BlackRock and MSC Buy Two Panama Canal Ports
Panama Canal. X/ @CSIS_Trade
March 7, 2025 Hour: 1:00 pm
Currently, Panama’s main ports are operated by multinational companies from the U.S., Singapore, Taiwan, and Hong Kong.
The purchase of two ports near the Panama Canal by the consortium formed by BlackRock and Terminal Investment Limited (TiL), the port arm of shipping giant Mediterranean Shipping Company (MSC), introduces complex scenarios in the Central American country, which has been the target of an attack and disinformation campaign by U.S. President Donald Trump, precisely due to these terminals.
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The acquired infrastructures are the Port of Balboa on the Pacific Ocean and the Port of Cristobal on the Atlantic Ocean. Since 1997, these ports had been operated by the Panama Ports Company (PPC), a subsidiary of the Hong Kong-based CK Hutchison Holdings.
This has been Trump’s excuse to allege supposed Chinese control over the waterway and to assert that he would reclaim the Panama Canal for the U.S., which built it in the early 20th century and operated it for more than 80 years until its transfer to Panama on December 31, 1999.
CK Hutchison denies that the transaction is related “to recent political news reports about Panama’s ports.” However, in a speech before the U.S. Congress, Trump described the port purchase as a “victory,” emphasizing that his administration had begun to reclaim the Panama Canal.
“Once again, President Trump is lying. The Panama Canal is not in the process of being reclaimed… The Canal is Panamanian and will remain Panamanian!” responded Panamanian President Jose Raul Mulino.
Ports Under Scrutiny by the Supreme Court and the Comptroller’s Office
The announcement of the sale agreement for the two Panamanian ports comes as the Supreme Court of Justice (CSJ) reviews an unconstitutionality lawsuit against the contract law that grants the concession, originally signed in 1997 and automatically renewed for an equal term in June 2021.
The renewal has been surrounded by allegations of corruption and unfavorable conditions for the Panamanian state, which holds a 10% stake in the ports. Attorney General Luis Carlos Gomez has already deemed the contract law “unconstitutional” in an opinion requested by the highest court, which “is mandatory but not binding,” explained analyst Jose Eugenio Stoute.
This situation presents several possibilities: if the contract is declared constitutional, “nothing changes,” but if the court rules it unconstitutional, a new contract would have to be drawn up through a bidding process. In that case, “Hutchison’s purchase would be nullified, and the BlackRock-TiL consortium would disappear,” Stoute stated.
On January 20, the General Comptroller’s Office also launched a financial and compliance audit of PPC, a week after the head of that institution, Anel Flores, stated that the concessionaire was providing “very little return” to Panama.
In its transaction announcement, the consortium stated that “the PPC transaction will proceed separately following the Panamanian government’s confirmation of the proposed purchase and sale terms” for Hutchison’s 90% stake in the Balboa and Cristobal ports. The deal also includes CK Hutchison’s 80% stake in 43 ports across 23 countries, valued at more than US$22 billion.
The details of this transaction have not been disclosed, but some Panamanians are already wondering if the matter was discussed between Mulino and MSC Group President Diego Aponte when they met in Zurich in January during the Davos Forum.
Looking on the Bright Side
“We have to see this in a positive light,” said former Canal Administrator Jorge Quijano, pointing out that one of the immediate effects of the change in port operators is that “it dismantles President Trump’s entire narrative that the Chinese control the canal, which is not true, and eases some of the pressure on Panama in that regard.”
Additionally, Quijano noted that the change opens the possibility of renegotiating the concession contract, as the current one “surely has some issues that will surface with the Comptroller’s audit,” as well as “legal aspects” that the Supreme Court may highlight.
This could also encourage Danish shipping company Maersk, the canal’s main client, to explore investment opportunities in a new port—similar to its previous attempt with the failed Corozal project, which the Canal Authority had pushed for years ago, the expert said.
Quijano explained that “50%” of the cargo handled by Balboa belongs to Maersk and that for this shipping company—the world’s second-largest, surpassed only recently by MSC—it must be “somewhat concerning” that its main competitor will now operate that port.
“Diversified competition is excellent,” Quijano emphasized, noting that in addition to Maersk and MSC, both of which are canal clients, other operators could be attracted to build more ports and further strengthen Panama’s logistics system.
Panama’s five main ports are located in areas adjacent to the interoceanic canal. They are operated by multinational companies from the U.S., Singapore, Taiwan, and, for now, Hong Kong, and rank among the busiest container ports in the region.
teleSUR/ JF
Source: EFE