Panama took physical control of two strategic ports flanking its famous canal on Monday, formalizing a seizure that sits squarely at the intersection of U.S.-China rivalry and Latin American sovereignty. The Maritime Authority issued an occupation decree for the ports of Balboa, on the Pacific side, and Cristobal, on the Atlantic, hours after the Supreme Court’s January ruling was published in the official gazette.
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The ports had been operated since 1997 by Panama Ports Company, a subsidiary of Hong Kong conglomerate CK Hutchison. The Supreme Court declared the concession unconstitutional in late January, citing excessive privileges and tax exemptions. The national comptroller estimated the irregularities cost Panama $1.2 billion over the life of a 25-year contract extension granted in 2021.
APM Terminals, a subsidiary of Danish shipping giant Maersk, will operate both facilities during an 18-month transition period while authorities design a new international tender. Former Panama Canal administrator Alberto Alemán Zubieta has been appointed to oversee the handover. Labor Minister Jackeline Muñoz assured that the roughly 1,200 workers at the two terminals would keep their jobs.
The takeover is anything but a local affair. The Panama Canal handles about 5% of world trade and roughly 40% of U.S. container traffic. President Donald Trump had repeatedly claimed China effectively controlled the waterway through Hutchison and threatened to reclaim it. Washington welcomed the court ruling, with the chair of the House Select Committee on China calling it a “win for America.”
Beijing hit back hard. China’s Hong Kong and Macao Affairs Office called the ruling “utterly ridiculous” and warned Panama would face consequences. CK Hutchison has launched international arbitration seeking damages and warned Maersk that assuming operations without its consent would trigger further legal action. The dispute also clouds a $22.8 billion deal in which CK Hutchison planned to sell 43 ports worldwide to a BlackRock-led consortium — a transaction Beijing moved to block.
For Panama, the calculation is straightforward: reassert control over infrastructure its constitution says belongs to the nation. But the legal and diplomatic fallout is only beginning. The arbitration could take years, and the message — that strategic assets in the Western Hemisphere are now a theatre of great-power competition — will not be lost on investors across the region.
For more context, read Brazil’s Morning Call and the Latin American Pulse.