel capacity. For instance, Panamax-class container ships with a capacity of 2,500 TEU pay $172,000 empty and $247,000 full, and Neopanamax vessels with a 12,000 TEU capacity pay between $622,000 and over $1 million, depending on cargo.

The unit cost per ton is projected to decrease from $11.79 in 2024 to $10.63 in 2025, according to official estimates.

While Trump advocates for renegotiation, Panama continues to strengthen ties with China. Discussions on a trade agreement, stalled since 2018, may resume in 2025, signaling the deepening influence of Beijing in the region.

However, Mulino rejected allegations of foreign control, stating, “Neither China, nor the European Community, nor the United States, nor any other power has any direct or indirect control over the canal.”

During his campaign, Mulino emphasized cooperation with the U.S. on migration issues, including closing the Darién Corridor—a key transit point for migrants heading to the U.S.

Russian President Vladimir Putin hosted an unexpected meeting with Slovak Prime Minister Robert Fico at the Kremlin on Sunday, December 22. The leaders discussed key issues, including the future of Russian gas supplies and the ongoing conflict in Ukraine. This meeting followed Putin’s warning of severe retaliation against Kyiv after a drone attack on Kazan.

Slovakia, a country heavily reliant on Russian gas, expressed growing concerns about the impending expiration of its gas transit contract, which allows supplies through Ukraine. This contract, set to expire on December 31, is unlikely to be renewed as Ukraine has stated its opposition to continuing the agreement.

The visit, unannounced prior to Sunday, underscores the high stakes for Slovakia, a NATO and European Union member. A brief video published by Russian journalist Pavel Zarubin showed Fico and Putin smiling and shaking hands, signaling cordial relations despite broader geopolitical tensions. However, Kremlin spokesperson Dmitry Peskov later confirmed that the meeting concluded without a joint statement.

In a Facebook post after the talks, Fico clarified that the meeting was prompted by Ukrainian President Volodymyr Zelensky’s resistance to gas transit through Ukraine to Slovakia. According to Fico, Putin reiterated Russia’s willingness to continue supplying gas to Slovakia and Western nations, but he admitted such arrangements might become unfeasible after January 1, 2025.

Beyond energy, the two leaders exchanged views on the Ukraine conflict, emphasizing the “possibility of an early peaceful resolution.” Fico, however, accused Kyiv of prioritizing sanctions against Russia’s nuclear sector, which he argued harms Slovakia economically and threatens electricity production at its nuclear power plants. Since returning to office in October 2023, Fico has ended Slovakia’s military aid to Ukraine, further straining bilateral relations.

In November, Fico announced plans to travel to Moscow in May for the 80th anniversary of the end of World War II. This reflects his administration’s pivot towards closer dialogue with Russia, a move at odds with Slovakia’s traditional Western alliances.

Tensions have also escalated over Ukraine’s demands for Slovakia to impose sanctions on Russia’s nuclear industry in exchange for maintaining gas transit. Ukraine contends that Slovakia earns approximately $500 million annually from its Russian gas trade. Additionally, Fico accused Zelensky last Thursday of offering him €500 million in Russian assets as an incentive to support Kyiv’s bid to join NATO.