Panama’s Attorney General Finds Hutchison’s Port Contract Unconstitutional
Panama’s Attorney General weighed in during the ongoing debate over Chinese control of the Panama Canal telling the country’s Supreme Court he has determined the contract with China’s Hutchison Port Holdings is unconstitutional. He is asking the Supreme Court to confirm the unconstitutionality of the contract as a step toward terminating the agreements.
It is the latest step by the government of Panama to address concerns raised by Donald Trump who has repeatedly asserted China is running the canal and that the United States would take it back. Panamanian President Jose Raul Mulino has alternately taken steps to appease Trump while also telling the U.S. to stop spreading “lies and falsehoods.” Mulino had been scheduled to have a telephone call with Trump on February 7, but it was canceled by the U.S. due to “last-minute scheduling conflicts.”
The Panamanian news agency reported yesterday, February 26, that Attorney General Luis Carlos Gómez had reviewed the concession contract between the Panamanian State and Panama Ports Company, a subsidiary of Hutchison. The Chinese company has been active in Panama since 1997, two years before the final U.S. handover of the canal, and has a contract for the development, construction, administration, and management of port terminals. In 2021, Hutchison received a no-bid 25-year extension of its contract. The company operates terminals in Balboa and Cristobal, two of the country’s five ports.
Gómez concluded that the contract improperly agreed to transfer the rights of the Panamanian state. He said the contract affects public welfare and interest, thereby affecting free competition and demand.
The opinion was submitted to the court on February 19 in support of two suits filed challenging the 2021 contract which was awarded during the administration by a previous president of Panama. The suit says the company is also benefitting from tax breaks and other agreements.
Mulino took office in July 2024 promising to clean up the problems of the prior administrations. In January, Panamanian Comptroller General Anel Bolo Flores announced that they would be auditing the 2021 contract with Hutchison.
The government of Panama and the Panama Canal Commission which operates the canal met with U.S. Secretary of State Marco Rubio early in February during his first trip since assuming the role. Rubio, accompanied by a delegation of representatives from the United States government, was received at the Miraflores locks by the Canal Administrator, Ricaurte Vásquez Morales, to observe operations. Vásquez said he expressed the ongoing commitment to ensure a safe, uninterrupted, and efficient operation.
The Panama Canal Authority said after the meeting it had conveyed to Secretary Rubio its intention to work with the U.S. Navy to optimize the transit priority of U.S. Navy vessels through the Panama Canal. The U.S. State Department issued an announcement saying Panama had agreed to free transit for the U.S. Navy but later was forced to walk back its statement.
Panama took other steps after Trump’s repeated acquisitions. It filed a formal notice with China that it was withdrawing from the Belt and Road initiative. China responded saying the Trump administration is applying "pressure and coercion" on Panama.