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Central America is defined by a strategic contest over the Panama Canal, with Panama's courts and government canceling Chinese contracts in favor of Western operators, while Costa Rica's political landscape shifts decisively with the election of right-wing populist Laura Fernández.
February 2026
Week of Feb 16, compared to 12-week average
The regional economy is dominated by a major realignment of control over the Panama Canal's critical infrastructure. Panama's Supreme Court voided Hong Kong-based CK Hutchison's port contracts, leading to the state taking control of two key ports and awarding major operations to Denmark's Maersk. Concurrently, El Salvador secured a $1.3 billion loan from the IDB, and Nicaragua received a new batch of Belarusian Amkodor machinery.
Costa Rica's political order has been transformed by the decisive victory of right-wing populist Laura Fernández, whose party also won parliament. China signaled its readiness to work with the new administration, while the US, under Trump, reasserted its influence in the region from the Panama Canal to Honduras. In parallel, the US increased pressure on Nicaragua by sanctioning Ortega's prison chief.
Security cooperation with the United States is a visible priority. Panama and the US conducted joint military drills, and the USS Honduras was reactivated. El Salvador demonstrated domestic enforcement capability with a major six-ton cocaine seizure.
Society is gripped by the acute tension over US immigration enforcement, particularly affecting Honduran nationals. A specific case of a student deported to Honduras and blocked from returning remained unresolved, with a judge giving the US two weeks to retrieve her and ICE vowing to deport her again. Broader policy shifts are evident, with an appeals court backing the end of TPS protections for Honduras and Nicaragua.