President Trump had been criticizing Panama for weeks over its most valuable asset, the Panama Canal, falsely claiming that China operated the waterway. Panama was under immense pressure from Washington.
On Tuesday, Wall Street stepped in.
An investment group led by BlackRock, a major American asset manager, announced the acquisition of two ports in Panama owned by a Hong Kong company at the center of tensions between Panama and Mr. Trump.
The deal, valued at about $19 billion, includes the ports situated at both ends of the canal and over 40 others owned by CK Hutchison. Political analysts believe the deal has alleviated pressure on Panama, offering a solution to a seemingly unsolvable crisis.
“It is an elegant off-ramp for what looked to be an unsolvable crisis,” said Benjamin Gedan, director of the Latin American program at the Wilson Center.
This deal highlights the opportunities for American companies under the America First foreign policy of the Trump administration. It also raises questions about the historical influence of Wall Street banks in Latin America.
“Where are the Panamanian voices here?” said Peter James Hudson, an associate professor at the University of British Columbia and the author of “Bankers and Empire: How Wall Street Colonized the Caribbean.”
President José Raúl Mulino of Panama downplayed the geopolitical implications of the deal, describing it as a “global transaction, between private companies, motivated by mutual interests.”
For BlackRock, the acquisition signifies a move beyond traditional asset management to expand its infrastructure investments. BlackRock is purchasing the ports through Global Infrastructure Partners, an investment firm acquired last year for nearly $13 billion.
Negotiations between the BlackRock-led consortium and CK Hutchinson executives commenced a few weeks ago, according to a source familiar with the discussions.
The Li family felt political pressure to divest from the ports business, particularly its assets in the Panama Canal.
The Panama Canal serves as a vital shortcut between the Pacific and Atlantic Oceans, eliminating the need for vessels to stop at Panama’s ports.
Mr. Trump has expressed a desire for the U.S. to regain control of the canal, which was transferred to Panama in 2000.
CK Hutchison has operated the Balboa and Cristóbal ports since 1997, holding 25-year concessions granted by Panama. The concessions were renewed for another 25 years in 2021.
BlackRock executives, including Laurence D. Fink and Adebayo Ogunlesi, briefed Mr. Trump, Treasury Secretary Scott Bessent, Secretary of State Marco Rubio, and others on the deal, receiving administration support.
The Li family specifically sought an American buyer for the ports, with three other bids also under consideration.
Frank Sixt of CK Hutchison emphasized that the deal was purely commercial and unrelated to recent political reports.
BlackRock’s largest infrastructure deal involves partnering with Terminal Investment Limited to operate ports in Europe, Latin America, and Asia.
Mr. Fink highlighted the global growth facilitated by these world-class ports.
The deal showcases Mr. Ogunlesi’s significant role at BlackRock and Terminal Investment Limited.
Ralph Schlosstein, chairman emeritus of Evercore, highlighted the connectivity and capabilities brought by Larry and Bayo to make the deal possible.
The Trump administration’s support for the BlackRock-led acquisition comes amidst scrutiny of the company’s E.S.G. initiatives.
CK Hutchison, founded by Li Ka-shing, includes various businesses such as retail chains, telecommunications networks, and energy companies.
Mr. Trump’s criticisms of Panama Canal fees and recent challenges to CK Hutchinson’s port concessions sparked legal action and an audit by Panamanian authorities.
Auditors are investigating revenue reporting by CK Hutchinson to determine the government’s relationship with the port concessionaire.
Lauren Katzenberg contributed reporting.