“My administration will be reclaiming the Panama Canal, and we’ve already started doing it,” announced President Donald Trump in an address to Congress on Tuesday night. “Just today, a large American company announced they are buying both ports around the Panama Canal and lots of other things having to do with the Panama Canal and a couple other canals. … We didn’t give it to China; we gave it to Panama, and we’re taking it back.”

On Tuesday, a consortium of BlackRock Inc., Global Infrastructure Partners (GIP), and Terminal Investment Limited (TiL) announced it had “reached in principle” an agreement to purchase the Panamanian ports in question from Hong Kong-based CK Hutchison, as well as its ports around the world, for a grand total of $22.8 billion.

BlackRock completed acquisition of GIP in October 2024, and GIP holds a stake in TiL. (GIP purchased a 35% stake in TiL from its parent corporation, Mediterranean Shipping Company — owned by an Italian billionaire family — in April 2013, but it sold part of its stake when GIC Private Limited, Singapore’s sovereign wealth fund, purchased a 10% stake in May 2019.) So, the “BlackRock-TiL” consortium is largely controlled by the American investment firm.

Under the agreements, the BlackRock consortium will acquire CK Hutchison’s 90% interest in the Panama Ports Company, “which owns and operates the ports of Balboa and Cristobal in Panama,” which lie near the Pacific and Atlantic ends of the Panama Canal, respectively.

President Trump and his allies had expressed concern that the operation of these ports by a Chinese company threatened U.S. national security interests, given the Chinese Communist Party’s (CCP) totalitarian sway over its domestic businesses. If the U.S. Navy needed to traverse the Panama Canal in a crisis, the presence of Chinese operatives near either end could give the CCP substantial leverage.

In a separate agreement, the consortium will also acquire CK Hutchison’s 80% interest in Hutchison Port Holdings (HPH), “owning, operating and developing a total of 43 ports comprising 199 berths in 23 countries.”

In addition to the Panamanian ports, the HPH port-folio will literally span the globe, including ports in the Americas (two in the Bahamas and seven in Mexico), Europe (seven in the Netherlands, four in the U.K., and one each in Belgium, Germany, Poland, Spain, and Sweden), the Middle East and Africa (five in Egypt, three in the UAE, two in Saudi Arabia, and one each in Iraq and Oman), and Asia and Australasia (two each in Indonesia, Pakistan, South Korea, and Thailand, and one each in Malaysia, Myanmar, and Vietnam.)

CK Hutchison ports operating in China and Hong Kong (of which their website lists 17 locations) will not be included in the sale.

The sale of CK Hutchison’s global ports “will proceed on an expedited basis,” with documents “expected to be signed on or before 2nd April 2025.” The sale of its ports in Panama “will proceed separately on confirmation by the Government of Panama.”

In a press release, CK Hutchison Co-Managing Director Frank Sixt said the sale agreement “is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.” He explained, “This Transaction is the result of a rapid, discrete but competitive process in which numerous bids and expressions of interest were received. As a result, the Transaction valuation agreed in principle is compelling, and the Transaction is clearly in the best interest of our shareholders.”

“Wholly unrelated” is probably too strong a denial. Its port business “is one of Hutchison’s biggest assets and has long been a pride of [96-year-old owner] Li [Ka-shing]’s,” Asia’s ninth-richest person, The Wall Street Journal reported. “The company first looked at legally challenging any moves to wrest the business from Hutchison’s control,” but BlackRock’s offer “was too good to turn down,” WSJ added, citing an inside source who concluded, “It was a very elegant solution. Li does not like leaving things lingering.”

However Hutchison chooses to spin the sale, the bottom line is that President Trump got what he wanted; control of ports on either side of the vital Panama Canal will be transferred from Chinese to American control. The solution also gives Panama what they want out of the issue, which is respect for their territorial sovereignty over the canal. With BlackRock and Hutchison reaching an agreement that makes both corporations happy, Tuesday’s deal apparently wins five-star reviews all around.

One interesting aspect of the trade is the participation of the investment management firm, BlackRock. Readers of TWS may recognize the name from its controversial ESG (environmental, social, and governance) activism carried out with its clients’ funds, which prompted a dozen conservative states to divest billions of dollars from BlackRock since 2022, which forced BlackRock to dial back its woke activism, at least a little bit.

But control of Panamanian ports by a woke American corporation is still preferable to Chinese control. At worst, BlackRock might pursue inefficient green energy initiatives or implement diversity quotas — the type of folly we are accustomed to seeing from American commercial giants.

The concerns about China controlling real estate so close to a critical naval thoroughfare are altogether different. At best, there is a danger of espionage. At worst, there is the possibility that some sort of Chinese interference may delay American efforts to concentrate naval power in the Pacific in response to, for instance, an attempted Chinese invasion of Taiwan.

Thus, one doesn’t need to be a fan of BlackRock to see the benefit in their taking control of ports adjoining the Panama Canal.

Finally, the BlackRock ports deal showcases one political advantage of capitalism — or, more specifically, corporatism. Less than two months into the Trump administration, a private corporation relieved the U.S. of a major vulnerability for its national security — one which could have tangled up the federal government in diplomatic knots. But a powerful investment firm solved the problem for the government simply by finding the right price.

The price for securing the Panama Canal — as well as a global ports network — was, apparently, $22.8 billion. That’s an unthinkable amount of money for most Americans to pull together on any timetable, although the richest could finance it for a venture they truly cared about (Elon Musk pulled together $44 billion, mostly in loans, to finance his 2022 purchase of Twitter).

But BlackRock is no private individual. BlackRock manages a mind-boggling $11.6 trillion in assets, nearly double the expenses of the U.S. federal government in fiscal year 2024 ($6.75 trillion). Thus, BlackRock’s $22.8 billion deal represents 0.2% of its assets under management (AUM), not counting the contributions from its consortium partners. “This agreement is a powerful illustration of BlackRock and GIP’s combined platform and our ability to deliver differentiated investments for clients,” said BlackRock Chairman and Chief Executive Officer Larry Fink.

It turns out that, when many people pool together their investments, they can amass a far larger pool of capital than any one person could accumulate on his or her own. This is a powerful tool, and it can be used for good or evil. There are also downsides to corporatism, such as the dilution of accountability (or even utter lack of it) for how each person’s money is used.

However, the potential to accumulate massive amounts of capital through incorporation is a feature of the American system. And, in this case, it advanced America’s national interests.