China’s Threat to Seize Panamanian-Flagged Ships

Officials from the Trump administration informed Breitbart News that Chinese authorities are warning about the potential seizure of Panamanian-flagged ships in China. This action appears to be retaliation against Panama following recent developments where control of two crucial ports at either end of the Panama Canal shifted away from Hong Kong firms linked to the Chinese Communist Party (CCP).

A major Greek shipping company communicated this threat to the Panamanian consulate in Greece, which was subsequently shared with the U.S. government. This marks a notable escalation from Beijing after Chinese interests lost their foothold in the Panama Canal, a vital conduit connecting the Atlantic and Pacific oceans.

Although there have been no actual reports of ship seizures so far, the looming threat might impact Panamanian-flagged vessels arriving at Chinese ports in the near future. Many ships worldwide operate under the Panamanian flag due to the Central American convenience program. Therefore, this threat could disrupt global trade, especially since prominent shipping companies from Greece, Japan, and India are significant users of the Panamanian flag. The term “detained” in this context refers to Chinese actions that may delay departure for inspections, not necessarily a seizure of vessels or cargo.

A senior Trump administration official revealed to Breitbart News that the email indicating the threat came from a significant shipping company. It stated that the China Maritime Safety Administration (MSA) “suggested” that Panamanian-flagged vessels be impounded in Chinese ports for political reasons.

The official elaborated that this situation is a direct retaliation from China, particularly because it lost a legal battle with CK Hutchison, a company based in Hong Kong that previously managed two major ports—Balboa and Cristobal—flanking the canal. Although China has claimed CK Hutchison operates independently, the reality appears different, and this retaliation seems politically motivated.

In a backdrop to these tensions, CK Hutchison lost its port management contract after a court ruling in Panama deemed it unconstitutional. Maersk’s APM Terminals and Mediterranean Shipping Company’s Terminal Investments have temporarily taken over management. Competitive bidding is expected over the following year for long-term management of these ports.

Simultaneously, China reportedly summoned executives from Maersk and MSC for discussions concerning their international shipping operations, amidst the legal dispute over the Panama Canal. Summons like this are often seen as warnings within the Chinese government context.

The importance of this situation is emphasized by the recent transfer of control over the ports from CK Hutchison to Maersk and MSC, which followed a legal ruling against CK Hutchison’s long-term port concessions from the 1990s.

Further complicating matters, China has warned both companies about possible negative consequences if they don’t exit the specific Panama ports. Now, the latest twist is the threat involving Panamanian-flagged vessels in Chinese ports.

As the issue unfolds, a Trump administration official stated that the U.S. would stand by Panama, expressing that the country is a close partner that has cooperated well with the Trump administration. Observing the situation closely, they intend to find various ways to assist Panama through this challenge, emphasizing the need to expose Chinese actions which seem to disregard the rule of law. Here, the Panamanian Supreme Court has indicated that the concessions granted to CK Hutchison were indeed illegal.