US Firms Gain Control Over Key Panama Canal Ports in $22.8 Billion Deal

US President Donald Trump talked about the Panama Canal soon after coming to power. Now, US companies are establishing control over this important trade route. US multinational investment firm BlackRock has agreed to buy two major ports in the Panama Canal from their Hong Kong-based owner. As a result, analysts believe that a new polarization is about to occur in global port management.

According to a report in the Financial Times, Hong Kong-based company CK Hutchison has agreed to sell a majority stake in the two ports for $22.8 billion, largely in response to pressure from Donald Trump over allegations of Chinese influence in the Panama Canal.

Under the deal, Hong Kong-based CK Hutchison is selling its business to a consortium of BlackRock, Global Infrastructure Partners (GIP) and Terminal Investment Ltd. The group will acquire a 90 percent stake in the company that owns and operates two ports in Panama, the company said in a statement on Tuesday.

Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies in Washington, sees the acquisition of the vital sea trade route as a victory for the United States, which he says will end the debate over the canal’s security. Ryan Berg told Reuters that it is a major victory for the United States in its strategic competition with China in the Americas.

Trump has repeatedly accused China of controlling the Panama Canal. He threatened earlier this year that the United States could retake control of the vital waterway. The Trump administration has pressured Panama to reduce Chinese influence and has argued that Beijing’s involvement in the port violates a treaty on the canal’s neutrality.

CK Hutchison expects to raise more than $19 billion from the deal, which will help it repay debt to shareholders. The company currently has a market capitalization of $19 billion. CK Hutchison shares rose 22 percent in Hong Kong trading on Wednesday morning after the deal was announced.

After winning the presidency last November, Donald Trump claimed Canada, Greenland and Panama as part of the United States. That’s when CK Hutchison began to think anew about the future of the port business. “When Donald Trump started talking about taking over Canada, Greenland and Panama after winning the election, pressure was put on Panama. CK Hutchison understood that this was a political problem and they started thinking about getting out of there,” said a person involved in the contract negotiations.

CK Hutchison operates 43 ports in 23 countries around the world, including the UK and Germany. They also operate ports in Southeast Asia, the Middle East, Mexico and Australia. This means that the new deal will see a large portion of CK Hutchison’s global port operations, not just the Panama Canal, go to BlackRock and its affiliates. Analysts say the deal signals a major shift in the port business, which could have a major impact on global trade.