Analysis prepared by COHA Research Associate Ashley Dalman

8-8-06, 7:30 pm

Under the Torrijos government, the expanding Panama Canal will not likely serve the needs of the vast majority of Panamanians. Much of the benefits will be tied to the commercial interests of the countryís accountants, bankers and lawyers, as well as their U.S. counterparts, and world trade.

Final costs: $5 or $25 billion?

The current government, not yet corruption-free, is not sufficiently professional to be trusted as the steward of such an enormous and lucrative financial venture.

Evidence of venality surrounds the Torrijos administration, as well as the canalís management.

Other administration flaws raise questions about Panama Cityís capacity to supervise such an enormous project.

The Panama Canal, although constructed by the U.S. government and under its control for three quarters of a century, is now under the authority of the government of Panama. The canal has become Panamaís oil, its black gold, generating significant revenues with much more to come. Fearing a potential loss in these revenues due to the transition to larger, post-Panamax ships the Torrijos administration and the Autoridad del Canal de Panamá (ACP) have proposed a project that would not only widen the canal, but would also add an additional third set of locks, allowing the waterway to accommodate increasing usage demands.

Despite the great economic benefits, Panamanians might well be wary when voting on the issue in the October referendum. The estimated cost projections being used by the government are of questionable accuracy according to some experts, and the project is likely to go way over budget, with the construction costs ranging from the official projected figure of $5.25 billion to as much as five times that amount. Furthermore, the Torrijos administration has not followed through on its pledge of greater transparency, allowing the administration, the judicial system, and the educational infrastructure to be inundated by a myriad of cases of corruption. In addition, the pressure on press freedom has limited the transparency of the expansion project. Further problems, such as domestic violence, human rights violations, and common crime plague the country, with the vast potential funding that would be made available through current and future canal revenues, becoming a veritable bonanza for some of the countryís less savory elements. But one thing is for certain: to launch a canal project under the Torrijos presidency ó no matter how much the nation and world trade need it ó is not just unlocking the hen house for the Torrijos fox to gain entrance, but would be akin to throwing its door wide open. Before deciding whether this is the time to undertake such an enormous venture, all aspects of this major initiative deserve to be examined and then re-examined.



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