IL Postcard

Panama Canal Expansion: Tune In to the Discovery Channel

Date: 05/31/2006

Dear Panama First Alert Reader,

The hot -- and often controversial -- topic of conversation in Panama these days is the expansion of the Canal, which over the past six years has paid the Government of Panama over $2.2 billion more than the total paid throughout the previous 85 years of operation.

According to proponents, expanding the existing size of the Canal will benefit not only Panama, but the entire Western Hemisphere.

The proposed expansion -- which likely includes the construction of a third set of locks -- would enable the 50-mile canal to handle almost twice the current volume of cargo and would speed the movement of ships that now must wait in long lines at the entrances of the canal. Currently, around 40 ships a day pass through its system of locks and lakes. The strong increase in U.S. trade with China (the two top users of the canal) has led to an increase in delays of ships waiting to pass the waterway.

The existing canal, first completed by the United States in 1914, is too small to accommodate today's larger-than-ever cargo ships. According to news reports, the government of Panama is concerned that without expansion of the canal, a competing project might be built in Central America or Mexico, or that the canal would become just a "regional" waterway. Indeed, according to a documentary about the subject currently airing on the Discovery Channel, the Canal will soon be obsolete if measures aren't taken to make the waterway amenable to contemporary shipping needs.

Those who are against the Canal expansion include environmental groups that say that such a massive project would harm ecosystems, displace thousands of peasant farmers and require too much water. Some are offering alternative solutions, including building a megaport that would enable larger ships to offload cargo to smaller ships that could transit the canal.

What Happens Next? A People's Referendum

On April 24, the Panama Canal's board of directors presented the full expansion plan. The project is expected to cost $5.25 billion which the board says will be paid entirely by users through a graduated toll system. The expansion as currently proposed will require an estimated 10,000 workers and may take up to 10 years to finish.

While the expansion can only be enacted after a nationwide referendum, there are still several steps that need to be taken. The current cabinet most approve the expansion proposal, and then relate it to the Legislative Assembly. Then, lawmakers and the Electoral Tribunal must set the date and guidelines for the public vote. It is anticipated that the public may vote on this referendum later this year.

Most Panamanians seem to be in favor of the project. In a recent Gallup poll*, 56% of respondents said they would vote in favor of the expansion plan, while 20% said they would vote against it.

Learn More: If you'd like to learn more about the Panama Canal expansion and how it might affect Panama's people and economy, go to www.pancanal.com or tune in to Discovery Channel's Extreme Engineering series' program titled "Widening the Panama Canal." It is a fascinating look at how the canal currently works as well as the options for and effects of expansion.The program will air on June 10 at 11:00 a.m. (Eastern and Pacific Time) and on June 14 at 7:00 p.m. (Eastern and Pacific Time). You can also sign up to receive a reminder from the Discovery Channel here.

Best Regards,

Brandon Clogston
International Living / Panama

For answers to your questions about Panama, e-mail Panama@InternationalLiving.com.

P.S. We'll be running an in-depth article about the Panama Canal expansion project in our next issue of Panama Insider, International Living's online publication for those who are interested in living or investing in Panama. Find out how to subscribe to Panama Insider here.
*Source: CID-Gallup. Methodology: Interviews to 1,211 Panamanian adults, conducted from May 5 to May 11, 2006. Margin of error is 2.7 per cent