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By Micah McCartney
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Panama’s move to void two longstanding port concessions flanking the Panama Canal was a blow to Hong Kong-based CK Hutchison and a win for U.S. efforts to check Chinese influence in the Western Hemisphere.
Yet as CK Hutchison seeks to sell its majority shares in dozens of other port projects worldwide, China's COSCO—the world's fourth-largest shipping company—hopes to fill the void. If the state-owned shipping giant succeeds, security risks for the U.S. could climb at other ports in Latin American and the Caribbean, according to recent analysis by the Center for Strategic and International Studies, a Washington think tank.
Why It Matters
China commands the world’s largest export machine and, through COSCO and other state-owned enterprises, holds stakes across a network of global ports that translate into structural influence in key maritime routes. A Newsweek investigation previously found associated risks including Beijing's political leverage in host countries or possible dual civilian and military use of infrastructure by the People’s Liberation Army.
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Some facilities operated by Chinese state-owned enterprises have received visits from Chinese navy warships, raising concerns among U.S. officials that commercial terminals could double as logistical support for military operations against the United States in future crises.
Newsweek reached out to COSCO and the Chinese Embassy in Washington, D.C., via emailed requests for comment.
What To Know
The January 29 ruling by Panama's Supreme Court annulled the lease contracts for the Balboa and Cristóbal terminals held by CK Hutchison subsidiary Panama Ports Company (PPC) and lowered the risk potential of those two ports, but five others would pose greater concern if leased to COSCO and therefore be more exposed to direct Chinese government influence.
These include terminals run by other CK Hutchison subsidiaries at ports in Mexico, including Manzanillo on the Pacific coast—the country’s gateway to Asia—and Veracruz, a major Gulf-side port with strategic Atlantic access.
A fifth, the Freeport container terminal in the Bahamas, is a major transshipment hub just 65 miles from Florida.
"The [court] decision is perhaps most significant as a further application of the administration's 'Trump Corollary' to the Monroe Doctrine," Henry Ziemer, an associate fellow with CSIS's Americas Program, told Newsweek.
"However, there is a risk that a 'win' for the United States in Panama will obscure China's broader influence in Latin America's port ecosystem," Ziemer said.
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CSIS has identified 37 port projects throughout Latin American and the Caribbean with links to Chinese companies, from Jamaica's Kingston port to the COSCO-developed megaport of Chancay in Peru. With China reportedly seeking to acquire at least some of the CK Hutchison-controlled ports, the Panama case “is more of an opening bid, not a decisive blow to China’s influence in Latin America,” Ziemer said.
The $22.8 billion deal CK Hutchison announced last year, would have seen its majority stakes in 41 projects sold to a U.S. consortium led by BlackRock, was met with scathing criticism from Chinese state media, which likened it to handing a “knife to the opponent.” Without Beijing’s approval, the deal remains in limbo.
CK Hutchison has said it would pursue “extensive damages” through arbitration after the Panama ruling.
What People Are Saying
Lin Jian, a spokesperson for China's Foreign Ministry, said in a February 4 press conference: "The international community can clearly see who is seeking to occupy the [Panama] canal and who is undermining international law."
Panama Ports Company said in a February 3 press release: “The commencement of arbitration by PPC follows a campaign by the Panamanian State specifically targeting PPC and its concession contract spanning a year that has been marked by a range of abrupt actions by the Panamanian State culminating in grave and imminent further damage to PPC, while similar port sector contracts have not been targeted."
What Happens Next
Panamanian authorities have appointed APM Terminals, a subsidiary of Danish shipping firm Maersk, as an interim operator at the concessions.
CK Hutchison is considering splitting the sale of its majority stakes in port holdings into separate transactions, Bloomberg reported recently. The company is said to be weighing the sale of port stakes to COSCO in countries viewed as friendly to Beijing, in a bid to win approval from the Chinese government, although it was unclear which terminals in the Americas would be part of the deal.
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