China bites back over Panama ports ruling

In a post on its official WeChat channel, the State Council’s Hong Kong and Macau Affairs Office (HKMAO) branded the court’s ruling “legally absurd, logically flawed, and utterly ridiculous.”

The statement was closely followed by an announcement from Hong Kong-headquartered Hutchison Ports that Panama Ports Company has launched arbitration proceedings against the Republic of Panama, seeking extensive damages. PPC said it has continued to manage port operations at Balboa and Cristobal, but that the Panamanian state had “declared and broadly deployed steps to take over the operations of PPC”.

PPC said these steps included unexpected site visits and instructions that the private company grant “unrestricted access to physical, commercial, and intellectual property and information, as well as to employees”. These demands were made as part of a port transition plan, PPC said, a plan it has not had access to and that is based on an unpublished court ruling, which has not come into effect.

HKMAO leaned heavily on the history of smooth operation and co-operation between PPC and Panama state entities since the concession was signed almost three decades ago, but its strong words for the authorities in Panama contain clear messages intended to influence the future of the nation’s ports sector.

“The fact that Panama has now ruled the contract unconstitutional means that it can similarly rule other concession agreements approved at any time in the future as unconstitutional. This sends a signal to international investors that Panama is incapable of providing any protection for them,” the statement said.

Earlier this week, the Panama Canal Authority (ACP) launched the prequalification stage of its tender for two massive projects: the development of two new container terminals, one each on Panama’s Pacific and Atlantic coasts, and construction of a 76 km gas pipeline across the country with a marine terminal at each end.      At a critical time for Panama’s ports and logistics sector, HKMAO warned that Panama will “pay a heavy price in terms of politics and economics” should it continue on its current course.       When President Trump took office in the US last year, Panama found itself thrust into the centre of a geopolitical tussle between the US and China. The Trump administration alleged the Panama Canal was under the “malign influence” of China, and while it avoids mentioning the US by name, HKMAO draws a clear line between the court’s decision and geopolitical events.

 “It is clear to all that the ruling reflects the Panamanian authorities' complete subservience and obsequiousness to hegemony, “ it said.

For its part, PPC said it had made efforts over the past 12 months to consult with Panamanian authorities to avoid disputes during what it called a campaign by the Panamanian State targeting PPC and its concession.

PPC said the year “has been marked by a range of abrupt actions by the Panamanian State culminating in grave and imminent further damage to PPC,” while other similar port contracts have not attracted the same scrutiny.