PANAMA CITY (AP) — Panama’s president moved to reassure the public on Friday that critical ports at both ends of the Panama Canal will continue to operate without interruption — a day after the country’s Supreme Court ruled that the concession held by a subsidiary of Hong Kong’s CK Hutchison Holdings is unconstitutional.
The court’s decision late Thursday furthers the US aim to block any Chinese influence over the strategic waterway and immediately drew a sharp rebuke from Beijing.
Panama’s president, José Raúl Mulino, said that until the court’s ruling is enforced — a period of time he did not specify — Panama’s Maritime Authority will work with Panama Ports Company, a subsidiary of CK Hutchison, to ensure continued operations at the port.
Once the concession officially ends, a local subsidiary of Danish logistics company AP Moller-Maersk will operate the ports in a transitional phase until a new concession can be tendered and awarded, Mulino said.
“Panama is moving forward, its ports will continue to operate without interruption, and we will continue to serve the world in the logistics center of excellence that we are,” Mulino said in a recorded video address.
The court’s decision followed an audit by Panama’s comptroller, which alleged irregularities in the 25-year extension of the concession, granted in 2021.
The Trump administration has made blocking China’s influence over the Panama Canal one of its priorities in the hemisphere. Panama was US Secretary of State Marco Rubio’s first stop abroad as the United States’ top diplomat. On Friday, Rubio told X that “the United States is encouraged by the recent decision by the Panamanian Supreme Court to find port concessions to China unconstitutional.”
Despite the insistence of the Panamanian government and the canal authority that China has no influence over its operations, Rubio made it clear that the US viewed the operation of the ports as a matter of national security. US President Donald Trump went so far as to say that Panama should return the canal to US control.
The court’s brief statement gave no indication of what would now happen to the ports.
The ruling is drawing backlash from Hong Kong
CK Hutchison’s subsidiary Panama Ports Company said it had not yet been notified of the decision, but insisted its concession was the result of a transparent international tender.
He said in his statement that the decision “lacks legal basis and endangers 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 security in the country.”
It said it reserves all rights to proceed legally in Panama or elsewhere, but did not provide further details.
The Hong Kong government strongly rejected the ruling in a statement, saying it firmly opposes any foreign government using coercive, repressive or other unreasonable means to seriously harm the commercial interests of Hong Kong enterprises. He said the Panamanian government should respect the spirit of the contracts and provide a fair business environment.
“Given the current situation in Panama, Hong Kong businesses should carefully review their existing and future investments there,” it said.
In Beijing, Chinese Foreign Ministry spokesman Guo Jiakun told reporters that China would take all necessary measures to protect the rights and legitimate interests of the “Chinese company,” without elaborating on potential measures.
Political analyst Edwin Cabrera said that once the parties are notified, the issue of what to do with the ports falls to Panama’s executive branches, specifically the Panama Maritime Authority.
“I get the impression from the conversations I’ve had with some people that the operation (of the ports) will not stop,” Cabrera said.
A sale deal that apparently angered Beijing
CK Hutchison Holdings last year announced a deal to sell its majority stake in Panamanian ports and others around the world to an international consortium that included BlackRock Inc. But the deal appeared to stall due to objections from the Chinese government.
The company said last July it was considering seeking a Chinese investor to join as a significant member of the consortium, a move some interpreted as a way to please Beijing, but CK Hutchison has not said anything since.
The company’s precarious position highlights the challenges Hong Kong’s business elites face in navigating Beijing’s expectations of national loyalty, especially when relations between China and the United States are strained. CK Hutchison is owned by the family of Hong Kong’s richest man, Li Ka-shing.
Last year, Panama’s comptroller audited the concession to the Panama Ports Company, which had held the contract to operate the ports since 1997. The concession was renewed in 2021 for 25 years under the previous Panamanian administration.
Comptroller Anel Flores said the audit found payments that were not made, accounting errors and the apparent existence of “ghost” concessions operating in the ports since 2015. The company has denied the allegations.
The audit determined that the irregularities had cost the government about $300 million since the concession was extended and an estimated $1.2 billion during the original 25-year contract.
Flores also said the extension was granted without the necessary approval from his office.
On July 30, the controller contested before the Supreme Court the contract of the Panama Ports company to operate the ports.
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Associated Press writer Kanis Leung in Hong Kong contributed to this report.