Full steam ahead for canal rebuild

Cargo ships wait to cross the Miraflores locks in Panama City. Picture / Reuters

PANAMA CITY - Panamanians have overwhelmingly backed a plan to give their famous 92-year-old canal its biggest-ever overhaul, an ambitious project the Government hopes will help lift the country out of poverty.

The Central American nation's Electoral Tribunal said the US$5.25 billion ($7.85 billion) rejig allowing the inter-oceanic canal to handle modern cargo ships had won four-to-one voter support in a referendum.

The project for the canal, which was United States territory until it was returned to Panama in 1999, will double its capacity to enable more and bigger ships to cross between the Atlantic and Pacific oceans, boosting Government revenue.

"Never in the history of the country have we Panamanians taken a decision of this magnitude," President Martin Torrijos said. "We have set the bases to build a better country."

Supporters say the expansion of the canal, an engineering wonder first opened in 1914, will create a jobs bonanza for Panama's three million people and boost economic growth.

Critics warned the plan could bankrupt the small nation, which is already burdened with huge debts and where 40 per cent of people live in poverty, if costs spiralled. Taxpayers could be forced to pick up the tab and investors lose money.

Costing US$375 million and 25,000 lives, the canal was dynamited and dug out by thousands of labourers braving malaria and yellow fever. It saves ships a long haul around South America's Cape Horn and carries about 4 per cent of world maritime trade. But its lock system is too small for many modern tankers and ships making the passage, mainly from the US, Japan, China and Chile, which also face longer waits to make the 80km inter-oceanic trip as global shipping grows.

France's Ferdinand de Lesseps, builder of the Suez Canal, started it in 1880 but abandoned work nine years later when the project went bankrupt.

The US Government bought the canal in 1904 and, 10 years later, opened the waterway. With an eye on naval supremacy and control of the Western Hemisphere, the US ran the canal for most of the 20th century.

The expansion plan, due to start in 2008 and finish in 2014, will build wider locks and deeper and bigger access channels, and let ships with 12,000 containers pass through, up from 4000-container vessels.

- REUTERS