business & economy

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President Martín Torrijos on the campaign trail in the Interior on May 30. He has been concentrating his efforts on visits with rural and small town audiences for various other purposes, but using these events to deliver a defense of his Panama Canal expansion plan. Here in the Cocle province town of Toabre, he was passing out $35 each to mothers of 474 needy families, claiming that the money came from the profits of the Panama Canal. Photo courtesy of the Presidencia

On the campaign trail for the canal expansion referendum

notes by Eric Jackson, largely derived from other media

Neither the Cabinet Council nor the Legislative Assembly have yet discussed it, so of course the Electoral Tribunal hasn't set a date for a referendum on it, but everyone who's the most remotely aware of current events here knows that there is a vote coming about whether to accept or reject the Panama Canal expansion plan that the Torrijos administration and the Panama Canal Authority (ACP) are promoting. It would appear that at this early stage the "yes" side is well ahead, but by a margin that should afford little assurance of ultimate passage. Thus, even there is formally no issue before the public, both the supporters and detractors are in their very different ways waging vigorous campaigns. These are some of the highlights:

·        The Panama Canal International Advisory Board, consisting almost entirely of figures from the world shipping industry, unanimously endorsed the canal expansion plan. They, of course, won't have even one vote among them in the referendum, but questions about whether shippers would be willing to pay the higher tolls that would come with the construction project have been raised and the "yes" side will be able to point to this as evidence that they'd pay. The resolution itself uses identical language to the ACP's publicity, leading to suspicions that it was written by the authority's publicists.

·        The Panamanian Society of Engineers and Architects (SPIA) has estimated that the construction project would cost $7 billion, rather than the $5.25 billion pricetag that the Torrijos administration and the ACP put on it. Backers of the Torrijos-Alemán Zubieta Canal Expansion Plan estimate that with a $5.25 billion pricetag and an annual growth in canal tonnage of three percent over the next 25 years, the project will generate a return on investment of 12 percent. But critic Roberto Méndez, a University of Panama economics professor, attacks the government's cost estimate as unrealistically low and the assumption behind the tonnage growth projection, that US imports from China will continue to grow at the rate that they have in recent years, as unrealistically optimistic. If the tonnage only grows two percent per year instead of three and the cost goes up to $7 billion, Méndez warns, then the project loses money. The ACP has attacked Méndez for disrespecting its team of experts, but now the prestigious SPIA's estimate lends creedence to the doubts the professor expresses.

·        Former La Prensa publisher I. Roberto Eisenmann Jr. has, in a two-part op-ed feature, endorsed the canal expansion project. The Eisenmann family made much of its fortune as the developers of Coronado, so critics of the proposal who dismiss it as of benefit mainly to narrow sectors of the construction and financial services industry may blow this off as personal economic interest. But especially in his role as head of Panama's chapter of Transparency International, Eisenmann has a following in the business community that should not be discounted.

·        According to La Prensa, investigators for the Electoral Prosecutor have raided the provincial offices of the Panama Maritime Authority (AMP) in Los Santos and obtained from its computers and from statements of people working there evidence that the facility was used to promote an event of the governing coalition's junior partner Partido Popular in support of the canal expansion plan. The Electoral Tribunal has for some time warned that public funds can't be used to promote a "yes" vote, but then its presiding magistrate Dennis Allen appeared with President Torrijos at the launch of the "yes" campaign at ATLAPA on April 24 and subsequently it has been held first that election authorities have no jurisdiction over the proselytizing activities of the president and second that at least prior to the scheduling of the vote the ACP has the right to use public funds to explain the proposal to the public. President Torrijos and canal administrator Alemán Zubieta have complained that even these strictures are unfair, because they say that getting a "yes" vote is a "matter of state" that rises above ordinary politics and the rules that govern campaigning. However, this was the use of the AMP, which is not the authority proposing the plan, to promote an event of a political party. Thus, the raid.

·        Banker Alberto Vallarino, a probable opposition presidential candidate in 2009, has endorsed the canal expansion proposal and denounced the opposition parties for their hesitance to jump on the "yes" campaign bandwagon. He argued that the construction project would create many jobs and stimulate the entire national economy.

·        Former President Guillermo Endara, also a probably opposition presidential candidate in 2009, has dismissed Vallarino's endorsement as a matter of his rival thinking as a banker about his personal business interests rather than as a Panamanian who puts top priority on  the best interests of the nation. Endara has yet to formally endorse a "no" vote but has questioned the claims advanced by the "yes" side about the number of jobs that would be created and generally expressed skepticism about the project.

·        Businessman Samuel Lewis Galindo, founder of the Solidaridad party and an also-ran presidential candidate in 1994, has endorsed the canal expansion project. Don Samy warned that if the proposal is defeated, foreign investment in Panama's ports, tourism and construction sectors would diminish.

·        In a La Prensa op-ed column, former Comptroller General Rubén "Chinchorro" Carles, a somewhat more successful 1994 presidential hopeful than Don Samy was but also one of the losers in the seven-candidate field, posed 35 hard questions that he said need to be answered before the vote. Chinchorro has not taken a stand on the proposal, but his questions and comments indicate that he is not taking the claims advanced by the ACP and Torrijos administration at face value. If Carles, who spent much of his working life in the banking sector and apparently did not enrich himself while holding various public offices, makes an endorsement one way or another it would be taken seriously, particularly by the sort of "small-c" conservatives who put financial solvency ahead of ideology.

·        Members of the Frente Panama Soberana, a group based among academics and professionals who oppose canal expansion as it is currently proposed, filed a criminal complaint that the ACP has over the past five years "illegally" retained some $205 million in cash that it says should properly have been delivered to the national government's treasury. The ACP replied that it had properly set aside the funds for its capital investment program. The argument has the appearance of a highly technical accounting dispute, and tends to fly over the heads of most Panamanians.

·        President Torrijos and the ACP management retreated to the new Playa Bonita hotel complex at Kobbe Beach (where the rooms cost $300 a night) for a weekend of meetings in which the deputies got to "know" the plan. Afterwards National Assembly president Elias Castillo appointed a committee to tour the country and "divulge" the details of the Torrijos-Alemán Zubieta Plan. But this raises legal questions --- if it's legal for the president and the ACP to spend public funds to campaign for a "yes" vote at this stage, but it's illegal for the AMP to spend public funds to promote a partisan "yes" event, where does the legislature spending public funds for a "yes" vote fall on this continuum?

·        An emerging key question about this particular plan is to what extent it would affect the drinking water supply upon which most Panamanians depend. From the summaries alluded to --- the studies themselves have been well nigh inaccessable --- it appears that various experts hired by the ACP came to different conclusions about whether the increased infiltration of sea water inherent in the proposed new locks' retaining tank system would make Gatun Lake so brackish as to be a problem. If the Miraflores and Mount Hope water treatment plants would need desalinization equipment, figure the cost of the equipment alone to be around $1 billion for each plant, plus high energy and maintenance costs to run the desalinization systems thereafter. Also, some critics say that if the ship traffic increases as the ACP predicts, then there won't be water left over in the lake to meet the needs of the communities that now depend on this source. In the face of such doubts, the ACP made a 30-year deal with the IDAAN water and sewer utility to "guarantee" the water supply to the Miraflores plant --- but not to the one at Mount Hope that supplies Colon. Any need for desalinization equipment, or to build a new water treatment plant using a different source to serve Colon's needs, adds a large sum to the true cost of the canal expansion plan, above the $5.25 billion figure that the "yes" campaign cites.