Mellow Yellow

In the January issue each year of this newsletter I have usually written something about how the country has fared during the previous year.  Each time, however, there have always been situations within the region which have dwarfed any problems which Panama has.  Last January, for example, Venezuela was in the spotlight and, incredibly, one year later, the trials and tribulations of president Hugo Chávez continue; although they might have changed in complexion, they still threaten his presidency.  This January issue, however, has a distinct Panamanian flavour. 

In the January, 1999, issue, mention was made of the impending transfer of control of the Panama canal in 2000, including the Canal Zone, from America to the Republic of Panama.  There was great concern at the time in some American political circles that the departure of American soldiers would weaken the security of Panama and, more importantly, the effective management of the waterway itself that lies on 144 global shipping routes.  The last 4 years of Panamanian control, however, have shown that not only have canal profits never been higher, the number of shipping accidents has never been lower.  This may have silenced some critics but there is still plenty of doubt lurking in the shadows for some die-hard sceptics who have since shifted their focus.  They now fear, what was first called, more than a century ago, the Yellow Peril.  China, a far-off country whose prime minister, on his first visit to America last December, received a 19-gun salute on the White House’s South lawn, is the source of this fear.  The frosty relations between America and China, however, have mellowed to the extent that president Bush is no longer an instinctive champion of Taiwan.  Even so, the Chinese card is being played on a regular basis and, because of this, the supposed threat sometimes comes up in conversation with visitors and at local business conferences fears about Chinese control of Panama’s global waterway have been voiced.

The manifestation of the Yellow Peril for the worry mongers is Hutchison Whampoa, which is the flagship company of Li Ka-shing, a Chinese billionaire living in Hong Kong and where HW is domiciled.  Mr. Li was born in Chiu-chow in the Chinese province of Guangdong in 1928, fleeing from Southern China after the Japanese had invaded Hong Kong.  He never finished school and when he was 22 he established a factory that made plastic combs and soap boxes.  More an agent of capitalism than communism, the elderly widower who is an avid golfer and philanthropist (he supports medical and educational charities), oversees his business empire from the 70^th floor of his company’s headquarters in Hong Kong.  HW has port operations in the United Kingdom as well as at Panama’s canal and the alarmists argue that this strategic location in Panama is a stepping stone from which China could launch all sorts of mischief and create chaos in the canal.  This flight of fancy overlooks the fact that China is moving closer to the west, not further from it, and, most importantly, a provision included in the 1977 pre-transfer canal treaty with America allows, in perpetuity, America to intervene to protect and defend the canal if a threat exists.  Panama should not fear HW’s presence any more than the United Kingdom does.

Opportunism vs. Communism

If the canal is under threat now, was world banking once also?  Had the Hong Kong & Shanghai Banking Corporation not re-domiciled from Hong Kong to the United Kingdom, would these same people have argued that one of the world’s largest banks (also with a strong presence in Panama) was also under the control of China?   The HSBC analogy is tinged with irony because Li Ka-shing purchased his controlling stake in HW from HSBC in 1979. HW, although financially troubled then, was, at that time, Hong Kong’s second largest conglomerate. 

Today the ports business contributes a third of the company’s earnings.  The astute 74 year-old billionaire has been guided by three tenets in business, none of which can be attributed to communism:  buy assets others see as unattractive; never allow sentiment to prevent the sale of a business at the right price; always leave enough on the table to entice your partners to come back for more.  He follows the advice of the French who counsel to buy on the cannons and sell on the trumpets.  In 1967 when Hong Kong was in the midst of riots, Mr. Li bought property throughout the city.  Again, in the 1980s, when fears increased over the colony’s future under Chinese rule after 1997, Mr. Li bought container terminals at bargain prices.  Some estimates place his worth at US$10 billion and he ranks as one of the 25 richest people in the world.

It is the Chinese New Year this month and any explosions heard in Panama will not result from Chinese invading forces but will come from fireworks lit by celebrating Chinese residents.  Panama, linked to a sinister Chinese plot, is fodder for the sceptics and just too tempting a combination for the conspiracy theorists.  The country, after all, with its multi-faceted history, has been, and remains, a hot-bed for conjecture as well as intrigue.  In the case of Mr. Li, however, the speculation has more in common with distortion mirrors at a theme park.  Aldous Huxley put it aptly:  “Facts do not cease to exist because they are ignored”.  Or because they are distorted, I would add.