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  A Bottleneck in the Global Economy: Panama Wrestles over Canal's Future

A Bottleneck in the Global Economy Panama Wrestles over Canal's Future

By Frank Hornig

Part 2

Miguel Antonio Bernal is the best-known opponent of canal expansion. A law professor, Bernal was already a critic of the regime back in the days when Panama was a military dictatorship. The cover page from the December 19, 1979 edition of the New York Times hangs on the wall in his law office. The lead photo depicts Bernal after he had been severely beaten by soldiers for protesting then US President Jimmy Carter's offer to pay the Panamanians to admit the exiled Shah of Iran to Panama.

When asked who benefits the most from the canal and who stands to benefit from its planned expansion, Bernal first takes a deep breath. Then he takes out the canal authority's organizational chart and reads off the names of its board of directors, or "Junta Directiva."

He derides the board's "Presidente" for having been what he calls General Manuel Noriega's lackey. According to Bernal, the family of the Administrador -- the authority's administrative director -- controls the country's largest construction company and will undoubtedly take its share of the multibillion-dollar project. And the remaining Señores on the board, says Bernal, are all members of the country's ruling families, with their own interests at heart.

"They all behave as if they were angels sent from heaven," he says, insisting that in truth they are just another mafia. "They want to steal the money from the people, which is really the only thing they know how to do." Instead of embarking on the costly project, Bernal says the authority would be better served by adding better lighting at night to improve capacity utilization.

From warships to global trade

The North Americans determined the fate of the canal for more than 80 years. The 16-kilometer (10-mile) wide canal zone was a US territory, its governor appointed by the Pentagon. In those days, warships were given priority over global trade.

When the Americans left in 1999, Panama's upper classes assumed control of the canal, as well as claiming the privileges and lifestyle of the former colonial regime. Bernal isn't the only one who is convinced that this is the case.

The emerald-green hills between Panama City and the canal resemble a park landscape, complete with palm trees and pelicans, not much more than a stone's throw from the rainforest. The administrative building of the canal authority, the "Autoridad del Canal de Panamá," sits in a commanding position at the top of a hill. The palatial structure is the true center of power in this small tropical republic. It houses the office of Alberto Alemán Zubieta, the head of the canal authority, an amiable engineer who adamantly denies all accusations of corruption and conflict of interest.

"In six years, we have paid the government more money than the Americans did in more than eight decades," he says. According to Zubieta, the canal's revenues have increased year after year since the Americans left. Of last year's $1.3 billion in revenues, about $500 million went into the national treasury. Though this is certainly a handsome profit from globalization, how long can the canal sustain its double-digit growth rates?

The world's biggest shipping companies have already made it clear to Alemán that change is coming. Within four or five years, they say, they will be shipping half of their freight on post-Panamax ships -- ships that won't fit through the old lock gates at Miraflores and Gatun. But these giant ships can dock in the port at Long Beach, near Los Angeles, where their containers are loaded onto trains bound for every major American city. Alemán's take on the problem is this: "We must liberate the industry from the canal's restrictions." What he means, in essence, is that the Panamanians have no choice but to give their go-ahead for rapid expansion.

Convincing the poor of the canal's benefits

The burning issues in Panama are logistics, state-of-the-art infrastructure and the international flow of goods. But poverty is also an issue.

Curundu is one of Panama City's poorest neighborhoods. One can hardly imagine a more challenging place to convince inhabitants of the blessings of global trade than Curundu, where thousands of people live in cramped, windowless rental tenements.

Last Monday, Mayor Juan Carlos Navarro had dispensed with his tie and suit jacket and was going door-to-door in Curundu. His mission was to convince ghetto residents to vote for canal expansion. "The canal is totally clogged," he told them, "if we don't do something about it, the business will go to someone else."

Many residents have bigger concerns than the fate of the canal. Children complain that their basketball court has been flooded since a bomb blew up a water line. Others point to their crutches and to the gaps in their teeth. One man, who goes by the name Carlos Riva and says he is a welder, talks about the "millions of problems" in Curundu. But before the man can respond to questions, security officials suggest we move on.

"He was no welder, he was a drug dealer," says an advisor to the mayor, adding that it would be best to leave the area before dark, when it becomes dangerous. "We heard gunshots the last time we were here."

So how will the people in Curundu benefit from the canal? Are they winners when it comes to globalization? Or could they at least become winners?

Samuel Lewis Navarro is Panama's vice-president and foreign minister. His office in the opulent Palacio de Bolivar offers an expansive view of the Pacific and a long line of waiting ships. A conversation with Navarro somehow conjures up the image of a blossoming republic.

Panama, says Navarro, is growing at a faster rate than any other Latin American country -- 8.1 percent in the first half of 2006 alone. Exports are at record levels and, according to Navarro, there is more foreign investment in Panama than in the rest of Central America and the Caribbean combined.

"Our economy is in excellent shape," says the vice-president, and it owes much of its success to canal revenues. But Navarro also says that he is acutely aware of the vocal opposition to canal expansion.

Navarro has devoted a great deal of thought to these issues. He believes that with many Panamanians, it hasn't really sunk in that the Americans no longer own the canal, but that it belongs to Panama and its people. What they also haven't realized, says the vice-president, is that the revenues from the canal can do a lot of good, especially when it comes to fighting poverty.

This is where Navarro waxes philosophical. The canal, he says, was the tropical republic's raison d'etre from the very beginning. "Panama," says Navarro, "was born as a globalized society."

Translated from the German by Christopher Sultan