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The Trump administration got a major victory in its crusade to rid the Panama Canal of alleged Chinese influence.
A consortium led by U.S.-based BlackRock has acquired a 90-percent stake in Panama Ports Company from Hong Kong-based CK Hutchison Holdings, giving the group control over the ports of Balboa and Cristobal in Panama. The ports operate on both sides of the Panama Canal.
The deal will also net the consortium Hutchison’s 80-percent stake in 43 ports comprising 199 berths in 23 countries.
Total enterprise value for the acquisitions is $22.8 billion.
Under Hutchison, Panama Ports Company had operated the Balboa and Cristobal ports since 1997. In 2021, the company had re-signed a new 25-year contract that would have extended their partnership through 2047.
According to CK Hutchison co-managing director Frank Sixt, the company received numerous bids and expressions for Panama Ports Company, in what he called “a rapid, discrete but competitive process.”
“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,” insisted Sixt.
The sale does not involve any interest in Hutchison Port Holdings Trust, which operates ports in Hong Kong and Shenzhen, as well as South China, or any other ports in Mainland China, CK Hutchison said.
The Panama Ports Company transaction will proceed separately from the deal for the other ports, and awaits confirmation by Panama’s government.
Hutchison’s ownership had spooked Trump’s allies in Washington, including Secretary of State Marco Rubio and Sen. Ted Cruz (R-Tex.). Rubio said during his Senate confirmation that its ownership sparked a national security concern, particularly if the company controlled the ports in a time of conflict.
BlackRock’s consortium also includes infrastructure investment fund Global Infrastructure Partners (GIP) and Terminal Investment Limited (TiL), a terminal operator which is majority owned by Mediterranean Shipping Company (MSC).
TiL operates terminals at major global ports including Los Angeles, Long Beach and New York/New Jersey in the U.S., as well as Singapore, Busan, Rotterdam, Ningbo and Antwerp internationally.
Internal pressure had been ramping up in the wake of President Donald Trump’s threats to “take back” the canal. He has repeated false claims that the Chinese operate the waterway, saying that Panama violated the Panama Canal Treaty and Neutrality Treaty first signed in September 1977 during the Carter administration. The twin agreements resulted in the transfer of the canal to Panama in 1999.
In what appeared to be an effort to appease Trump and his administration, Panama’s government audited Panama Ports Company in late January.
A month later, two lawyers had filed suit with the Panamanian Supreme Court challenging the 25-year contract extension, calling it unconstitutional.
Panama’s attorney general Luis Carlos Gómez followed up the litigation with his own opinion, asserting that the deal violated the country’s constitution and carried a lack of justification in the public interest.
Panama already made some concessions to the U.S. after President José Raúl Mulino met with Rubio during the latter’s first trip as the country’s chief diplomat.
The country opted not to renew its participation in China’s Belt and Road Initiative, making Panama the first Latin American nation to leave the foreign infrastructure investment program.
The Panama Canal Authority (ACP), the agency that operates the 51-mile waterway, followed up by saying it would “optimize transit priority” of U.S. Navy ships sailing through the canal.
The ACP stopped short of giving American warships free passage through the canal—a stated desire from Rubio and the State Department.
While the Panama Canal is built to be a neutral passage that is open to ships from all countries, the U.S. has plenty of vested interest in the global trade artery.
More than 76 percent of the cargo that goes through the canal originates or is destined for the U.S., according to data from the ACP. Additionally, 46 percent of the total containers moving from Northeast Asia to the U.S. East Coast traverse through the canal, the Commerce Department says.
A report from the Financial Times said BlackRock CEO Larry Fink briefed senior leaders in the Trump administration to secure their backing for a takeover. According to that report, the consortium would not have gone forward with its bid if they believed the U.S. government would not support the deal.
