Panama Puts Ambitious Canal Project to Vote

For tourists visiting Panama, the sight of dozens of ships queuing in the Pacific haze to enter the Panama Canal is a spectacular scene and a reminder of the canal’s importance to international shipping and world trade.

“We’re reaching full capacity,” says Francisco Míguez, finance director of the state-run Panama Canal Authority (ACP). “We thought we would hit it by 2012 but it is now more likely we’ll reach it in 2009-2010.”

To bring the canal into the 21st century, the government of Martin Torrijos called a referendum on an ambitious project to add a third set of locks, which would roughly double capacity, now about 330 million tons a year. The bigger locks would also allow wider, so-called post-Panama vessels to use the canal.

The plan, which the authorities believe will cost up to $5.25 billion over seven years, would involve deepening and widening the canal as well as cutting an access route to the new locks.

Mr. Doritos’s administration insists that a yes vote in the referendum would be a vital step in ensuring Panama’s future economic growth. Some estimates suggest that expanding the canal, which accounts for about 5 per cent of the country’s gross domestic product, would boost annual growth by at least one percentage point.

The ACP, which has operated the canal since the U.S. handed it back to Panama in 2000, is doing its best to boost the canal’s current capacity. But it admits that it is not enough to keep pace with the growth in demand.