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PANAMA
Canal expansion inaugurated
Javier Llopis Puente*
8/23/2016
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First New Panamax container ship crossed the renovated canal connecting the Atlantic and Pacific oceans.

After nine years of pharaonic works, with an investment of US$5.5 billion and the work of more than 41,000 people, the expanded Panama Canal was inaugurated on June 26 with the arrival of the Cosco Shipping Panama, a giant Chinese container ship bound for the city of Kwangyang, South Korea.

The canal can now accommodate between 97 percent and 98 percent of container ships in the world; larger ships — New Panamax model — may hold up to 14,000 containers, and measure 49 meters wide by 366 meters long, thus tripling its capacity. Until now, all ships of that size had to transit via the Suez Canal in Egypt.

“It’s a great day for Panama [whose canal is] the route that unites the world,” said Juan Carlos Varela, president of Panama. Indeed, maritime transport already represents 23 percent of Panama’s gross domestic product, and that figure reaches more than 40 percent when the related sectors are incorporated; something that is generating great expectations around the expansion of the canal. In 2015, the Panama Canal Authority (ACP) paid $1 billion to the Panamanian state for royalties. It is expected that this figure increases each year with the expansion.

According to sources of the ACP, the change brought on by the works is that it will allow the transit of ships carrying Liquefied Petroleum Gas (LPG), which is produced in large amounts in the United States. Thus, these ships will be able to sail from the Gulf of Mexico to the Asian markets more quickly and at a lower cost.

The Panama Canal expansion plan was presented on Apr. 24, 2006, by the then President of Panama Martín Torrijos (2004-2009). The plan consisted of a third set of locks, the largest expansion since the opening of the canal on Aug. 15, 1914. This was the result of studies carried out by the ACP as part of a Master Plan looking at 2025.

The Panamanian Constitution provided that all citizens had to be consulted through a referendum and, on Oct. 22, 2006, the project was approved by 76.8 percent of Panamanian voters.

Environmental aspects
However, a sector that is critical of the project also raised its voice in the matter. The argument is that there are environmental factors that should have been taken into account, such as the impacts of the El Niño phenomenon and the global warming on water sources.

Among these voices is that of Eric Jackson, the editor of the newspaper Panama News, who says that there are studies that argue that regardless of what is done to mitigate the problem of the increased water consumption in the basin, the salt water flow into Gatun Lake will increase, the lake from which approximately half of the Panamanian population obtains its drinking water.

Jan Van Bilsen, a Belgian filmmaker and journalist living in Nicaragua for more than 30 years now, told Latinamerica Press that “Panamanians are fortunate that Gatun Lake had already existed prior to the expansion of the channel.” He added that “if the lake will remain a safe source in regards to drinking water, this will be seen in the course of the years to come.”

Also, the expansion project has been rivaled by the Grand Interoceanic Canal in Nicaragua whose construction began on Dec. 22, 2014, and is to be completed by 2020. This canal would start from the Atlantic Ocean until reaching Lake Cocibolca (or Lake Nicaragua) to then cross the isthmus of Rivas before reaching the Pacific Ocean. Thus, the canal would cover an area of 270 square kilometers.

However, and according to Oscar Bazán, vice president of planning at ACP, the Nicaraguan project “cannot be a serious competitor in the medium term because of the magnitude of the obstacles,” referring to the time of construction, the cost of the works, calculated to be $70 billion, and the projected tariffs that would apply for the toll: $12 per tonne in Nicaragua compared to $5.90 per tonne in Panama. Although Nicaragua insists that the canal will not compete with the Panama Canal, the fact is that there are no more than 600 kilometers (370 miles) between the two routes.

Van Bilsen added that while “the canal in Nicaragua aims to be the first canal to allow ships of the Triple EEE class, ships that can carry 18,000 containers at the same time (...), there are only about 10 ships of that size in the entire planet.” He also pointed out that the “near-impossible technical feat of making such a deep ditch on Lake Nicaragua. Some sort of concrete corridor would need to be made immersed in the bottom of the lake.” —Latinamerica Press.

*Peruvian, Political Sciences graduate in Political Science at the Institute of Political Studies-Sciences-Po, France, who presently is doing an internship at Comunicaciones Aliadas.


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