Panama’s Supreme Court issued a ruling late on Thursday that the concession held by a Chinese company to operate ports at each end of the Panama Canal contravenes the small nation’s constitution.
The ruling, which followed an audit by Panama’s comptroller, who alleged there were irregularities in a 25-year extension granted in 2021 to Panama Ports Company, a subsidiary of Hong Kong’s CK Hutchison.
The ruling follows moves by the Trump Administration to block Chinese influence over the strategic waterway.
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Officials in Panama claimed China had no influence over the canals’ operations, but US Secretary of State Mario Rubio was sent down to tell local authorities that the US regards the ports’ operations as an issue of national security.
White House has insisted that China must have no capacity to interfere in the running of the canal, with President Trump saying the waterway should be returned to US control.
Panama Ports Company was unhappy about the ruling, telling Associated Press it had not been notified of the decision and that the concession “was the result of transparent international bidding.”
It issued a statement saying the ruling “lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country,” AP reported.
A spokesman for China’s Foreign Ministry later said Beijing would take all necessary measures to safeguard the legitimate rights and interests of ‘the Chinese company’.
China’s buy-up of ports all around the world has been a hot issue since it was highlighted in a report in 2017 which revealed that Chinese firms had spent billions buying up ports across the Indo-Pacific.
The report, Harbored Ambitions, by C4ADS, details the purchase of 15 ports throughout the region, some as part of China’s Belt and Road Initiative.
Sale of CK Hutchison ports
The issue rose to international attention in March last year after the return of Trump to the White House, when BlackRock announced it was heading a consortium negotiating a $22.8-billion takeover of more than 40 ports in 23 countries from Hong Kong conglomerate CK Hutchison.
The huge deal, which included the two Chinese-run ports on the Panama Canal, delighted Trump, but upset the leadership in Beijing.
State media condemned the ports sale as a betrayal of the Chinese people and “an act of US hegemony.”
Officials in Beijing threatened to block the deal and insisted that the national shipping company Cosco must have a stake in the BlackRock and the Mediterranean Shipping Company consortium that wants to buy the ports.
In September, it was reported that the White House wanted more strategic ports to cut China’s maritime advantage, because of concern that Washington’s dependence on foreign ships and ports is excessive.
Lawmakers were also concerned about Chinese maritime infrastructure holdings in places such as Greece and Spain, the Caribbean, and ports on the US West Coast, the sources said.
By late last year, the deal had reportedly hit a stalemate, with BlackRock and MSC pushing back against Beijing’s demand that Cosco must have a majority stake in the new group that will run the ports.
That led to speculation that Trump, Xi and the key buyers will have to try to resolve the matter, or perhaps agree to split on the ports they most want, at some point later this year.
China ‘threat’ over buyback of Aussie port
In fact, there are ownership disputes over more than just the Panama ports. The purchase of a 99-year lease to run the port in Darwin in northern Australia by Landbridge, a company owned by Chinese billionaire Ye Cheng, in 2015 has also generated considerable controversy.
The Albanese government vowed in the run-up to the election last year that it would return the port to Australian control because of national security concerns — and the fact it is directly adjacent to US and Australian army bases in the Far North.
But its Chinese appear to be digging in their heels.
On Wednesday, China’s envoy in Canberra seemed happy to rock the boat again by suggesting that Beijing would “take measures” to defend the Chinese firm’s interests if the Federal Government takes back control of the port.
After, Albanese said they would proceed regardless, as Australian control of the port is in the “national interest.”
Both Canberra and Washington want the Chinese out, as Darwin serves as the hub for up to 2,500 US Marines who rotate through the city annually. The port is also used for equipment entry and fuel storage.
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China Warns CK Hutchison, BlackRock: Be Careful on Ports Deal
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China and CK Hutchison ‘Seeking Resolution to $23bn Ports Deal’
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