BlackRock Secures Groundbreaking Deal: American Control of Both Ports Along the Panama Canal

A company based in Hong Kong is selling its controlling stake in a port subsidiary near the Panama Canal to a group that includes BlackRock Inc. This move puts the ports under American control, especially after former President Donald Trump raised concerns about Chinese involvement in the canal operations.

In a recent announcement, CK Hutchison Holdings stated that it will sell its shares in Hutchison Port Holdings and Hutchison Port Group Holdings for nearly $23 billion, a sum that includes $5 billion in debt. This deal would give the BlackRock-led consortium control of 43 ports across 23 countries, including the crucial ports of Balboa and Cristobal at either end of the Panama Canal. Other ports involved are located in Mexico, the Netherlands, Egypt, Australia, and Pakistan.

This transaction needs approval from the Panamanian government. It does not include ports in Hong Kong, Shenzhen, or other Chinese locations.

About 70% of the shipping traffic using the Panama Canal is headed to U.S. ports. The canal, built by the U.S. in the early 1900s, was handed over to Panama in 1999 after a treaty signed by President Jimmy Carter. Trump has criticized this decision, calling it a mistake.

Trump’s administration raised concerns about potential threats from China regarding the canal, with Senator Ted Cruz commenting that the ports offer China strategic advantages. Cruz warned that this could pose risks to U.S. national security.

During a visit to Panama, U.S. Secretary of State Marco Rubio advised President José Raúl Mulino to limit Chinese influence over the canal. However, Mulino dismissed concerns about any Chinese control over the canal operations.

Following Rubio’s visit, Panama withdrew from China’s Belt and Road Initiative, which aims to enhance global trade through infrastructure development. This decision was met with criticism from Beijing.

While Trump focused on retaking control of the canal, his administration also targeted Hutchison Ports, a key operator of the ports at both ends of the canal. Hutchison had recently secured a 25-year extension to manage these ports, but there were already audits underway regarding that extension.

Frank Sixt, a co-managing director at CK Hutchison, described the sale process as quick and competitive, noting that many bids were received. He emphasized that the sale is strictly a business transaction and not linked to recent political events.

In addition to BlackRock, the consortium includes Global Infrastructure Partners, which is a subsidiary of BlackRock, along with Terminal Investment Limited. BlackRock has significant assets under management and chose to not comment further on the deal beyond a press release.

In the wake of the announcement, BlackRock’s shares saw a slight decline in afternoon trading.

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