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Robert McMillan: Expanding the Panama Canal

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There is no doubt that Panama can take on the canal expansion successfully. Hopefully that will mean a totally transparent process for construction contracts and financing, argues Robert R. McMillan.

A few weeks ago, Martin Torrijos, president of Panama, announced a well thought-out plan to enlarge the Panama Canal and bringing it up to the needs of the future. Before getting into the specifics, some history, and the challenges going forward, I would be remiss if I did not commend the current management of the Panama Canal Authority, the government agency responsible for operating the canal. The current administrator of the canal, Alberto Aleman, is a United States-educated engineer. He and his Panamanian predecessor, Gilberto Guardia, could not be more professional managers. Each one could very well be running a major company in this country. Panama is fortunate to have had such fine people in charge of the canal during the transition and after its transfer from the United States on Dec. 31, 1999. Today, some 15 percent of the world's merchant fleet cannot transit the canal because the ships are too large. Some argue that they were built that way knowing that they could not fit into the canal's locks. Panama, on the other hand, does not want to be left out of the future as a major global crossing.

Enlarging the canal is not a new issue. In fact, back in 1929 studies were conducted with construction actually starting on a third set of wider locks in 1939. Visiting the canal today, the remnants of that earlier effort are clearly visible. The construction was stopped at the beginning of WWII. Our emphasis and funds had to be diverted to defeating Hitler and the Japanese. The expansion of the canal would have to wait. After WWII, the project was stalled because of growing nationalism in Panama and concern about communism across Central and South America. Then, as negotiations for the transfer of the canal to Panama accelerated, there was a feeling within American canal management that no large expenditures should be made. The canal should be well maintained - but not enlarged. As a footnote to what turned out to be Carter-Torrijos Treaty, the initial negotiations took place in the Nixon and Ford administrations with Harry Kissinger as Secretary of State.

In 1991, the American Panama Canal Commission authorized the widening of the Galliard Cut to allow Panamax vessels to pass each other traveling in opposite directions. This, in effect, was a compromise between those who wanted the third set of locks to be started before the transfer and those who wanted the status quo. President Torrijos, Panama's president, is the son of Omar Torrijos, who was responsible for the treaty transferring the canal. After approval by the president's cabinet, the National Assembly of Panama, and then approval in a national referendum, construction can begin, probably early in 2007. The proposed new locks will be 74 feet wider and 435 feet longer than the current locks. In addition the passage way will be deepened to 49.5 feet - all designed to give the largest Panamax vessels the ability to transit the canal. It is expected that some 7,000 jobs will be created during the construction with over 40,000 new jobs eventually created as a result of the expansion.

There is no doubt that Panama can take on the project successfully. Financing the $5.25 billion effort has been well planned. And to his credit, President Torrijos has moved aggressively to weed out corruption in Panama. Hopefully that will mean a totally transparent process for construction contracts and financing.

Every country interested in the canal will want to be a part of this massive effort. That will range from the United States to the People's Republic of China and from Brazil to European countries. It is my hope that bidding will be fair and the United States with almost 70 percent of canal traffic will be able to effectively participate in the construction and financing.

Robert McMillan is a former Chairman of the Panama Canal Commission, the US agency that operated the canal until it was handed over to the Panamanian government in 1999. This column originally appeared in Anton Community Newspapers in Long Island, USA. Reprinted with permission from the author.

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