FOLLOWING a period of the posturing that has become emblematic of the Trump Administration – including a threat to “take back” the Panama Canal – the US has signed an agreement with Panamanian Government over the waterway’s future.
A joint declaration on security matters was signed last week by the Minister for Canal Affairs of Panama and the United States Secretary of Defense. The declaration reaffirms respect for, and the recognition of, Panamanian sovereignty over the interoceanic waterway, as well as compliance with the Neutrality Treaty and the legal framework governing its operation, comprised of the corresponding constitutional title, the said Treaty, and the Organic Law of the Canal.
The declaration also states that efforts will be made develop a mechanism which will allow compensation for services provided to warships and auxiliary vessels, seeking a cost-neutral basis. This mechanism will be evaluated jointly with the Ministry of Security of Panama, The Canal Authority said in a statement.
Within the framework of this declaration, the existing cooperation with the US Department of Defense is highlighted in areas such as engineering, security, and cybersecurity, which will also be part of the analysis to define the compensation. The declaration constitutes a first step in establishing this model, which will be developed in later stages.
Meanwhile, the Panamanian Government is close to completing an audit of the CH Hutchison-controlled Panama Ports Company, which has a 25-year concession to operate the ports of Balboa and Cristobal to which the Trump Administration objects due to Hutchison’s Chinse connections.
The audit is to check PPC’s compliance with the conditions of the concession and was launched as knowledge of the Blackrock/GIP/TIL bid to buy PPC (and other Hutchison terminals worldwide) became known.
Reuters reported that Comptroller General Anel Flores claimed the audit had already found that Panama “left US$1.3 billion on the table” due to tax incentives and benefits granted to CK Hutchison, but the company responded its investments in Panama had surpassed not only the $50 million required in the original concession contract signed in 1997, but they had also eclipsed a $1 billion requirement contained in a 2005 addendum.
Tax exemptions granted to PPC by the government were, “precisely the same tax exemptions granted to all other port operators in Panama,” Hutchison said.
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