The Panamanian government gave port authorities the green light to occupy two key ports at the entrances of the Panama Canal, officially seizing control of the terminals from Hong-Kong-based firm, C.K. Hutchinson.
The move by the Central American government, which received ownership of the canal from U.S. President Jimmy Carter in 1979 and is overseeing the canal’s maintenance and operations, comes after a ruling in late January by the Panamanian Supreme Court that decided concessionary contracts that awarded the Panama Ports Company (PPC), a subsidiary of C.K. Hutchinson, charge over the two key terminals were “unconstitutional.”
The administration in Washington has highlighted China’s growing influence in the region, especially around key infrastructure sites in Latin America, as an issue of national security, exerting political pressure on Panamanian authorities to “re-examine” some of the contracts written with Chinese-linked maritime consortia.
The Panamanian decree issued on Monday authorized the Panamanian Maritime Authority (AMP) to occupy the key ports for “reasons of urgent social interest.”
The occupation includes waterways inside and outside of both the Balboa and Cristóbal terminals, including their operations and maintenance.
PPC has operated the two ports since 1997, but after the Panamanian court’s ruling, invalidating the contracts held by PPC, C.K. Hutchinson was scheduled to sell the port terminals to U.S. investment firm BlackRock. But the deal was later killed when the Chinese government intervened.
The long-term ownership of the two ports is to be determined separately, according to Alberto Aleman Zubieta, head of the technical team overseeing the port’s transition.
“Two separate contracts are being presented to the Board of Directors of the AMP—one for the Port of Balboa and one for the Port of Cristobal—instead of a single contract for both ports,” Zubieta commented in a press conference.
Danish-owned Maersk AMP Terminals is now slated to take temporary control of both the Atlantic and Pacific terminals.
The Panama Canal is responsible for almost 5% of global maritime trade.
