This chapter delves into Panama’s role in global politics, exploring its historical and contemporary positioning as both an “object” and a “subject” of great power competition. Despite being a small state, the Panama Canal has made Panama a focal point for major powers like the United States and China. While frequently acting as a pawn in geopolitical rivalries, Panama has also demonstrated agency by asserting its sovereignty, diversifying diplomatic ties, and leveraging international norms, though this agency is ultimately constrained when its territorial sovereignty is directly threatened. Our study shows that small states can develop successful strategies to reduce their exposure to global risk and gain leverage in international affairs. However, a close analysis of 2025 dynamics concludes that a small state’s ability to act independently is context-dependent, particularly vulnerable when its core national interests are at stake. Rising geopolitical competition in the international arena presents a challenging scenario for small countries like Panama.