BlackRock Inc. has purchased a controlling stake in ports near the Panama Canal, effectively putting them under American control.
The move comes in response to President Donald Trump’s allegations of Chinese interference with the Panama Canal.
The big picture: The deal is valued at nearly $23 billion, inclusive of $5 billion in debt, and once completed, it will give the BlackRock consortium control over 43 ports in 23 countries, including the critical Balboa and Cristobal ports located at the ends of the Panama Canal, as well as other ports in countries such as Mexico, the Netherlands, Egypt, Australia and Pakistan.
Why it matters: The Panama Canal is a vital shipping lane, with approximately 70% of the sea traffic that crosses it connected to U.S. ports.
- The United States initially constructed the canal in the early 1900s and relinquished control to Panama in 1999, although President Trump has criticized this move and alleged that the U.S. “foolishly” gave it away.
Go deeper: The deal does not include any interest in a trust that operates ports in Hong Kong, Shenzhen, and South China, or any other ports in China.
- It is described as a purely commercial transaction, with CK Hutchison stating that it was the result of a rapid, discrete but competitive process in which numerous bids and expressions of interest were received.
