Panama is reportedly considering canceling a port operation contract near the canal with a Hong Kong company, which would further distance the country from China after its commitment to no longer renew the Belt and Road agreements with the Communist Party.
President of Panama, Jose Raul Mulino, indicated on Sunday (February 2) after a meeting with U.S. Secretary of State Blinken that Panamanian authorities are reviewing some Chinese companies in Panama, including a key concession signed in 2021 for 25 years, granted to CK Hutchison Holdings based in Hong Kong, allowing them to operate ports at the two entrances of the canal.
According to sources cited by Bloomberg, Mulino is weighing the possibility of canceling the contract held by CK Hutchison Holdings.
Sources caution that no decision has been made yet, and the government will proceed in a way to avoid lawsuits and follow proper procedures.
Additionally, Bloomberg reported that two lawyers filed a lawsuit on Monday (February 3) against the CK Hutchison Holdings contract, alleging violations of the Panamanian constitution. One of the lawyers, Norman Castro, stated that the concession contract includes excessive tax benefits and grants large areas of land to the port company, contravening the principle in the constitution that “public interest takes precedence over private interests.”
According to Panama’s mainstream media, “La Prensa”, the China-based company under CK Hutchison Holdings, Panama Ports Company (PPC), obtained approval from the Panamanian government in January 1997 to operate the Balboa and Cristobal ports at the two ends of the canal for 25 years.
The Panamanian President’s Office did not immediately respond to Bloomberg’s request for comments, and CK Hutchison Holdings also did not respond.
The Panama Canal, which was built by the United States over a period of 10 years, opened in 1914. According to an agreement signed by U.S. President Jimmy Carter in 1977, the canal was handed back to Panama. In 1999, Panama gained full control of the canal, which is now one of the busiest waterways in the world, connecting the Pacific Ocean to the Caribbean Sea.
During his meeting with Mulino, Blinken stated that President Trump has preliminarily determined that China’s current influence and control over the Panama Canal region pose a threat to the canal, violating the Permanent Neutrality and Operation Treaty of the Panama Canal. This situation is unacceptable, and if Panama does not make immediate changes, the U.S. will have to take necessary measures to protect the rights prescribed in the treaty.
Following their meeting, Mulino made a commitment to no longer renew the Belt and Road agreements with China, which Blinken welcomed on Monday, emphasizing that this is a significant step forward in Panama’s relationship with the U.S.