Panama open for business (8) – but feared shitless of competition

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Remember the 2006 campaign for the referendum about the expansion of the Panama Canal? It was the Canal Authority (ACP) at its snottiest, promoting a plan that was under-budgeted and relied for its financing on criminal optimism about growth of traffic through the waterway. None of these ludicrous financial projections can be found on the ACP website anymore, now that financial crisis and economic slowdown have come along and the shipping world protests at every toll raise.

Another example of the unlimited arrogance of the ACP was how they denied in absolute terms that there would be an alternative for the Canal available, ever. Polar ice melting? Nonsense!

Two years later, the first commercial ship sailed through the Northwest Passage.

The Suez route? Not an economical alternative! the ACP said.

Since the plans were approved, Suez has been stunting continuously with special fees and deals because, unlike Panama, they can afford to.

Another Canal? Impossible!

But just days ago, President Daniel Ortega of Nicaragua said that his country has every right to build an inter-oceanic canal.

His statement came after Haaretz and others reported that Venezuela and Iran were behind plans to build an alternative for the Panama Canal:

Sources in Latin America have told Haaretz that the border incident and the military pressure on Costa Rica, a country without an army, are the first step in a plan formulated by Venezuelan President Hugo Chavez and Nicaraguan President Daniel Ortega, with funding and assistance from Iran, to create a substitute for the strategically and economically important Panama Canal.

The plan has aroused concern in Washington, and the U.S. has started behind the scenes efforts to foil it.

It's made to sound as if, with axis of evil Venezuela and Iran behind it, the motives for the initiative may not be fully known but are most certainly sinister. The logical question to ask would of course be how it will be managed. If Nicaragua has a neutral canal, more or less like Panama, with its safety guaranteed by UNASUR, what would be the problem?

Continues Haaretz:

In recent years, the amount goods passing through the canal in each direction totaled about 190 million tons. The transit fees paid by the ships and other canal-related activities account for 75 percent of the annual revenues of Panama's economy. The Panamanian economy and Panamanian stability would be in real danger of collapse if another canal took away its monopoly on shipping between the Atlantic and Pacific oceans.

Indeed. While the Panamanians indulge in backward nationalism, their flag waving "corazon del universo" and "puente del mundo" crap, the Nicaraguans and their allies are cleverly planning to break Panama's faux monopoly. Because here's the thing with this monopoly: It is a geographical monopoly which 1) never lasts forever and 2) is shared with other Central American countries such as Nicaragua. Maybe Panamanians should start looking at maps that include other countries than just their own.

Or study history. The French tried to dig the Panama Canal first, but the Americans had their eyes on Nicaragua as the location for the waterway all along, until the shareholders of the French failure successfully lobbied for Panama to save their investment.

And even way before that, Latin American liberator Simon Bolivar envisioned a future for the isthmus with not one, but multiple canals:

The states of the Isthmus of Panamá as far as Guatemala, will perhaps form a confederation. Because of their magnificent position between two mighty oceans, they may in time become the emporium of the world. Their canals will shorten distances throughout the world, strengthen commercial ties between Europe, America, and Asia, and bring to that happy area tribute from the four quarters of the globe.

Panama's sense of entitlement has placed it firmly outside any serious effort towards Central American integration, to which it only pays lip service. Multiple canals, as per Bolivar's vision, could have been something that benefits the whole region and not just small parts of it - geographically and demographically. Panama has long bragged alone, and now it stands to lose alone. Serves them well.

26 thoughts on “Panama open for business (8) – but feared shitless of competition

  1. One, Must ask one self why if the Panama Canal was such a big part of the US Security and Global Domination strategy why it was handed over to this group of morons at the ACP to operate and run into the ground?

    This canal expansion is only forty percent financed at this point!

    The expansion plans are horribly flawed, possibly to the point of becoming mostly unusable due to these so called newly unproven construction concepts!

    “Panama where the numbers never add up”

  2. I am not an expert in US history but I believe President Carter was a decent human being who was trying to do the right thing. But as you have pointed out before I have tendency to see things through rose colored glasses (thank god)
    It may be more rose coloring on my part, but by all accounts, the canal has been run efficiently, is generating more money than thought, and certainly nothing has gone downhill since the take over. If there is less traffic I really think we can draw some conclusions to it being related to the international financial crisis. People are simply shopping/buying less. I believe the morons realize which side of their bread is buttered and running the canal into the ground is simply not in their best interest. The expansion plan may have been ill conceived, ill advised and may be turning into a white elephant, but that is another topic. Besides, as recently covered on this site, it is very probable an earthquake will do the expansion work for free and they will come out under budget. That will free money for the wall.

  3. It’s not all bad news you know… The Editor will soon move to Kugluktuk from where he will publish a new blog called Canadrama Repubic featuring hairy polar bears jumping happily around a cargo ship caught in ice desperately waiting for the two summer weeks during which some ice is melting.

  4. Well I hear these two weeks are indeed lovely in Kugluktuk, and the Friesners are already buying land there – with Panama cracking down on money laundering and all that.

  5. @ Dr. Dias

    The Panama canal lost importance relative to the Suez canal because most “easy to extract” oil is in the Middle East. Dr. King Hubbert, geophysicist, was ridiculed when publishing peak-oil theory in 1956 but was proven to be correct, in 1970.
    When Panama would have had an active department of geology, peak-oil could have been known long ago and also what the implications on trade via the Panama canal would be.

    Regarding US global domination, since the Reagan regime, entire industries have been moved from the US to low wage countries. Several of those low wage countries now produce enough scientists and engineers to be independent of US innovation or inventions.

    That leaves the US military might. Quite a few years ago, it already was labeled as “paper tiger”. Just look how many wars the US started after WWII, and how many actually have been won. The successful invasion of Grenada comes to mind.

    During the cold war, when the Panama canal still was a strategic US asset, the prevalent idea was that if the US added an aircraft carrier to its navy, the competition had to do the same. But as the US was wealthier, it could add more and hence, stay ahead.

    The theory of asymmetric response has ended that: instead of building aircraft carriers to keep up, long range supersonic anti-ship missiles are produced. When the speed of such missiles is high enough, they could destroy an aircraft carrier by mere impact – no explosives required.
    It wouldn’t be a surprise if for the price of one aircraft carrier, enough dong-feng-21 missiles could be produced to sink the entire NATO fleet.

    What also works out negative for the US is “privatization for maximum profit” as it ensures the most expensive weapons but not their highest effectiveness. So military hegemony either has ended or is about to end.

    What remains is the US $ hegemony, which relies on the petro-dollar. The US-made financial crisis has damaged that too.

    The issue that since the occupation of Afghanistan and promotion of that country to the world’s number one heroine producer, the petro-dollar has morphed into the narco-dollar and in an Islamic sense no longer is a proper means of payment, could end the exclusive role of the dollar in oil trade. This will mean massive inflation of that currency and unless measures are taken, will affect Panama as well.

    So from the beginning , it could have been clear that a canal expansion wasn’t the best investment.

  6. JANB,

    Thank you for stating the the oblivious truth!

    Your analyst shows the that the USA only walks away when it is no longer profitable or can no longer be subverted by proxy!

    Panama is now the cheap right wing proxy of the US Government!

    Panama days a s some form of Republic are certainly waning!

    “Panama where the numbers never add up”

  7. After JANB’s fully substantiated comment, I declare that this is a generalisation by way of a question: looking as far back as the 1940s and 50s, when hasn’t Panama been “the cheap right wing proxy of the US government”?

    The oligarchy in Panama has always looked for and received support from American governments, and profited from these relationships, at the expense of selling out the country. But, as I said, this are unsubstantiated remarks.

  8. Dr. Dias,

    It still would be possible to improve the fate of all Panamanians, despite the peak-oil issue. This would mean making deals, probably with the Chinese, not based on giga-profits but on mutual interests.

    The Chinese are interested in resources like ores (copper, gold etc.) and the interest of Panama would be electrified infrastructure, anticipating on increasing oil prices that are to make combustion engines obsolete. Also technology for recycling waste into fertilizer because production from oil will become unaffordable first and unavailable later, with predictable effect on food prices and related riots.

    A good and affordable electrified system of (fast railroad) transportation is the logical choice for Panama because already 60% of electricity is generated by hydro installations, in Costa Rica that is 80%.

    Food and transportation oil-free would mean political / social stability too because food prices then are decoupled from the increasing cost of oil.
    From that perspective the reintroduction of the balboa would start to make sense, and floating with respect to the US $ or other oil-dependent currencies, to prevent inflation.

    However it wouldn’t be the mining business as usual (leaving a desert behind with predictable climate effects) but mining in such a way that the area can be restored to fulfill the same amount of negative feedback on the weather as did the vegetation before mining. This is a must because of the rains required for hydro-electrical power.

    But as this is a proposal where the numbers add up rather well and for every Central American country, it’s very unlikely it will ever be carried out in Panama.

    Nevertheless something has to be done as even physics magazines are starting to mention the issue of recession
    and business magazines are getting worried about freedom

  9. Dear janb,
    We are desperately looking for a decent and smart presidential candidate – if you are Panamanian born, I would urge your candidacy. If you are not, would you consider training someone?

  10. Yes, Panama has hope, but only if the it’s Citizens decide that enough is enough and takes control and flushes the Hack Politicians and money launders to pay for real social programs that are for the benefit of the Panamanian people.

    Not selling it’s Natural Resources for four cents on the dollar to Corporations that do not even invest any of their profits back into Panama!

    Panama could become the Center for massive recycling of plastics and metals to export to China and India, these industries can be profitable and are proven technology.

    Panama does not even have a working Postal service!

    How can a country proceed when it can not even deliver mail and/or Packages to proper addresses or Businesses?

    Panama is heading into a state of Martial Law which is being driven by a Government that fills the media(TV & Print) with false and unsubstantiated claims of the progress similar to the propaganda of other extreme right wing states.

    If is on TV or in Print it must be true???

    The true fate of Panama is not that all the poor and underprivileged will rise above their plight in life!

    But by having the ability to become more than just a minimum wage proletariat.

    To be able to feed your family(not starve), have decent livable housing, safe and drinkable water, a decent educational which will lead to your children having a better life with true security which to raise their children?

    Panama is a small country which has much to offer, only if it managed for the benefit of the people not the few who are stealing Panama blind!

    “Panama where the numbers never add up”

  11. @Dr Dias. Post offices are going out of business or are broke almost everywhere. I would suspect within the next 10 years, all packages will be handled by private companies. I would not Judge the ability of Panama to do business based on that alone. There is enough fodder elsewhere.
    We cannot only criticize and offer no solution. Where is the perfect system we can model after? And who shall implement that perfect model?

  12. @Frombocas

    As a foreigner I have been living just a few years in Panama so couldn’t be eligible for any political function except probably as “external adviser”.

    Training someone might take too much time so I suggested to the gardener that by working holidays, he would earn his son a computer system. He accepted and I’ll install Linux (Spanish) on it plus everything his family needs to get informed and communicating (like in forums regarding organic farming, environment, sustainable development etc. all over Latin America).

    Linux is a must for developing countries because contrary to MS Windows you don’t have to buy a new, more powerful computer (that in spite of that does the same) every 3 years.

    Also I emphasized that because so few people have a computer with Internet connection, it is expected from him to organize social events (community) like showing movies, for instance “the war on democracy” by John Pilger, to get an idea of the forces at work.

    This would be easier if the president had adopted a good plan for a reliable national network, safeguarded from events like inundations and earthquakes. Even the local school (300 students) doesn’t have Internet. A temporary solution will be a wireless connection from Costa Rica (I.C.E.), relatively slow (128 Kbps) but at $7 / month, affordable, contrary to a privatized Panamanian network.

    Problem, the wireless Tico network is overloaded 18 of the 24 hours, hence slow, and works with frequent interruptions. But it’s still better than nothing.

  13. @ Dr. Dias

    I haven’t been long enough in Panama to fully understand the politics but it appears to be similar to the US, where the seeming 2 parties in reality represent the same moneyed interest groups, like depicted in this cartoon:
    Such a system could work even better with more parties.

    Because only those subservient to moneyed interests can enter the political circus, there is a guarantee that nothing changes, whomever gets elected.

    Regarding TV, I don’t have one, if just to avoid the commercials. But I notice that the gardener mentions to have seen events on TV (like the horror in Bocas), days after this site already has published them. That has the smell of censorship.

    That people fall for what they see on TV isn’t true, it’s just that they have the experience that politicians have one single goal, filling their pockets. Hence the apathy which is in the interest of politicians so they can stay the course (filling their pockets).

    With clever admission rules for a new party in such a way that its eventually elected members have no alternative but to stay the course as well – the work of lawyers who keep themselves employed by providing laws only they can interpret, amend and defend “correctly”, ad infinitum and of course at a high price.

    So it will probably take a little more than political games to make the necessary changes – unless politicians discover to be so much despised that once retired, they cannot hide in any country, whatever they pay in bribes.

  14. The only real similarity between Panama political party system and the USA is here it is run by corrupted families and the Hangers on, which now hide behind Anonymous Societies(Corporations) now !

    In the USA the Political parties are now a incorporation of of Corrupted Corporations mostly Banks, Hedge Funds, and so called global Industrialist which blatantly steal and Pillaged the world financial system!

    A good example is the Bail out of Ireland the Banks are charging 5.85% to the Irish Government all the while they are borrowing the money for less than 0.5%.

    Why should the Banks and the EU be allowed to charge an over the top interest rate to a sovereign Government?

    Panama is nothing more than a trench between two oceans.

    It will never be more than it is!

    The Political Hacks and the Over Privileged here, will never allow Panama to grow out of their control.

    “Panama where the numbers never add up”

  15. I read this article with great interest, but I also found the tone a bit disappointing. I am in the process of writing a guidebook about Panama and am seriously considering ending all contact with expats – rarely do they have anything pleasant to say about the country they live in.

    Re: the canal and the alleged Iran-Venezuela conspiracy. Plans already exist for a ‘dry canal’ between the port of Corinto on Nicaragua’s Pacific coast and what is currently the Community of Monkey Point on the Caribbean.

    These plans were drawn up nearly 10 years ago and Ortega recently granted exclusive concession to two South Korean companies (all without consultation to the affected communities, of course).

    INTUR, the Nicaraguan tourist board, has also just spent millions of dollars promoting the Rio San Juan as an eco-tourist destination, so it seems unlikely that the government would want to destroy it. However, I grant all things are possible in Nicaragua.

    • Actually, similar plans for a shipping Canal were announced by Ortega in 2006, while in Panama they were campaigning to get the Canal expansion plans by referendum. Then the crisis hit and I thought it wouldn’t resurface, but it did.

      It’s difficult to judge how serious the plans are. I’m not one of those who believe they couldn’t pull it off – if the Americans could do it 100 years ago surely the Russian, Iranians and Venezuelans combined could do it today. I think that it would be good for the region.

  16. Nicaragua is the natural choice for a canal and the Rio San Juan could be easily transformed into one with 21st century technology. The US might kick up a stink though, given the implications.

    I think such a canal would certainly be good for the Managua elite. Personally I am not very keen on the idea, as the local ecology is pristine and the Caribbean coast cultures are now quite fragile.

    My biggest concern is that the Caribbean terminus – whether San Juan del Norte, Bluefields or some speculative deep-water port at Monkey Point – would end up like Colon in Panama.

    I have nothing against progress or wealth creation, but if the cost of ‘progress’ is environmental and cultural destruction – and if most of the wealth ends up in the pockets of a crooked political elite anyway – is it really worth it?

    Ultimately the decision should lie with the people, not the government – they are the ones who have to sacrifice their way of life for these mega-projects.

  17. @The Editor:
    “None of these ludicrous financial projections can be found on the ACP website anymore” False… here is the info: , and if someone needs more, there is an office where you could ask.

    “Two years later, the first commercial ship sailed through the Northwest Passage.” First, it is a different maritime market. Second, you need special vessels to travel that route, and third, if you didn’t know, that Al Gore’s global warming/climate change fiasco is turning the other way around: No shipping company would change their route if they can’t use it for 7 months, or if it’s gonna depend on how the climate is responding.

    “The Suez route?” Yes, it is a competition to us, but a little one, because again is a different maritime market. The vessels that pass through them, not necessary pass over here. It is not cost effective because it still takes more time and when you ship merchandise like Chile’s fruit market (our third top client), time is money. Plus they have a problem with Somali pirates

    Iran’s interest in building a Canal through Nicaragua is for geo-political reasons, like the USA did. Nicaragua has the right to do it, but last time I read, it would cost about 21 Billions to do a level Canal from scratch through Nicaragua. If we needed to borrow around 2 Billions from financial institutions, with 96 years of experience on how to run a canal, and with a financial crisis, it looks like a crazy idea to finance something like that, if you ask me.

    The Haaretz said that the Panama Canal related activities represent “75% of the annual revenues of Panama’s economy”. I don’t know where they got that information, but the Panama Canal only represents 8% of the GDP. You said, “I think that it would be good for the region”. I don’t, because the market in the area is only 5% of the whole world maritime market. There’s no place for two canals, neither three or four.

    About the environmental issues, the Smithsonian Institute made an experiment several decades ago, putting in the same water tank species from both oceans. It didn’t go well. Some species became predators of the other ones, so making a level canal would have a negative impact in the area for sure. Remember that we are talking about two oceans that have been separated for thousand of years.

    @Dr Dias: The USA interest in the Canal was a geopolitical issue and wasn’t necessary when they started using their intermodal system which is a private/public business. They couldn’t privatize the Canal and make money from it, so it gave it to the “morons of the ACP” like you said. Well those “morons” change the model of the Canal to a profiting business, and had given in only 10 years 21% more incomes to Panama than the USA gave in 86 years. What have the Panama’s governments done with that money?… well that’s another discussion. The “morons” also gave this year, with the crisis and less transits, more than 2006’s incomes, which was a condition the ACP have to do with the approval of the Expansion Program Proposal. Also the Expansion Program is under budget, and way advance in schedule. They are starting to put concrete for the new locks in January of 2011, 4 months in advance.

  18. nigel rios,

    While the ACP gives a small pittance to Panama for the canal traffic Tax(Tariff)!

    The US spent Billions on the infrastructure and Maintenance in and around the Panama Canal for all those years.

    It also pump Billions into the local economy for all those years!

    Something the ACP has failed to deliver!

    Panama was an US invention, the Canal was built by US strength!

    What has ACP and Panama done to improve the plight of the poor and the underprivileged here in Panama not one thing since the US left!

    Panama is nothing more than a trench between two oceans.

    By the way Somoza the dead Ex-dictator of Nicaragua along with others in the US Government in the seventies had plan the Sea level Canal because of the great expense, maintenance, and corruption to operate the Panama Canal!

    “Panama where the numbers never ad up”

  19. @Dr. Dias: Are you actually a panamanian? I don’t know where are you getting your info.

    “Small pittance to Panama” First of all, the US didn’t had a profiting business model. Every profit was re-invested in the operation of the Canal. It was after we received the Canal that the model changed, the transit rates changed to how much cargo is passed with every vessel, not how many transits. The 21% that I was talking about is more than $2 Billions. Read the numbers until 2006 for yourself (page 10) So saying that is something the ACP has failed to deliver is not true. We have made more incomes to the local economy in 10 years than the US did. I don’t know what “billions pumped by the US” are you talking about. If you’re talking about the money soldiers spent while they were living here, that’s not the same thing.

    You should know that the ACP can’t just take the incomes and start building schools or hospitals. It is against the organic law of the ACP. The local government is the one that has to do it. If they haven’t, as I said, that’s another discussion.

    But FYI, the ACP has 9,000 direct employees. The lower payment is $2.90/hour, thats over $450/month. Maybe is not too much for somebody, but where do you get that here in Panama? If you add all the jobs from the expansion contracts, (that are also over minimum wage), the Canal is generating a lot of jobs. So it has a positive impact in the economy, even if you don’t want to see it.

    I don’t know if you are aware of all the land properties issues that was made after 1999 in the Canal watershed, for poor people in the area. And I don’t know if you’re aware of the reforestation programs the ACP is doing around the country (Chiriqui, Cocle, Los Santos) that involves people of those zones.

    And that “Panama is just a trench” thing, I’ve heard it a lot of times by foreigners living or visiting Panama, and my answer to them always is… “well, so why are you still here???”

  20. @NIGEL RIOS: To answer your question, I don’t know whether DR. DIAS is a Panamanian or not, but I know where he gets his information from: The many outrageous messages he posted in this forum (going as far as to claim that Panama is now a NAZI State) and the garbage he relayed in this forum are part of a desinformation campaign designed by the Chavez/Ortega team, financed by Ahmadinedjad and relayed by moles like him.

  21. Yes, You all like to make your comments based on numbers and pure BS propaganda supplied by the same Panamanian government groups and Ministries who conducted a very flawed census(this is the same Panamanian Ministry that lauds out all the so-called business statics, always wrong)!

    Yet, they can not even repair a simple pothole,repair a water main, repaid the sewage system, Have any form of garbage sanitation, spray for mosquito control, and lets the majority of Panamanians go Malnutrition.

    You seem to me to live in the Gringo Ghettos and as long as you profit off the backs of the Poor and Underprivileged here in Panama you feel you are above the them and their culture .

    By the way have you ever lived on $450.00 a month in Panama in the last few years?

    Food prices have gone up over sixty percent in four years!

    Rents have gone through the roof for all most all Panamanians.

    Yet, you have the balls to spout your BS how Panamanian Government and the ACP have given to Panama.

    ACP has sold and been deforesting Panama ever since the US left Period.

    ACP as a business model?

    Give me a brake, it squanders more resources, monies, and pays the top officials outrageous Salaries and benefits that are out of line with any comparable first world service industry.

    Just where in the Hell do you live, not in the same Panama that I do, that is for sure.

    Too many here see only Larger egocentric Policies as Right of Left ( Capitalism, National Socialism, or communists or all combined).

    To sanction any one you strives for the Nation of Panama to take care of, give hope, feed and house it’s own people, to ensure dignity and a livable wage!

    This is considered anti Government and anti Social?

    Just what planet do you live on?

    When will you the pure exploiters of Panama People and it’s Natural Resources, just take your combined Social bias and Social judgments to enhance this Country of Panama.

    Instead of putting up with the status quo of corruption and greed you seem to support so lovenly.

    To truly see what this Government is truly doing in Creating major debts to the world Bank, IMF, and the INEX Bank that the Panamanian People can never afford to repay!

    Hence, the cycle of Poverty and Malnutrition will continue unabated forever here in Panama!

    So, take your name calling and label your self a a human failure for not having your head out of your Rectum!

    Viva Simon Bolivar!!

  22. @Dr. Dias: Obviously you have no idea on how the Panama Canal works. By your rants and weird claims, you made me feel like I was talking to a kid who just don’t want to listen, with his hands on his ears saying blah, blah, blah.

    “Viva Simon Bolivar!!” ROFL.. Obviously, you’re in the wrong country Sr.

    @ XIO: Thanks so much for the tip. After reading the last comment, I just have to say… “OMG, trolling 101”. I just can’t waste my time on that.

  23. @ Nigel Rios

    The Nicaragua canal would still be in the interest of Washington as well because a trip from the US East coast to the West coast would be about 800 Km shorter than a trip via the Panama canal. So Washington isn’t against the construction for economical reasons but for political reasons because it wouldn’t be in control: the financiers would (Russia, China, Venezuela).

    @ Dr. Dias

    Malnutrition can’t be blamed solely on the Panamanian govt. In Canarias I watched a similar decline in health: kids got obese, no longer could walk well and had to be taken to and from school by bus. But whereas in Canarias there was no “free trade” agreement that required shelves to be full of HFCS loaded food and other addicting unhealthy junk, this could be different in Latin American countries with such “free trade” agreements. In this respect, Wikileaks would be interesting because every doc with a brain knows the cause of the global obesity / diabetes epidemic.

    Regarding $450 / month, this is only possible when owning house and enough land to grow 80% of your food. Remember that a few years ago the “pensionado” status required a secured income of minimal $500 / month when single, plus $100 /month per family member / spouse. Now the requirement for pensionado status is minimal $1,000 / month. The reason would be interesting, from one year to another, inflation can’t be 100%. A better reason might be a brake on immigration of people who are unlikely to contribute to / participate in Panamanian society especially with peak-everything in perspective.

    Any experience with innovative, realizable plans posted on this site?

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