Following his inauguration, President Donald Trump made a controversial claim about the Panama Canal, asserting that it was effectively under Chinese control, despite it being managed by the Panama Canal Authority. Recent developments reveal a significant $22.8 billion deal where a majority stake in the Panama Ports Company will be sold to an investor group led by Blackrock. This acquisition is seen as a major financial maneuver, with Trump celebrating it as a fulfillment of his campaign promise to reclaim American interests in the canal.
One of the earliest actions taken by American President Donald Trump following his inauguration on January 20 was a bold statement regarding the Panama Canal. During his inaugural address, he highlighted the inflated costs faced by American ships navigating the canal and proclaimed that, “Above all, however, China operates the Panama Canal, and we did not give it to China, but to Panama, and we are taking it back.”
While Trump’s assertion was not entirely accurate, as the Panama Canal is owned and managed by the Panama Canal Authority (ACP), it is worth noting that two key ports—Balboa on the Pacific and Cristóbal on the Atlantic—are indeed owned by the Panama Ports Company. This company falls under the umbrella of CK Hutchison Holdings Limited, a major conglomerate headquartered in Hong Kong. The concessions for these ports were recently extended by the Panamanian President Laurentino Cortizo in 2021 for an additional 25 years.
Transformative $22.8 Billion Agreement
In a significant development, CK Hutchison announced on Tuesday that there would be a shift in ownership structures. A deal has been reached whereby a large portion of the Panama Ports Company will be sold to an investor group spearheaded by the American investment firm Blackrock.
The transaction, valued at $22.8 billion (approximately 20.3 billion Swiss francs), not only includes a 90% stake in the Panama Ports Company but also encompasses 43 ports across 23 nations, including locales in Germany and the United Kingdom, as reported by the “Financial Times.” This acquisition is anticipated to be one of the year’s most substantial financial moves.
Notably, Switzerland is part of this venture, with the investor group featuring the Mediterranean Shipping Company (MSC) based in Geneva. Diego Aponte, the president of MSC, expressed excitement regarding the collaboration with the involved companies, stating that investing in CK Hutchison’s ports is expected to yield significant profits.
Swift Negotiations and Political Context
Reports from various American media outlets suggest that the White House may have pressed for a greater American stake in the Panama Canal. According to Bloomberg, discussions about terminating the contract with CK Hutchison have been on the table for the Panamanian government in recent weeks.
Frank Sixt, co-CEO of CK Hutchison, refuted any political implications surrounding the acquisition, emphasizing that the deal is strictly commercial and unrelated to recent political discussions about Panama’s ports. However, it seems likely that political dynamics, particularly Trump’s influence, played a role in facilitating this takeover, as negotiations only began shortly after his inauguration and concluded within a few weeks via video calls and phone discussions.
It appears Trump is navigating the global economy with confidence, as evidenced by the immediate reactions to his statements and actions.
Trump’s Enthusiasm for the Takeover
Trump expressed his satisfaction with the agreement during his State of the Union address in Congress, highlighting the involvement of Blackrock, which he referred to as a “large American company” buying two crucial ports at the Panama Canal.
He took the opportunity to frame the acquisition as a realization of a campaign promise, stating that his administration is reclaiming the canal. His comments were met with applause from Republican representatives. Trump asserted, “The Panama Canal was built by Americans for Americans—not for others. But others could use it.”
The Historical Significance of the Panama Canal
The Panama Canal, constructed by the United States between the late 19th and early 20th centuries, revolutionized maritime navigation by enabling ships to avoid the lengthy journey around South America. This monumental engineering feat cost many lives but served as a remarkable technological achievement, utilizing lock systems to navigate a 26-meter elevation difference along the 82-kilometer waterway.
In the 1970s, a treaty was established between the U.S. and Panama, ensuring that the canal would eventually be transferred to Panamanian control following a transitional period. By the end of 1999, the canal was officially under Panama’s jurisdiction.
Despite this change in ownership, the Panama Canal holds immense economic importance for the United States, with over 60% of the freight traffic traversing the canal either beginning or ending at American ports.