Recently, the Peruvian Port Authority filed a lawsuit to cancel COSCO Shipping's exclusive right to operate at the port of Chancay, saying that it was "correcting a mistake". In response, COSCO Shipping said that this would affect the security and legal stability of the investment. And Peru's move is clearly to cross the river and tear down the bridge.
It is understood that COSCO Group has invested 1.3 billion US dollars to help Peru build the largest deep-water port in the Americas - Chancay Port. According to the agreement, the port is expected to be put into operation in November this year, and COSCO has the exclusive right to operate it. Located 80 kilometers outside the Peruvian capital of Lima, this natural deep-water port can accommodate the world's largest cargo ships, and will be "South America's gateway to Asia".
At last year's APEC meeting, Peruvian President Boluarte spoke highly of the port, saying that "the port of Chancay is an important example of China's investment to promote free trade, and Peru has gained a special status on the international stage." However, just a year later, near the end of construction, it faced a turnaround.
But objectively speaking, Peru does not abide by the spirit of the contract, and ultimately loses its own interests.
【Chinese enterprises in the construction of Qiankai port】
First of all, from the economic side. As one of the port projects of Chinese enterprises in Latin America, the construction content of the Qiankai multi-purpose terminal is a comprehensive integrated port area and maritime engineering construction, and the first phase of the project includes 2 multi-functional terminal berths, 2 dedicated container terminal berths, breakwaters, roads, storage yards, etc. After the completion of the project, the annual throughput capacity of bulk cargo will reach 6 million tons, and the annual container throughput capacity will reach 1.5 million TEUs, which is of great significance for Peru to build the most influential logistics distribution center on the Pacific coast and promote regional economic and social development.
In addition, during the three years of construction, thousands of Peruvian people participated in the construction, while China unreservedly provided training to local Peruvian employees, many of whom are in high demand in the job market with their experience in building the port of Chancay. More importantly, Chinese enterprises have also undertaken the construction of supporting facilities in the surrounding areas, and carried out public welfare medical care, community condolences, mental health counseling and other services in the local area, which has greatly improved the living standards of local residents.
In terms of trade, China has been Peru's largest trading partner for many years in the past decade, with major imports including copper and its concentrates, fishmeal, iron ore and its concentrates, zinc and its concentrates, and gold. Among them, copper and copper ore are among the most imported commodities from Peru by China.
【Qiankai Port Planning Map】
So, if Peru now resolves to tear up its cooperation with Chinese companies, it could damage its relationship with China and miss this opportunity to boost trade and strengthen economic partnerships. On top of that, the abrupt withdrawal of such an important cooperation project would undoubtedly cost itself credibility, and could cast doubt on the credibility and policy continuity of the Peruvian government among investors in other countries, making Peru less attractive as an investment destination.
And the strange thing about this is that in the face of these obvious negative effects, why did Peru have to take this step? I analyze that there may be two reasons.
First, Peru has been at loggerheads for years. Eight months after Boluarte's presidency, Latin American countries remain polarized towards the Peruvian government, with no diplomatic recognition from the Latin American left-wing countries that support former President Castillo, who believe that Boluarte came to the presidency through a coup d'état.
It is worth mentioning that just as Peru was rumored to tear up the contract with China, Boluarte was caught in an investigation because he was wearing a luxury watch, and Peruvian police officers searched his residence overnight and accused him of "unconstitutionality". After that, Peruvian legislators from several parties even proposed to remove Boluarte. In this context, it cannot be ruled out that Peru has gone wrong internally, trying to create resistance to Boluarte's administration by sabotaging cooperation with Chinese companies.
[Peruvian President Boluarte is in a crisis of governance]
Second, when the Chancay port project was first proposed, the United States directly expressed its dissatisfaction with Peru and warned Peru that China would turn the port into a military base. However, the real intention of the United States is to maintain its influence in Latin America, and the United States is worried that China will expand its influence in the Western Hemisphere through such infrastructure projects, and may further promote China's military and intelligence activities to gain strategic advantages. Therefore, it is very likely that the United States took advantage of the political instability in Peru to secretly sabotage. Of course, it cannot be ruled out that Peru deliberately released the news of the breach of the treaty in exchange for favorable conditions in exchange for China when the port was about to be completed.
For us, the completion of the Chancay port is conducive to strengthening China's trade links and logistics efficiency with South America, but it does not mean that Peru can tear up the agreement with China at will. Whether it is the port of Piraeus in Greece, the port of Colombo and Hambantota in Sri Lanka, the Mombasa-Nairobi railway in Niah, and the Ajibouti railway in Ethiopia, as long as the infrastructure built in cooperation with China is the "first project" of the country. I hope Peru thinks twice, once it destroys relations with China, it will be difficult to redeem it.