Panama’s re-route canal suffering on its centenary

View of the Panama Canal locks under construction in Cocoli, near Panama City. Picture: Getty

Instead, the 100th anniversary of the Panama Canal’s opening is being marred by doubts over an ability to harness the benefits of a multibillion-dollar expansion which has been beset by cost overruns, strikes and the looming threat of a rival project.

The latest setback in the canal’s expansion came in May, when 5,000 labourers walked off the job for two weeks as part of a nationwide strike over wages by construction staff.

That followed a two-week stoppage in February in a dispute over almost £1 billion in extra costs between the canal administrator and the European contractor building a third set of locks.

Because of the interruptions, the original completion date in October has been pushed back by 14 months and analysts say more delays can’t be ruled out.

The construction of the 48-mile canal across the Isthmus of Panama a century ago, which cost the lives of an estimated 30,000 workers, transformed international trade by greatly reducing travel time between the Atlantic and the Pacific.

As part of the £3.15bn expansion, wider locks with mechanical gates will cut congestion and be able to accommodate much larger, “post-Panamax” vessels, which carry about 2½ times the number of containers that ships currently using the canal can take.

Canal administrator Jorge Quijano, pictured, acknowledged that he would have liked to finish the expansion in time for the centenary. “But we knew from the beginning a project as complex as this wouldn’t necessarily be done on time,” he said.

Taiwanese president Ma Ying-jeou complained about the delays during a recent visit to Panama, saying they could harm his country’s trade with the United States.

Two major cargo shippers, Denmark’s Maersk and Taiwan’s Evergreen, have already re-routed some operations, depriving the canal of about $80 million (£50m) a year, Mr Quijano said.  When funding for the expansion was approved by a referendum in 2006, its completion was seen as a chance to showcase Panama’s role as a linchpin of global commerce.

Backers portrayed the vote as a bet on the future of Panama’s children in a country where poverty still affects one third of the population.

But, for the most part, business has boomed under home management of the canal, with it contributing more than £5bn ($8.5bn) to government revenue since the US handed it over on 31 December, 1999.

But competition is lurking. A Chinese firm was recently awarded a contract to build a waterway through Nicaragua. While just a threat on paper for now, Panama authorities have responded with the possibility of digging a fourth set of locks.

President Juan Carlos Varela opposed declaring the centenary a national holiday. “The anniversary is best celebrated by working,” he said. “Panama already has plenty of free days.”

Panamanians will celebrate the anniversary with an evening of fireworks and a free concert by salsa singer Ruben Blades.

Relatives of US president Theodore Roosevelt will be guests. It was his enthusiasm for the “big ditch” that spurred the isthmus to proclaim independence from Colombia in 1903 and sign a treaty granting control of the future waterway and the 550 square mile canal zone to the US.