The Hong Kong-based conglomerate that operates ports near the Panama Canal has agreed to sell shares of its units that operate the ports to a consortium including BlackRock Inc., after President Donald Trump alleged Chinese interference with the operations of the critical shipping lane.
In a filing, CK Hutchison Holding said Tuesday that it would sell all shares in Hutchison Port Holdings and all shares in Hutchison Port Group Holdings. The two units hold 80% of the Hutchison Ports group that operates 43 ports in 23 countries.
The consortium, comprised of BlackRock, Global Infrastructure Partners and Terminal Investment Limited will acquire 90% interests in Panama Ports Company, which owns and operates the ports of Balboa and Cristobal in Panama, according to the filing.
In January, U.S. Sen. Ted Cruz, the Republican chair of the Senate Committee on Commerce, Science and Transportation, raised concerns that China could exploit or block passage through the canal and that the ports “give China ready observation posts” to take action. “This situation, I believe, posts acute risks for U.S. national security,” Cruz said.
U.S. Secretary of State Marco Rubio visited Panama in early February and told President José Raúl Mulino that Panama had to reduce Chinese influence over the canal or face potential retaliation from the United States. Mulino rejected the idea that China had any control over canal operations.
Panama quit China’s Belt and Road Initiative following Rubio’s visit, drawing condemnation from Beijing.
But while much attention was focused on Trump’s threat to retake control of the canal, his administration trained its sights on Hutchison Ports, the Hong Kong-based consortium that manages the ports key ports at either end of the canal.
Hutchison Ports had recently been awarded a 25-year no-bid extension to run the ports, but an audit looking at that extension was already underway. Observers believed the audit was a preliminary step toward eventually rebidding the contract, but rumors had swirled in recent weeks that a U.S. firm close to the White House was being lined up to take over.