Hailed as a landmark development in Peru’s infrastructure, the Chancay Port has however been surrounded by controversies since its construction began in the small fishing town of the same name, some 78 kilometers north of the capital, Lima. Environmental and social impact issues, permit irregularities, and security threats are some of the concerns that have accompanied the Chinese-funded project since its inception.
Inaugurated on November 15, 2024, the Chancay Port, majority owned by Chinese state-owned enterprise COSCO and aligned with China’s broader strategy to expand its maritime and logistics footprint globally, continues to set off alarm bells about its environmental, social, and strategic geopolitical impact on Peru and the region, while also raising questions about potential military use in the future.
Security and defense experts have warned that the new port positions Peru as a key hub for China’s expansion in the region and stressed that China’s authoritarian model and opaque practices spark serious security concerns.
For Euclides Tapia, a professor of International Relations at the University of Panama, the true impact of the project will not be evident in the short term, he told Diálogo. “As the majority shareholder, China, through COSCO, will make decisions according to its own interests, which are those of the Chinese Communist Party and not those of Peru,” Tapia said.
Ositran controversy
Just weeks prior to the port’s inauguration, yet another controversy arose, this time legal. In late October, COSCO filed a protective action with the Peruvian Judiciary against Peru’s regulatory body Ositran (the Supervisory Body for Investment in Transportation Infrastructure for Public Use), aiming to limit Ositran’s oversight of the port, arguing that as a private port, Chancay does not fall under Ositran’s jurisdiction. COSCO also claimed that Ositran’s oversight model is incompatible with the port’s operation and could hinder development.
For its part, the Peruvian regulatory body believes that since the port is a transport infrastructure for public use, it must supervise its operations. As a regulatory entity, Ositran contended, it has an obligation to oversee port competitiveness, transparency, and accessibility in the port services market. “Ositran’s oversight also includes monitoring prices and service quality — elements it considers essential to prevent monopolies and ensure fair competition in the sector,” Latin American Chinese Research Center Andrés Bello Foundation indicated in a report.
“This conflict has raised public and expert concerns, with some fearing that limiting Ositran’s oversight could lead to port management that favors COSCO’s interests over the well-being and needs of the Peruvian market,” the Andrés Bello Foundation said. “Moreover, the case raises questions about the extent of control the Peruvian government can exert over large-scale infrastructure projects when these are primarily financed and managed by foreign capital, in this case, a Chinese company.”
Port exclusivity
Months prior, another controversy, involving the Peruvian government and COSCO over exclusive control of the Chancay Port operations for a 30-year period, marred the port project. In March 2024, Peru’s National Port Authority (APN) requested the annulment of an agreement that gave COSCO exclusivity to operate all port services, citing an administrative error. In response, COSCO threatened to withdraw from the project and resort to international arbitration.
The issue led to a legislative modification giving automatic exclusivity to private ports, a measure that sparked concerns about the project’s lack of transparency and China’s growing influence in the country.
Environmental and social impact
The Chancay Port has also drawn significant criticism for its negative environmental and social impacts, including damaging the nearby Santa Rosa Wetland, a vital ecosystem for various bird species, and for disrupting local fishing activities and destroying the marine life and habitat with dredging and sediment discharge.
Local groups have also expressed concerns about air and noise pollution and inadequate community engagement from the Chinese company whose works damaged homes and roads of the small town from the blasts and explosions to build the port. According to international non-profit organization Business and Human Rights Resource Centre, the local community also denounced land speculation and land trafficking, leading to an increase in public insecurity.
Dual role
From a geopolitical standpoint, Chancay is emerging as a strategic asset due to its location and capacity to accommodate deep-draft vessels, including warships. “China’s exclusivity in the port’s operation reinforces its importance in the region,” German news network DW reported.
State-owned COSCO Group, which owns COSCO Shipping, “works directly with the [People’s Liberation Army] PLA on a routine basis, providing support to deployed PLA vessels through the shipping line,” said via X Thomas Shugart, adjunct senior fellow for the Defense Program at the Center for a New American Security (CNAS).
According to think tank Center for Strategic and International Studies, “COSCO Shipping is widely recognized as the maritime supply arm of the PLA and has provided logistical support to the PLA Navy’s escort operations in the Gulf of Aden [in the Indian Ocean] since 2008.”
Experts have also voiced their concerns that the port could serve as a military base for logistics support operations, resupply, and repair of warships.
“In addition, the duality of the port positions Peru as a possible facilitator for China to provide hidden support to countries such as Russia and Iran to evade international sanctions, which would deepen Peru’s dependence on China,” Tapia concluded. “This represents a significant threat not only to national sovereignty, but also to the country’s economic and geopolitical stability.”
