A ruling expected soon from Panama's Supreme Court could determine who controls two major ports at either end of the Panama Canal, a decision carrying significant implications for U.S.-China competition and American strategic interests in the region.
Secretary of War Pete Hegseth underscored the stakes while visiting Panama last April, warning that Chinese-linked companies retain influence over critical infrastructure near the canal.
"China-based companies continue to control critical infrastructure in the canal area," Hegseth said, adding that the situation is "not acceptable" for U.S. or Panamanian security.
The Wall Street Journal reported that the court is weighing lawsuits seeking to terminate a long-standing license held by Hong Kong-based CK Hutchison Holdings to operate the Balboa and Cristóbal ports.
The case has drawn close attention from Washington and Beijing as President Donald Trump has repeatedly argued the United States should reassert control over the canal, which it built in the early 20th century and transferred to Panama in 1999.
Private lawyers and Panama's comptroller allege Hutchison violated the country's constitution by harming government and taxpayer interests.
A government audit found up to $1.3 billion in lost revenue since Hutchison won the original 25-year license in the late 1990s and renewed it in 2021.
Panamanian leaders have said they will comply with the court's ruling. If the license is terminated, the government plans to ensure continuity of port operations while launching a new bidding process that could restructure or separate the terminals.
Panamanian President José Raúl Mulino has publicly questioned whether the contract can continue, saying last year he did not see a viable path forward for the current agreement.
Hutchison has described the legal challenge as politically driven and has indicated it would pursue international arbitration if the ruling goes against the company.
The dispute is further complicated by Hutchison's agreement to sell more than 40 ports worldwide, including the Panama terminals, to a consortium led by BlackRock and Mediterranean Shipping Co.
China opposed the deal, demanding expanded control for a state-owned shipping company. The transaction now faces uncertainty.
At least 5% of global trade moves through the Panama Canal, one of the world's most critical shipping corridors.
The canal connects Asian ports with U.S. East Coast markets and serves as a major route for U.S. energy exports.
Hegseth said the United States and Panama have recently strengthened defense and security cooperation, stressing that China did not build, operate, or control the canal.
"Together with Panama in the lead, we will keep the canal secure and available for all nations," he said.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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