12,000 ships through the panama Canal: The two entrances to this canal are the ports of Balboa and Cristóbal. The united states and china are currently fighting over these ports. The panama Canal handles about 39% of global container traffic, about 3.74 million TEUs annually. This canal allows any ship to quickly travel between the east and west sides of the United States. Without this canal, ships would have to travel about 8,000 nautical miles.
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Hong Kong-based CK Hutchison, which owns a majority stake in two ports of the panama Canal, a vital waterway for global trade, is planning to sell its stake, while MSC, the world's largest shipping company, and BlackRock are actively trying to buy it. However, the Chinese government has opposed this and is planning to block the sale of the stake. Why is the panama Canal important: china and the united states have been fighting over who controls the world's most important waterway. The canal runs through the heart of Central America. Through this, it creates a shortcut between the Pacific and Atlantic oceans.Panama Canal trade: Busy all year round, this canal is always in high demand. Today, about 423 million tons of goods pass through this single route each year, accounting for about 5 percent of global maritime trade. For example, earlier this year, cargo traffic through the Suez Canal was disrupted due to tensions in the red Sea. As a result, all ships going from Asia to the US east Coast were diverted through the panama Canal.
Furthermore, if the panama Canal stops operating, global trade will be severely affected. Especially trade from the US could suddenly stop. Do you understand now why the US and china are fighting over this..?
Panama under US control: This canal originally started as a French project. Later, it was acquired by the US. For more than 90 years, from 1904 to 1999, it was completely under US control. It was only in 1999 that it was handed over to the Panamanian government. To show the world who dominates this route, the US has built numerous military bases around the canal. However, china is indirectly competing to dominate the canal. china has been expanding its relations with panama under its Belt and Road project. This situation is becoming a problem for the United States.
Let's get to the point, Balboa Port is the entrance to the panama Canal on the Pacific Ocean. On the other side, Cristobal Port guards the Atlantic Ocean. CK Hutchison is a Hong Kong-based company. This company currently has a contract to manage these two ports. The panama government gave this company a contract for about 25 years in 2021. As a result, it is currently under the control of a Chinese company. MSC's port operations unit, Terminal Investment Ltd. (TiL), and BlackRock's Global Infrastructure Partners (GIP) are jointly trying to take over these two ports for a price of $ 22.8 billion.
If the deal goes through, MSC-BlackRock will take over the entire panama Canal. But CK Hutchison will continue to hold a small stake. But this is where the problem begins. china plans to block the deal: Although CK Hutchison has no direct connection to the Chinese government, it operates in the shadow of the Chinese Communist Party. On the other hand, MSC and BlackRock are companies supported by Western countries. Therefore, from China's perspective, this is seen as an attempt by Western countries to dominate. Chinese state media and geopolitical commentators say that this is a move to lose critical infrastructure in the Americas. china is doing everything possible to ensure that it does not lose this deal. At the same time, Chinese officials are putting increased pressure on CK Hutchison to cancel this sale agreement. The Chinese government is ready to use anything from antitrust law to national security laws to block this deal. The Chinese government is worried: July 27 is the deadline for finalizing this deal. The Chinese government is actively trying to break this deal before that date. Otherwise, it is trying to use this as leverage to at least get some tax breaks from the US. According to recent reports, Chinese state-owned shipping company COSCO is trying to buy a small stake in the MSC-led consortium. If successful, china could regain a seat on the port management.
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