WikiLeaks: Vice-president calls Panama Canal expansion a “disaster”

Print More

El Pais reports today, quoting from the leaked diplomatic cables, that Vice-President Juan Carlos Varela called the Canal expansion project a "disaster" during a conversation with a delegations of US congress members and US ambassador Barbara Stephenson on December 29, 2009.

"In two or three years it will be obvious this was all a failure", Varela reportedly added during another meeting.

President Ricardo Martinelli, when asked how the expansion project was coming along, reportedly grimaced, and said he was worried about it. He continued to say that he suspects the Canal administrator, Alberto Aleman Zubieta, has favored the consortium that includes CUSA, a construction company managed by his family.

During the election campaign, Martinelli, who was minister of Canal affairs during the Moscoso administration, repeatedly took credit for supposedly initiating the Canal expansion project.

The project was approved in 2006 by a referendum that saw a turn-out of only between 40% and 50%, after a multi-million dollar campaign that made bizarre claims about the creation of tens of thousands of jobs and converting the country into another Singapore. The financing of the project was based on toll raises and excessive growth projections of shipping which most experts called unrealistic at the time. The financial crisis and its consequences for shipping did the rest.

The cables show how the US embassy tried everything it could to have US construction giant Bechtel win the bid for the expansion contract. However, Spanish company Sacyr made a better offer with better specifications. The US suspected that the Spanish government supported Sacyr so it could put up the required guarantees.

Text of the cable:

ID: 242958
Date: 2010-01-08 17:19:00
Origin: 10PANAMA1
Source: Embassy Panama
Classification: CONFIDENTIAL
Dunno: 09PANAMA550
Destination: VZCZCXYZ0018

DE RUEHZP #0001 0081724
R 081719Z JAN 10

C O N F I D E N T I A L PANAMA 000001


E.O. 12958: DECL: 2020/01/08
SUBJECT: Senior GOP Officials Express Doubts About Contractor for
Panama Canal Locks

REF: 2009 PANAMA 0550

CLASSIFIED BY: Stephenson, Ambassador; REASON: 1.4(B), (D)

1. (C) Senior GOP Officials have expressed doubts to the Embassy
and to members of a visiting U.S. Congressional delegation about
the ability of the GUPC Consortium led by Spanish and Italian firms
Sacyr and Impregilo to carry out the work on the expansion of the
Panama Canal.

2. (C) At a December 29 lunch with the Ambassador, Vice
President/Foreign Minister Juan Carlos Varela expressed serious
concerns about GUPC, raising the topic by saying dramatically, "The
Canal expansion project is a disaster." He described the companies
that are leading the consortium as being in deep financial trouble
and expressed his dismay that the same companies that cannot do the
Canal expansion are now trying to win the bid for the Panama City
Metro project. " (Note: VP Varela is sensitive to
possible failures with the Canal Expansion and Metro Projects,
because his aspiration to be elected President in 2014 is currently
highly dependent on a successful on-time completion of the
projects. End Note.)

3. (C) Varela again voiced his concerns on January 3 in a
conversation with DCM and visiting CODEL member U.S. Rep. Pedro
Pierluisi of Puerto Rico. Varela told Pierluisi that the
consortium was "very weak" and he had "real doubts" about their
ability to perform. Separately, Varela said to DCM, "You don't
mess around with something as important as the Canal. When one of
the bidders makes a bid that is a billion dollars below the next
competitor, then something is seriously wrong. Of course I hope
for the best, but I'm afraid that Alberto [Canal administrator
Alberto Aleman] has made a big mistake." See reftel.

4. (C) President Martinelli expressed similar doubts in a
conversation with Ambassador on the margins of a GOP presentation
to the CODEL on January 4. When the Ambassador asked how he
thought the Canal expansion project was going, Martinelli grimaced
and indicated he was a bit worried. He said that he feared that
Canal Administrator Aleman might have tipped the bid toward the
consortium that included CUSA, which is run by his cousin Rogelio

5. (C) Comment: While we at the embassy have heard rumblings of
tussles within the winning consortium as the lead contractor tries
to squeeze subcontractors to bring costs down to the low winning
bid, we have not thought the expansion project to be in any real
trouble. Certainly Canal Administrator Aleman remains very upbeat
about the project, both in public and in private, and we have
always regarded him as a highly capable manager with unimpeachable
integrity. Given that the Vice President is now raising his
concerns with visiting Codels, however, we though it best to let
Washington know that there are concerns and there may possibly be
real trouble. Post provided relentless advocacy for the Bechtel
bid on the Canal expansion and understands through our continuing
close contacts with Bechtel that they, with their reputation for
coming in to clean up messes, are keeping a close eye on how the
project is advancing (or not). End comment.

10 thoughts on “WikiLeaks: Vice-president calls Panama Canal expansion a “disaster”

  1. Here is the original Wikileaked document that will undoubtedly “shake the coco tree” here in Panama:

    C O N F I D E N T I A L PANAMA 000539


    E.O. 12958: DECL: 07/09/2019

    REF: A. PANAMA 508
    B. PANAMA 519


    1. (C) In an elaborate ceremony attended by President
    Martinelli and most of the Cabinet, the Panama Canal
    Authority (ACP) announced that the consortium led by Spanish
    firm Sacyr had won the $3.2 billion contract to build the
    third set of locks, centerpiece of the once-in-a-century
    Canal Expansion project. This award marks an increased tide
    of Spanish influence in Panama. President Torrijos had
    established very close ties with the Spanish Royals,
    attending a ceremony in Madrid in his honor during
    devastating floods last November, during which Spain
    announced a gift of two helos to Panama. The Spanish
    government also established a regional crisis response center
    in Panama. In early June, President Martinelli visited the
    King of Spain, and the Spanish delegation at President
    Martinelli’s inauguration, led by Prince Felipe, was very
    well received (ref A). We strongly suspect that the
    financially troubled Sacyr was able to offer a surprisingly
    low price due to backing from the Spanish government.

    2. (C) Sacyr’s win over consortia led by Bechtel and ACS
    (also from Spain) complicates our bilateral relationship on
    both political and economic levels. On the political level,
    the award casts an unwelcome spotlight on the Aleman family.
    Alberto Aleman Zubieta, the ACP Administrator, formerly
    served as General Manager of CUSA, Panama’s largest
    construction company and a junior member of the Sacyr
    consortium. In the mid-1990’s Alberto Aleman’s cousin,
    Rogelio Aleman, succeeded him as the GM of CUSA (with Alberto
    reportedly selling his shares in the firm). Cousin Jaime
    Aleman, who provides legal representation to the winning
    consortium, is Martinelli’s Ambassador-designate to the
    United States. In addition, Alberto’s sister, Vicky, is
    the wife of a founding partner of Jaime’s law firm.

    3. (C ) As expected, Sacyr offered the lowest price, $3.2
    billion, versus $4.3 billion for Bechtel and nearly $6.0
    billion for ACS. A Bechtel representative noted that the
    concrete cannot even be poured at Sacyr’s price, and that
    ACS’ price indicated that they did not want to win. More
    shocking was Sacyr’s commanding win in technical points –
    4089, versus 3790 for Bechtel and 3974 for ACS. An earlier
    press leak by a member of the Sacyr consortium that it had
    achieved the highest technical score (ref B) – despite
    expectations to the contrary – could cause Bechtel to
    question the confidentiality of the process. A
    representative of Bechtel’s partner, Mitsubishi, told
    Ambassador that they would fight the award. Embassy will
    consult with Bechtel and further report on the award of this
    contract and next steps.

  2. Gee whiz!

    This nothing new in Panama!

    This is the way of life for these so call upper crust and the connected here in Panama!

    What else could or would be expected!

    The use of Bankrupted construction companies and supply companies with little or no expertise is so essential to the Laundering and corrupted right wing individuals who control, steal the wealth, and natural resources of the Panamanian people!

    Now this Government has it standing army to defend it from it critics and the so called free Press?

    “Panama where the numbers never ad up”

  3. It is hard to know how much of these worries are real to these politicos or how much is posturing to later lay the blame on the PRD. The problems of the canal engineering are widely accepted by independent engineers but Martinelli and Varela had no complaints publicly at the opportune moments. Seems that they let it slide at the time to reap the economic benefits during their gestation and perhaps to lay blame on the PRD in 2014, when Varela probably will run for president.

  4. @Faustino: I am really sorry that you took my remark personally, when obviously it was intended to put DR. “Viva Bolivar” on a no-trolling diet.

    As for You, I hope Santa Claus will put a bullshit grinder in your “peeardee” sock.

  5. x1o,

    You are one of those very unoriginal noninflected short sell artists and plagiarizer!

    No much in the way of substance or merit , you and clyde must be really good in Bed together!

    As usual no comments that show concern or any form of compassion for others just your convulsed prejudices against the People of Panama and it true history!

    Happy Trails!

  6. News Bananamarepublic’s readers may find disturbing.
    On Monday, December 20, 2010, the Parliament of the Bolivarian Socialist Republic of Venezuela voted a bill introduced by the Government of Hugo Chavez framing the media, and initiating a filtering system of the Internet content. Called “law of social responsibility for the radio, television and electronic media”, the new legislation entirely transforms the radio and television public services and defines “prohibited content” on the Internet that Venezuelans should no longer have access to. Basically it is a copy of the Cuban and Chinese legislation in the matter. The banned contents concern anything that might constitute a disturbance to public order and the calling into question of the authority. Article 28 prohibits all messages that “encourage, promote or glamorize the crime”, “make war propaganda”, “seek to create anxiety among citizens, or undermine public order”,”do not recognize the legally constituted authorities”,”call to murder”, or “entice to disregard the laws”. “This prohibition applies not only to the Internet, but also to radio and television”.
    Aren’t we lucky here in Panama to live in a country where we have free access to the Internet?
    Merry Christmas and my best wishes for the New Year to all my fellow bloggers and long live and its free spirited Editor Okke Ornstein.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.