Panama Canal ports stay operating after court finds concession unconstitutional
By ALMA SOLÍS, Associated Press
PANAMA CITY (AP) — Panama’s president assured the public Friday that critical ports at both ends of the Panama Canal will continue to operate without interruption — a day after the country’s Supreme Court ruled that the concession held by a subsidiary of Hong Kong’s CK Hutchison Holdings was unconstitutional.
The court’s ruling late Thursday advances the United States’ goal of blocking any Chinese influence on the strategic waterway and immediately drew a sharp rebuke from Beijing.
President José Raúl Mulino said that until the court’s decision is carried out — a period of time he did not specify — the Panama Maritime Authority would work with Panama Ports Company, the subsidiary of CK Hutchison, to ensure continued operations at the port.
Once the concession is officially completed, a local subsidiary of Danish logistics company AP Moller-Maersk will operate the ports in a transition phase until a new concession can be proposed and awarded, Mulino said.
“Panama is moving forward, its ports will continue to operate without interruption and we will continue to serve the world at the center of logistics excellence that we are,” Mulino said in a recorded video speech.
The court’s decision follows an audit by Panama’s comptroller, who alleged irregularities in the 25-year extension of the concession, granted in 2021.
The Trump administration has made blocking China’s influence over the Panama Canal one of its hemispheric priorities. Panama was U.S. Secretary of State Marco Rubio’s first overseas stop as the United States’ top diplomat.
Despite the Panamanian government and canal authorities’ insistence that China has no influence over its operations, Rubio has made clear that the United States views port operations as a matter of national security. US President Donald Trump went so far as to say that Panama should return the canal to US control.
The court’s brief statement gives no indication of what will happen to the ports now.
Decision sparks backlash in Hong Kong
CK Hutchison’s subsidiary, Panama Ports Company, said it had not yet been informed of the decision, but insisted its concession was the result of a transparent international tender.
She said in her statement that the decision “lacks legal basis and endangers not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal security of the country.”
It said it reserved all rights to proceed legally in Panama or elsewhere, but did not elaborate.
The Hong Kong government strongly rejected the move in a statement, saying it firmly opposes any foreign government using coercive, repressive or other unreasonable means to seriously harm the commercial interests of Hong Kong companies. He said the Panamanian government should respect the spirit of the contracts and provide a fair business environment.
“Given the current situation in Panama, Hong Kong companies should carefully consider their current and future investments in this country,” he said.
In Beijing, Chinese Foreign Ministry spokesperson Guo Jiakun told reporters that China would take all necessary measures to safeguard the legitimate rights and interests of “Chinese enterprise,” without elaborating on potential measures.
Political analyst Edwin Cabrera said that once the parties are informed, the question of what to do with the ports is up to Panama’s executive branch, particularly the Panama Maritime Authority.
“I have the impression, from the conversations I’ve had with some people, that the operation (of the ports) will not stop,” Cabrera said.
A sales agreement that apparently irritated Beijing
CK Hutchison Holdings announced a deal last year to sell its majority stake in Panamanian ports and other ports around the world to an international consortium including BlackRock Inc. But the deal appeared to stall due to objections from the Chinese government.
The company said last July that it was considering seeking a Chinese investor to become a significant member of the consortium, a move that some interpreted as a way to please Beijing, but CK Hutchison has not said more since.
The delicate position the company finds itself in highlights the challenges Hong Kong’s business elites face in meeting Beijing’s expectations for national loyalty, particularly when relations between China and the United States are strained. CK Hutchison belongs to the family of Hong Kong’s richest man, Li Ka-shing.
Last year, Panama’s comptroller audited the concession of the Panama Ports Company, which had held the contract to operate the ports since 1997. The concession was renewed in 2021 for 25 years, under the previous Panamanian administration.
Comptroller Anel Flores said the audit revealed unmade payments, accounting errors and the apparent existence of “ghost” concessions operating at the ports since 2015. The company denied the allegations.
The audit determined that irregularities had cost the government about $300 million since the concession was extended and about $1.2 billion over the 25 years of the original contract.
Flores also said the extension was granted without the required approval from his office.
On July 30, the comptroller challenged the Panama Ports Company’s port operating contract in the Supreme Court.
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Associated Press writer Kanis Leung in Hong Kong contributed to this report.
