Path between the oceans: Tide turns against the Panama Canal

Six years after gaining sole control from the United States of the man-made marvel the world once dubbed the "path between the seas", the government of Panama has concluded that the 51-mile canal which bears the tiny nation's name, is simply too narrow to cope with today's new generation of mighty cargo ships.

In a televised address on Monday night, President Martin Torrijos heralded a new engineering mega-project that will once again capture the world's imagination. He is asking his Congress and his citizens - a referendum will be held later this year - to approve an expansion of the canal and a doubling of its capacity at an estimated cost of £3bn, just shy of the £3.6bn that is Panama's annual budget.

If President Torrijos gets his way, the newly enlarged Panama Canal will open in 2014, precisely 100 years after the existing canal was first opened for shipping.

Supporters of the project argue that the improved waterway will ensure Panama remains crucial to the flow of global shipping for another century and beyond. Detractors warn it could bury the country under a mountain of crippling debt.

It will not, of course, be quite as momentous - or dangerous - as was the forging of the canal in the first place, when some 25,000 lives were lost. The French first attempted to gouge a corridor through the jungles of what is now Panama in 1880 only to give up nine years later, defeated by landslides and disease. It was left to the US in the early-1900s, at the urging of President Theodore Roosevelt, to complete the dream.

More recent history is providing Panama with the inspiration to upgrade the canal that has more than proved its worth both to the country and to the world's cargo lines.

In the years since the US finally surrendered the canal and its management to the Panamanian government on 31 December 1999, international shipping has exploded, most notably with the economic ascendancy of China and other Asian nations. But the canal, as any captain who has navigated it recently will attest, is getting clogged.

President Torrijos, meanwhile, has a personal stake in the canal and its success. It was his father, Omar Torrijos, who negotiated the 1979 treaty with the US, when Jimmy Carter was in the White House, which led to the 1999 handover and eventual withdrawal of the last US troops from Panamanian soil.

The problem is not hard to grasp. No one can blame the engineers of President Roosevelt for lack of foresight, but they didn't make the canal, and in particularly its system of massive steps up and down between the two oceans - its monster locks - big enough. As shipping traffic grows and, more especially, as the ships themselves broaden, the canal is in danger of falling into irrelevance.

Today, there is a whole class of cargo ships specifically designed to squeeze through the canal's locks. Called Panamax vessels, they carry on average some 4,900 containers. There are also fleets of oil tankers of similar dimensions. But increasingly, the world's shipyards are going beyond the Panamax limits and building super-container ships that will never be able to navigate the Panama Canal. Unless, of course, it is widened.

In his speech this week, President Torrijos conceded that enlargement of the canal represents a "formidable challenge and a gigantic project". But his announcement did not come out of the blue. Conscious that he could face popular resistance to a project bearing such a formidable price tag, he has spent several months consulting with political opponents, union leaders, farmer and students.

"The Panama Canal route is facing competition," Torrijos told the nation. "If we do not meet the challenge to continue to give a competitive service, other routes will emerge that will replace ours. It would be unforgivable to refuse to improve the capacity of the waterway." He said his country faced "the most important decision about the canal and its role in the 21st century".

Most of what is feeding traffic to the canal is the rapidly expanding trade between Asia, especially China, and the ports of the eastern US. Shipping companies already face delays typically of up to a week before their vessels can even enter the canal, because of fast-growing congestion. About 40 ships pass through the narrow channel every day, including the occasional passenger cruise liner. And as they buy new, larger ships the cargo companies are being forced to avoid the waterway altogether.

The alternatives are either to send their vessels on an easterly route through the Suez Canal and across the Atlantic or to off-load their cargoes on the western coast of the American continent and convey their goods by rail and road into the US heartland. With that in mind, the US has been vigorously improving its Pacific ports and Mexico has been working hard to expand capacity at several of its west coast ports, for instance on Baja California.

The economic stakes in the race to maintain its shipping dominance are not small for Panama, therefore. The canal currently takes care of almost 40 per cent of all ocean-borne shipping between Asia and the eastern US, a share that faces rapid erosion. In 2005, Panama earned £0.7bn in canal fees, maintenance and other related services levied on some 13,000 ship crossings.

Then there is the economic boon that the expansion project itself is expected to generate. President Torrijos predicted that the five-year project to build new locks would create about 7,000 new jobs for his country. He meanwhile assured his people that the funds for the work would be raised by new levies on shipping companies using the waterway and loans from banks. He insisted that no money earmarked for the undertaking would be diverted from the government's budget and vital social programmes.

Economists seem to agree that the canal promises significant fruit for Panama. Aaron Gellman, a professor of transport at Northwestern University in Chicago, who is on the canal's advisory board, argues that the project would be enough to ensure the country's economic output grows 40 per cent over the next four years and that unemployment, now at about 9 per cent, should dip to a mere 2.5 per cent.

The project would also be seen as a feather in the cap for Panama and its success in managing the canal since the Americans departed in 1999. "An expansion of the canal would validate the decision of the United States to turn over the canal to Panama, which is running it magnificently," Gellman noted.

Controlled by President Torrijos' own party, Congress is almost certain to embrace the project. The national referendum, meanwhile, is likely to be held in August. While, opponents, led by a former Panamanian administrator of the canal, Fernando Manfredo, are vowing to campaign hard against it, the people of Panama are likely to approve the canal's expansion by a large majority.

The canal, to a very large degree is Panama. Indeed the history of the canal is the history of the country. It is a story of human determination that all school-age children in Panama can recite without pause. In two parts, it begins with the selection of France's Ferdinand de Lesseps to undertake the seemingly Herculean task of tying the world's two greatest oceans together. De Lesseps, 70 years old in 1880, was already a national hero in France as the man who had successfully built the other great man-made waterway, in a different hemisphere far from the Americas - the Suez Canal.

But De Lesseps made errors that in the end spelled disaster for the many investors in the company created to cut the canal, notably believing that he could build it at sea level all the way from one coast to the other. After nine years of clawing and scraping through the jungle-covered highlands with steam-excavators and hand-held shovels, the Frenchman admitted defeat. By then about 20,000 labourers had died working on the canal, some buried in huge landslides but the majority felled by yellow fever and malaria borne by mosquitoes. Such was the anger in France, both De Lesseps and his son were convicted of bungling the entire enterprise and sentenced to prison. But he died before seeing captivity.

Before their retreat, however, the French had spent £160m and shifted 50 million cubic meters of earth and rock. Indeed, 11 miles of the canal had been dug. In 1902, President Roosevelt announced his intention to buy the rights from the French to resume the effort. "No single great material work which remains to be undertaken on this continent," he said, "is as of such consequence to the American people." The US quickly negotiated a Panama Canal Treaty with Columbia. In 1903, a revolution, supported by the US, ended Columbian control of the territory and the nation of Panama was born.

Over the next decade, the US spent £197m in Panama. When the canal was completed in 1914, the rest of the world, distracted by the start of the Great War, barely took notice. But it had been done under budget and in time. The investment paid off, with the US successfully keeping control of the canal, and therefore a large chunk of global shipping, for all the rest of the 20th century.

Most important to the success of America's engineers had been their quick understanding that instead of attempting to forge a waterway at sea-level - made almost impossible not least by significant tide-differentials between the two oceans - the canal should be composed of several steps, lifting ships up and then letting them down again as they traversed the narrow isthmus. They achieved it by building massive locks.

It is those locks that, under the Torrijos plan, will now be replaced. In essence, the proposal envisages a third shipping lane in the canal, with an entire new set of locks, which will be 55m wide and 430mlong, compared with the existing locks that are 33m wide and 305m long. Once in place, they will be big enough to accommodate even the largest ships currently at sea, notably the post-Panamax class of vessels, some of which can carry as many as 8,000 cargo containers.

Meanwhile, engineers are promising to build basins beside each of the new locks with water to fill them each time they are emptied. A new generation of water-pumps will mean that 60 per cent of the water needed each time to fill one of the locks will be recycled and used again. This avoids the need to build huge new water reservoirs, which would have encroached on precious farmland and thus - President Torrijos hopes - avert serious opposition from the farming community.

Foremost among the plan's critics, Mr Manfredo has been pushing for a more modest approach to modernisation. He would like to see a major new port development at the Pacific end of the canal to facilitate the transfer of cargo to and from the very large new ships to smaller vessels that could still fit through the waterway. The price-tag would be about $600m, or one 10th of what President Torrijo expects to spend. And then there is the risk, of course, that the Torrijo budget turns out to be unrealistic. "I only need to remind you what happened with two other mega-projects: the English Channel tunnel and the [Narita] airport on an island off Tokyo," warned Julio Manduley, a consultant advising the opposition group.

But to most Panamanians the Manfredo option will surely look timid. And history tells everyone that timidity is not a quality that sits well beside the miracle of engineering that is the Panama Canal.