Panama blocks Chinese-linked company from operating ports at either end of the canal

The Panamanian government has voided a pro-Chinese company’s contracts for running two port facilities at either end of the Panama Canal, bolstering Trump administration efforts to secure the waterway as a military transit route for any future conflict with China.

The Supreme Court of Panama ruled Thursday that the terms of the contract allowing Hong Kong-based conglomerate CK Hutchison Holdings to operate the ports of Balboa on the Pacific coast and Cristobal on the Atlantic end of the canal were unconstitutional.

The ruling means the company, which has had close ties to the Chinese party-state system for decades, will be forced to end its operations at the strategic facilities.

Panamanian President Jose Raul Mulino told reporters in Panama City on Friday that operations at the ports would continue without interruption and that a local subsidiary of the Danish logistics company A.P. Moller-Maersk will run the facilities during the transition from CK Hutchison.

“Panama moves forward, its ports will continue operating without interruption and we will continue serving the world at the logistics center of excellence that we are,” Mr. Mulino said in a recorded video address.

The court ruling came after an audit by the Panamanian government found irregularities with a 25-year contract extension granted to CK Hutchison in 2021.

Panama Ports Co., the CK Hutchison subsidiary that will lose control of the ports, criticized the decision and defended its bidding for the contract extension.

The company said in a statement that the court ruling “lacks legal basis and jeopardizes 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 certainty in the country.”

In Beijing, a Chinese Foreign Ministry spokesman also criticized the impending takeover of the ports as violating the rights and interests of Chinese companies.

“We’ve made clear China’s position on relevant ports in Panama. China will firmly safeguard the legitimate and lawful rights and interests of Chinese companies,” said spokesman Lin Jian.

CK Hutchison announced last year it planned to sell its majority stake in the canal ports and other ports worldwide to an international group that included BlackRock Inc. in a bid to ally U.S. concerns.

The deal, however, was derailed by opposition from Beijing.

The court action follows pressure from the administration to better secure the canal and reduce fees for American ships.

Focus on the Western Hemisphere

President Trump posted on social media in April that he had tasked Secretary of State Marco Rubio to “immediately” seek to solidify American control of the canal.

“American Ships, both Military and Commercial, should be allowed to travel, free of charge, through the Panama and Suez Canals!” Mr. Trump posted on Truth Social. “Those Canals would not exist without the United States of America.”

During his inaugural address in January 2025, Mr. Trump said: “China is operating the Panama Canal. And we didn’t give it to China. We gave it to Panama, and we’re taking it back.”

White House, State Department and Pentagon officials had no immediate comment on the Panama court ruling.

Mr. Rubio posted Friday on social media: “The United States is encouraged by the recent Panamanian Supreme Court’s decision to rule port concessions to China unconstitutional.”

The Pentagon’s new national defense strategy mentions the canal as being threatened and a target of a renewed Monroe Doctrine that will seek to increase American power and influence in the Western Hemisphere.

“As early as the 19th century, our predecessors recognized that the United States must take a more powerful, leading role in hemispheric affairs in order to safeguard our nation’s own economic and national security,” the strategy report said.

The U.S. dominant position and influence was allowed to slip away, the report said.

“As a result, we have seen adversaries’ influence grow from Greenland in the Arctic to the Gulf of America, the Panama Canal, and locations farther south,” the report said.

“This not only threatens U.S. access to key terrain throughout the hemisphere; it also leaves the Americas less stable and secure, undermining both U.S. interests and those of our regional partners.”

’A win for America’

Marine Corps Gen. Francis Donovan, who was approved by the Senate on Friday to be the next commander of the U.S. Southern Command, said last month that the Panama Canal is a “key strategic asset” for military and economic security.

Protecting the canal is one of the highest priorities for Southern Command, and Gen. Donovan said he plans to conduct a comprehensive review of canal security.

Gen. Donovan said during a Senate nomination hearing that China is infusing ports, lines of communication, airfields and roads in the region including the Panama Canal.

The goal of the activities is “not only to increase their capabilities or desires but to counter ours, specifically in a time of conflict,” he said.

A Southern Command spokesman did not respond to a request for comment.

In 2022, Army Gen. Laura Richardson, then-Southern Command commander, said the Balboa and Cristobol ports are Chinese state-owned facilities that “could be quickly changed over to a military capability if they needed that to.”

Rep. John Moolenaar, chairman of the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, praised the action as furthering U.S. national security.

“The Supreme Court of Panama has made the right decision to terminate CK Hutchison’s contract to operate two ports on the Panama Canal,” Mr. Moolenaar, Michigan Republican, said in a statement. “This is a win for America, Panama and all of our allies who recognize the Canal’s importance to national security and the world economy.”

Mr. Moolenaar said China’s malign influence is not welcome in the Western Hemisphere.

“It is critical that all ports on the Canal be entrusted to operators who share our common values and a commitment to continued cooperation with both the U.S. and Panama,” he said.

The contract’s audit was conducted by Panamanian Comptroller Anel Flores, who found payments were not made, accounting errors and the apparent existence of “ghost” concessions operating in the ports since 2015, The Associated Press reported.

Panama Ports Co. disputed those allegations.

From Panama to Australia

The audit also discovered that the irregularities had cost the government about $300 million since the contract extension in 2021 and about $1.2 billion under the original 25-year contract.

The Panama Ports contract for operating the two ports was challenged in the Central American country’s highest court on July 30.

According to a 2000 U.S. intelligence report, the original operator of the two canal ports, Hutchison Whampoa Co., won the port concessions through “an unfair and corrupt contractual bidding process.”

The major shareholder of Hutchison Whampoa, Li Ka-Shing, has close ties to the communist Chinese government, the report said.

Hutchison Whampoa merged with Cheung Kong Holdings in 2015, whose chairman was Mr. Li, and the company was then renamed CK Hutchison Holdings.

David Day, a Hawaii-based China expert, said the Panama court ruling is a setback for China in the region.

“It is essentially a death knell to Beijing’s plan to force the [state-owned enterprise] COSCO to take an equity share in any Blackrock bid to take over control of the CK Hutchinson port empire globally,” said Mr. Day, chairman of the Global Risk Mitigation Foundation. “This is a huge setback for Beijing as the ruling also torpedoes the valuation of the deal now that the Panama ports are not part of the deal.”

China also is trying to maintain control of Port Darwin in the Northern Territories of Australia.

In a related Chinese foreign port control dispute, Australian Prime Minister Anthony Albanese said last week that his government is committed to returning control over the key northern port that was leased to a Chinese company for 99 years.

The port was sold to the Chinese company Landbridge in 2015 in a deal criticized by the U.S. government.

The Marine Corps Rotational Force-Darwin is a U.S. task force that has conducted six-month deployments to the area since 2012. The troops work with Australian Defense Forces in being ready to counter Chinese aggression in the nearby South China Sea.

Chinese Ambassador to Australia Xiao Qiao has said Beijing is obligated to take action to protect the interests of Chinese companies if Canberra moves ahead with forcing the divestment in the Port Darwin.