CK Hutchison Ups the Ante Starting Second $1.5B Arbitration Against Panama

CK Hutchison is seeking additional compensation for Panama's breaches of investment protection (Balboa Port - Hutchison Ports)

Published Aug 20, 2026 8:43 PM by The Maritime Executive

Hong Kong-based CK Hutchison Holdings has started a second arbitration against the Republic of Panama over the cancellation earlier this year of its subsidiary’s port concession. While the Panama Ports Company is already pursuing an arbitration that it said could amount to more than $2 billion in damages for the contract, the parent company is now seeking damages of more than $1.5 billion for breaches of treaty obligation and international law.

The company asserts breaches of an investment protection treaty through sovereign acts that targeted the concession and destroyed CK Hutchison’s investments in Panama. It is asserting that Panama, starting in early 2025, launched a campaign with a series of state actions targeting its investments. CK Hutchison cites a “sudden new investigation that lacked due process, a reversal of its longstanding legal position that protected the concession,” and a scheme to replace the Panama Ports Company. 

In harsh language, CK Hutchison is saying that Panama “sought to cover up its conduct through disinformation.” It says the campaign culminated in the taking over of property, technology, employees, and proprietary and protected documents and materials.

It is also picking up a line from the criticisms by the Chinese government. CK Hutchison says that by not respecting the laws, “Panama has demonstrated that it has become a risky country.” 

In filing the arbitration claim, the company asserts that Panama failed to take steps to resolve the treaty dispute. The company says it responded with a supplemental treaty notice and that Panama has conducted “only one perfunctory consultation meeting.” Further, it says there has been no offer of compensation or resolution.

The Panama Supreme Court ruled at the beginning of 2026 that the enabling laws for the concession to operate the port terminals in Balboa and Cristobal were unconstitutional and void. The concession had been in place since 1997 when Panama began assuming operations at the end of the United States’ treaty to build and operate the canal. Panama had renewed the concession in 2021 with the Panama Ports Company for an additional 25 years.

Panama gave temporary contracts to MSC’s Terminal Investments Limited and Maersk’s APM Terminals to take over the operations. The country has declared its intent to conduct a new tender and has said it would limit bidders to only one of the terminals as opposed to the single contract in the past. It has also declared a new tender for competing new greenfield terminals in each port.

The new arbitration filing is the latest in a series of actions by CK Hutchison and the Panama Ports Company. The port subsidiary has its arbitration claims, and they have also been pursuing claims against Maersk and MSC for their "interference" with the business. 

The Chinese government also said Panama had become a risky place to do business, and reports said it had warned other Chinese companies about doing business in Panama. COSCO suspended some of its shipping service to Panama, and China was accused of running a campaign of retaliation that included a dramatic increase in port state inspections and detentions for Panama-flagged ships calling in Chinese ports. 

While CK Hutchison had agreed to sell the two Panama ports as part of its larger exit from international port operations, Bloomberg reports it was unlikely to have been a factor in the failure to complete the port sale. It writes that the deal for CK Hutchison to sell its international port operations is likely “waiting for clearer political signals before moving the sale ahead.” 

It speculates that Panama and CK Hutchison will settle the dispute. Furthermore, it believes CK Hutchison is increasing the pressure, aiming to force Panama into negotiations.

 

El Niño exposes the Panama Canal’s unresolved water problem

Roughly 5% of global seaborne trade transits Panama, and close to 70% of that cargo starts or ends its journey in the United States. / pixabayFacebook

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By Alek Buttermann August 25, 2026

The rain that should be filling Gatún Lake is falling everywhere except where it should. Panama sits under a wet season that began in May and normally leaves the canal's reservoirs brimming by December. Instead, cumulative rainfall across the watershed between May and August 2026 was 34% below the historical average, and water flowing into the lakes was down 44%, according to the Panama Canal Authority (ACP), the state entity that runs the waterway. A widely anticipated El Niño weather pattern, only officially confirmed by US forecasters in June, is intensifying faster than anyone at the ACP expected.

And the consequence is blunt. Daily transit slots fall from 36 to 34 on September 4 and to 32 on September 15, the ACP told shipping lines in an advisory. Maximum permitted draft, the depth a loaded ship can sit in the water, has already dropped to 14.78 metres and will fall again to 14.63 metres in early September and 14.48 metres on October 1, well below the 15.24-metre maximum. Every centimetre shaved off draft means a containership must leave cargo on the dock rather than sink lower into the lake.

A canal that has done this before, only worse

Panama has been here before. The 2023-2024 drought forced the ACP to cut transits from 38 to 22 a day and slash draft to 13.4 metres, a reduction that rippled through global freight rates for the best part of a year. What makes 2026 different is timing and duration. Jorge Luis Quijano, a former ACP administrator, told La Prensa that NOAA forecasting models now put the probability of El Niño persisting through April 2027 at 97%, with a 90% chance the event turns severe before the year is out. Panama went from one of its wettest starts to a year on record — January to March ranked second-highest in 77 years of measurements — to one of its driest Augusts, fourth-lowest in the same period. Whether the canal avoids a repeat of 2023 hinges on a single month. If Gatún and Alhajuela lakes have not refilled by the end of November, Quijano warned, "we will be in trouble next summer."

The ACP's outgoing administrator, Ricaurte Vásquez, who hands over to his deputy Ilya Espino de Marotta in September, has framed the response around an eight-month planning horizon rather than a knee-jerk reaction to today's rainfall. That is prudent engineering. It does not change the arithmetic facing shippers now.

Record prices, and Americans will feel it

Roughly 5% of global seaborne trade transits Panama, and close to 70% of that cargo starts or ends its journey in the United States. Container lines have already begun passing the cost of scarcity onto customers. CMA CGM will apply a $500 per TEU Panama Canal surcharge on Far East cargo bound for the US East and Gulf coasts from September 10, MSC has introduced its own surcharge on the same lane, and spot rates from the Far East to the US East Coast have jumped 234% year-on-year to over $10,000 per 40-foot container. Auction premiums for priority slots, once averaging around $135,000 before this year's Middle East crisis, spiked as high as $4.6mn in August, when South Korea's SK Shipping paid to jump the queue for a liquefied petroleum gas carrier. A container ship secured a Neopanamax slot for nearly $4mn days earlier.

None of this happens in isolation. The US-Israel war with Iran has effectively shut the Strait of Hormuz, another chokepoint the world's tankers depend on, pushing extra tonnage towards Panama at precisely the moment its capacity is shrinking. Some shippers are choosing the long way round, via the Cape of Good Hope, adding 10-14 days to a voyage and its own fuel bill to the final invoice.

American consumers rarely notice a single canal transit fee. What they notice, eventually, is the cumulative effect on everything from pharmaceutical ingredients sourced from China to fresh produce and electronics, particularly if cargo owners with no slack in their schedules keep paying record premiums rather than wait. Logistics firms are already rerouting freight to West Coast ports and onto rail and trucking networks that were not built to absorb it, spreading the cost of a Panamanian drought across the US interior.

Río Indio, the fix Panama keeps deferring

The ACP has a long-term answer sitting on the table, and it has sat there for two decades. The Río Indio reservoir project, first identified as a strategic necessity in the ACP's 2006 Master Plan, would flood 4,600 hectares west of the existing canal and pipe water to Gatún through a 9km tunnel, adding enough capacity to sustain around 12 extra daily transits during a water crisis, according to Quijano's estimate. The price tag is $1.6bn, with construction pencilled in for 2028 to 2031.

The project's human cost is why it has stalled. Some 3,375 families across more than 230 rural communities would see their land submerged. Vásquez himself concedes the obstacle is not engineering but "social consensus", and Panama's government has left the ACP, an autonomous state entity answerable to no elected ministry, to sell the reservoir to the people who will lose their homes for it. That approach has produced accusations of opacity and demagoguery from critics writing in the Panamanian press. It also leaves a two-million-strong metropolitan population that shares the canal's water supply exposed to the same droughts as the shipping lanes, since roughly half of Panama's population draws drinking water from the same lakes.

Environmental risk compounds the social one. Flooding farmland to build a reservoir carries the usual costs of habitat loss and displaced agriculture, and campaigners have pushed back against a process that offers little transparency on mitigation. Panama's government, led by President José Raúl Mulino, has been happy to let the ACP absorb that political heat rather than build the national consensus the project needs.

Three governments, one recurring failure

Washington has increasingly treated the canal as leverage rather than simply infrastructure. Donald Trump built a foreign policy narrative around reclaiming American influence over the waterway, conflating two privately operated container terminals with sovereignty over the canal itself. That dispute fed into Panama's Supreme Court stripping Hong Kong-based CK Hutchison of its port concessions, triggering arbitration claims that now exceed $3.5bn. Extending a 90-day waiver in August to let foreign tankers move fuel between US ports, meanwhile, is a tacit admission that Washington's own Hormuz confrontation is adding to the strain it complains about at the other chokepoint.

Beijing's response, quietly detaining Panama-flagged vessels at Chinese ports after the ruling, punished ordinary shipowners for a judicial decision Panama's own courts made, or were pressured into making.

Panama's own government bears the largest share of responsibility for arriving at 2026 unprepared. A drought that returns every two to seven years, and that the ACP's Master Plan flagged twenty years ago, should not still be an emergency. Seizing terminals first and negotiating later, and outsourcing the Río Indio conversation to an unelected canal authority, are choices Panama City made, not choices forced on it by El Niño. The rain will return. Whether Panama has built anywhere to store it by the time the next drought arrives is still, entirely, a political decision.

 

MSC and Chief Engineer Guilty and Fined for 2024 Runaway Boxship Incident

MSC Michigan VII took a wild ride at 16 to 17 knots exiting Charleston with the crew unable to control its speed (YouTube)

Published Aug 10, 2026 6:42 PM by The Maritime Executive

MSC Shipmanagement, as the operating company for the containership that took a full-speed runaway trip through Charleston harbor in 2024, and the chief engineer of the MSC Michigan VII appeared in court on Monday, August 10, admitting their guilt and being ordered to pay fines. The National Transportation Safety Board and the U.S. Coast Guard detailed a series of mechanical failures aboard the vessel, citing maintenance issues and charging a failure to report a hazardous condition.

The company pleaded guilty in court and was sentenced to a criminal fine of $6 million. The company was also ordered to conduct a root-cause analysis of the circumstances relating to the hazardous conditions on the MSC Michigan VII. It will also serve a four-year probation for failing to report the hazardous conditions and obstructing an NTSB and USCG investigation.

The chief engineer of the MSC Michigan VII, Fernando San Diego San Juan, had previously pleaded guilty to failing to report the hazardous conditions and also for obstructing the investigation. He was sentenced to pay a $2,000 fine and will be returned to his home in the Philippines.

“The hazardous condition onboard this vessel, and MSC’s failure to report it, could have ended in a fatal bridge strike,” said Principal Deputy Assistant Attorney General Adam Gustafson of the Justice Department’s Energy and Natural Resources Division (ENRD). “Had the MSC Michigan VII been heading into port instead of out to sea, the result would likely have been catastrophic.”

MSC Michigan VII was built in 2000 and was registered in Liberia. Databases show it started operating for MSC in 2022. The vessel is 998 feet (304 meters) in length with a capacity of 6,648 TEU.

The chief engineer admitted in his pleas that he found the vessel to be in poor condition when he boarded at the start of his contract months earlier. He had discussed the issue with the technical supervisor before the ship reached Charleston in June 2024. On the day of the incident, it was departing the terminal and completed the turn in the basin to begin the transit out of the port on the Cooper River.

The pilot reported to the USCG that they had lost control of the ship, and it was runaway making between 16 and 17 knots during its wild ride through the harbor. The two-and-a-half-mile, eight-lane Arthur Ravenel Jr. Bridge spanning the harbor was ordered closed and evacuated. Two people were injured on the shore by the wash from the vessel, which was going approximately four times the speed limit in the harbor.  Ships and boats tied up along the river were damaged, as well as piers. The Coast Guard ordered local beaches cleared. Somehow, the crew was able to steer the vessel, avoiding the bridge and finally regaining control outside the harbor.

During the investigation, it was determined that the linkage rod running to the vessel’s governor had disconnected. The main engine was running at full speed, and the crew was unable to control the speed of the containership.

It came out that the ship was having a problem achieving the ordered speeds from the bridge, and the solution was to manually adjust the linkage rod between the governor and the fuel rack to achieve the ordered RPMs. It was discovered that the nuts on both ends of the linkage rod were loosened by the MSC Michigan VII’s engine department crew so that the rod could be more easily turned to adjust its length and, therefore, the main engine RPMs. The upper and lower locking washers, designed to prevent the rod from being backed out, had been removed. USCG found one of the locking washers on the deck beneath the governor. 

In the court filing, it was asserted that only trained technicians should manually adjust a vessel’s governor and linkage rod. It states that none of the engineering crew onboard the MSC Michigan VII were qualified to make the adjustments. San Diego San Juan admitted that he knew that this practice was hazardous because manually adjusting the length of the linkage rod could cause it to fail. Nevertheless, he allowed the practice to continue.

During their investigation, the USCG and the NTSB interviewed San Diego San Juan, and asked him if the linkage rod was ever adjusted. He said that the crew never adjusted the linkage rod, and only a qualified technician would adjust the linkage rod. 

The NTSB and USCG later interviewed San Diego San Juan again and asked him whether there had been a delay between the bridge telegraph and the main engine response in the past. He said there had not been. San Diego San Juan was asked again if anyone had ever adjusted the linkage rod, and he falsely answered “no.” However, he later admitted he knew that the governor linkage rod had at previous times been manually adjusted to reach the desired RPM.

In pleading guilty, MSC and San Diego San Juan admitted that, on occasion, the exact revolutions per minute (rpm) ordered by the MSC Michigan VII’s bridge telegraph could only be achieved if the length of the linkage rod between the governor and fuel rack was manually adjusted.  

Further, during the USCG inspection of the MSC Michigan VII after the incident, it is alleged that San Diego San Juan told another crew member that he had said to the USCG that he did not see anyone adjust the linkage rod. He told that crewmember and two others to say what he had said to the USCG so they would be on “the same page.” 

The court papers detailed other issues that San Diego San Juan discovered after joining the ship in April 2024. One of the main air compressors leaked and was malfunctioning.  As a result, there was a risk that the main engine would not receive sufficient air during maneuvering. The ship’s generators could also not sustain enough power at times to run the bow thruster. The ship was also said to be at risk of a blackout.

The ship was detained for weeks in Charleston, but made repairs and returned to service. The chief engineer had been facing a maximum sentence of six years imprisonment and/or a fine of $250,000, as well as a term of up to three years supervised release for failing to report the hazardous condition. The charge of obstructing the proceeding also had a maximum sentence of five years imprisonment and/or a fine of $250,000, as well as up to three years supervised release.

 

MSC’s Terminal Company Withdraws Antitrust Review for Barcelona Acquisition

MSC's TiL withdrew its application for a antitrust clearance to acquire a container terminal in Barcelona (BEST Hutchison)

Published Aug 11, 2026 6:19 PM by The Maritime Executive

MSCs’ terminal operating company, TiL (Terminal Investment Limited), withdrew its application last week for an EU antitrust review for its proposed acquisition in Barcelona. Last year, the company agreed to the acquisition of the Barcelona Europe South Terminal (BEST) operated Terminal Catalunya in Barcelona, which is a division of CK Hutchison.

There was no explanation why the application was withdrawn, just a brief status note as of August 3 on the case, which was under review by the European Commission. The competition authority had been notified of the proposed acquisition at the beginning of November 2025 and reported that it found in a preliminary examination that it could fall within the scope of the European Commission’s Merger Regulation.

It was highlighted that the terminal is one of the main deep-sea gateways for cargo to Barcelona and Spain. Opened in 2012, the terminal is part of the port’s larger operations, which also include bulk cargo and vehicles. Hutchison BEST recently highlighted that the terminal has tripled its volume since 2013, reaching close to 2.8 million TEUs in 2025 and consolidating its position as a key Mediterranean gateway for international trade. This growth translates into high operational activity, with more than 1,200 vessels handled in a single year and a strong commitment to rail transport, reinforcing its role as a benchmark logistics node. It further reported that the terminal had exceeded its initial forecasts, reaching €876 million in investment — 32 percent above the expected figure — driving automation, digitalization, and sustainability projects that strengthen its long-term competitiveness.

The European Commission in December 2025 reported that it was proceeding with an in-depth investigation into the proposed acquisition of TERCAT, noting that MSC already had significant operations in the port of Barcelona.

The Commission said it had preliminary concerns that the transaction could lead to higher prices or reduced quality of container terminal services at the port of Barcelona. It said the investigation would consider the potential for significantly reduced competition for container services in Barcelona and the potential impact on shipping companies competing with MSC.

The Commission speculated that the merged entity could provide preferential treatment to MSC for the use of BEST’s container terminal services. They said this could take the form of higher prices, late access to the berth, or the limited availability of cranes and storage space for MSC’s competitors. They said competitors would also have a limited possibility to switch to the other deep-sea container terminal in the port of Barcelona, Terminal de Contenedores de Barcelona.

Under the European regulations, the Commission had until the end of April to reach a decision. However, that could be postponed as it sought information or other input.

The acquisition was separate from the larger deal that TiL and BlackRock were negotiating with CK Hutchison for the acquisition of its international terminal portfolio. The larger deal ran into roadblocks due to Chinese opposition, and while there is still interest, so far, a revised deal that might carve up the Hutchison portfolio, with a portion going to COSCO, has reportedly been discussed, but no agreement was announced. It was also further complicated by Panama’s moves in February that voided Hutchison’s concession for the two ports in Panama, which were a separate element of the larger transaction. 

Soft Power And Strategic Ports: China’s Expanding Media Presence In Panama – Analysis



August 1, 2026
Diálogo Américas
By Paolo Manzo

Key Takeaways:

China pairs economic investments in ports, telecom, energy, and logistics with coordinated media and digital campaigns that portray it as a reliable development partner and reduce scrutiny of strategic dependencies.

In Panama, after the country left the Belt and Road Initiative and a court struck down Chinese-linked port concessions, Beijing’s messaging shifted from cooperative to confrontational, framing the decisions as U.S. pressure rather than independent national choices.

Similar influence efforts appear across Central America and the Caribbean, integrating infrastructure projects with narratives that can normalize dependencies; analysts recommend stronger independent media, fact-checking, and transparency to counter them.

In recent years, China has paired its economic expansion with growing media and digital influence efforts, using strategic communications to strengthen its presence in key sectors such as ports, telecommunications, energy, and logistics. Through state media, embassies, social media platforms, and local partners, Beijing promotes narratives that portray China as a reliable partner and a driver of development.

These campaigns are not solely intended to improve China’s image. They also seek to shape the political and social environment in which projects involving strategic infrastructure are debated. The goal is to build support for Chinese investments while reducing public scrutiny of potential risks related to economic dependencies, control of critical infrastructure, and security concerns.


“Beijing has progressively shaped public debate and policy orientations in ways that discourage critical examination of strategic dependencies, governance risks, and security concerns associated with major Chinese investments,” Martin Vladimirov, program director at the Europe-based Center for the Study of Democracy, told Diálogo.

Panama offers a particularly revealing example of how this strategy has evolved. For years, China’s presence at the ports of Balboa and Cristóbal was accompanied by narratives emphasizing cooperation, modernization, and economic growth. But after Panama withdrew from the Belt and Road Initiative (BRI) and the Supreme Court declared the Panama Ports Company concessions unconstitutional, Chinese messaging became noticeably more confrontational, raising questions about how Beijing may respond when its strategic interests are challenged in the region.
The battle over the ports narrative

The dispute surrounding the ports of Balboa and Cristóbal marked a turning point in China’s communications strategy in Panama. Following the country’s withdrawal from the BRI, the strengthening of ties with Washington, and the January 2026 ruling against Panama Ports Company, controlled by Hong Kong-based CK Hutchison, messages from Chinese state media and diplomatic channels adopted a much more confrontational tone.


According to Beijing’s narrative, Panama’s decisions were not the result of an independent national choice but rather the product of pressure exerted by the United States. At the same time, CK Hutchison was portrayed as the victim of an injustice and a violation of the rule of law, while Chinese authorities emphasized the need to protect the company’s “legitimate rights and interests.”

As Vladimirov noted, “In Panama, Beijing has portrayed criticism of Chinese involvement in strategic infrastructure as politically motivated or driven by geopolitical competition.”

This approach represents an evolution of the model identified in a 2025 report by Expediente Abierto. The study identified three pillars of Chinese messaging in Panama: China as a historic partner through the presence of the Chinese-Panamanian community for more than 170 years; China as a driver of economic and infrastructure development; and China as an alternative to U.S. influence.

Through a network that includes Xinhua, CGTN Español, the Chinese Embassy, and a range of local amplifiers, port and logistics investments were presented as tools for growth and modernization. While the port concessions dispute has not altered the fundamental objectives of China’s communications strategy, it has changed the tone. Themes of national sovereignty and historic U.S. interference, already present in earlier messaging, have become central to the debate.


Vladimirov believes this phase may be temporary. “Over time, I expect China to rely instead on economic incentives, trade partnerships, and diplomatic engagement to preserve its position,” he said. Panama remains too important as a logistics and commercial hub for China.

The Panama case is particularly significant because it combines critical logistics infrastructure, global maritime connectivity, and a geographic position of strategic importance to international trade. In this context, debates over ports, concessions, and investments extend beyond economics and become closely linked to sovereignty, institutional resilience, and the protection of strategic infrastructure.
A strategy that extends beyond Panama

Panama’s experience is not unique. Across Central America and the Caribbean, China’s economic expansion has been accompanied by communications efforts designed to strengthen its political and social legitimacy.

In El Salvador, for example, construction of the new National Stadium and the La Libertad tourist pier has been presented as tangible evidence of China’s contribution to the country’s development. Chinese official messaging has also highlighted cooperation with the Salvadoran government in the areas of security, technology, and education.

In Costa Rica, meanwhile, the strategy has focused on cultural diplomacy, academic exchanges, and telecommunications. The controversy surrounding Huawei and other Chinese providers’ exclusion from the country’s 5G network has often been portrayed by media outlets and voices aligned with Beijing as an example of geopolitical pressure. Costa Rican authorities, however, have argued that the restrictions stem from cybersecurity regulations requiring suppliers of critical telecommunications infrastructure to originate from countries that are parties to the Budapest Convention on Cybercrime, a criterion that China does not meet.

Cuba offers another important example. On the island, China’s presence extends to telecommunications through companies such as Huawei and ZTE, as well as to port and airport infrastructure and the energy sector, where Beijing has invested in power grid modernization and new solar energy projects. This has been accompanied by close media cooperation between Cuban and Chinese state media organizations, including content-sharing agreements, co-productions, and converging narratives.
Infrastructure and information

According to analysts, one of the most significant aspects of China’s strategy is its ability to integrate economic and informational influence. Investments and narratives advance in parallel.


Alongside its commercial expansion, Beijing has built a network that includes embassies, state media outlets, cultural institutes, universities, research centers, and local interlocutors. Together, these actors help disseminate favorable messaging about Chinese investments and reinforce the image of the People’s Republic of China as a reliable and indispensable development partner.

According to Vladimirov, Chinese influence is typically exercised through a mutually reinforcing network of actors. “State media and embassies partner with local political figures and commercial stakeholders to amplify narratives that promote Chinese investments and portray China as a reliable development partner,” he said.

Experts warn that the primary concern is that these narratives may normalize strategic dependencies and limit public debate about the geopolitical, economic, and security costs associated with control of critical infrastructure. As Vladimirov noted, “These dependencies can eventually become economic and political levers that are difficult to remove.”

To counter propaganda and influence campaigns, Vladimirov argues that it is essential to strengthen independent media and promote fact-checking mechanisms capable of identifying coordinated or misleading narratives. Increasing transparency regarding who funds and disseminates certain content, as well as developing institutional capabilities to monitor foreign influence operations, is equally important.

This article was published by Diálogo Américas

About Diálogo Américas
Diálogo Américas is a professional magazine published by U.S. Southern Command as an international forum for security issues in Latin America.
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China weaponises port inspections to punish Panama over ports ruling

Strip the sovereignty rhetoric from Washington and Beijing, and what remains is a resource fight over who controls the infrastructure bookending the world's most valuable shortcut / bne IntelliNews

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By Alek Buttermann July 8, 2026

Panama's top maritime officials land in Beijing on July 16 with a mandate that looks technical and is anything but. Officially, Panama Maritime Authority (AMP) administrator Luis Roquebert leads a delegation to renew a bilateral shipping treaty and discuss inspection protocols. In reality, Panama is going to beg its way out of a blockade dressed up as bureaucracy, one that has already driven over 200 vessels off its flag.

The case

Strip away the geopolitics and the underlying dispute is simple. Since 1997, Panama Ports Company, a subsidiary of Hong Kong conglomerate CK Hutchison, has run Balboa and Cristóbal, the container terminals sitting at the Pacific and Atlantic mouths of the Canal. These are not the waterway itself, which Panama has operated independently since 1999, but they are the chokepoints on either side of it: whoever runs them controls the first and last mile for a large share of the roughly 14,000 vessels transiting the canal each year.

In 2021, that concession was quietly extended for another 25 years, to 2047, without competitive bidding. In January, following an audit which found Panama had collected barely a third of what it was owed under the contract, the Supreme Court ruled the 1997 concession law and its 2021 extension unconstitutional. The court's core finding: the deal was never put out to public tender, a breach of Article 266 of the constitution, and its terms caused direct harm to the public interest. Hutchison lost both ports. It has since filed an international arbitration seeking more than $2bn in damages.

Washington's fingerprints all over

The ruling did not land in a vacuum. A year earlier, after Trump accused China of "running the Panama Canal," Hutchison struck a $22.8bn deal to sell its non-Chinese port empire, Balboa and Cristóbal included, to a consortium led by BlackRock and MSC's Terminal Investment Limited. Beijing's antitrust regulator froze the sale as capitulation to American pressure, and Hutchison spent 2025 trying to appease both capitals by inviting Chinese state-owned COSCO Shipping in as a co-investor.

The court's ruling landed in the middle of that stalemate, and the White House did not hide its satisfaction, touting it as a decisive blow against Chinese-linked control of the canal's flanks. Panama then handed interim operations to Maersk and MSC's TiL, the exact consortium that Trump's pressure had assembled a year earlier. Panama's court may have ruled on solid procedural grounds. Yet coincidentally, it also delivered Washington the outcome it had spent a year manufacturing, which makes Panama's insistence on pure judicial independence a harder sell than officials in Panama City want to admit.

China's punishment campaign is real

None of that, however, legitimises what Beijing did next. China weaponised Port State Control (PSC) the way only a dominant port authority can: quietly, deniably, devastatingly. Tokyo MOU records show detentions of Panama-flagged vessels at Chinese ports climbing from 20 in February to 92 in March, 135 in April, and a peak of 140 in May, easing only to 64 in June as diplomatic heat rose. COSCO suspended its own Balboa service in solidarity. The message needed no press release: cross a Chinese state-linked firm, and Beijing makes your flag radioactive.

It has worked. Panama's open registry, its single greatest commercial asset at 8,638 vessels and 233.2mn tonnes representing the world's largest merchant fleet, is now its greatest vulnerability, and shipowners have already voted with their re-flagging.

Beijing then overplayed its hand in public. At the Organisation of American States (OAS) General Assembly in late June, China's permanent observer Xie Feng told Panama to "correct its errors," a demand for a democracy to overrule its own top court that foreign minister Javier Martínez-Acha threw back hard by revealing Chinese officials had asked him directly, more than once, to intervene in the ruling. US ambassador Kevin Cabrera called Beijing's denial of any link between the detentions and the ruling an outright lie. 

US counterweight is self-interest wearing a rule-of-law mask

Federal Maritime Commission (FMC) Chairman Laura DiBella's July 7 statement escalated things further, warning that China's "retaliatory and unjustified" inspections could trigger a US investigation and corrective measures against Chinese-controlled carriers. The legal hook is genuine. So is the self-interest: Washington spent a year engineering Hutchison's exit and will not now watch Beijing claw the outcome back through customs paperwork. Trump's claim that "China's trying to take over the Panama Canal" conflates commercial terminal operators with sovereignty over the waterway itself, a narrative his administration has found useful since it first floated retaking the canal outright.

Peel back the sovereignty rhetoric from both capitals, and what remains is a resource fight over who controls the infrastructure bookending the world's most valuable shortcut. China is punishing Panama for a ruling Washington did much to engineer. The White House is defending a rule-of-law outcome it spent a year manufacturing for its own strategic ends. Panama, caught in the middle, dispatches a technical delegation to Beijing and hopes Roquebert can squeeze out a renewal of the treaty, prolonging a ceasefire neither superpower has much incentive to make permanent.

 

Panama Ship Registry Returns to Paris MoU “White List”

The Panama Ship Registry has returned to the Paris MoU White List due to an effort to ensure quality of the ships in the registry (Panama Maritime Authority)

Published Jul 2, 2026 6:49 PM by The Maritime Executive

Officials in Panama are highlighting the successful return of its ship registry to the Paris MoU White List after having been on the Grey List for the past several years. They are highlighting it as a confirmation of their efforts to maintain the highest standards for Panama-registered vessels.

It is a critical development for the flag and registry, which is the largest by the number of ships. It has been under pressure from competitors and criticized for substandard vessels and harboring shadow fleet tankers. The administration has made a concerted effort with the support of the government to purge the registry and enhance its administration.

The annual listing setting the standards for flags is effective as of July 1 and is based on three years of data reviewed by the Paris MoU. Flag state performance is evaluated using a rolling three-year average based on inspections and detention conducted at ports within the organization.

Panama highlights that there were 5,7312 inspections of ships under its flag between 2023 and 2025. It reports the data shows a total of 338 detentions during that period, or a rate of 5.9 percent, well below the Paris MoU standard of 7 percent to be on the White List.

Ships on the White List are recognized for operating under the highest standards. It is also reflected in their inspection routines

The Panama authorities highlight a sustained strategy to strengthen safety standards, enhance compliance with international conventions, and reinforce oversight of the Panamanian merchant fleet. The return to the White list, they report, reflects a series of initiatives over the past several years to improve performance on inspections while also raising the overall quality of the registry.

Among the steps they highlight is a strengthening of its preventative inspection program and an introduction of more rigorous mechanisms to identify and monitor vessels with a history of deficiencies during inspections. It also adopted enhanced methodologies for flag state inspections.

Other efforts included reinforcing a precheck process to ensure that only vessels meeting international standards are admitted to the Panama Ship Registry. It has also enhanced the removal process for violators and increased the number of flag cancellations.

The Panama flag, however, has been under pressure in 2026 due to the political and commercial disputes between Panama and China. China recently denied it was targeting ships with the Panama flag as a retaliation for Panama’s cancelling CK Hutchison’s operations in the port of Balboa and Cristobal. The number of Panamanian-flagged ships detained in China jumped dramatically, while China says this was due to the ships being involved in fishing boat accidents.

 

Peru reasserts control over China's flagship South American port

Chancay was built to be Beijing's flagship gateway into South America. A Lima court ruling has just put it back under Peruvian state oversight, reopening the fault line between Washington and China over who controls Latin America's ports. / Presidencia PerúFacebook

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By Alek Buttermann July 2, 2026

A Lima court has just done what Washington has spent months demanding: it put China's flagship South American port back under state oversight. On July 1, the Second Constitutional Chamber of the Superior Court of Lima overturned a January ruling that had stripped Ositrán, Peru's transport infrastructure regulator, of its power to inspect and sanction the $1.3bn Megaport of Chancay. For a facility built to be China's main gateway into South America, this is a serious reversal.

The ruling landed days after a separate court blocked a parallel attempt by the port's operator, Chinese state-controlled Cosco Shipping, to halt an antitrust probe by Indecopi, Peru's competition authority. Together, the two rulings end Cosco's brief run of regulatory immunity. The court's reasoning was blunt: Chancay is a public-use facility, regardless of the private ownership structure behind it.

The regulators are back

Cosco has lost its shield. For months, the terminal sat in a regulatory grey zone after the January ruling ordered Ositrán to stay away, effectively creating a private enclave on the Pacific coast. Cosco argued that a fully privately financed port, built without a state concession contract, fell outside standard public oversight law. It wanted routine disputes handled through commercial channels, not state mandates.

The appellate judges rejected that argument outright. Routine information requests and baseline administrative checks, they found, do not amount to an "imminent threat" to a private company's constitutional rights. That closes a loophole Cosco had used to play one regulator off against another. Now it faces both Ositrán and Indecopi at once, with no immunity from either.

Cosco is not done, though. Its lawyer, Ramiro Portocarrero, has confirmed the company will escalate the matter to Peru's Constitutional Tribunal through a Constitutional Grievance Recourse, arguing the state promised legal stability for a $1.3bn investment and then changed the rules mid-operation.

Peru follows Panama's script

Washington has run this play before, just five months earlier and one country north. In late January and February, the Trump administration pushed Panama's Supreme Court to nullify long-standing concessions at the ports of Balboa and Cristóbal, sitting at the Pacific and Atlantic mouths of the Panama Canal. A subsidiary of the Hong Kong-based conglomerate CK Hutchison had held those terminals for decades.

Secretary of State Marco Rubio led the public pressure, arguing Chinese port control was unacceptable on strategic grounds. The dispute peaked on February 23, when Panama's government seized the terminals by executive decree and handed interim control to Western-allied shipping lines, prompting a multi-billion-dollar arbitration claim from Beijing.

Chancay is the sequel. Washington treats Chinese control of Latin American port infrastructure as a systemic risk to Western supply chains. The method is identical to the one used in Panama: lean on domestic courts to enforce local law, reassert host-country sovereignty, and strip the legal protections shielding Chinese state-linked capital.

Washington times its message to the ballot box

The US State Department set the tone early. Its Bureau of Western Hemisphere Affairs warned publicly that "cheap Chinese money costs sovereignty". US Ambassador Bernie Navarro reinforced the point in person, delivering US-donated cargo scanners directly to Chancay's customs checkpoint, establishing a physical, symbolic American presence inside China's main South American gateway.

The timing of the ruling is political as much as it is judicial. Following Peru's June 7 elections, Navarro and Rubio moved quickly to congratulate conservative candidate Keiko Fujimori on her presidential win. They framed US engagement as a defence of transparent institutions against Chinese state firms dodging local rules. Beijing pushed back hard, with foreign ministry spokesperson Lin Jian dismissing the American statements as defamation.

None of this is coincidental. It traces a direct line back to Washington's national security establishment. Fujimori's campaign advisor in the run-up to the vote was Carlos Díaz-Rosillo, who during the first Trump administration served as White House director of policy and interagency coordination and later as the Pentagon's acting principal deputy assistant secretary of defense for international security affairs, a brief that explicitly covered defence policy for the Western Hemisphere. His move from drafting Washington's regional security doctrine to endorsing Fujimori across major Peruvian media outlets shows how tightly US security interests and Peruvian electoral politics have become intertwined. Navarro mirrored that posture on the ground: his highly visible role during the election cycle drew local criticism for pushing the boundaries of diplomatic neutrality.

Pulling Peru back from Beijing

Since Trump assumed office, Washington's focus on Peru has intensified dramatically, driven by alarm over how deeply intertwined Lima has become with Beijing. China is Peru's uncontested top trading partner, absorbing nearly 30% of Peruvian exports worth over $22bn a year, the vast majority of it copper and other minerals. Chancay was supposed to be the crown jewel cementing that architecture.

To break the alignment, the White House has deployed an aggressive, multi-layered counter-offensive. In January 2026, the Trump administration designated Peru a "Major Non-Nato Ally" (MNNA), a rare status that unlocks privileged access to US military hardware, joint defence research, and security programmes.

Washington backed that diplomatic upgrade with hard cash. The US State Department pushed through an estimated $3.42bn deal to sell F-16 fighter jets to the Peruvian Air Force, a sum roughly equivalent to Peru's entire annual defence budget, to anchor Lima's long-term military reliance on the West. The deal triggered fierce local political gridlock and internal ministerial clashes over funding timelines in April, but Peru ultimately secured its first payments to keep the purchase alive.

Simultaneously, to neutralise China's commercial maritime leverage at Chancay, Washington has shifted focus just north to Callao. The US has cleared equipment packages to modernise the naval base there and is pushing a deal for the US Army Corps of Engineers to build a brand-new main naval headquarters at Callao. Elite military access, fighter jets, and naval infrastructure: Washington is building a military firewall where it lost the economic argument.

A domestic corruption trail

While the geopolitics dominate the headlines, Peru's own state auditor has uncovered something arguably more damaging at home. An audit by the Comptroller General (Contraloría) found that officials at the National Port Authority and the Ministry of Transport and Communications possessed blueprints as early as 2021 showing the port's access tunnel was being built along an unapproved route, yet sat on that information for years while construction continued. The Contraloría has since referred several officials for criminal prosecution.

The bigger blow is a civil liability claim tied to ProInversión, the state investment agency. Auditors found officials fast-tracked a general sales tax (IGV) early-recovery scheme worth PEN527.8mn to Cosco representatives who allegedly lacked the legal authority to sign the contract. That sum, roughly $154mn, is more than a tenth of the port's entire $1.3bn construction cost.

The Contraloría has recommended the case go to Peru's Public Prosecutor's Office for Corruption Offences, naming Cosco itself as civilly responsible. Combined with a prior environmental fine and a failed beach-erosion system, the pattern points to a state regulatory system that repeatedly looked away.

The sovereignty play nobody quite believes

Peru's Constitutional Tribunal will have the final word, and Chancay's regulatory status stays provisional until it rules. Officially, this is a story about sovereignty restored: a turbulent Andean state standing up to a Chinese state giant, backed by a superpower patron cheering from the sidelines.

Read the fine print and the story gets murkier. The same officials now empowered to police Cosco are drawn from the same ministries that sat on tunnel blueprints for years and fast-tracked a $154mn tax break to representatives who, on paper, had no authority to ask for it. Sovereignty, in this telling, was for sale well before Washington decided it needed defending.

Cosco knows the routine. It has watched CK Hutchison run the same play in Panama: fight in the courts, absorb the political theatre, wait for the news cycle to move on. An appeal to the Constitutional Tribunal buys time, and time is the one resource a $1.3bn sunk investment can still spend freely.

What is being restored at Chancay is not so much sovereignty as leverage, and it now sits with whichever government official Cosco, Ositrán or Washington decides to call next. Peru did not choose sides in the US-China contest so much as it discovered, again, that its ports are worth more as chips than as ports.

China’s Global Strategy: Using Port Infrastructure As A Tool Of Power – Analysis

July 3, 2026 
Diálogo Américas
By Julieta Pelcastre

Key Takeaways

Strategic Global Expansion — China has invested ~$24 billion (2000–2025) in 168 ports across nearly 90 countries, creating a network that links trade routes, mining operations, and logistics hubs. In Latin America, ports like Chancay (Peru) are strategically placed near Chinese-backed mining projects, enhancing supply chain control.

Dual-Use Concerns — Beyond commerce, 31% of Chinese-funded ports saw naval activity, rising to 41% at operator-owned facilities. Examples like Nicaragua’s Corinto port (financed then visited by Chinese naval hospital ship) raise questions about intelligence, crisis leverage, and military access.

Sovereignty & Dependence Risks — Heavy reliance on Chinese financing/operation risks ceding control over critical infrastructure. Analysts warn of long-term constraints on national decision-making and recommend diversification, stronger oversight, and regional cooperation to protect sovereignty.

Analysis

China’s global expansion of port infrastructure is widely regarded as part of a broader strategy to expand geopolitical influence, secure access to strategic supply chains, and strengthen its long-term positioning. According to the report, Anchoring Global Ambitions, published by AidData in partnership with the Center for Strategic and International Studies (CSIS), Beijing has spent the last two decades building an extensive network of ports and logistics corridors that increasingly intersect with strategic resources, critical maritime routes, and key infrastructure hubs around the world. Within this network, Latin America is becoming an increasingly important node.

Beyond facilitating trade, these investments may also provide China with greater access to strategic logistics data, increased influence over maritime chokepoints, and expanded operational leverage during periods of crisis or geopolitical tension. Analysts warn that the integration of Chinese companies into the operation, financing, and modernization of critical port infrastructure could increase regional dependence on external actors for the management of key supply chains and trade corridors.


Between 2000 and 2025, China invested some $24 billion in the development and modernization of port infrastructure across 168 ports in nearly 90 countries, according to the AidData report published in March 2026. The initiative includes not only the construction and expansion of terminals, but also more than 360 related projects involving logistics systems, cranes, scanners, and other port technologies supplied by Chinese companies, deepening Beijing’s role in the operation of strategic maritime infrastructure.

Juan Belikow, a political scientist and specialist in security and organized crime at the University of Buenos Aires, Argentina, told Diálogothat China’s port expansion reflects a long-term strategy aimed at establishing interconnected global logistics hubs.

“They are setting up a series of nodes around the world through which international trade will have to pass,” Belikow said, highlighting the concentration of trade flows in these corridors.

Latin America: A strategic hub in China’s logistics network

Latin America has become an area of growing strategic importance with China’s port expansion strategy. According to data from AidData’s CPORTS 2.0 and CFTM 2.0, at least seven ports in the region are located within 500 kilometers of Chinese-financed mining operations. These include ports in Chancay, Peru; Guayaquil, Posorja, and Bolívar in Ecuador; Buenaventura in Colombia; and a port in Guyana.


The proximity between these Chinese-backed ports and extractive projects highlight the growing integration between logistics infrastructure and natural resource supply chains. In Peru, for example, the port of Chancay is located near major mining operations such as Toromocho and Raura, strengthening China’s access to strategic minerals and export corridors critical to global supply chains.

Brazil has also emerged as an important hub within this network. Between 2009 and 2023, the country received some $505 million in Chinese investment related to port infrastructure projects. Analysts warn that this growing footprint has implications that extend beyond commerce, particularly regarding strategic logistic access, supply chain influence, and long-term dependence on infrastructure operated or financed by Chinese entities.

Naval activity and dual-use concerns

Concerns surrounding China’s global port investments are not limited to commercial activity. According to the AidData report, 31.2 percent of Chinese funded port projects worldwide recorded some form of Chinese naval activity between 2000 and 2025, including military ship visits, exercises, and official engagements. The percentage rises to 41.5 percent at port facilities where Chinese operators hold direct ownership stakes, reinforcing concerns among analysts about the dual-use nature of these projects.

One recent example is the Port of Corinto in Nicaragua. In July 2025, Nicaragua approved some $128 million in Chinese financing to modernize the port. Four months later, the Chinese naval hospital Silk Road Ark docked at Corinto, marking the first known visit by a Chinese military vessel to the country.


For analysts, cases like Corinto illustrates how commercial infrastructure projects may also support broader strategic objectives by expanding China’s access, presence, and influence in critical maritime regions.

CSIS warned in its report No Safe Harbor that China’s growing involvement in strategic ports could provide Beijing with access to sensitive logistics information and increase its ability to influence operations at key maritime hubs, particularly during crisis scenarios. The report also notes that Chinese companies operating ports abroad may create opportunities for intelligence collection, logistical support, and expanded strategic access.
Sovereignty and challenges for the region

China’s growing presence in strategic infrastructure is also raising concerns about sovereignty and operational dependence throughout Latin America and the Caribbean.

Investigative outlet Expediente Público warned that increasing reliance on Chinese-operated or Chinese-financed infrastructure could gradually limit countries’ ability to independently manage strategic logistics systems and supply chains. Analysts note that as Chinese companies become more deeply integrated into port operations, governments may face increasing difficulty maintaining full control over critical maritime infrastructure.

Belikow emphasized that ports are not merely commercial facilities, but strategic nodes capable of shaping trade flows and influencing national decision-making. “Ports are bottlenecks of international trade, allowing China not only to expand its presence but also to observe the behavior of other actors at these key points,” Belikow said.

According to Belikow, China’s financing model also reflects a long-term strategic approach that differs significantly from the shorter political and economic cycles often seen in the region. “Our leaders think from now until the next election,” he said. “China does not.”

A strategic response

As China expands its global infrastructure footprint, analysts argue that countries in Latin America will increasingly need to evaluate the long-term strategic implications associated with foreign control or influence over critical logistics infrastructure.

The report Anchoring Global Ambitions recommends that governments strengthen long-term infrastructure planning, diversify financing options through partnerships with trusted allies, and improve coordination mechanism for evaluating strategic investments.

The report also highlights the importance of strengthening regional cooperation to ensure greater oversight and resilience across critical logistics networks.

“Managing these hubs not only allows for influencing trade but also for anticipating trends and guiding decisions,” concluded Belikow, warning that, although these investments may seem attractive in the short term, “they are ceding control.” This process, according to the expert, “becomes entrenched over time and constrains states’ ability to ensure their sovereignty over key infrastructure.”

This article was published by Diálogo Américas

About Diálogo Américas
Diálogo Américas is a professional magazine published by U.S. Southern Command as an international forum for security issues in Latin America.
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