The U.S. Department of State has approved a potential foreign military sale to support the design and upgrade of infrastructure at Peru’s main naval base, located less than 50 miles from the Qiankai Port owned by Beijing.
The proposed military sale is valued at up to $1.5 billion, subject to congressional review and may require lengthy negotiations between the Peruvian government and potential suppliers. The final contract amount may be lower than the maximum amount approved by the State Department.
The U.S. Defense Security Cooperation Agency stated in a release, “This proposed military sale will help achieve U.S. foreign policy objectives, enhancing security for a key partner that is a significant force for political stability, peace, and economic development in South America.”
The U.S. supports the construction of a new naval base near Callao, Peru, a project dating back to at least late 2024. Callao is a major commercial port city in Peru, and the relocation of the naval base is to accommodate the expansion of the trade port.
According to the U.S. announcement, if the agreement is reached, up to 20 U.S. government or contractor personnel could be stationed in Peru for up to 10 years, responsible for construction management and supervision.
Previously, the U.S. criticized Peru for allowing China’s state-owned company, China Merchants Group, to build and operate the $1.3 billion Chancay Port north of Callao, expressing concerns that the port could eventually be used to dock Chinese warships.
Peru, located in South America, has maintained cooperative relationships with both Beijing and Washington. China is Peru’s largest trading partner.
Shortly after reaching a consensus on the Chancay Port project in 2019, Chinese state media predicted that Peru could become a hub for China-South America trade in the future, hinting that the port could help Beijing advance other priorities such as laying undersea cables, part of China’s Belt and Road Initiative.
It is reported that over one-third of the ports owned or operated by Chinese companies worldwide have hosted Chinese naval vessels.
The Wall Street Journal reported that former U.S. and Peruvian officials familiar with the talks have revealed that the U.S. has discussed concerns with Peruvian officials regarding Chinese control of critical infrastructure like the Chancay Port. The relationship between Chinese state-owned commercial companies and the Beijing government, especially the Chinese military, is a cause of concern for the U.S.; as ports and their equipment can be used for both commercial and military purposes.
Some former U.S. officials believe that this project highlights a diplomatic gap left by the U.S. in Latin America because the U.S. had previously concentrated resources elsewhere, such as in Ukraine and the Middle East.
The Trump administration recently designated Peru as a major non-NATO ally and appointed a new U.S. ambassador to Peru.