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CK Hutchison Holdings, the Hong Kong-based logistics giant, announced plans to sell a majority stake in a business that controls ports in Panama to investors including the US financial giant BlackRock in a deal worth almost $23bn.
The sale of a 90% interest in Panama Ports Company, which holds the contract to run the ports of Balboa and Cristóbal until 2047, comes as Donald Trump piles on pressure to end what he sees as China’s influence and control over the Panama canal.
The deal – one month after US secretary of state Marco Rubio’s visit to Panama City – represents a swift and significant victory for the US president’s aggressive negotiations towards Panama.
Following his conversations with Panamanian president José Raúl Mulino, Rubio declared that “control of the Chinese Communist party over the Panama Canal” was unacceptable and that the US would use “measures necessary to protect its rights”.
CK Hutchison insisted the deal was unrelated to Trump’s vow to “take back” the canal. “I would like to stress that the Transaction is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports,” said co-managing director Frank Sixt.
Few in Panama believe this.
In the past two weeks Panama has also taken in third-country migrants deported from the US, as part of an agreement made with Rubio, and greenlit a contentious dam project that would provide more water to the Canal.
Mauricio Claver-Carone, Trump’s special envoy to Latin America had previously told Politico that the canal risked becoming “obsolete” due to Panama’s failure to properly maintain the canal and tackle low water-levels that limited transits.
“Trump aimed at the heart of the country, the Panama canal,” says Nehemías Jaén, a former Panamanian diplomat. “He never intended to take it. Every concession that Panama makes is a win for him.”
Few Panamanians will mourn the departure of Panama Ports. In recent months, clips of the comptroller general announcing that the company had not paid “one cent” to the government over the last three years, have gone viral on social media.
Many Panamanians believe that corrupt politicians struck sweetheart deals for operation of the port.
“This is good for Panama and for the world,” says Mario Perez Balladares, director of a transshipment company, adding that he expected container volumes to increase at the ports in the wake of the decision.
But there could be a long term negative impact on Panama’s image, according to Jaén. Just six days ago, the attorney general said he considered the contracts for the Balboa and Cristobal ports to be unconstitutional, opening the possibility that the contracts could be rescinded by Panama’s supreme court.
With the purchase of Panama Ports by a US company, that legal case now looks unlikely to proceed, giving the impression that Panamanian institutions bend to US pressure rather than their own laws.
“This is creating a very negative perception of Panama in terms of investor protection,” says Jaén. “Panamanians don’t want to be considered a US colony again.”
