Future Of Panama Ports Deal Murkier Than Ever
In the midst of a three-way tug-of-war between Panama, America and China over control of Panama Canal ports, Panama has decided it wants more players in the game.
The Panama Canal Authority plans to sell rights to two yet-to-be-built ports to bring in more operators and limit the influence of any one group, specifically Geneva-based Mediterranean Shipping Company (MSC) and China’s state-run Cosco. The authority’s head, Ricaurte Vásquez Morales, said he wants more competition now that MSC and Cosco, China’s largest shipping company, have emerged as significant players in the contest over control of the canal.
In March, President Donald Trump announced that the United States—in the form of private equity firm BlackRock—was “taking back” two Panama Canal ports that he alleged were under Chinese control. Since then, the deal’s future has become mired in negotiations, public threats of legal action, political posturing and diplomatic maneuvering.
In the original announcement, a group of investors led by BlackRock agreed to take over operation of two ports at either end of the Panama Canal for a deal worth between $19 billion and $22.8 billion. The ports had been operated by CK Hutchison Holdings Limited, a Hong Kong-based Chinese port investor that operates many of the world’s busiest container ports. An “exclusivity window” of 145 days for the deal expired on July 27.
Shortly after the deal was announced, Chinese publications began criticizing it as a “betrayal” of national interests and attacking Chinese billionaire Li Ka-shing, who owns a large stake in one of the companies involved. He also has had prior conflicts with Chinese leader Xi Jinping. China’s State Administration for Market Regulation (SAMR) launched a review, though the two ports generate little to no revenue in China. To satisfy Beijing’s concerns, China’s state-owned shipping giant Cosco is now seeking a 20- to 30-percent stake in the deal.
To complicate the issue, Panama has been asserting its own national interests and raising questions about how CK Hutchison’s port deal was renewed in 2021. Panama’s comptroller general, Anel Flores, launched a comprehensive audit into CK Hutchison’s 2021 concession renewal for the Balboa and Cristobal ports. Flores has not made the full results of the audit public, but he claimed it revealed “many irregularities” and filed lawsuits to declare nullify the contract. Flores told Reuters, “They are talking about billion-dollar deals here, which do not include Panama, the true owner of the Panamanian ports.”
In the latest announcement, Vásquez said he expects the bidding process for the new ports to be completed by the end of the year and for Panama to receive bids from a number of additional potential operators.
The Wall Street Journal reported that, according to sources familiar with the negotiations, APM Terminals, the port unit A.P. Moller-Maersk, and its French rival, CMA CGM, are both expected to make offers.
