The Concession

Chancay sits 78 kilometers north of Callao on Peru’s Pacific coast. At Chancay, COSCO Shipping Ports operates a deep-water terminal that handled 286,000 containers in its first operating year --- Latin America’s largest Chinese-operated port, inaugurated in November 2024 with Xi Jinping presiding by video link alongside President Dina Boluarte. Phase one has a design capacity of one million containers per year. Full buildout --- 15 berths --- would handle 3.5 million. At Callao, Peru’s Ministry of Defense authorized approximately $1.2 billion in sovereign bonds on April 9 to finance Phase II of a naval base redesigned by the United States under a $1.5 billion Foreign Military Sales agreement notified to Congress in January.

Both are maritime infrastructure on the same coastline. One serves Chinese commercial shipping. The other houses the Peruvian navy under American design. They will operate simultaneously for decades.

On January 29, 2026, the First Constitutional Court of Lima ruled that Peru’s transport infrastructure regulator, Ositran, must refrain from exercising supervisory, regulatory, inspection, and sanctioning powers over Chancay’s operations. The reasoning: Chancay was developed entirely with private capital. It is not a state concession. Infrastructure that is not a concession falls outside the concession regulator’s authority. Ositran President Verónica Zambrano announced an appeal.

The distinction matters. A concession, in port law, is a franchise delegated by the state --- a public function operated privately under public oversight. The court ruled that Chancay is not one. COSCO did not receive a delegation of public authority. It built the port on land it acquired, with capital it raised, through a legal architecture the court has now defined as beyond the state’s ordinary regulatory reach.

This is not abstract. In 2024, when Peru’s National Port Authority sought to void COSCO’s exclusive operating rights --- calling the original grant an “administrative error” --- COSCO formally requested arbitration under the Peru-China Free Trade Agreement. Peru changed its law instead. The National Port System Law was amended in June 2024 to preserve the exclusivity. Boluarte signed the amendment.

The United States State Department characterized the result in February 2026. The Office of Western Hemisphere Affairs told NPR that COSCO’s position at Chancay demonstrates that “cheap Chinese money costs sovereignty.”

They were describing a facility that Peru’s own courts had placed beyond Peru’s own regulator. They were not describing the facility 78 kilometers south.

At Callao, the architecture is different in form and identical in permanence.

Peru was designated a Major Non-NATO Ally on January 14, 2026 --- the highest security partnership status the United States extends outside a formal alliance. The $1.5 billion FMS agreement covers design, construction, and program support. Up to 20 US government or contractor representatives will be on-site for up to 10 years. On December 5, 2025, Peru’s Congress authorized US military personnel with combat weapons in Peru for the entirety of 2026, by a vote of 73 to 25.

The infrastructure remains under exclusive Peruvian ownership. Peru is borrowing --- through the sovereign bonds --- to pay for an American-designed facility on Peruvian soil. This is not called a concession either. It is a bilateral security agreement funded by Peruvian debt, designed by American engineers, authorized by Peruvian legislators, and permanent in any operational sense.

The Defense Post headlined its coverage: “$1.5B Upgrade of Peru Naval Base Close to Chinese-Run Port.” The proximity is the headline whether anyone wants it to be or not.

Peru held the first round of its presidential election on April 12 and 13. Keiko Fujimori finished first with 16.99 percent. Roberto Sánchez Palomino, running for Juntos por el Perú, finished second with 12.05 percent. The runoff is June 7.

Al Jazeera’s pre-election analysis reported that geopolitical tensions had “barely surfaced in the election campaign, with foreign policy almost entirely absent from debate.”

Fujimori has cast herself as Washington’s preferred partner. She has made no public statement about Chancay, COSCO, or Chinese state enterprise investment in Peru.

Sánchez defines himself as the “Castillista” candidate --- the political heir of Pedro Castillo, the president removed from office in December 2022. He heads a congressional commission monitoring the Chancay megaport. As Castillo’s Minister of Foreign Trade and Tourism, he told Dialogue Earth that the Peru-China FTA had allowed Peru to “consolidate its presence in Asia” and described Chancay as “a key node for trade between both regions.”

The candidate positioned closer to Washington has said nothing about the Chinese port. The candidate positioned on the left has spoken positively about it. Neither has addressed what it means that both superpowers are building on the same coast. The strategic question occupies no space in the political campaign because no actor in the campaign has an incentive to raise it.

Both superpowers describe the other’s presence as predatory.

The US calls Chinese port infrastructure a sovereignty risk. An Atlantic Council dispatch characterized Peru’s “institutional weakness” as having “facilitated China’s expansion into strategic sectors.” The Diplomat published one argument that Chancay “could be used to resupply” Chinese warships --- and a second warning that this framing “risks conflating commercial engagement with strategic subversion and underestimates Peruvian sovereignty.”

No comparable analysis characterizes the American military presence at Callao as a sovereignty cost. The $1.5 billion flows through a bilateral agreement, not “cheap money.” The American presence is called security cooperation. The Chinese presence is called a risk. Both are foreign infrastructure on Peruvian soil, authorized by the same government. The framing asymmetry is not an asymmetry in the structural fact.

Farid Kahhat, professor at the Pontificia Universidad Católica del Perú, told RPP that the Chancay dispute is “a matter that concerns solely the Peruvian state.” He is right. The Peruvian state decided. The question is when it decided, and whether anyone asked.

Here is the counterargument, and it is stronger than the framing above suggests.

Peru is not trapped. A country that extracted a $1.5 billion naval base modernization from one superpower and a deep-water Pacific trade hub from the other --- while retaining ownership of the first and customs revenue from the second --- is performing strategic extraction, not suffering strategic capture. The refusal to articulate a public framework for managing both presences is itself the framework. Middle powers that need what both superpowers offer and can afford to alienate neither do not resolve contradictions. They inhabit them.

Latin American countries have reversed major infrastructure commitments before. Bolivia withdrew from the ICSID arbitration system in 2007; Glencore still won $253 million through UNCITRAL arbitration over nationalized mining assets. Ecuador terminated all 16 of its bilateral investment treaties in 2017; it still faces billions in existing claims under sunset clauses that continue to protect investments made while the treaties were in force. Reversal is possible. It is not free.

The next president of Peru can shift the regulatory environment, recalibrate diplomatic tone, and tilt the operational conditions at either facility. That flexibility is genuine. What is not flexible is the infrastructure itself. Chancay’s terminal is built. Callao’s Phase II is funded. Both are protected by legal architectures --- investment treaty on one side, military sales agreement and Major Non-NATO Ally designation on the other --- that the June 7 election cannot dismantle without costs neither candidate has proposed to bear. COSCO has already demonstrated, in 2024, that it will invoke arbitration rather than accept regulatory constraint. Peru has already demonstrated, in 2024, that it will change its laws rather than face the claim.

The decisions that locked both facilities into Peru’s coastline were made by a government that held power through constitutional succession. Boluarte assumed the presidency after Castillo’s removal by Congress in December 2022. Her government signed the law protecting COSCO’s exclusivity. She presided over the Chancay inauguration alongside Xi. Her government authorized the Callao bonds. Both commitments were made under legitimate constitutional authority. Neither was put before voters as a strategic question.

This is not a Peruvian pathology. Infrastructure decisions of this magnitude are rarely submitted to democratic deliberation anywhere. Military basing agreements, port concessions, investment treaty obligations --- these are executive-branch instruments in most democracies. The decisions are legal. The process is constitutional. The architecture is permanent. The voters are downstream.

What makes Peru’s case legible is the geography. Seventy-eight kilometers. Two superpowers. One coastline. The proximity compresses what usually remains invisible into something a headline writer can measure.

On June 8, Peru will have a president-elect. It will also have a Chinese-operated port and an American-designed naval base on the same coast, 78 kilometers apart. Only one of these was on the ballot.

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