Panama’s Port Lawsuits Reshape Great Power Competition in the Americas: The Mulino Doctrine in Action

On July 30, 2025, as the world’s largest infrastructure deal teetered on the brink of collapse, Panama’s Comptroller General Anel Flores walked into the Supreme Court and filed two lawsuits that redefined great power competition in the Western Hemisphere. The lawsuits demanded that the decades-old contract between Panama and Panama Ports Company (PPC), a subsidiary of Hong Kong-based Hutchison Port Holdings, be rendered null and void over the “many irregularities” found during a months-long audit. The timing was notable. Just days earlier, China had effectively torpedoed BlackRock’s $22.8 billion bid to acquire CK Hutchison’s global port empire by demanding that state-owned COSCO shipping receive a stake in the consortium—and not just any stake, but “veto rights” over important decisions.

Rather than chaos, Panama’s actions followed a deliberate and coordinated approach, which CSIS has called in previous research the “Mulino Doctrine.” As global powers maneuvered for control of two key ports at the strategic approaches to the Panama Canal, Panama took initiative through a fundamental expression of sovereignty: the rule of law. Critics of President José Raúl Mulino’s approach may now view these actions as a sophisticated application of national independence.

Previous CSIS research delineated sovereignty as strategic practice versus sovereignty as vocal—but ultimately performative—gestures. Panama’s recent actions constitute the former.

China’s Checkmate Move

To understand Panama’s legal gambit, one must first grasp the scope of what China was on the cusp of accomplishing. In March 2025, BlackRock announced its historic deal to acquire 43 ports across 23 countries from CK Hutchison Holdings—199 berths overall. The crown jewels in this unprecedented deal were Panama’s Balboa and Cristóbal terminals. Donald Trump, setting the goal of “reclaiming the Panama Canal,” announced after the BlackRock deal became public, “The Panama Canal was built by Americans, for Americans, not for [others].”

But Beijing had other plans. After an initial silence, the deal was met with increasing criticism in China’s state-owned outlets, with the Global Times and Ta Kung Pao criticizing Li Ka-shing, the nonagenarian business magnate whose family owns the CK Hutchison conglomerate, for showing insufficient loyalty and selling out the Chinese people. In addition to freezing Li out of any deals with Chinese state-owned enterprises (SOEs), Beijing ordered its State Administration for Market Regulation to intervene, delaying the deal on the grounds that it challenges the Belt and Road Initiative. In early July, rumors circulated that the exclusive period of negotiations between Hutchison and BlackRock would close at the end of the month without a resolution, unless BlackRock acceded to one of Beijing’s conditions. The Wall Street Journal revealed Beijing’s alleged terms: If the consortium bidding on Hutchison Port Holdings did not include COSCO Shipping, a Chinese SOE, there would be no deal. By July 28, 2025, CK Hutchison allowed BlackRock’s period of exclusive negotiations to expire and announced it would invite “a major strategic investor from the PRC”—widely understood to be COSCO after the Wall Street Journal and Bloomberg reported on the internal dynamics of the deal.

In a single maneuver, China had transformed what the Trump administration had celebrated as a U.S. victory into a potential Chinese strategic triumph. The original consortium led by BlackRock would be forced to accommodate China’s state-owned shipping giant as a “significant member” or watch the deal collapse entirely. Furthermore, according to Bloomberg’s reporting of internal discussions, COSCO even demanded “veto rights” over critical decisions of the consortium. As a formerly sanctioned and blacklisted SOE, COSCO works closely with the People’s Liberation Army Navy and has a long track record of collaborating closely in China’s civil-military fusion strategy. On the other hand, CK Hutchison maintains a record of occasional independence from Beijing.

This is where many traditional analysts would predict Panama’s capitulation. Small states, the conventional wisdom suggests, must choose sides when great powers collide—“the strong do what they can, while the weak suffer what they must,” to put it in Thucydides’ famous phrasing. Instead, Panama chose litigation.

The Anatomy of Legal Sovereignty

Comptroller General Anel Flores filed two separate lawsuits on July 30, 2025, against the Panama Ports contract, citing serious irregularities and harm to the country’s interests during a months-long audit. But this was no bureaucratic exercise. “The contract was bad, one-sided and abusive, against the interests of the country,” Flores declared. “Panama is the true owner of the ports.”

The legal challenge rests on devastating findings: The audit reportedly revealed evidence of multiple breaches of contract that amounted to more than $300 million in losses to Panamanian state coffers. More fundamentally, the audit found that PPC failed to get proper approvals for its 2021 no-bid contract extension, with tax breaks under the contract costing the country $1.3 billion.

The key lies in the timing. Rather than opposing the BlackRock deal or capitulating to Chinese pressure, Panama exercised strategic patience and was thereby able to create a third option: legal sovereignty that transcends great power preferences. By subjecting the arrangements enjoyed by Hutchison Port Holding’s subsidiary to Supreme Court review, Panama intends for its most strategic assets to remain under conditions that serve its national interests, regardless of which global consortium ultimately prevails.

Strategic Patience in Action

In President Mulino’s candid response to the legal action at a press conference, he stated, “I do not at the moment see the continuation of the Panama Ports contract, amended or not.” However, he went on to say: “We will wait for the verdict.” This may reflect indecision but could also be strategic patience.

Consider the calculus from Panama City’s perspective: If the BlackRock-Mediterranean Shipping Company consortium prevails, Panama enters negotiations from a position of legal strength. If China’s COSCO secures participation, especially under the terms Bloomberg reports it allegedly demands, Panama has shown its willingness to challenge unfavorable arrangements that could impinge on sovereignty. If the deal collapses entirely, Reuters reports that Panama’s President José Raúl Mulino considered that, “Public-private partnerships could take over two key ports near the Panama Canal if courts invalidate a contract with Hong Kong-based CK Hutchison’s . . . to operate them.”

This marks a shift from more reactionary approaches to what former Secretary of State Henry Kissinger called “creative diplomacy”—the art of turning constraints into opportunities. The Mulino administration absorbed domestic criticism, at great cost to the president’s popularity and approval ratings, for security cooperation with the United States, while simultaneously preparing legal challenges to economic arrangements that potentially compromised national interests. This maneuver demonstrates that sovereignty requires institutional capacity, not just political will.

The Hegseth Visit in Context

Secretary of Defense Pete Hegseth’s April 2025 visit to Panama now appears in a different light. The security cooperation memorandum signed during that visit sparked protests, with opposition figures denouncing alleged U.S. “militarization.” Yet the agreement was modest—formalizing consultation mechanisms that had existed informally for decades.

The real significance lay in Panama’s management of the domestic blowback. Rather than vocal or even theatrical nationalism, the Mulino administration weathered criticism while maintaining its strategic course. In light of the shifting strategic context, this patience could be seen not as weakness but preparation, establishing that Panama would cooperate where cooperation served its interests while reserving the right to challenge arrangements that did not.

The lawsuits against Hutchison Port Holdings’ subsidiary show strategy: Panama demonstrated it could sign security agreements with Washington while simultaneously challenging commercial arrangements with Hong Kong—based on legal analysis and national interest rather than ideological posturing.

A Small States Guide

Panama’s approach offers lessons for small states worldwide seeking to maneuver amid increasing great power competition. “Against this backdrop, Panama appears determined to regain control over its key port assets,” as one analysis notes. But this determination manifests through institutional mechanisms rather than dramatic confrontations, especially not against great powers.

The contrast with traditional approaches is stark. Where other small states might have resorted to the rhetoric of nationalization or symbolic gestures, Panama deployed its Comptroller General’s Office, the Supreme Court, and its constitutional framework.

Panama’s move represents what Klemens von Metternich understood about balance-of-power politics: The goal of smaller states should not be to defeat great powers but to maintain autonomy among them. Sovereignty is not a slogan but a practice requiring difficult choices about which relationships to prioritize and how to manage competing pressures. The Mulino Doctrine recognizes this complexity. Panama’s legal challenge creates options rather than commitments, flexibility rather than binary choices.

Several Scenarios Emerge

The legal challenge is the latest twist in the global port sale saga, where the two Panamanian terminals lie at the heart of geopolitical competition, regulatory scrutiny, and the exercise of sovereignty. The outcome may provide an answer as to whether small states can maintain strategic autonomy in an era of intensifying great power competition.

Following the latest moves by China, three principal scenarios emerge:

1. Panama’s Supreme Court validates the contracts, Panama renegotiates from a position of strength, and any future arrangement reflects enhanced national interests rather than inherited colonial dynamics.
2. Panama’s Supreme Court annuls the contracts, forcing all parties—BlackRock, Mediterranean Shipping Company, COSCO, or other bidders—to compete for new arrangements under Panamanian legal standards.
3. Legal uncertainty will prevail for a while, providing Panama with permanent leverage over any global consortium and ensuring continuous alignment with national interests. French shipping giant CMA CGM is the latest to express interest in acquiring a stake in CK Hutchison’s global ports business, after exclusive talks between the Hong Kong conglomerate and a BlackRock-Terminal Investment Limited consortium expired. The multiplication of bidders only strengthens Panama’s position.

In each scenario, Panama has an opportunity to emerge stronger. This is the essence of the Mulino Doctrine: using institutional mechanisms to create strategic options rather than accepting predetermined outcomes. The key insight is that strategic autonomy requires institutional capacity, not just political will. Panama can challenge arrangements that compromise its interests because it possesses the legal institutions and administrative competence to do so credibly. Other small states facing similar pressures from great power competition should note that Panama’s approach works not because of moral authority or international sympathy, but because of institutional sophistication backed by legal precision. Panama has transformed a crisis of external pressure into an opportunity for institutional assertion.

The test of any doctrine lies in its practical application under pressure. The world is watching. And Panama is offering a valuable example.

Carlos Ruiz-Hernández is a senior associate (non-resident) with the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at CSIS.