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Panama Approves Massive $5.25 Billion Canal Expansion

Mon October 30, 2006 - National Edition

PANAMA CITY, Panama (AP) Voters overwhelmingly approved the largest modernization plan in the 92-year history of the Panama Canal, backing a $5.25 billion expansion that will allow the world’s largest ships to squeeze through the shortcut between the seas.

In a referendum marked by low turnout Oct. 22, Panamanians approved an overhaul that will build a third set of locks on the canal’s Atlantic and Pacific sides to handle modern container ships, cruise liners and tankers that are too large for the waterway’s current 108-ft.-wide (33 m) dimensions. Construction is set to begin in 2007 and will take up to eight years to complete.

The Panama Canal Authority, the autonomous government agency that runs the waterway, says the project will double capacity of canal already on pace to generate about $1.4 billion in revenue this year. Expansion will be paid for by increasing tolls to produce annual revenue of over $6 billion by 2025.

“We are going to serve the world better and that means we are going to serve Panama better,” canal administrator Alberto Aleman Zubieta, with little voice left from celebrating, told The Associated Press. “Everyone’s a winner. The shipping industry, the Panamanians and all of the countries that will benefit from international shipping commerce.”

A large chunk of canal revenues go to education and other Panamanian social programs. Still, critics contend that as drawn up, the expansion plan benefits the canal’s customers more than Panamanians, and worry that costs could balloon for this debt-ridden country.

President Martin Torrijos, whose government has been among the expansion plan’s top supporters, said “today we have laid the groundwork to build a better country together.”

“Just six years after we recuperated the canal ... we have decided without foreign influence what we want to do with the canal and its future,” he said.

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

A bit more than 78 percent of Panamanians voted in favor of the expansion, with 94 percent of polling stations counted by the country’s electoral tribunal. Only about 22 percent opposed the plan, though abstention among the country’s more than 2.1 million voters was almost 57 percent.

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

The canal employs 8,000 workers and the expansion is expected to generate as many as 40,000 construction jobs. Unemployment is 9.5 percent, and 40 percent of the country lives in poverty.

“Ahead is the time we can overcome the shame of a country that has 40 percent of its children living in poverty, a country that developed in an unequal way,” Torrijos said.

But critics fear that the expansion could cost nearly double what Torrijos’ government has let on and stoke corruption and uncontrolled debt.

“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 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.

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