Panama president says port caught in US-China dispute

Panama President Jose Raul Mulino said his country maintains a positive relationship with China despite being caught up in a dispute between the Asian superpower and the U.S., and defended Panama's takeover of port contracts held by Hong Kong's CK Hutchison.

He spoke at a regular press conference after receiving what he called a "high-level" message from China's government acknowledging that a dispute over the port contracts will be heard by international arbitration courts, and did not constitute an issue between the Panamanian and Chinese governments.

The message, received through China's ambassador in Panama, marked a friendlier approach, even as he noted an ongoing surge of detentions and inspections of Panama-flagged ships in China.

"We are, in a way, being carried along like a tide by the outcome of a problem between two major powers, the United States and China," Mulino told reporters.

CRITICAL CANAL

The Panama Canal handles 5% of global maritime trade, making control of its entrance ports a flashpoint for geopolitical tension between Washington and Beijing.

CK Hutchison, through local unit Panama Ports Company, lost the port concessions it had held for nearly three decades after a Panama Supreme Court decision in January that was widely seen as related to U.S. pressure to limit Chinese influence over the strategic waterway.

Panama then handed temporary operations to Maersk's APM Terminals and MSC's TIL Panama, as Panama Ports Company said it would fight the move in international arbitration and accused Panama's government of a wrongful takeover.

"We did not expropriate the ports, we took over the ports because they were left without a contract," Mulino said. "I have no interest in escalating this problem with China."

Nevertheless, he raised concern about the unusually high numbers of Panama-flagged ships being detained in China, an issue that prompted the U.S. and allies to voice support for Panama's sovereignty in a joint statement this week.

China called the statement misleading and accused the U.S. of politicizing the ports.

Mulino said he has not decided on further steps.

"I do not want this to escalate due to a geopolitical conflict, and for our Panamanian-flagged vessels to be used to try to apply pressure," he said. "I believe that is not fair."