San Francisco Frontiers - Panama wrests control of canal ports from Hong Kong group

"The Panama Maritime Authority has taken possession of its ports and guarantees the continuity of operations," an official said after the Panamanian Supreme Court annulled Hutchison's contracts to operate the ports.

The court ruling was the latest legal move to ricochet through the interoceanic waterway, which handles about 40 percent of US container traffic and five percent of world trade.

The Central American country has been swept up in broader tensions between Washington and Beijing, with US President Donald Trump claiming, without providing evidence, last year that China effectively runs the canal.

Panama has always denied Chinese control over the 80-kilometer (50-mile) waterway, which is used mainly by the United States and China.

Nevertheless, in January, the country's supreme court had declared as "unconstitutional" the contract which had allowed Hutchison's subsidiary Panama Ports Company (PPC) to manage the ports of Balboa on the Pacific and Cristobal on the Atlantic since 1997.

Hutchison had asked the Panamanian government to enter into negotiations to allow it to continue operating the two terminals -- to no avail.

Publication of the court ruling in the official gazette Monday effectively ended the legal process.

"The Panama Maritime Authority has taken possession of its ports and guarantees the continuity of operations," ports director Max Florez told reporters.

He said an 18-month transition period now begins, with the ports being operated by two other companies before contracts are awarded under a new international tender.

PPC denounced the move as an "illegal takeover without transparency or coordination" and said Panama's actions were "confiscatory."

- 'No layoffs' -

China's Hong Kong and Macao Affairs Office had previously warned that Panama would pay a "heavy price, both politically and economically" for stripping Hutchison of its tender.

Panama said APM Terminals, a subsidiary of the Danish Maersk group, will operate the port of Balboa, and Terminal Investment Limited, owned by the logistics giant MSC, will operate the port of Cristobal.

Labor Minister Jackeline Munoz assured there would be "no layoffs" at the two terminals, which employ around 1,200 people.

Following the court's January ruling, the Panama Maritime Authority had said a division of Maersk Group would temporarily take over operation of the facilities.

Last week, Hutchison warned of possible legal action against Maersk and others over the annulment of its contract.

The Hong Kong company has said it will challenge Panama's decision before the International Chamber of Commerce.

US Ambassador to Panama Kevin Cabrera defended Panamanian authorities, saying they have the right "to have their judicial system make its own decisions" and that the Supreme Court ruling was "very good" for the people of Panama.

The Panama Canal was built by the United States, which operated it for a century before ceding control to Panama in 1999.

On his first day back in the White House last year Trump threatened to seize the canal.

He cooled his threats after Panamanian authorities decided that the concession ran counter to Panama's interests.

M.Gonzalez--SFF