A soybean shipment waits in the export corridor of the Port of Paranagua in the state of Parana, south of Brazil, in January 2025. China Merchants Port Holdings Co. Ltd. controls 90% of the port. REUTERS
DIÁLOGO AMERICAS
Peru’s Port of Chancay runs the risk of becoming an important organized crime hub, not only in Latin America but also internationally. Such was one of the findings of a recent report by national security think tank International Coalition Against Illicit Economies (ICAIE).
“In our report we consulted experienced Peruvian police officers, who agreed that both Peruvian groups and transnational organizations, such as Mexican cartels and Chinese gangs, will seek to establish themselves in the new port because of its potential as an important commercial hub in the region,” Pablo Zaballos, Southern Cone director of IBI Consultants, researcher for ICAIE, and one of the authors of the report, told Diálogo Americas, a publication of U.S. Southern Command.
Built 70 kilometers from the capital, Lima, the Beijing-funded Port of Chancay was inaugurated by Chinese Communist Party General Secretary Xi Jinping in November 2024. According to the ICAIE report, “given the almost absolute control that the Chinese logistics company COSCO has over the port and the traffic entering and leaving the facility, it is unlikely that there will be external verification regarding COSCO’s reports.”
In addition, the reduced presence of local police, locals’ disappointment at the Beijing government’s unfulfilled promises of jobs and economic growth, and the construction of an industry around the port with casinos and shipping companies are some of the factors that could attract the world’s worst criminal networks, including Chinese triads, the report added.
“Criminal groups linked to the People’s Republic of China, including the triads, are particularly active in Belt and Road Initiative (BRI) projects, often as part of port security systems,” the report said. According to the document, given that Chancay is among the main BRI projects in Peru, it is very likely that it will also attract the triads, which are particularly active in money laundering and drug trafficking.
“The Chinese triads, which have already consolidated their role in the international trafficking of drugs such as methamphetamines and heroin, could extend their operations to this port. Their involvement ranges from production to transportation and distribution, using strategic routes to maximize their reach,” Zaballos said.
Until now, precursor chemicals for synthetic drugs such as fentanyl have arrived from China mainly through Mexican ports. The opening of the Chancay Port could significantly alter the networks that smuggle them. “The port’s capacity to move large volumes of cargo could make it easier for these networks to operate more efficiently, positioning it as a strategic point for importing precursors from Asia and exporting finished products to other markets,” Zaballos added.
Narcotrafficking in Chinese ports
But Chancay is just the tip of the iceberg. A recent report by the Center for Strategic and International Studies (CSIS) warns of the security risks of Chinese expansion in the region’s port sector.
According to the report, Beijing’s opacity and lack of transparency “facilitate the creation and acceptance of bribes and corruption, which, in addition to coercion, are central to any criminal organization seeking to exploit transportation or logistics facilities, including ports.”
Many Latin American ports controlled or operated by Chinese companies serve as hubs used by organized crime or are close to drug trafficking routes. “If we look at Chinese investments in other ports worldwide, we see similar dynamics. For example, with the acquisition of COSCO, the port of Piraeus in Athens has grown a lot commercially, but it has also become one of the key entry points for cocaine from Latin America and heroin shipped from ports in Iran, Pakistan and Turkey,” maritime security expert Ruggero Scaturro, senior analyst at the Global Initiative against Transnational Organized Crime, said.
As a major Europol operation in 2022 demonstrated, much of the cocaine destined for the international market passes through the Panama Canal and the Colón Free Zone, one of the world’s largest logistics hubs for international trade. The free zone is immediately adjacent to the Manzanillo International Terminal and the Port of Panama, both of which are operated by the Chinese company Hutchison Port Holdings.
According to Christopher Hernández-Roy, deputy director of the Americas Program at CSIS, “the Buenos Aires container terminal operated by Hutchison is also located at the Paraguay-Parana Waterway terminal, an increasingly important southern route for transporting Andean cocaine around the world.”
The Paranaguá Port case
In Brazil, 90% of the Paranaguá Port has been controlled by Hong Kong-based China Merchants Port Holdings Co. Ltd. since 2018. Located in the southern state of Paraná, Paranaguá is the largest grain port in Latin America. The port is also a crucial hub for international drug trafficking, especially by Italian and Balkan mafias, due to the type of goods shipped, mainly soybeans, of which China is the largest recipient.
“Apart from containers, there are also many other ways of transporting illicit goods, which is certainly a very important vulnerability. Drugs can be hidden, for example, in so-called bulk carriers,” Scaturro said.
These bulk carriers are specially designed to transport unpackaged goods, mostly bulk cargoes such as soybeans. In 2021, a bulletin from the Brazilian maritime insurance and consulting firm Proinde reported that in Brazil “there has been a significant increase in the number of cases of bulk carriers sailing from grain ports with cocaine hidden in the bulk cargo, in empty spaces, or attached to the hull of the vessel.”
In September 2024, the Brazilian Federal Police’s Operation Viking uncovered an international cocaine trafficking network bound for the Balkans in the Paranaguá Port, which used divers to hide the drugs in the submerged spaces of cargo ships.
According to Proinde, the use of bulk carriers is a more advantageous system for criminals because controls are more difficult and, unlike drugs smuggled in containers that have not been packed or sealed by the carrier, those discovered inside the ship tend to shift criminal responsibility to innocent third parties, usually the crew.
Wildlife and raw materials
China is the world’s largest importer of timber, much of which comes from Latin America, but the industry lacks legislation and tools to control its legal origin. According to a report by the Washington-based Brookings Institution, Mexican rosewood trees are illegally logged and shipped to China through the Lázaro Cárdenas Port in Michoacán, Mexico, operated by Hutchison Port Holdings.
China is also one of the world’s largest markets for illegal wildlife trafficking from Latin America, such as shark fins and jaguar fangs and bones. The U.S. nongovernmental organization Earth League International has denounced that some members of the Chinese diplomatic community are allegedly complicit in this trafficking and offer political protection to Chinese criminal networks in Latin America. “Chinese-controlled ports are suspected of turning a blind eye to these shipments,” Hernández-Roy added.
As for illegal fishing, rampant off the coasts of Argentina, Brazil, Ecuador and Peru, Chinese vessels often offload their illegal catches onto huge freighters on the high seas. “However, these vessels enter Latin American ports where the Chinese have operations, without their tracking devices, which raises questions about the reasons for their presence,” Hernández-Roy said.
In Latin America, China’s predatory behavior also includes raw materials such as iron needed to make steel, of which it is the world’s largest producer, as well as copper and gold.
According to the CSIS report, there is a decades-long relationship between organized crime and illegal mining in the Mexican state of Michoacán, where the illicit extraction of iron ore reached its peak in 2014, with the seizure of 119,000 tons in Lázaro Cárdenas on a ship bound for China.
Espionage risks
In 2023, the Brazilian port of Itapoá, in the southern state of Santa Catarina, became the first in Latin America to be equipped with remotely operated cranes from China’s state-owned Shanghai Zhenhua Heavy Industries Co. Ltd. Other cranes from this company are scattered throughout many ports in the region, such as Guayaquil in Ecuador and Chancay in Peru. The Chinese-made cranes have sparked worldwide concern that they could be a Trojan horse for espionage.
According to Hernández Roy, ports, especially the larger ones, contain valuable information. “The arrival and departure of certain ships and types of ships, what they import or export, their destination points, the condition of the ships, information about their crews, what is being transported in the port and who is transporting it, offer a wealth of information that can be collected and analyzed to understand volumes, patterns, trends,” Hernández-Roy said.
Electronic surveillance, through cameras, scanners and possibly by installing signals intelligence tools on port infrastructure, could provide additional intelligence-gathering capabilities.
“China’s 2017 National Intelligence Law, which mandates all citizens and companies to cooperate with state intelligence, means that Chinese companies or individuals could be obligated to provide this kind of support,” Hernández Roy said.