The Panama Canal Terminal Operations Dispute: A Political Saga
The ongoing battle over the operations of the terminals at each end of the Panama Canal has taken a new turn with Panama’s Comptroller General announcing legal action to void the 2021 contract extension with CK Hutchison. This latest development adds to the political drama that has seen former U.S. President Donald Trump claim Chinese control over the Panama Canal, while Panama’s Government asserts its sovereignty.
Anel Bolo Flores, the Comptroller General of Panama, has raised concerns about the contract extension granted by the previous government in 2021 to Panama Ports Company, primarily owned by CK Hutchison. The government of Panama holds a minority stake in the company. Flores initiated an audit of the contract renewal process in April following pressure from the United States.
During a press briefing in Panama, Flores criticized the contract extension, labeling it as “bad, one-sided, and abusive, against the interest of the country.” While not disclosing specific audit findings, Flores mentioned uncovering “many irregularities” in the process.
CK Hutchison has defended the validity of the contract, asserting that it complies with all legal requirements. The company has been operating in Panama since 1997 and was awarded a 25-year extension of its concession in 2021 through a non-competitive process.
Flores has challenged the renewal process, citing tax breaks and amendments that he claims are causing Panama to lose up to $1.3 billion in revenue. As a result, the Comptroller General’s office has filed two legal cases with the Supreme Court, seeking to declare the extension unconstitutional and void the 2021 agreement.
Another contentious issue is the proposed sale of Panama Ports Company to an investment group led by BlackRock and MSC’s Terminal Investments Ltd. Trump’s endorsement of the deal as a return to U.S. control of the Panama Canal has drawn criticism from China, which views it as detrimental to Chinese trade interests.
In response to the dispute, Hutchison reported ongoing discussions with the BlackRock-TiL consortium, exploring the possibility of involving a Chinese investor in the deal. Additionally, French shipping company CMA CGM has expressed interest in acquiring some of the terminal assets controlled by CK Hutchison.
Amidst these developments, Hutchison had previously reached tentative agreements with the BlackRock-TiL consortium for the acquisition of the Panama company operating the Balboa and Cristobal terminals, as well as for 43 port operations globally outside China.