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Business & Economy Briefs

US, RP have very different canal expansion pricetags

by Eric Jackson, from other media

The most vocal skeptics about a Panama Canal expansion project are most certainly the Western Watershed farmers who think that they may be forced off the land by such a work, and these families have the support of part of the Catholic Church, leftist organizations and environmentalist groups. But the critics that at the end of the day pose the most danger for those who would have such a project approved by the voters in a referendum come from business and the professions, the most prominent individual in this camp being former deputy canal administrator Fernando Manfredo. The latter group argues that the construction of a third set of locks and the supporting infrastructure they'd need would be extremely expensive, that it's not possible to predict the world shipping industry over the next 50 years and that there is a limit to how far the canal can increase its tolls, factors which combine to make it very likely that any canal expansion wouldn't be able to be amortized via ship tolls and thus would have to be subsidized by the Panamanian people.

Defenders of a canal expansion respond to critics in the business and professional fields by making three main points: first, that the project would not be as expensive as the skeptics suggest; second, that the injection of a huge amount of money into the Panamanian economy for a public work of this size would ripple right through the national economy, prompting new development in fields that may be only very remotely connected to the canal; and third, that if Panama does not expand the canal and the waterway becomes obsolete then much of the rest of the nation's economy that exists because of the canal with wither away.

At a recent hearing before the US Senate Foreign Relations Committee, Undersecretary of Defense for the Western Hemisphere Roger Pardo-Maurer buttressed the skeptics' arguments by setting the price range of the work at between $16 and $25 billion. The Panama Canal Authority (ACP), which has been waging a prolonged and sometimes ferocious publicity campaign in favor of an expansion plan whose details it will not reveal, has through its spokespeople and defenders before various business audiences put the price of canal expansion at between $6 and $8 billion. Manfredo has been basing his arguments on a presumed $10 billion pricetag.

The story about Pardo-Maurer's estimate was broken in La Prensa by its Washington correspondent Betty Brannan Jaén and drew an insistent response from the ACP and the Torrijos administration. Vice President and Foreign Minister Samuel Lewis Navarro told La Prensa that the undersecretary's estimate “has no basis.” In the same article canal administrator Alberto Alemán Zubieta called the American official's figure “completely wrong.” Economy and Finance Minister Ricaurte Vásquez, who by virtue of his cabinet job chairs the ACP board of directors, also in La Prensa blasted Pardo-Maurer's figures as “irresponsible” and criticized the US government for listening to the arguments of the skeptics.

Part of the debate in the Foreign Relations Committee touched upon a favorite topic of the American far right, the allegation that the Peoples Republic of China runs the Panama Canal. It's a flagrant lie, but one that has been disseminated by  the billionaire right-wing cult leader Reverend Sun Myung Moon through the communications media he owns (most notably the Washington Times), extremist anti-feminist leader Phyllis Schalfly and her Eagle Forum, the John Birch Society and such GOP members of Congress as Senator Trent Lott and Representative Dana Rohrabacher, to the extent that many Americans believe it. Without spinning wild conspiracy theories or stating any clear falsehoods about China's role in Panama, Pardo-Maurer raised the possibility of Chinese financing for the canal expansion work.

Panama, because it recognizes Taiwan, has no formal diplomatic ties with mainland China. However, the Chinese have large economic interests here and the Peoples Republic's economic office here is a diplomatic mission in almost every sense but its name. Beijing has said that if Panama drops its ties with Taiwan and recognizes mainland China it would be disposed to help out with the canal expansion's financing.

Taiwan has for many years said that it's willing to help Panama modernize the canal, and there are also Japanese and European financial offers outstanding. US government policy has been that it will not participate in any canal modernization project, but that stand has been softened by way of technical assistance from the US Army Corps of Engineers and offers of additional expertise that may be needed.

The ACP, although it leaks parts of canal expansion plans mainly in the foreign press on a regular basis, consistently tells the Panamanian press that there is no  canal modernization plan to consider. Nevertheless, the claim that several ACP representatives made at the annual CADE business leaders' forum earlier this year was that the expansion job can be entirely self-financed without any loans from abroad. That, however, would necessarily imply steep toll increases that many in the shipping industry predict would drive current canal customers to seek alternate routes.