| CANAL EXPANSION, A GIFT TO CORPORATE AMERICA Noriegaville 20 09 2005, by Okke Ornstein | <><><><>
| Just five years after Panama regained control over its Canal, the Torrijos government sets out to give it away again. To Wal-Mart. ![]() Panamanians are still waiting for the Canal Authority (ACP) to publish its "masterplan" for the future of the Panama Canal, which will include the construction of a third set of bigger locks. However, the leaked draft for that masterplan together with recent statements in the United States media indicate that expansion of the Canal will benefit big US corporations and multinational shipping companies while bringing only disadvantages for Panama. "Companies push for widening of Panama Canal", read a recent headline in the Houston Chronicle. The article explains how US mega-corporation Wal-Mart needs bigger locks so that shipper Nippon Yusen can more economically ship its products from Asia to the US South and East coast. Writes the Houston Chronicle: "Nippon Yusen and Wal-Mart Stores are among companies pressing Panama to enlarge the 91-year-old waterway to take bigger ships at a time when growing exports from Asia clog U.S. Pacific ports. If the country balks at spending the $10 billion needed to expand the canal, it will lose income as ships take alternative routes such as the Suez Canal to reach the Atlantic seaboard, says Asaf Ashar, a professor at the National Waterways Institute at the University of New Orleans. "People will still use it, but it will have secondary status," says Ashar, who estimates that, without expansion, annual toll revenue would fall 21 percent, or $210 million, based on the fiscal year that ended Sept. 30, 2004." But there are several facts that remain hidden in this corporate push. First of all, the expansion of the Canal can only be financed if tolls increase substantially. That, in its turn, causes the Canal to lose its economic advantage over the Suez route or the Northern Arctic route which then will reduce annual toll revenue as well. On top of that, Panama will have a debt of between $5 and $10 billion it needs to repay, plus interest. A wider Panama Canal fits into a vision of the future of the shipping industry that the promoters of the scheme harbor. First in that vision come bigger ships. The bigger you build the ship, the lower the cost of shipping a container from point A to B. That is, within certain limits, because if ships become too big they need bigger and deeper ports, bigger cranes to be loaded and unloaded and larger docks. In this scenario, these bigger ships travel along what can be best described as a global shipping beltway, which runs from Asia through Panama to the US East coast to Europe and then through Suez back to Asia. The beltway connects on its various ports of call to north-south shipping routes which are maintained by smaller ships. The benefits of this for shippers and their clients are obvious. To stay with Wal-Mart; this company has much of its goods produced in China and Asian sweatshops (and, ironically, sells them with the slogan "Buy American") and the cheaper they can get them to the market the more profitable the endeavor is. The Panama Canal, as it sits there today, is simply an obstacle in this vision of further cutting shipping costs.Additionally, it is more cost-effective for US corporations as well as the authorities to have Panama carry the financial burden of a wider Canal than having to finance expansion themselves of these "clogged Pacific ports". The result will be a huge debt for Panama, increased by the fact that the ACP wants private financing which carries higher interest rates. The reality is that the ACP can only raise the toll fees - in itself already a process that under the treaty needs to be negotiated every time again in consultation with the USA - to the level where Panama doesn't lose its competitiveness with Suez. That level is, recent studies indicate according to Panamanian economist Roberto Mendez, not enough to allow the expansion project to be financed responsibly. The disregard for facts and simple economics is largely due to the fact that the very people in Panama who are currently hyping the expansion project stand to benefit from it economically themselves (through the banks and construction companies they own, among others). Canal administrator Alberto Aleman Zubieta even went as far recently as promising Panama nothing short of an economic boom and an enormous increase in traffic through the Canal, without backing up any of these claims in any way. Eventually, it will likely be the Panamanian people who will have to cough up the money to pay for the bigger Canal by paying higher taxes and social security cuts, a process that has already been set in motion by the Torrijos government. Additionally, indigenous communities may very well have to be displaced because their land needs to be flooded. Panama should not enter in such an irresponsible scheme only to enable companies like Wal-Mart to increase profits while enslaving third world workers. If corporate America wants a bigger Canal they should also carry the risk of building it, or simply stick with panamax. |