October 25, 2006

Canal expansion to cost $5.25B

PANAMA CITY, Panama

Panama embarks next year on an ambitious plan to widen its storied canal, recognizing that one of the engineering wonders of the world is too narrow for today’s colossal ships.

In a referendum marred by low turnout, voters authorized the construction of a third set of locks so that vessels too wide for the current 32-metre-wide sections can take the shortcut between the seas.

“Today we have laid the groundwork to build a better country together,” said President Martin Torrijos, who staked his political future on the plan.

His government said the US$5.25 billion project, the largest in the canal’s 92-year history, would create 40,000 jobs in a country where 40 per cent of people live poverty and were unemployment sits at 9.5 per cent. Currently the canal employs 8,000.

“With that kind of money, there’s a lot to steal.”

Igor Meneses

Advertising Executive

The Panama Canal Authority, the autonomous government agency that runs the canal, says the project will double the capacity of the canal. Construction is set to begin in 2007 and will take up to eight years to complete. It will be paid for by increasing tolls, which will pay back $2.3 billion in loans to cover the initial costs.

Critics contend costs could balloon for this debt-ridden country and the size of the program could lead to corruption.

“The expansion is necessary, but we all have to watch closely, make sure there isn’t embezzlement and corruption,” said Igor Meneses, a 34-year-old advertising executive who was waiting to vote in an older section of Panama City. “With that kind of money, there’s a lot to steal.’”

The United States built the waterway and controlled it until Dec. 31, 1999.

On the sweltering streets of Panama City, those wearing green T-shirts, bandanas, caps and vests supporting expansion were everywhere Sunday. Cars and trucks with ‘Yes’ bumper stickers and flags jammed streets.

“Voting ‘no’ is like closing the door on the canal. It’s the top source of income for Panama and improving it means more money for the government and less poverty,” said boat salesman Leonardo Aspira, who sported a ‘Yes’ shirt and baseball hat in Kuna Nega, a largely Indian town of dirt roads and banana trees on the outskirts of the capital.

About 78 per cent of voters favoured of the expansion, with 95 per cent of polling stations counted by the country’s electoral tribunal. Turnout among the more than 2.1 million voters was 43 per cent.

Voting results were so lopsided that Electoral Tribunal President Eduardo Valdes called Torrijos to say the referendum had been unofficially approved less than three hours after polls closed.

The United States arranged for Panamanian independence from Colombia to build the canal, and ran it from 1914 to 1999. Torrijos’ father, strongman Omar Torrijos, signed a treaty with President Jimmy Carter in 1977 to cede control of the waterway back to Panama, a decision that also was approved by Panamanians in a referendum.

Some aspects of the waterway remain little changed from when it opened nearly a century ago. Electric locomotives coax larger ships through with just a few feet to spare on each side — an awesome sight along the freshwater channel lined with palm and banana trees.

ASSOCIATED PRESS

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