Panama is upsetting the applecart at the center of world trade and it could just deliver Donald Trump a token victory along the way.
This week, Panama’s Comptroller General Anel Flores brought two lawsuits to the nation’s Supreme Court seeking to end a decades-long hold by a Hong Kong-based company, CK Hutchison, on two main ports. The local arm of the company, Panama Ports Company (PPC), has operated main terminals at both points of the Panama Canal since 1997.
Flores asserts the contract was unequal from the beginning and that a 25-year extension executed in 2023 was rammed through without sufficient government supervision. Both lawsuits allege that the contract is void, one holding that it should be canceled in its entirety and the second stating it’s downright unconstitutional.
The timing is indicative. Only months ago, a consortium led by the US attempted to purchase PPC and scores of other ports in CK Hutchison’s portfolio with the investment behemoth BlackRock and the Swiss shipping giant MSC. The offer, though, was stymied when China’s regulators intervened and suggested that it would not pass if their shipping behemoth, COSCO, had some voice in taking over.
By July 27, the agreement had collapsed. Now that Panama is suing CK Hutchison’s contract in court, those port operations could soon be back on the market and this time around, the US stands a much better chance of making a move.
What actually fueled all of this? On Jan. 20, while delivering his second inauguration address, Trump pledged to “take back” the Panama Canal from China. That same day, Flores announced that the port would be audited. It’s difficult not to draw the line.
President Jose Raul Mulino maintains the court proceedings are unrelated to foreign politics, but Panama’s recent move to abandon China’s Belt and Road Initiative is something else. The nation seems to be recalibrating itself quietly with Washington.
If the courts rule in Panama’s favor, the port contracts will probably be re-bid. That provides Panama with a rare opportunity to ask for better terms but it could also bring a legal battle with CK Hutchison, which might claim Panama was being political.
Flores, however, remains steadfast. “It doesn’t seem appropriate that individuals from elsewhere in the world are determining the destiny of property that is owned by Panamanians,” he said.
