BlackRock has secured a $23 billion deal to place strategic Panama Canal ports under American control. While one of the largest global investment management firms argues the massive transaction marks a significant shift in global trade dynamics, as the world’s largest asset management firm aims to bolster U.S. influence in key international shipping routes, others are skeptical that their acquisition of the Panama Canal is for America.
This week, CK Hutchison Holdings, which manages ports near the Panama Canal, agreed to sell shares of its port operations to a consortium that includes BlackRock Inc. in a deal that is worth $22.8 billion. The move comes after President Donald Trump raised concerns about Chinese interference with the critical shipping lane. The units own 80 percent of the Hutchison Ports group and operate 43 ports across 23 countries. The deal would grant the BlackRock corporation control over these 43 ports in Mexico, the Netherlands, Egypt, Australia, and Pakistan, among other regions. BlackRock, Global Infrastructure Partners, and Terminal Investment Limited are set to acquire a 90 percent stake in Panama Ports Company.
“This agreement is a powerful illustration of BlackRock and GIP's combined platform and our ability to deliver differentiated investments for clients. These world-class ports facilitate global growth," BlackRock CEO Larry Fink said in a statement. "Through our deep connectivity to organizations like Hutchison and MSC/TIL and governments around the world, we are increasingly the first call for partners seeking patient, long-term capital. We are thrilled our clients can participate in this investment.”
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However, critics say the move risks escalating tensions between the United States and Panama.
Trump has often objected to Chinese and Hong Kong-based companies operating in Panama. Some U.S. officials and politicians, such as Sen. Ted Cruz (R-TX), have said that CK Hutchinson’s control of the ports risks security concerns.
Cruz said such a deal could cause China to block passage through the Panama Canal, adding that the ports “give China ready observation posts" to respond. "This situation, I believe, posts acute risks for U.S. national security.”
The United States is the Panama Canal's largest user, with approximately 70 percent of the shipping traffic passing through the canal either coming to or from America.
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