What's going on with Panama Canal Container Port?
Is a US government fund eyeing up Panamanian assets?
On 28 January, Louis Sola, the Trump-appointed Chairman of the Federal Maritime Commission (FMC), appeared at the US Senate Hearing on the Panama Canal. He used the opportunity to decry Chinese investment projects in the country and assert that “American companies should play a leading role in advancing Canal infrastructure.”
But how can US firms compete with Chinese state-run companies that invest in the strategic interest of the CCP, winning tenders for Latin American infrastructure projects with low-ball offers?
Sola had a suggestion. Three weeks after his appearance at the Senate hearing he said the following in a statement:
Once the U.S. sovereign wealth fund is created, fund managers should immediately partner with the [Panama Canal Authority] to identify investment opportunities in and adjacent to the Canal’s operational areas…investing in ports, logistics facilities, or the Rio Indio Reservoir project.
According to CBS, Trump advisors have been working to deliver a plan for a US a sovereign wealth fund (SWF) before the end of the month. No one appears to know how it will be funded, but - just possibly - Panama might offer a clue of how it will be spent.
Some excellent digging by La Prensa’s Mónica Palm revealed that Notarc, the investment group behind Panama Canal Container Port (PCCP), are in the process of selling the project to something called the United States Strategic Fund.
The screenshot below was from an email sent to Palm by PR firm Cavalry Strategies.
There is no record of this entity’s existence. Subsequently Palm received an email from PCCP’s lawyers saying the port had been sold to US Infrastructure Fund LLC, a Florida company created on 23 December, the day after Trump first threatened to take back the Panama Canal at West Palm Beach. It was declared inactive the following February.
A little background on PCCP: The land around Margarita Island on the Caribbean coast were purchased by China’s Landbridge Group in 2015, ahead of Panama’s diplomatic recognition of Beijing. My DC sources tell me that the prospect of a greenfield port - potentially with “roll-on/roll-off” shipping capacity - was deemed a greater security concern by China hawks than the existing Hutchinson Ports.
The US kept a beady eye on PCCP. The port was never built and in May 2022 Bahamas-based Notarc said it would take over the project in partnership with shipping giant MSC.
After that…crickets 🦗🦗. There was no press coverage of the project’s legal dispute in Delaware courts where Landbridge claimed their former employee Liang Zhang had forged documents in order to sell the port to Notarc.
Two days after I wrote about PCCP on these pages, a local journalist asked Mulino about the future of the port. He said he would “clean the table of these stumbling blocks,” and retender the project.
That didn’t go down well with US congressman Carlos Gimenez who pointed out that Notarc was ostensibly backed by US capital.
I think the congressman is unaware of the following three points: 1) I have it from multiple sources that MSC backed out of the deal with Notarc. 2) In the Bahamas, Notarc are accused of lobbying for Chinese interests in the controversial Baha Mar tourism development. 3) Liang Zhang maintains close ties to Notarc’s leadership and is sole shareholder of something called Notarc Global Investment.
Given these factors, and the prospect of a lengthy legal battle, it seems logical that the project requires a fresh start if it is going to be built any time soon. But what is the United States Strategic Fund?
Panama’s Maritime Authority say they have received no notification of the sale of the project. I reached out to some contacts in DC and Miami. One thought this might be “smoke and mirrors” on Notarc’s part to buy time or curry favor with the US.
Another possibility is that Louis Sola has made a convincing case to the White House. Maybe “US Infrastructure Fund” and “United States Strategic Fund” are just a place-holder names, and the Margarita Island port is destined to become an asset of a sovereign wealth fund that hasn’t been set up yet.
OTHER NEWS
🤡 El Loco Exile: Having spent 15 month holed up in the Nicaraguan embassy to escape a 10 year prison sentence, former president Ricardo Martinelli flew to Colombia on Saturday. The deal with former critic Gustavo Petro is very fishy.
🍌 Banana Drama: Protests in the Bocas del Toro province have been the most disruptive, forcing Chiquita Brands to close one of its banana plantations on Tuesday.
🛢️ Oil Exploration: Panama’s Energy Secretary said it would study its Caribbean offshore territory for hyrdrocarbons in partnership with Colombia’s national oil firm Ecopetrol.
Notarc is incredibly sketchy! There's this reporter who writes on Panama, can't remember his name, pointed out some unbelievable things about that firm that might surprise the Congressman even more than what's in this post ...
There's no way Notarc can pull off something like the Margarita Island project, not even at the basic level of raising funds. I know a company they should go to if they're interested ...
The frightening thing about a Ro-Ro port is that you could quite literally have a container ship discharge the equivalent of an armored battalion in a matter of hours. Moreover, in theory the deployment could be concealed, depending on on the quality of U.S. intelligence. (The technology is called the "tarp." Of course, the use of tarps could be a warning sign.) Now, this can be exaggerated, since the Chinese would be operating at the end of a long logistical tail ... but if the port were large enough, then supplies could also be pre-positioned in specialized warehouses.
That would be in addition to pre-positioned cargo vessels, which the Chinese could discharge rapidly in port facilities under their control. Hopefully U.S. intelligence would note unusual traffic and loitering -- looking for ships coming from China would not be enough since the Chinese could easily switch cargoes in civilian ports before moving them towards Panama.
In other words, a large-enough Ro-Ro facility means that the PLA could potentially occupy Panama in the opening day of a war. That would be a very large headache for the Americans; a strategic dilemma that we would not want to face.
It is possible to imagine the above scenario without Chinese control of ro-ro facilities, but the risks for the PLA would jump by an order of magnitude and potential discharge rates would collapse.
I am tempted to put on my old S-2 hat and write up a scenario but I don't think enough people would read it to make it worthwhile.
I will say, though, that I am often dismayed at the sophomoric quality of the military analyses that goes to Congress or the public. (Calling James Bosworth -- we need to discuss this problem!)