The United States has now underscored its maritime security partnership with Panama, as a high-stakes dispute involving China, US investors and a Hong Kong conglomerate continues to cloud the future ownership of key ports at the Panama Canal.
US Ambassador Kevin Cabrera boarded the US Coast Guard cutter Alert during a port visit in Panama City, praising joint operations ranging from counter-narcotics missions to search-and-rescue efforts carried out with Panama’s Ministry of Public Security.
In a post on social media, Cabrera said the cooperation reflects Washington’s commitment, under US President Donald Trump’s leadership, to working with regional partners to promote security and prosperity across the hemisphere.
The visit comes as negotiations over the sale of two strategically important Panama Canal ports have reached an impasse, highlighting growing geopolitical tensions between Washington and Beijing over control of critical infrastructure.
The ports, located at Balboa on the Pacific side and Cristobal on the Atlantic, are owned by Hong Kong-based CK Hutchison Holdings, which has been seeking to sell more than 40 port assets worldwide in a transaction that could generate more than US$19 billion in cash.
A consortium led by BlackRock, through its Global Infrastructure Partners unit, and Mediterranean Shipping Co reached a preliminary agreement earlier this year to acquire the portfolio. Talks, however, have dragged on for months amid disagreements over the structure of the buyer group and the role of China’s state-owned shipping company, China Cosco Shipping Corp.
According to people familiar with the negotiations, Beijing has hardened its position and is now insisting that Cosco be granted a majority stake and veto rights over port operations as a condition for approving the deal.
The Wall Street Journal reported on Tuesday that Chinese officials have warned they would move to block the transaction through regulatory channels unless Cosco is given effective control of the ports, escalating earlier demands for a smaller or equal share in the consortium.
The newspaper said BlackRock and MSC had been open to offering Cosco an equal stake, but that the push for majority ownership and veto power has been rejected by the buyers and by the US government. US officials have said that Chinese control of assets at the Panama Canal would threaten national and economic security and violate the US-Panama treaty.
A White House official told the Journal that Trump has made clear that Chinese control of the canal or its key infrastructure would be unacceptable. People involved in the talks described the negotiations as being at an “intractable impasse”.
China has significant leverage over the parties involved. Chinese regulators assert the right to review global mergers involving companies with substantial business interests in the country, and Beijing has previously blocked or reshaped international shipping deals it deemed contrary to its interests.
In 2014, for example, its Ministry of Commerce blocked a proposed “P3” shipping alliance between Maersk, Mediterranean Shipping Co and CMA CGM that would have allowed the three carriers to coordinate schedules and capacity on major trade routes, significantly strengthening their market position.
The alliance had already won regulatory clearance in both the US and the European Union, but Chinese officials said it would reduce competition and disadvantage domestic shippers and refused to approve the pact.
Chinese officials have privately indicated that control of the Panama Canal ports could be used as a bargaining chip in broader US-China trade and tariff negotiations, people familiar with the matter said.
While the sale remains stalled, CK Hutchison continues to operate the Balboa and Cristobal terminals. The company has previously warned that a transaction of this size and complexity would require approvals from multiple jurisdictions and could take years to complete.
Separately, the Panama Canal Authority is moving ahead with plans to award new concessions for container ports on land near the waterway, a process expected to conclude early next year. China’s Cosco is barred from bidding because it is a government-owned entity, the authority has said. -- SOUTH CHINA MORNING POST
