By Marcelo Rochabrun (Bloomberg) — The US State Department has given the green light for a potential military sale to help design and build infrastructure for Peru’s main naval base. This base is located less than 50 miles from a port owned by China.

The proposed sale is valued at up to $1.5 billion and is pending review by Congress. It could involve lengthy negotiations between the Peruvian government and possible contractors. The final cost might be lower than the amount approved by the State Department.

The US Defense Security Cooperation Agency stated, “This proposed sale will support US foreign policy goals by enhancing the security of an important partner that promotes political stability, peace, and economic growth in South America.”

Plans for US assistance in constructing a new naval base in Callao, a city near Lima, have been in the works since at least late 2024. Callao serves as Peru’s primary commercial port, and the naval base is being moved to accommodate the port’s expansion.

If the deal goes ahead, up to 20 US government or contractor personnel may be in Peru for as long as 10 years to manage and oversee the construction.

The US has previously criticized Peru for allowing China’s state-owned COSCO Shipping to construct and operate the $1.3 billion Chancay port, located just north of Callao, raising concerns that the port could be used for Chinese military ships.

China is Peru’s largest trading partner, and the country has managed to maintain friendly relations with both Beijing and Washington.

Recently, the US designated Peru as a major non-NATO ally and has appointed a new ambassador to the country.