Terminal Risk
Back in 2006, when he was considering a second run for president, Senator John Kerry visited the bank where I worked in search of support (and contributions). He spoke about the plans of Dubai Ports World to take over U.S. container terminals by acquiring the troubled British shipping group Peninsula & Oriental. Dubai Ports, now known as DP World, was (and still is) controlled by the Emirate of Dubai. Its ownership of container terminals, Kerry warned us, would make it easier for Arab terrorists to launch attacks in the United States.
Kerry was not alone. After it became clear that Congress would block the deal, Dubai Ports sold P&O’s U.S. operations to a U.S. owner. Those assets eventually came under the control of a company now known as Ports America, which still owns them. Ports America, despite its name, is largely Canadian owned. In a delicious irony, it has been led since 2022 by a chief executive who was formerly chief operating officer of DP World’s ports and terminals. No one seems to be exercised about potential links to terrorists.
The recent kerfluffle over the ownership of container terminals at both ends of the Panama Canal by CK Hutchison Holdings brought back memories of the Dubai Ports debate. Hutchison, based in Hong Kong, is a publicly traded company and was a pioneer in developing container terminals. After President Trump declared in his inaugural address that “China is operating the Panama Canal,” Hutchison’s management apparently determined that the time was right to shed most of its terminals and avoid becoming the target of China hawks in Washington — never mind that the notion that China could use the Hutchison terminals in Panama to block the canal seems a bit farfetched.
President Trump now asserts that the United States is “reclaiming the Panama Canal” by virtue of New York money manager BlackRock’s role in acquiring Hutchison’s terminals. But matters aren’t quite so simple.
If the transaction is completed, Mediterranean Shipping Company, the world’s largest container ship line, will take a significant stake in the terminals. MSC is owned by an Italian family and is based in Switzerland. Its finances are private.
Would its role in the terminals in Panama reduce the purported security risks of Chinese influence there? The Trump Administration itself may not think so. The Administration plans to impose “service fees” on arriving vessels operated by companies that own ships built in China, which the United States accuses of “targeting of the maritime, logistics, and shipbuilding sectors for dominance.” MSC likely has hundreds of Chinese-built vessels in its fleet of 900 container ships and would be among the largest targets of those U.S. sanctions. In today’s Washington, it’s not hard to imagine someone asserting that China could use its role in providing MSC with ships to influence the operation of the terminals in Panama. If you’re determined to identify risks, you’re likely to find some.
Tags: panama canal, ports