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Panama Canal special update

Free tade talks with USA put off until after referendum

Torrijos unveils $5.25 billion canal expansion plan
by Eric Jackson

Before an audience of politicians, government officials, public figures, journalists from the corporate mainstream press and individuals selected to make the crowd look more representative on television, President Martín Torrijos took to the stage at ATLAPA's Teatro Anayansi early on the evening of April 24 to unveil the long-awaited Panama Canal expansion plan. What the public actually got was a summary, which was preceded by another summary by Economy and Finance Minister Ricaurte "Caitín" Vásquez and a canal history video and was succeeded by another video promoting the canal expansion and the singing of the national anthem.

It would have been impractical to present the entire project in that format --- the studies and plans behind the report encompass some 55,000 pages, which the president declared open for anyone to obtain and examine. In his summary and in the press releases, paid advertisements and interviews with Panama Canal Authority (ACP) and government officials that accompanied it, Torrijos did address many of the most controversial questions about the project, taking several steps to sidestep political problems that could harm the chances to get the proposal passed in a referendum to be held later this year.

Torrijos said that the canal is approaching its maximum capacity while world commerce is increasing, particularly because of China's rise as an industrial power. "The Panama route is not the only one," he warned, raising the possibility that failure to expand the canal now would be turning business opportunities over to the competition. "The canal is, to say it in graphic form, our oil," the president said. "Just like unexploited oil lacks value, and to extract it you have to invest in infrastructure, it is required that the canal expand its capacity in order to absorb the increasing freight demand and thus, to generate more wealth for Panamanians."

Some of the key points of the plan the president presented were:

·        A project that costs $5.25 billion, well below most prior estimates and about one-quarter to one-third of the amount that the US government a few months ago estimated the job would cost;

·        A promise that the project would be "self-financing," that is, carried out by the ACP without the issuance of government bonds or the expenditure of tax revenues, and ultimately amortized by income from the tolls ships pay to use the waterway;

·        An end to speculations about dams to flood the canal's Western Watershed, and a promise to submit legislation repealing Law 44 of 1999, which aroused farmers' fears of being displaced by a canal expansion project, to the National Assembly;

·        An estimate that 40,000 jobs would be directly or indirectly created by the project, well below the 240,000 figure disseminated in the foreign press by ACP deputy administrator Manuel Benítez the week before; and

·        A 2014 date for the project's completion.

Free trade political obstacle sidestepped

In another related development, it was reported in the following morning's edition of La Prensa that negotiations for a free trade agreement with the United States have been put off until at least 2007, which will minimize the effect of free trade talks upon the canal expansion referendum debate. In the inconclusive prior rounds of talks, the American negotiators had insisted on a government contracting provision that would put US contractors on an equal footing with Panamanians ones and those of third nations in bidding for the work to be done.

Moreover, in recent Panamanian history national referenda have turned on the popularity of the president in office at the time. Free trade with the Americans, which polls had suggested enjoyed the support of a slight plurality of Panamanians with those opposed more vehement than those in favor, would inevitably become more unpopular if and when details not discussed in public but patterned on the NAFTA and CAFTA models were disclosed.

Thus, by putting free trade off until after a canal expansion referendum, Torrijos sidestepped what could have been the most explosive hazard in a political minefield.

That this was the intended course of action could have been guessed at for weeks based upon the exigencies of US politics. In Washington free trade is controversial for another set of reasons and it would have been necessary to reach an agreement sometime in March to get the deal before the US Congress in time to be approved before its summer recess. After that most of the members of the House of Representatives and nearly one-third of the Senators will be campaigning for re-election and would be indisposed to take controversial stands before the voting in November. As polls now stand --- though a lot could change --- it appears that the Republicans will lose control of one or both houses of Congress and thus that the sort of agreement provisions that the Bush administration could get ratified might change after the new Congress is sworn in next January.

Opposition to plan subdued, but unlikely to go away

So far the principal critics from within the political class --- former President Jorge Illueca and former deputy canal administrator Fernando Manfredo --- have not made any public response to Torrijos's announcement. Their principal concern, that the project might be a costly boondoggle that leaves Panama with a ruinous debt, was the target of much of the presentations by Vásquez and Torrijos. However, the $5.25 billion price tag and the assumption that the shipping industry will accept higher tolls rather than look for alternative routes are likely to be carefully scrutinized by those whose doubts are based upon the project's viability as a business proposition.

The Panamanian left, much of which is encompassed within the National Front for the Defense of Economic and Social Rights (FRENADESO), is unlikely to mute its opposition. Earlier in the day, FRENADESO filed a complaint with the Electoral Prosecutor, accusing President Martín Torrijos, canal administrator Alberto Alemán Zubieta and others of illegally using public funds to promote a "yes" vote in an upcoming referendum. Electoral Prosecutor Gerardo Solís quickly responded that he has no jurisdiction to investigate the president, but did leave open the possibility of action against others on this complaint. The Electoral Tribunal has previously declared that it would be illegal to spend government funds to promote one side or another in a referendum, but the government argues that this is wrong because canal expansion is a "matter of state" rather than a partisan political issue. Not surprisingly, the corporate media upon which the ACP and government have spent and intend to spend a lot of money promoting the expansion plan quickly and nearly unanimously defended the use of public funds in such an advertising campaign.

Those farmers in the Western Watershed who were asked by the mainstream media expressed relief at the president's promise to repeal Law 44.

Environmental leaders expressed apprehensions about two matters: the plan to raise the level of Gatun Lake and the possibility that the water-saving lock system that's contemplated in the project will make Gatun Lake and Miraflores Lake --- the source of most of Colon's and the Panama City metro area's drinking water --- brackish. "The ACP has not taken the time to prepare a rigorous environmental study," University of Panama biology professor and environmentalist leader Ariel Rodríguez told La Prensa. Lider Sucre, who heads the National Association for the Conservation of Nature (ANCON), warned in El Panama America that the raising of Gatun Lake's level is an issue that will have to be addressed from the environmental point of view.

What next?

Earlier on April 24, the Panama Canal Authority's board of directors unanimously approved the canal expansion plan and that board's president, Ricaurte Vásquez, made a show of delivering an 80-page tabloid report on the project to President Torrijos during the ceremony at ATLAPA.

The current president of the National Assembly, PRD deputy Elias Castillo, later told reporters that he expects the legislature's debate on this matter to take about two months. That would have it concluding shortly before the regular session terminates at the end of June.

The Panamanian constitution provides that at least 90 days must elapse between the calling and holding of a referendum. Scheduling would be up to the Electoral Tribunal.

Much of the suspicion of and opposition to the canal expansion plan has been based in the secrecy and news management by the ACP and successive administrations, but Vásquez implicitly responded to much of that criticism by telling the audience at ATLAPA and on television that the report was delayed in order to have a "complete presentation." Leave it to Panama's politicians to play self-destructive games when the stakes are high, but nevertheless it would seem that rushing the proposal through the legislature or inserting amendments that only serve special interests at committee sessions held in the middle of the night when few people are watching are tactics that will be hard to get away with in this instance.

Thus Panama ought to be immersed in a debate that lasts for about five months, and go to the polls in a September or October referendum.

See the Spanish-language text of President Torrijos's remarks on the presidential website at http://www.presidencia.gob.pa. The Panama News will publish them in English translation shortly.