A Hong Kong-based conglomerate agreed to sell its stake in a subsidiary that operates ports along the Panama Canal to a United States-based firm as the Trump administration ramps up pressure to rid the canal of Chinese influence.
CK Hutchison Holdings, which holds 90% control of the Panama Ports Company, said in a filing that it would sell its shares in two ports, Balboa and Cristobal, to a consortium led by BlackRock, the world’s largest asset management company.
Hutchison Port Holdings and Hutchison Port Group Holdings, under the control of CK Hutchison Holdings, hold 80% of the Hutchison Ports group that operates 43 ports in 23 countries.
The consortium consists of BlackRock, Global Infrastructure Partners, and Terminal Investment Limited.
This $23 billion deal came after Secretary of State Marco Rubio’s February visit to Panama, during which he told Panamanian President Jose Raul Mulino that the Panama Canal must be rid of Chinese influence or Panama could face retaliation from the Trump administration.
Rubio told Mulino that Panama Ports Company's majority control of a Chinese-linked company violated a 1979 treaty agreement that stipulated the canal would remain neutral.
In January, Sen. Ted Cruz (R-TX) raised concerns that the ports “give China ready observation posts,” thus giving China the opportunity to exploit or block passage through the canal.
“This situation, I believe, posts acute risks for U.S. national security,” Cruz said.
President Donald Trump has threatened to take back the Panama Canal and echoed Cruz’s concerns of a threat to U.S. national security.
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“China’s running the Panama Canal," Trump said. "That was not given to China; that was given to Panama, foolishly. But they violated the agreement, and we’re going to take it back, or something very powerful is going to happen.”
Mulino said he had no intention of returning control of the Panama Canal to the U.S., but after Rubio’s visit to Panama, the nation ended its Belt and Road Initiative with China.