PANAMA: Panama debates referendum on canal expansion

An ambitious $5.25 billion plan to expand Panama's famous canal is expected to win voter support in a referendum next month despite fears that costs could spiral and threaten the poor nation with bankruptcy. Polls show some two thirds of voters, hoping for a jobs bonanza, support the widening of the canal as opposition to the canal's first major overhaul since it opened in 1914 has lost steam. The canal, which initially cost $375 million and 25,000 lives nearly a century ago, carries 4 percent of world trade on a shortcut between the Pacific and Atlantic Oceans, saving ships a long haul around South America and the dangerous Cape Horn. But many modern ships are too bulky to fit into its narrow locks, meaning Panama has to expand them or lose business to competitors like the U.S. intermodal system of ports and cross-country rail links. The Panama Canal Authority (ACP), which runs the waterway, warns the route will become log-jammed in seven years if nothing is done. The current plan would double capacity. "The great task that us Panamanians have is to produce a good result. I could have bad estimate, but if I manage things well, nothing goes wrong. Here, we are speaking about a good start to the year, we have an excellent estimate," ACP Financial Director Jose Barrios said. Opponents say the size of the project is too risky for a poor nation like Panama. In a worst case scenario, they say, costs could skyrocket and Panama could be forced to sell the canal to stave off bankruptcy. That would not only be an economic disaster, but a blow to Panama's nationalist pride after the United States handed over the canal to Panama in 1999. "Absolutely no one can guarantee what will be the cost of the project, nor can anyone guarantee what transit demand there will be. As for selling a proportion of the taxes, no one can say either how far we can continue rising the tariffs before suddenly being in a situation in which we are no longer competitive in the market," Ex-vice Panama Canal Administrator Fernando Manfredo said. The project, due to start in 2008, would need $2.3 billion in loans or bond issues to be paid back with the revenues from higher tolls from ships using the canal. Project supporters say it will create up to 7,000 jobs in the construction phase and up to 40,000 indirect jobs. However the canal's workers union says those projections are incorrect. "They are speaking about 250 thousand employees, but that is a deception. (According to) their own studies - that we have been able to access - in 2010 they will have less than 4, 500 employees while the canal is in full operation," Zaul Mendez from the canal's Suntrac and Conusi worker's union said. Still, many believe that the extensions will be an investment for the future. Supporters of the "Yes" vote in the referendum call their campaign the "Siembra Tu Futuro", or "Sow Your Future" movement, and speak of the impacts the improvements could make in the long term. "It has been 80 years without any growth in the canal. Now under Panamanian jurisdiction, we will grow it for the world, grow it to foment a reductions in the cost of international maritime cargo transport, in the name of globalization," President of the "Sow Your Future" movement, Joaquin Vasquez, said. The "No" vote supporters, however, see too much uncertainty. They have started a grass roots campaign against the proposal, distributing flyers in the streets and organising local radiothons to gather support. "We do not have a budget nor a source of funds in this sense (for the campaign). I think that we are making a proportionally superior case against this propaganda (of the "Yes" vote) that, in our opinion, is the people are getting tired of," Emisora radio director Rolando Villalaz said during one of the radiothons held at his station. Yet a recent poll of 1,200 Panamanians showed almost 64 percent would vote for the expansion in the Oct. 22 referendum, up 7 points from a May survey. The poll's margin of error was 2.9 points. Meanwhile Torrijos' approval ratings have climbed to over 67 percent in recent weeks, helped by booming economic growth of 7.9 percent in the first half of this year. "I see that they (the locks) are under a lot of pressure," said one "Yes"-vote supporter Edliberto Poveda. "This is for the future, for the youth, for the children," said one "Yes"-vote supporter Hector Flores. "I really am in favour. But what I do think is that the way in which they have presented (the proposal) and they was they are managing it, the presentation is not the best," said one "Yes"-vote supporter Abdiel Rivera. To popularise the "Yes" vote, supporters including Tourism Minister Ruben Blades - also a well known salsa singer and Hollywood actor - have recorded several propaganda songs that have been blasting out over the radio in the small Central American nation. The top users of the Panama Canal include the United States China and Japan, followed by Chile, the No. 1 user in Latin America. As well as increasing capacity, the new post-Panamax locks will be designed in such a way that maintenance can be conducted with minimal interruptions to operations mostly during non-transit hours of the larger vessels. Recent canal maintenance works had caused severe vessel traffic delays and a record-setting jump in the auction fee for express transit.

ITN Source | October 3, 2006

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