For nearly a year, two ports, one on either end of the Panama Canal, have been the center of a fascinating geopolitical tussle. Last March, the owner and operator of the ports, Hong Kong’s CK Hutchison, announced it would sell them along with lots of other ports it owns around the world to a US consortium led by BlackRock. This fit in with the Trumpian demand that the US have full control over the Canal, and indeed hegemony over all the Americas. Beijing protested strenuously, saying this was a matter of national security for China and put pressure on Li to cancel the deal. And so it was left in limbo. There was a suggestion six months ago that the Panamanian authorities were planning to void the Hutchison contracts, but to whose benefit was not clear. It now is.
This week the Panama Supreme Court ruled that Hutchison’s contracts were unconstitutional and therefore void, and that Li Ka-shing’s company needs to give up the ports, which Hutchison has been running since 1997. Then on Thursday, Beijing told state-owned firms to stop all talks on new projects in Panama, told Chinese ships to avoid the canal if at all possible and moved to restrict imports from Panama, says Bloomberg. That has to mean that the move to void the contracts is a step towards the sale of the ports to US interests. Or maybe direct Panama an ownership? Less likely but possible. The control of the Panama Canal has huge strategic significance and Beijing’s reaction is reflective of its global perspective.
The other associated element is the expected visit by Trump to Beijing in April. Mr T spoke to Mr X this week on topics including Taiwan, it was announced. And no doubt Panama will also be a part of discussions. These next few months, as we have suggested before, are full of risk and uncertainty. If the world can make it through to the US mid-term elections with something close to the status quo still in place, then it would be somewhat extraordinary. Fingers crossed.
Have a good weekend.