Nearly thirty years ago, General Omar Torrijos signed with the United States a treaty leading on January 1, 2000 to the return to Panama of the sovereignty on Panama Canal. At the time of a national referendum, another page of this saga came to be turned: by 78 % of the voices, but with a participation lower than 44 %, the Panamanians indeed gave their agreement to a project of expansion without precedent since the Canal was opened, in 1914.
For president Martin Torrijos, the son of Omar, it is indeed a "historical" project, whose centre piece will be the construction of a third set of locks. 427 meters long and 55 meters broad, it will allow the transit of the famous "post-Panamax", cargo liners too big to use the current infrastructures. However, this 5,25 billion dollars titanic work did not achieve unanimity. For the detractors of the project, the expansion of the Canal is at the same time likely to push the country to high debt, to degrade the environment, while being of no help to the 40 % of the Panamanians living in poverty. This decision is a hard blow for Nicaragua which had announced a few weeks before an interoceanic plan of a Canal through its territory, estimated at 18 billion dollars.
The large ships owners, on the other hand, are happy with 'yes' at referendum. The saturation of the Panama Canal, driving 5 % of the world maritime trade, was announced to take place between 2009 and 2012. As for the increase in tolls (+ 3,5 % per annum over 20 years) intended to finance this expansion, it is regarded as a less evil. Some experts say that a congested Canal would cost Panama more because it would have to lower transit tolls.
The building site, which will be spread out over eight years, has finally aroused the interest of the leaders in engineering. The Panamanian authorities retained the concept of locks suggested by Tractebel Development Engineering (Suez group) and the national Company of the Rhone. But Bouygues, Alstom ,Vinci and Eiffage, in fact the great French groups - and of course international - are also interested by the Panamanian market, the largest building site which will be subjected to an international tender, probably in spring 2007.
The benefits generated by the Canal, which brought to the State 500 million dollars in 2005, explains in great part the interest which is not limited to the maritime sector only. Panama, the second Latin-American country in term of foreign investments per capita, profited from capital contributions of 8 billion dollars since 1995. And the forecasts for the ten next years are even more optimistic: in addition to the Canal, a 300 million dollars port is in project, close to entry of the channel, without forgetting the cleansing of Panama City bay and the construction of a motorway connecting the Pacific to the Atlantic.
One of the most visible signs of this economic boom has already marked Panama City, a Latin-American Hong-Kong where real-estate projects are growing. Five skyscrapers exceeding 300 meters in height, with hotels, shopping centres, offices, apartments and casino are in construction in the capital. One of them, financed by Donald Trump, illustrates well the new profile that the country intends to adopt. The American billionaire wants to build in Panama City one of his luxurious towers which made his success. With an estimated cost of 220 million dollars, Trump Ocean Club, whose silhouette will rise in the North-West of the bay, is right now the most expensive real-estate project of Latin America.
About the Author:
Marcus Laval is a senior analyst with an experience of more than 20 years, who has written more articles and published them at Press Centre
The expansion of Panama Canal
