QUORA
Nice! Well done China!
It turns out that China does have some serious heft to retaliate against Panama. And the best thing is, the Panamanians can do practically nothing to retaliate against this. Anything they try is likely to cause more problems for themselves.
Those who have followed me should know that I posted about Panama’s actions having consequences. When they screwed over the biggest Chinese player, the port operator itself, it sent a chilling feeling down other Chinese players in the trade.
For instance, you can see this link to my previous post:https://qr.ae/pCfYTw
CK Hutchinson is a highly professional and respected port operator. Decades in the trade. Operates 53 ports across 24 countries. Decades of experience in Panama with billions invested.
If you can suddenly throw out a huge player with such an august resume at the behest of the United States, everybody else is vulnerable. So the Chinese trade sank. Fewer Chinese ships called at Panama. COSCO pulled out its business. And other non-Chinese investors also got nervous and started shelving their plans. Because they don’t want to be on the hook if Trump tells Panama to make things hard for them too.
But now Panama is feeling the pain from direct Chinese retaliation too. And it is extremely good retaliation. Which I hadn’t paid much attention to previously. But now it all makes sense. It is very good sense. It is something that China could have done long ago, except they preferred to exercise Chinese patience and wait until the right opportunity came along.
China is starting to inspect all Panama-flagged ships going to China. This causes a delay of 2-3 days minimum, which causes Panama-flagged ships to become less competitive in the logistics trade. And which will eventually drive shippers to register elsewhere.
This will have a huge effect on Panama’s economy, because they depend so much on shippers registering in Panama.
Will it hurt China? No. There are many countries that you can register flags of convenience under. Also, there is mention of Greece, another country famous for its shipping. Greece is friendly with China, and more respectable because it has to abide by EU regulations. Shippers can just switch registration to Greece anytime.
PRC has not liked flags of convenience for a very long time. They put up with it because it is an established maritime convention. But letting ships in the China trade enter Chinese waters under flags of convenience, means China has no control or accountability over these ships. They don’t pay Chinese taxes. They are out of Chinese regulatory oversight. Chinese labor, environmental, and other laws do not apply. Sleazy operators can abuse their flags of convenience because countries like Panama offer registration without oversight. China would really prefer all ships in the China trade to register in China. (Very few do, precisely because they do not want to be under Chinese jurisdiction.)
Moreover this is not some example of lawfare without basis. Panama and Liberia are notoriously lax on ship registrations. So there are plenty of Panama-registered vessels which have sleazy owners and operators. Inspecting Panamanian vessels more frequently will put an end to mischief making, at least from Panama.
If you are sleazy and your country is friendly with China, at least China will pretend to overlook issues with your ship. If you are sleazy and your country has offended China… no reason for China to overlook anymore.
And now Panama is starting to sound like Lithuania. They want China to come back, but they aren’t courageous, intelligent or decent enough to apologize and rectify their conduct. Government ministers have been holding press conferences and dropping hints, but they simply aren’t sincere so they will definitely be ignored.
I think Panama will just go the way of Lithuania.https://qr.ae/pCfYTw
2.3K views
View 61 upvotes
11 comments from
Jeanpeterson Pierce
and more
CVD 