Panama will not be threatened by China over canal court ruling, leader says

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PANAMA CITY (AP) — Panamanian President José Raúl Mulino on Thursday said he hoped an ongoing legal battle with a Hong Kong firm over operations of Panama Canal ports would “not escalate,” but that Panama's government would remain firm in its ruling against the company.

“Panama is a dignified country and will not allow itself to be threatened by any country on earth,” Mulino said in his morning press briefing, responding to rebukes by the Chinese government.

Mulino's comment comes a week after Panama's Supreme Court ruled that a concession held by a subsidiary of Hong Kong’s CK Hutchison Holdings in the Panama Canal was unconstitutional.

The court's decision was seen as a win for President Donald Trump, who aims to block Chinese influence over the strategic waterway. The push by the U.S. thrust the Central American nation into the center of a geopolitical tug-of-war.

China warned Panama would pay “a heavy price” if the Panamanian ruling was upheld.

Hong Kong’s CK Hutchison Holdings said it strongly disagreed with last week’s ruling, and on Wednesday its subsidiary announced it had started arbitration proceedings against Panama.

Mulino said that until the court’s ruling is executed — a period of time he did not specify — Panama’s Maritime Authority would work with Panama Ports Company, the CK Hutchison subsidiary, to ensure continuing port operations.

Once the concession is formally ended, a local subsidiary of Danish logistics company A.P. Moller-Maersk will operate the ports in a transitional phase until a new concession can be bid and awarded, Mulino said.

The two Panama ports are part of a $23 billion sale of CK Hutchison’s 43 global ports to a consortium of buyers including U.S. investment firm BlackRock. The deal, which was first announced last March, has been delayed by complications surrounding the Panama court case as well as elevated geopolitical tensions between Washington and Beijing.

Analysts believe the Hong Kong conglomerate is likely to buy time with legal proceedings, such as the latest arbitration move, while looking for alternatives for the broader port deal.