Voters to decide on Panama Canal expansion

Voters headed to the polls on Sunday for a referendum on a $5,25-billion plan to widen the Panama Canal, a strategic waterway whose main users are the United States, China and Japan.

Proponents say the canal, through which roughly 4% of world trade flows, badly needs an overhaul to accommodate mega-ships and remain competitive against other maritime routes.

President Martin Torrijos said on Friday that the weekend referendum “was a date with the nation”.

“The canal is and will be a vital part in development, and plays a fundamental role in the growth of world trade,” Torrijos told Canal 4 television.

The US is by far the biggest user of the waterway with 136,5-million long tons of cargo coming from and going there, followed by China with 35,1-million and Japan with 32,2-million, according to the Panama Canal Authority.

Proponents say the canal will reach capacity in 2012.

The government says the work will be financed by a hike in tolls, worth $1,2-billion in 2005.

Polls predict a victory of 62% to 70% in favour of the expansion in Sunday’s referendum.

“We are optimistic,” said Rodolfo Sabonge, the director of planning for the Panama Canal Authority. “Between Hong Kong and the east coast of the United States, ships take three days longer via the Suez Canal. But if the lines lengthen at the entrances to the Panama Canal, ship owners will seek an alternative.”

It takes just eight to 10 hours to cross the Isthmus of Panama, the tiny middle of the Americas, via the 80km canal.
But the actual average time, including the wait, is 26 hours.


Promoters of the project also point out that modern shipping relies more and more on mega-ships too large for the canal, considered a marvel of engineering when it was completed 92 years ago.

If the canal is not expanded to accommodate modern shipping needs, “other countries will take Panama’s role in moving world cargo”, Torrijos said.

The proposed third lane, parallel to the existing two, would accommodate massive post-Panamax vessels 366m in length, 49m wide and with a 15m draft.

Today, such ships—too wide and too long for the Panama Canal—must go around Cape Horn at the southern tip of South America to connect to ports on the east and west coasts of the Americas.

Panamanian authorities say the project will directly generate 7 000 jobs, and indirectly 35 000. Work would begin late next year and is projected for completion in 2014.

The canal’s current capacity of 14 000 ships per year would increase to 17 700, they say.

Built by the Americans between 1904 and 1914 after an initial failed attempt by the French, the canal is the driving force of Panama’s economy. About 80% of Panama’s gross domestic product, $16-billion in 2005, is linked to canal activity.

Detractors say the government has underestimated the cost of the project by about $3-billion. They cite damage to the environment from the expansion and argue that the government should focus instead on fighting poverty, which touches 40% of Panama’s three million people.

“It’s a project that meets the needs of Panama’s oligarchy, which will pocket hundreds of millions of dollars in bribes,” said Miguel Bernal, a law professor at the University of Panama.

“The no-vote is silent. People are afraid,” he said, lamenting that the opposition lacks funds to argue its case while the government has spent lavishly to promote the project in a publicity blitz.—AFP

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