In this installment of his SJA exclusive, Peter Bäckman, CEO of TEDCAP describes the strategic importance of the Panama Canal and the key players seeking to gain control of it.

The Panama key

The latest geopolitical tremors surrounding Panama have sent shockwaves across Latin America, revealing the increasingly intricate and high-stakes game between global powers vying for control of strategic infrastructure.

The US’ renewed push to “reclaim” the Panama Canal – coupled with BlackRock’s $22.8 billion acquisition of the majority control of Panama Ports – marks a significant shift in the balance of influence in the region.

This move, celebrated by US President Donald Trump as a key step in his administration’s efforts to counter Chinese influence, sets the stage for escalating tensions with far-reaching consequences for the entire Latin American region.

Global supply chains

The Panama Canal has always held an outsized strategic value, acting as a lifeline for global trade.

Approximately 5% of world maritime trade – including vital energy shipments – passes through this narrow, 50-mile waterway that connects the Atlantic and Pacific Oceans.

Control of the canal and its surrounding infrastructure translates to leverage over global supply chains, military logistics and economic flows.

For decades, the US maintained this control – both overtly and covertly – until the canal’s administration was fully transferred to Panama in 1999 under the terms of the 1977 Torrijos-Carter Treaties.

Since then, China has steadily expanded its economic footprint in Panama, particularly through Hong Kong-based CK Hutchison’s port operations in Balboa and Cristóbal, key terminals bookending the canal.

The newly announced deal, where BlackRock – one of the largest US-based asset management firms – is set to acquire a 90% stake in these ports, effectively rolls back that influence.

For Washington, this is not just about commerce; it’s a calculated effort to curtail Beijing’s growing strategic presence in the Western Hemisphere.

The aggressive posture of the US in this latest maneuver reflects a return to a neoconservative foreign policy doctrine – one that prioritizes American dominance in regions deemed critical to national security and global leadership.

This mindset, reminiscent of Cold War-era interventions, aims to counter perceived adversaries like China and Russia through economic, military and diplomatic pressure.

However, the consequences for Latin America go beyond Panama.

The region, long wary of US interference, faces the risk of becoming a fragmented battlefield for proxy influence.

Washington’s moves may embolden governments aligned with US interests, while alienating those seeking stronger ties with China – a dynamic already visible in countries like Brazil, Argentina and Chile, where Chinese investments in infrastructure and technology are growing rapidly.

Another player

The BlackRock acquisition introduces a new layer of complexity.

While the move ostensibly secures vital infrastructure under Western control, it also raises alarms about corporate overreach and sovereignty.

BlackRock’s sprawling global portfolio, which spans energy, technology and logistics, blurs the line between private capital and state-backed geopolitical strategy.

Latin American governments – many grappling with economic fragility and social unrest – may see this as an opportunistic US power grab under the guise of investment.

This narrative plays directly into China’s messaging, portraying itself as a more benign, development-focused partner.

The risk for regional leaders is clear: aligning too closely with Washington risks alienating Beijing, which has become a key trade and infrastructure partner for much of Latin America.

Additionally, the Trump administration’s rhetoric around “reclaiming” the canal has sparked fears of military escalation.

US Southern Command’s reported contingency plans – ranging from increased security cooperation to potential troop deployments – reflect an undercurrent of hard power readiness.

Any miscalculation or escalation could destabilize not only Panama but ripple through neighboring countries, particularly Colombia and Costa Rica, which rely on canal-related trade.

Beijing’s swift and furious response to the BlackRock deal is telling.

President Xi Jinping’s reported directive to explore legal avenues to block the acquisition signals China’s intent to contest this power shift.

More broadly, China may double down on its investments in alternative trade routes – including the Nicaragua Grand Canal project, though stalled, or expanded port developments in Brazil and Argentina.

Latin American nations caught in the crossfire face increasingly difficult choices.

Economically, many benefit from Chinese investment in infrastructure and technology, while still relying on US security guarantees and trade access.

Politically, governments will need to carefully manage the optics of perceived alignment with one superpower over the other.

The Panama Canal affair exemplifies the region’s enduring vulnerability to external power plays – a reminder that strategic assets are never far from the grip of global competition.

For countries in the region, the key will be navigating this new phase of great-power rivalry without sacrificing sovereignty or economic stability.

Governments must focus on diversification: strengthening internal institutions, expanding regional alliances and fostering a balanced approach to international partnerships.

Next on the horizon

The rise of private mega-corporations like BlackRock as geopolitical actors adds a further wrinkle.

Unlike traditional state-backed interventions, corporate acquisitions present a veneer of market-driven legitimacy.

But make no mistake – the strategic objectives are just as potent and the regional implications just as profound.

Latin America’s leaders must recognize that while external powers may promise prosperity and security, true resilience comes from within.

Strengthening economic independence, technological capacity and regional integration will be vital to avoid becoming collateral in the next chapter of global power realignment.

The Panama Canal saga is far from over.

What’s clear is that this pivotal artery – and the nations surrounding it – remain central in the grand game of global influence.

Latin America’s future, as ever, hinges on how well it balances on this razor’s edge.

You can connect with Peter on LinkedIn here.

Read the previous installments of Latin America Unveiled here and keep an eye out for the next piece, coming soon!