A deal to see many Panamanian ports falling under the ownership of investors based in the U.S. and other Western countries is threatening to fall apart after China’s government began threatening to block such a deal from happening.
China wants Cosco involved in any final deal but Trump will likely be opposed.
The Chinese government is demanding that Cosco, the Chinese-owned shipping giant, be granted a stake in any final deal. China’s demand is for Cosco to be named an equal partner and shareholder, giving China a strong level of control over any decisions regarding the ports in question.
If Cosco were allowed to be brought in on a final deal, President Donald Trump would likely come out against the deal, given his broad anti-Chinese policies, executive orders, and other messaging out of the White House in his first-term, and for most of his second term to-date.
Trump had early in his second term hoped to take control of the Panama Canal if certain conditions were not taken, especially regarding Chinese control of the canal and some of its key ports.
What ports are currently involved in the proposed deal, whether or not China is involved?
The ports in question under the deal are two Panama Canal ports and dozens of others in different countries. Currently, these ports are under the control of a Hong Kong-based company CK Hutchison. In March, investors reached a deal to buy the ports from the current owner. However, because Hong Kong is under some Chinese-backed control, China has the power to block the sale.
Other partners in the deal would be BlackRock, the private equity giant, and Mediterranean Shipping Company (MSC), who would all be equal partners with China under China’s proposal.
What happens next?
No deal that includes China-owned Cosco can be reached until the end of July, under rules established for ownership talks earlier this year. But still, the investors involved are open to such a possibility of Cosco’s involvement, hoping to get a deal done as soon as possible.
As mentioned, President Trump may come out against a deal. If that happens, it will be a lot harder to reach a deal that is palatable to China as well as the U.S. The U.S. and China are both in involved in trade talks over tariffs and other reciprocal activities which both countries find unfair. The prospects for a deal are already hard, but this would further complicate overall U.S.-China relations.
