Diplomacy
Panama takes next steps to end Chinese firm's control of key canal ports
The proposal has been well received, as critics say the economic benefits of the concession have been minimal and that it amounts to a 'colonial enclave.'
![File photo of China's President Xi Jinping (2nd left) and then-Panamanian President Juan Carlos Varela waving, accompanied by first ladies Peng Liyuan (left) and Lorena Castillo (right), in front of the Chinese Cosco Shipping Rose container ship at the Cocolí Locks in the Panama Canal in December 2018. [Luis Acosta/AFP]](/gc4/images/2025/02/28/49353-canal_de_panama-600_384.webp)
By Laura Beatriz Pacheco |
PANAMA CITY -- Panama's Attorney General's Office has recommended revoking the concession granted to a Chinese company to operate ports at both ends of the Panama Canal, citing its "unconstitutional" nature.
The proposal has gained approval from various sectors, who argue that the economic benefits of the concession -- described as a "colonial enclave" --have been minimal and have served only to perpetuate economic inequalities.
The contract held by CK Hutchison Holdings, owned by Hong Kong billionaire Li Ka-shing, has sparked widespread concerns about China's growing influence over the Panama Canal, according to AFP.
Since 1997, the Panama Ports Company (PPC), a subsidiary of CK Hutchison, has managed two of the canal's five ports under a concession granted by the Panamanian government.
![US Secretary of State Marco Rubio (left) shakes hands with Panama Canal Authority Administrator Ricaurte Vásquez Morales during a tour at the Miraflores locks of the Panama Canal February 2. [Mark Schiefelbein/Pool/AFP]](/gc4/images/2025/02/28/49354-canal_de_panama2-600_384.webp)
Minimal benefits
Panama's Supreme Court agreed on February 19 to consider a lawyer's request to nullify the contract, the second such challenge it has heard.
On February 26, Attorney General Luis Carlos Gómez filed a submission in support of the suits and asking the court to find the contract "unconstitutional" for "improperly agreeing to transfer exclusive rights of the Panamanian state," AFP reported.
PPC manages the ports of Cristobal on the canal's Atlantic side and Balboa on the Pacific side.
The arrangement was renewed in 2021 for 25 years.
Panama's Comptroller General Anel Flores and the Maritime Authority of Panama initiated an audit of PPC at the end of January, focusing on concessions where the Panamanian state holds shares.
Despite the growth in container traffic, the economic benefits for Panama from this concession have been minimal, Flores said February 26. He described the arrangement as a "colonial enclave" that exacerbates economic inequalities, La Estrella newspaper reported.
The plaintiffs in the case argue that the company benefited from undue tax breaks and other benefits.
'Blatantly violate the constitution'
The complainants argue that the company enjoys "a broad spectrum of rights" over port management, including the ability to expand at no additional cost and with precedence over third parties.
They further contend that PPC has exclusive and preferential access to strategic areas, preventing other operators from competing on equal footing.
This situation undermines the port market, limiting the participation of new investors who could offer better terms for the state and society, Gómez added.
The 1997 concession, renewed in 2021, grants the Chinese company powers that "blatantly violate the constitution," Panamanian trial lawyer and former prosecutor Giovani Olmos emphasized.
He explained that it creates a contractual imbalance, where private interests override national interests, putting the state at a disadvantage, according to statements made to La Estrella.