A consortium of investors led by BlackRock — the largest asset manager in the world — has acquired two strategically located ports on either side of the Panama Canal, from Hong Kong’s CK Hutchison.
This deal is valued at around $19 billion and includes Balboa, Cristobal as well as more than 40 ports across 23 countries.
This transaction takes place amid increased geopolitical concern over China’s global role and accusations from Donald Trump, who claims that Beijing exerts undue control over this vital shipping route.
The deal still needs to be approved by the Panamanian government.
What is the nature of this deal?
BlackRock consortium’s deal will see them take over 43 ports including important facilities in Mexico and the Netherlands.
The acquisition excludes any interest in CK Hutchison’s ports in Hong Kong or Shenzhen.
In a press release, BlackRock CEO Larry Fink stated that “These ports of world-class facilitate global growth”.
We are the preferred choice for long-term investors because of our strong connections to companies like Hutchison, as well as governments across the globe.
What is Trump saying about Chinese involvement in the canal?
In the early twentieth century, the US built the Panama Canal. It was then handed to Panama under the terms of a 1977 treaty, signed by Jimmy Carter.
BlackRock acquired CK Hutchison after a number of Trump’s and his allies’ statements expressing concern about CK Hutchison’s presence in Panama.
President Obama has claimed repeatedly, but without any evidence, that China is in control of the canal. He has also suggested that America should take back the waterway.
China operates the Panama Canal. We didn’t hand it over to China. “We gave it to Panama and are taking it back,” Trump stated in his inaugural speech.
He suggested in January that economic or military pressures could be applied to gain influence over the Canal.
It is not proven that China controls the canal, but the growing influence of China in the global port and shipping infrastructure has caused concern among US officials. They are worried about the Chinese government’s ability to pressure companies into disrupting commercial or military shipments if there were a war.
Observers think the sale of the company to BlackRock will help ease concerns about Chinese influence within the US Government.
CK Hutchison claims transaction is purely commercial
CK Hutchison has been operating the Balboa Port and Cristobal port for many decades. The company stressed that this was a purely commercial decision.
Frank Sixt, co-managing director of BlackRock said that BlackRock had won the bid after a competition.
Sixt stated, “I’d like to emphasize that this transaction is of a purely commercial nature and has nothing to do with recent news stories about the Panama port.”
The sale comes after Panama recently extended Hutchison Ports contract for 25 years, without any competitive bid process.
A preliminary audit had been conducted to assess the expansion, leading some people to speculate that an American-aligned company might assume control of operations.
According to AP observers, the audit is a pre-cursor to rebidding of the contract. However, rumours have been circulating in the last few weeks about a US company close to White House being lined up for the job.
The post BlackRock purchases key Panama ports amid Trump’s Chinese-influence claims appeared first at ICD
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