Panama’s government has ordered the occupation of two key ports at the entrances to the Panama Canal, a move triggered by a Supreme Court ruling that invalidated the operating concession held by CK Hutchison, a Hong Kong-based company. The decree, issued on , authorizes the Panama Maritime Authority to occupy the Balboa and Cristobal terminals, citing “reasons of urgent social interest.”
The occupation encompasses all movable property within and outside the port facilities, including cranes, vehicles, computer systems, and software. The action follows a final ruling by Panama’s Supreme Court declaring the concession unconstitutional, effectively stripping CK Hutchison of its legal basis to operate the ports.
The dispute over the ports has become entangled in a broader geopolitical rivalry between the United States and China. Last year, former U.S. President Donald Trump accused China of “running the Panama Canal,” raising concerns about Beijing’s influence over the strategically vital waterway. This accusation preceded a planned sale of the two ports by CK Hutchison to a consortium that included U.S. Investment firm BlackRock, a deal that ultimately faced intervention from the Chinese government, which halted the transaction.
In , the Supreme Court invalidated the law approving the concession contract for Panama Ports Company (PPC), a subsidiary of CK Hutchison. The ruling also nullified a 25-year extension granted in , further solidifying the legal challenge to CK Hutchison’s control. The court found that the laws and acts underpinning the concession contracts violated the country’s constitution.
The Panama Canal, handling approximately 5 percent of global maritime trade, is a critical artery for international commerce. The Balboa port, located on the Pacific side, and the Cristobal port, on the Atlantic side, have been operated by CK Hutchison since the 1990s. The concession allowed PPC to develop, construct, operate, and manage the two container terminals.
Panamanian President José Raúl Mulino has moved to reassure the public that port operations will continue uninterrupted despite the court’s ruling. He stated that the Panama Maritime Authority will collaborate with Panama Ports Company during a transitional period, the length of which has not been specified. Following the formal termination of the concession, a local subsidiary of Danish logistics firm A.P. Moller-Maersk will assume operational control of the ports on an interim basis until a new concession can be awarded through a bidding process.
The situation has drawn a strong reaction from Beijing. The court’s decision and the subsequent occupation of the ports are viewed as a setback for Chinese investment in Panama and a victory for U.S. Efforts to limit China’s influence in the region. The move also follows a pattern of increased scrutiny of Chinese involvement in critical infrastructure projects across Latin America and the Caribbean.
The initial legal challenge to the concession stemmed from audit findings that revealed accounting errors and irregularities totaling $300 million. These findings prompted the Supreme Court to review the legality of the concession agreement and ultimately declare it unconstitutional. The ruling effectively ends decades of CK Hutchison’s control over these vital transit points for global trade.
The unfolding events underscore the strategic importance of the Panama Canal and the complex geopolitical dynamics at play in the region. The canal, originally built by the United States and handed over to Panama in , remains a focal point of international interest and a key component of global supply chains. The current dispute highlights the delicate balance Panama must maintain between its economic interests and the competing pressures from major world powers.
The future of the port concessions remains uncertain as Panama prepares to initiate a new bidding process. The outcome of this process will likely have significant implications for the canal’s operations, regional trade flows, and the broader geopolitical landscape.
