The US has approved a possible Foreign Military Sale (FMS) package worth $1.5 billion to support the relocation of Peru’s main naval base, in what appears to be a countermove to China’s deepening footprint in Latin America.
“The State Department has made a determination approving a possible Foreign Military Sale to the Government of Peru of Design and Construction at Callao Naval Base and related elements of logistics and program support for an estimated cost of $1.5 billion,” the Defense Security Cooperation Agency said in a statement.
Located next to the commercial Port of Callao, the Callao Naval Base has long served as the main naval hub for the Peruvian Navy, or Marina de Guerra del Perú as it is officially known.
However, the Peruvian government has been planning to move it a few kilometres away to free up space for expanding the commercial port infrastructure.
The proximity of the naval base to the busy commercial port, which is operated by companies such as APM Terminals on the north side and DP World Callao on the south, has caused operational issues, including increased civilian-military interactions that threaten efficiency and safety.
Moreover, it is believed that relocating the base will enable the commercial port to increase capacity by up to 80%.
The US Foreign Military Sale (FMS) package is driven by the sustained rivalry between the Port of Callao and the Chancay port, which is operated by China.
Earlier, when Washington criticised the Chinese ownership of the port, Peru indicated that the US must increase investment in the country if it was so apprehensive of Beijing.
The US appears to have taken that advice and embedded it into its foreign policy.
The US Defence Security Cooperation Agency (DSCA) said in an official statement that the “proposed sale will contribute to the foreign policy objectives of the United States by helping to improve the security of an important partner that promotes political stability, peace, and economic progress in South America.”
Notably, the United States has been part of Peru’s plans to relocate the naval base since at least 2024, the same year that Chinese President Xi Jinping inaugurated the Chancay Port.
The scope of the FMS support includes the design and construction of maritime and onshore facilities, as well as related support.
It is Callao Vs Chancay In Peru
The Callao port is Peru’s primary commercial hub and now offers direct routes from China and South Korea.
The main purpose of relocating the naval base is to make the port more competitive with the Chinese-built Chancay mega-port, located 80 kilometres north of Lima and operated by Chinese COSCO Shipping since November 2024. Chancay handles large vessels on direct Asia-South America routes amid burgeoning trade ties.
With COSCO’s exclusivity over the port, Chancay has become China’s first logistics hub in South America.
The port is expected to create new markets for Chinese electric vehicles and other exports, and is the first mega port on South America’s Pacific coast capable of accommodating mega-ships, thanks to its nearly 60-foot depth.
The US earlier chastised the Peruvian government for approving the operation of a key port located just north of Callao by China, citing security risks.
Chancay port is about 4,500 miles from San Francisco, but geopolitically, it is on America’s “20-yard line.”
The main concern in the United States is that Beijing would use the port for military purposes, giving it a deep-water port close to the US.
Typically, ports and their associated equipment can serve dual purposes, enabling both commercial activities and potential military uses by the Chinese People’s Liberation Army Navy (PLAN).
Moreover, the US Southern Command believes that the deep-water port is suitable for Chinese military ships to dock and can also be used by its survey vessels for spying, a practice common among these vessels.
The relocation would therefore strengthen US-Peru security ties and serve as a major hedge against Beijing’s influence and investment in the region.
However, Congress will assess the proposed sale and will require the Peruvian government and possible vendors to engage in protracted discussions. The ultimate contract value could be less than the sum authorised by the State Department.
If the FMS is approved, up to 20 US government or contractor employees would be stationed in Peru for up to ten years to oversee and manage construction.
China’s Growing Inroads In South America
Despite being a late entrant to South America, China has made swift inroads into the region, unsettling the United States.
Beijing has now emerged as the region’s major trading partner, surpassing the United States. Bilateral trade between the region and China reportedly exceeded $500 billion in 2024, with projections of reaching $700 billion by 2035.
Chinese state-owned businesses have made significant investments in mining, technology, and energy. Additionally, China has invested hundreds of billions of dollars over the past decade in building critical infrastructure such as ports, roads, and power plants, which many see as an attempt to buy power and influence in the region.
China also established a Space Agency station called Espacio Lejano in Argentina, which the US fears could be used to track satellites.
The lingering concern is that these facilities may track or interfere with US and other partner satellites, despite being supposedly employed for space research. Furthermore, some researchers say these sites could help the PLA guide hypersonic missiles, potentially boosting China’s capability to strike the US.
China’s strongest link to the region is through the Belt and Road Initiative (BRI). So far, 22 countries in the region have signed BRI cooperation documents with China. While Panama exited the BRI in February 2025 amid pressure from the United States, Colombia joined the BRI in May 2025, keeping the balance.
The BRI is one tool Beijing has used to advance its ambition to become a world power, a goal the US sees as a massive threat, particularly in Latin America, which Washington considers its backyard.
The US argues that BRI loans carry high interest rates and opaque terms, creating unpredictable debt situations. US officials frequently cite the case of Sri Lanka’s Hambantota Port, which was leased to China for 99 years after Sri Lanka defaulted on its debt.
Washington is particularly concerned about the relationship between Chinese commercial enterprises and the government, especially regarding military implications.
China is the largest buyer of Argentina’s lithium and has invested in extraction projects across the triad of Argentina, Bolivia, and Chile, which holds half the world’s known reserves.
This supports China’s electric vehicle and battery industries. Additionally, Huawei and other firms have built telecom networks, expanding control over cyber infrastructure. China promotes its Beidou satellite system and has more space infrastructure in Latin America than anywhere outside its borders.
The US has been wrangling with China for influence in Latin America. One of the most notable examples of this was Argentina’s decision to buy used Danish F-16s rather than the brand-new JF-17 Block III aircraft developed jointly by China and Pakistan, as previously reported by the EurAsian Times.
The Latin American region has emerged as a key battleground in Donald Trump’s confrontation with China, and Washington is pressuring regional nations to take sides. This became evident with Trump’s campaign against the alleged Chinese presence in Panama and threats of taking the canal back.
Not just that, Trump imposed tariffs on them as part of a broader “America First” trade policy aimed at reducing trade deficits and protecting domestic industries.
However, China retaliated by campaigning against bullying and intimidation and by unveiling a US$9.2 billion credit line and an infrastructure investment fund for Latin American and Caribbean countries, further intensifying the rivalry with the US in its backyard.
- Contact the author at sakshi.tiwari13 (at) outlook.com
- Follow EurAsian Times on Google News
