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U.S. and Panama Strengthen Security Ties as Audit Reveals $1.2 Billion Port Contract Breach

Defense Secretary Pete Hegseth vows to counter Chinese influence on the Panama Canal while CK Hutchison's port asset sale faces scrutiny.

Panama Ports, a subsidiary of logistics giant CK Hutchison, won the concession to operate Balboa port on the Pacific side of the canal and Cristobal port on the Atlantic side in 1997
FILE - Cargo containers sit stacked as cranes load and unload containers from cargo ships at the Cristobal port, operated by the Panama Ports Company, in Colon, Panama, Feb. 4, 2025. (AP Photo/Matias Delacroix, File)
FILE - Cargo containers sit stacked as cranes load and unload containers from cargo ships at the Panama Canal's Balboa port, operated by the Panama Ports Company, in Panama City, Jan. 31, 2025. (AP Photo/Matias Delacroix, File)
A ship sails near the Balboa Port after Hong Kong's CK Hutchison Holdings Ltd 0001.HK agreed to sell its interests in a key Panama Canal port operator to a BlackRock Inc-backed consortium, amid pressure from U.S. President Donald Trump to curb China's influence in the region, Panama City, Panama, March 4, 2025. REUTERS/Enea Lebrun/File Photo

Overview

  • A Panamanian audit confirmed CK Hutchison's subsidiary, Panama Ports, breached its contract by failing to pay $1.2 billion in fees, prompting legal action by Panamanian authorities.
  • U.S. Defense Secretary Pete Hegseth met with Panamanian President José Raúl Mulino, pledging enhanced U.S.-Panama security cooperation to protect the canal’s integrity.
  • Hegseth emphasized that the U.S. would not allow China to jeopardize the Panama Canal, which handles over 40% of U.S. container traffic annually.
  • CK Hutchison's pending $19 billion sale of its port operations to a BlackRock-led consortium is under review by Chinese regulators, delaying the transfer of control.
  • The Chinese government criticized U.S. actions as 'blackmail,' while Panama continues to assert its sovereign control over the canal and its operations.