The Flip Side of Paradise, Part II

Can the Panama Canal expansion help Panama’s poor? NPR reports


Panama’s Canal Divides A Country Into Haves And Have-Nots
by Tim Padgett, WLRN Miami, National Public Radio


Jorge Quijano has one of the coolest office views in the Americas: the Pacific port entrance to the Panama Canal. The panoramic vista seems to help Quijano, who heads the Panama Canal Authority, see the bigger picture.

On the one hand, Quijano understands why Panama has run the canal so effectively since the United States handed it over in 2000.

“When the United States built the canal, it was treated like a noncommercial utility, like a water filtration plant,” Quijano said in an interview at his Panama City headquarters. “We’re running it as a business.”

One that’s expected to rack up revenues of more than $2.5 billion in 2014, and which moves 330 million tons of cargo in and out of the Western Hemisphere each year.

But Quijano, while stressing that he’s an engineer and not a politician, also concedes that more Panamanians need to see more of that wealth.

For starters, he says, “Panama has to strengthen its education,” which is rated among the world’s worst. “There’s so much investment coming into Panama now, but if we don’t have [trained] people, those investments will go elsewhere.”

This year marks the Panama Canal’s 100th anniversary. Panama is nearing completion of a more than $5 billion expansion of the waterway, and it recently elected a new president, Juan Carlos Varela. There has never been a more critical moment for the country to see the bigger picture Quijano warns about.

Glaring Inequality

If Panama doesn’t start addressing the inequality that keeps almost 40 percent of its population in poverty it may well threaten to turn the boom into bust.

To Panamanians, what the U.S. did in handing ownership of the Panama Canal to Panama is as important as the maritime marvel the U.S. built in 1914.

And Panama has made the most of it. In the past five years, its economy has grown faster than any in Latin America. Panama City has a new subway. Its waterfront skyline now sports the region’s tallest skyscraper, the Trump Ocean Club.

In fact, Panama today rivals South Florida as a prime shopping destination for many in Latin America.

“When you go to Miami, you will see a lot of people with luggage in the malls buying things,” says Carlos Urriola, executive vice president of the Manzanillo International Terminal (MIT) next to the canal’s Caribbean entrance. “Today you see this in Panama.”

The MIT, now one of Latin America’s largest ports, handles 20 times more freight than it did in 2000.

“It’s amazing,” says Urriola, “that a small country of 3.5 million people has so much influence in what happens to world commerce.”


Many Haven’t Seen The Benefits

Yet it’s just as astonishing that so few of those 3.5 million seem to feel the benefits — especially Panama’s youth. More than half the country’s children are poor, and almost a fifth suffer malnutrition.

That weighs heavily on Panamanians like Eladia Córdoba, a widowed, unemployed mother in Panama City’s El Chorrillo slum. Given Panama’s prodigious new resources, she says she can’t understand its glaring lack of a social safety net, although the government has recently begun more serious social welfare programs.

“All that canal wealth isn’t getting to poor people or the barrios,” Córdoba says inside her tiny walk-up apartment while feeding her four young children a lunch of pasta and ketchup. “It’s not coming to anyone’s rescue here.”

The canal expansion will accommodate more massive vessels known as Post-Panamax ships, and it should almost double the canal’s revenues over the next decade.

Panama hopes the project will also propel its bid to become the Hong Kong of the Americas, a global maritime and financial hub. Quijano believes Panama is already “the gateway for Latin America and even the United States.”

Panama City’s Prosperity Vs. Colon’s Struggles

But can that stature really last long and meaningfully if Panama doesn’t also narrow the chasm between rich and poor? Between, especially, a Panama City-based white elite known as los rabiblancos and black Panamanians in communities like Colón.

That port city, Panama’s second-largest, sits next to the canal’s Caribbean entrance. But it has been largely left out of Panama’s prosperity. Unemployment there is about 50 percent, and in recent years the frustrations have boiled over into deadly street protests.

Roberto Darkins has taken part in some of those demonstrations. He sells clothing — some of it he proudly shows off as his own brand, Que Jeans — on Colón’s main street. But he laughs when someone mentions Panama as a banking center, given how hard he says it is for small businesses to get even microloans.

Darkins also scoffs at Panama’s celebrated building boom, which he says has made housing less affordable for families like him, his wife and four children, who share a one-bedroom apartment on the eighth floor (no elevator) of a decaying 19th century building.

New apartment complexes, he says, “charge $500 or $700 a month, and the salary here is like $200 or $300 a month. Who do you expect to go and live in those buildings?”

He also says he fears Panama’s notoriously corrupt political system will devour the fruits of the canal expansion: “The more money you make, the more corruption they’re gonna do.”

Consider a legal case that played out recently in Panama:

The dispute involved a deceased U.S. millionaire who’d left $50 million in his will to a trust for impoverished Panamanian children.

His rabiblanca [RD: "rabiblanca" literally means "white tails" and refers to the old, mostly white, Spanish families that have historically controlled wealth and power in Panama] Panamanian widow and her children fought to annul the will so the money would go to them instead. Panama’s lower courts ruled the will valid — but the widow and her kids got the Supreme Court, whose corruption has been a target of U.S. State Department complaints, to overturn them.

That’s a big part of Panama’s bigger picture. And it will still be right outside everyone’s window when the bigger canal locks open next year.

Panama saves whales and protects world trade

Did you know that Panama is one of the only places in the world blessed with Humpback whale migrations from both the Southern and Northern hemispheres? During the Southern hemisphere Humpback whale migration, July-October each year, we have several thousand humpbacks who come to Panama to breed and give birth. Anne Gordon, the same Anne who conducts Embera Village Tours, also offers whale watching tours out of Panama City. If you are embarking or disembarking in Panama and want a truly unique experience, you might consider going whale watching with Anne.

To protect these wonderful creatures the Panama Canal has implemented new procedures to prevent ships using the Panama Canal from colliding with these fantastic creatures.

The Republic of Panama’s proposal to implement four Traffic Separation Schemes for commercial vessels entering and exiting the Panama Canal and ports was approved unanimously by the International Maritime Organization in London, May 23. Based on studies by Smithsonian marine ecologist Hector Guzman, the new shipping lanes are positioned to minimize overlap between shipping routes and humpback whale migration routes and reduce vessel speed four months a year at the peak of the whale overwintering season.
Several cetacean species move through the tropical waters near the Pacific entrance to the Panama Canal in the Gulf of Panama. With Smithsonian ecologist Richard Condit, intern Betzi Perez-Ortega and colleagues from Whalesound Ltda. in Chile and the College of the Atlantic in Maine, Guzman recently published results from six seasons in Panama’s Las Perlas Archipelago. Based on photo-identifications of nearly 300 individual humpback whales, including 58 calves, they estimated the total population at more than 1000 animals that visit year-round and matched them to individuals sighted from the Antarctic Peninsula, Chile and Colombia. They concluded that the Archipelago, only 60 kilometers (40 miles) from the Pacific entrance to the Canal, is an important breeding area for humpback whales from the Southern Hemisphere.
Panama is a leader in global commerce and a steward of this exceptional marine biodiversity. Nearly 17,000 commercial vessels cross the Gulf of Panama each year. This number is expected to increase significantly when new locks now under construction permit larger, “post Panamax” vessels to transit the Canal and enter its ports.
Based on his analysis of whales tagged with satellite transmitters, Guzman estimates the new policy will reduce potential areas of collision between ships and whales by 93 percent and reduce the interactions between ships and whales by 95 percent in the Gulf of Panama.
In the Pacific, an array of three schemes is also expected to significantly diminish the potential of ship collisions with coastal fishing vessels and pollution-causing accidents affecting seven marine protected areas including Wildlife Sanctuaries, a UNESCO World Heritage site and wetlands protected under the international Ramsar Convention.
The Panama Maritime Authority took the lead, based on the input from the Panama Canal Authority’s Captain Fernando Jaen and the Maritime Chamber’s Jocelyne Anchor to define the policy and shepherd it through the approval process.
“This is a clear example of Smithsonian research that makes a difference,” said William Wcislo, acting director of STRI. “We are a research organization, not a conservation organization, but our research feeds conservationists’ efforts to protect biologically rich and vulnerable ecosystems.”
“Scientific results impact conservation, but putting policy into effect takes a great deal of time,” said Guzman. “We have to be patient and consistent. It took two years of teamwork to design the policies and obtain a consensus for the traffic separation schemes for whale protection. Now Panama has six months to implement the TSS’s, and the maritime industry has six months to comply.”
Guzman is currently working with scientists and policy makers from Ecuador and Chile to safeguard passage for whales along the entire coast of South America and plans to expand the project to other countries in South and Central America.


IT’S ALL HERE … Everything You Need to Know

It’s 4:30 a.m. – When I am on the bridge giving commentary as we make a passage through the Canal this is when and how the day begins. You’ll get inside information on what’s happening on the bridge of a ship passing through the Canal and pictures on the bridge showing perspectives that guests never get to see.

The Bridge of Life – Millions of years ago there was no Panama! The waters of the oceans flowed freely between the continents before the “bridge of life” liking the continents was created.

New Granada – Eventually the Spanish arrived and conquered, and then as the Spanish Empire dissolved, Panama struggled to find it’s place in the New Word.

The Dream – Columbus, King Charles V of Spain, Benjamin Franklin, Thomas Jefferson, and Simon Bolivar all shared the same dream.

At work: bridge commentary during Canal passage.

At work: bridge commentary during Canal passage.

A Century of Expansion – Voyages and expeditions of discovery opened up new areas of the world, and the fledgling United States of America began expanding to the west.

The Panama Railroad – Although many cruise passengers will take the excursion on today’s Panama Railroad, few realize how important the original Panama Railroad was not only to Panama but also to the United States. This was the “little railroad that could” and carried billions of dollars of gold across the Isthmus.

The French Effort – Riding high on the success of the Suez Canal, Ferdinand de Lesseps came declaring that a canal across Panama would be easier than building the Suez Canal.

Banana Republic – The term “Banana Republic” was coined to describe the Republic of Panama created with the assistance of the United States, who in return got a path cross the Isthmus dividing the new country in two.

Let The Dirt Fly – Theodore Roosevelt, like Caesar, came, saw and conquered. The United States undertook the greatest project the modern world had ever seen and finished the Panama Canal ahead of schedule and under budget.

Dr Richard DetrichaHow It Works – In theory quite simple: up, over, and down, but achieving that was and is quite a marvel! Here’s what you need to know about how and why the Canal functions.

A Complicated Marriage – Panama’s relationship with the United States was complicated from the start. Many people read David Mc Cullough’s wonderful history, The Path Between The Seas: The Creation of the Panama Canal 1870-1914, failing to realize that it covers only PART of the history. A lot has happened since 1914, in the world, in Panama, with the Canal, and with Panama’s relationship with the United States.

Moving Forward – Time moves on, and so has the Canal and Panama. What about the future role of the Canal? Nicaragua? The Northwest Passage? The Canal expansion project?

Panama 101 – What is in Panama and why are people so excited about visiting the country itself?

Booking Passage – The questions everyone ask … What is the best time? How to find the best price? Which side of the ship is best? What about shots, passports, etc.?

I do change my shirts!  This is just my traditional Panama Canal day shirt!  It's more fun if there is another ship in the locks next to you.

I do change my shirts! This is just my traditional Panama Canal day shirt! It’s more fun if there is another ship in the locks next to you.

Seeing Panama – If you are lucky enough to actually stop in Panama and not just barrel through the Canal, what are the shore excursion options? Which one is best? How do you choose? Should you book through the cruise line or go independently? What are the independent options? Included are actual photos from most of the tours.

Your Voyage – Mile by mile guide of your cruise through the Panama Canal. What to expect and what to look for? Facts that you should know along the way.

Questions & Answers – Probably half of these are the same questions that you’ve been asking?

Our Ship & Our Bill – Everybody’s question: how much? A hypothetical ship and how the toll and fees are charged.

Key Dates in Panama History

U. S. Military Installations in Panama 1904 to 1999

99 Years Old And Going Strong!

It should happen to me!  This month the Panama Canal celebrates 99 years of service to over a million vessels!  The giant new rolling gates have arrived and the expansion program is over 60% complete and scheduled to open sometime next year, or as we say in Panama, “Manana!”

If you are one of my many faithful subscribers, to watch this video you may need to actually visit the Internet site.

In a FINANCIAL TIMES article, “Panama Canal: Out of The Narrows”,  Andres Schipani and Robert Wright wrote . . .

After a visit to Panama almost four decades ago, the novelist Graham Greene saw the canal as becoming “less and less” important every year, with “a smaller tonnage passing, a smaller revenue, a channel too shallow and locks too narrow for the great tankers”.

That fear of irrelevance has only intensified as the world’s ships have grown too big to pass through the canal. Today, about half of the container ships afloat or on order worldwide are too large to travel through its locks. The “Panamax” vessels historically designed to transit the canal are now relative minnows.

If that were not enough of a challenge, melting Arctic ice could also open a rival route to the north.

Eager to defend its status as one of the world’s great trade conduits, Panamanians decided to expand the canal in a national referendum almost seven years ago. That $5.25bn project is running about six months behind schedule but, when the work is finished in mid-2015, the expanded waterway is expected to transform some of the most critical trade routes between the Atlantic and the Pacific. Logistics companies such as railways are trying to gauge whether the expansion will ultimately greatly increase direct shipments to the eastern US . . .

The deeper, wider channel will allow the passage of enormous vessels with up to three times the capacity of the biggest ships currently using the route. Panamanian officials predict that the canal, which celebrates its centenary next year, will increase the annual tonnage it carries to more than 600m tons in 2025 from 333.7m tons last year.

However, while Panama is making its bullish projections, regional infrastructure is not yet ready for the bigger vessels. Many US ports are unable to accommodate larger ships travelling via Panama. Several tropical ports are also vying with each other to become the deepwater hubs for the decades ahead but observers say port expansions are struggling to keep pace with the potential shift in shipping patterns.

In Panama, the expansion is 60 per cent complete. Dredging of the navigational channels along the narrowest section, the Culebra Cut, is finished. In a colossal ditch, 8,000 workers wearing yellow helmets and fluorescent vests are building compartments for the sets of locks.

Somewhat cruelly for Panama, ship sizes have once again outgrown the canal while this work has been going on. Maersk Line, operator of the world’s biggest container fleet, has 20 new ships on order that are so vast that they cannot pass through even the enlarged waterway.

Originally, it was envisioned that the expansion programme would chiefly make it easier to ship manufactured goods from Asia to the eastern US. But ships travelling the other way have become far more significant than anyone imagined seven years ago. “In the future, we foresee trade growing between Asia and Latin America,” says Jorge Luis Quijano, the Panama Canal administrator, “with east Asia sourcing more and more raw materials out of Latin America.”

Despite a downturn in the commodity supercycle, many businesses remain hungry for lower transport costs to ship commodities such as iron ore, coal, soya and natural gas to Asia. Additionally, the flow of containerised Asian goods to Latin America is still strong, thanks to a robust growth in wages and domestic credit, which has been fuelling a consumer boom in the region.

Nevertheless, Panama is not going to be able to tap these shifting trade flows unchallenged. Nicaragua’s national assembly – dominated by the leftist Sandinista front – has backed a $40bn proposal for a little-known Chinese company HKND to dig a rival to the Panama Canal. Many already doubt the economic feasibility of a project three times longer than Panama’s 80km waterway.

Not to be left behind, Guatemala and Honduras have announced “land bridge” projects between the Atlantic and Pacific. There is also speculation in Mexico about Chinese investment in a connection across the Tehuantepec isthmus.

Container shipping lines such as Maersk, which has about 15 per cent market share in Latin America, are open-minded about such projects. “For me, any infrastructure investment that is going to facilitate trade between customers is welcomed,” says Robbert van Trooijen, Maersk Line chief executive for Latin America and the Caribbean. “I see myself as a user of those projects.”

Since Panama took control of the Canal in 1999, about 5 per cent of world trade has been passing through its locks. It earned $1.6bn in pre-tax profits last year on revenues of $2.4bn, and accounts for up to 10 per cent of the country’s economic output.

Panamanians are confident that regional rivals will not eat too deeply into their profits. “We don’t consider there will be any competition,” Fernando Núñez Fábrega, Panama’s foreign minister, told the Financial Times last month when asked about the Nicaraguan rival. For him, if everyone who wanted to build a canal did so, “Central America would end up like a Swiss cheese”.

. . .

The expansion of the canal is set to shake up the way shipping lines operate for reasons well beyond the size of vessels that they can use. Because bigger ships take longer to load and unload in port, container lines may send the new, bigger ships to fewer ports in the US or South America once they emerge from the canal. That will spark greater demand at both ends of the canal for new “feeder” services ferrying containers between smaller ports and larger “hubs” where the bigger vessels dock . . .

However, Alberto Alemán, who stepped down as Panama’s canal administrator in December 2012 after 16 years at the helm, hopes that much of the new business will come to Panama’s own ports, on both coasts. Panama offers logistical advantages. It is not only a regional airport hub but also has a large free trade zone, like Singapore and Hong Kong. The country is also Latin America’s fastest growing economy, with annual growth rates of about 10 per cent . . . Read the entire article

Meanwhile ports in the US, where development of infrastructure has lagged behind almost everywhere, are scrambling to find funds to play catch up. The ports who aren’t planning to expand to accommodate the larger vessels are going to be left in their wake.

If you are planning a cruise through the Canal or are just interested in its fantastic history, you’ll want to get a copy of my book Cruising The Panama Canal: Centennial Edition.

Commercial Boquete

New Lock Gates Arrive for Panama Canal Expansion

A major milestone in the expansion of the Panama Canal took place when the first of the new rolling lock gates arrived from Italy. This is a good shot because of the workers in the photo giving you a sense of the size of these gigantic gates.

It took some two hours to unload each of the four lock gates that will become part of the biggest locks in the world when the expansion of the Panama Canal is completed.

The gates, which arrived Tuesday, August 20, took 30 days to travel from Trieste in Italy. The ship that carryiied them is on its way back to Italy to continue ferrying the remaining 12 gates. Each one is 30 meters high and 10 meters wide.

To unload each one, at a specially constructed dock. took four flatbeds each with 120 wheels.
The 16 gates that will allow the passage of post panamax ships that currently have to make the long voyage around the Horn, will be in place by April 2014. [NEWSROOM PANAMA]

And here’s the video complete with the dramatic music the ACP likes for this kind of thing.

Views – Vistas

Sunrise Over The Pacific

The other day I received an email from a retired teacher who was planning a trip through the Panama Canal.  His kids had given him McCullough’s PATH BETWEEN THE SEAS and my Cruising The Panama Canal: Centennial Edition book to read in preparation for their trip.

McCullough’s book is the definitive history of the building of the US Canal and is a weighty tome somewhat intimidating because of its size.  I had one Captain who said, “Richard, every night I read McCullough’s book and it puts me to sleep.  What am I doing wrong?”
I asked him what page he was on and he had only gotten to page 80.  I said, “Hang in there for 150 pages and you will be hooked” and sure enough he was.  But I suspect because of the comparative sizes and the fact that my book is about cruising through the Canal, the retired teacher read my book first.  And he found a few mistakes and happily emailed me.  I really do appreciate when readers do this!  Really!  But one of the things he questioned was “sunrise over the Pacific.”

Well in Panama from certain vantage points it happens!  Although the Isthmus runs East-West and the Atlantic is on the East and the Pacific on the West, in Panama City you can see the sunrise over the Pacific and just to prove that . . . I took this picture early one morning from the top of Ancon Hill looking out to the Pacific.

Panama Sunrise Over The Pacific


The Stuff of Espionage Novels & Movies

Who knew . . . the Panama Canal!

At the center of the current international brewhaha is tiny Panama and the Panama Canal. As one might expect in this day and age the Panama Canal Authority is very interested and demanding in know what is being transported through the Canal across the country. Apparently those sneaky North Koreans were transporting undeclared arms from Cuba hidden underneath tons of raw sugar. The ship had for whatever reason, probably emails and phone calls, attracted the attention of the US, hence Panama, and guess what . . .

Inspectors digging through the sugar . . .

Unidentified Cuban weaponry hidden beneath 10,000 tons of raw sugar

During the inspection prior to entering the Canal the crew resisted, and at one point when the crew refused to host anchor and move to a new location and Panama authorities had to cut the ships anchor chain.  In the melee the ship’s captain attempted to commit suicide by slicing his throat and he is now in a Panama City hospital.

Panama has requested the UN, US and Great Britain to assist with investigation.  Cuba claims these are old weapons being sent to North Korea for refurbishment.  Panama has granted permission to North Korean diplomats to come to Panama to aid in the investigation.  Boy, given a little imagination and artistic license, does this story have entertainment potential!

See these two stories from Panama Newsroom . . .

Detained N. Korea ship’s captain tried to slit throat

SHIP SEIZURE: North Korean diplomats heading to Panama

Although the Canal is officially neutral it has allowed warships from the US, Russia and other countries to pass.  The problem here is UN sanctions on North Korea and the fact that the illegal cargo was obviously hidden, not declared, and was attempted to be smuggled through the Canal.

Meanwhile construction continues on the amplification of the Canal . . .

Here’s a VERY nicely done update from the ACP . . . I only wish my workers moved as fast as this guys appear to move!

And now is the time to book your Panama Canal Cruise

2014 is the 100th Anniversary of the Panama Canal and this is the time when many people are planning and booking their Panama Canal cruise for this fall and next Spring.  If that is you . . . be sure to get ahold of my book Cruising The Panama Canal: Centennial Edition.

The more you know about the history of the Canal and Panama, the more you will enjoy your trip! My book is designed to be readable and a helpful guide both preparing for a Canal cruise and for the actual day crossing the Canal.



About these ads . . . Facebook, like everyone else, is looking to monetize their application by presenting these ads.  I don’t have any say in what ads you see . . . but if you do click I make a penny or so for my grandkids’ college fund.  Actually several of these ads are really great ads and fun to watch.



“Spanish? Start learning Chinese?”

As I struggle with learning Spanish, some are suggesting I should be learning Chinese instead.  While in Seattle I visited a contact at Holland America’s corporate offices: he was learning Chinese.  Why? China is emerging as one of the hottest markets for cruise passengers going!  On my last contract on a cruise ship for three Med cruises in a row we had groups of over 250 from China.  And what is generating a lot of discussion is the approval of Nicaragua to grant a canal concession to a Chinese businessman.

There was this, for example, at Newsroom Panama:

The delivery of a 100 year concession award for an Inter-oceanic Canal to a company without the capital or experience to carry out a project of this magnitude could be the result of a brilliant long-term operation by the Chinese government.

Jorge Cobas, writing in CentralAmericanData says:

As a commercial project, the Inter-Oceanic Canal in Nicaragua is economically unfeasible, in particular because the uncertainty over the return on investment to be made is so large. But for a country destined to be a world leader, as is China, for whom finance of $40 billion is no small thing, possession of a dominion over a waterway in the backyard of its greatest commercial competitor makes this investment a bargain.

President Obama conducted a routine visit to Central America in his second presidential term, and the most important thing he left behind was stories about the menus at the formal dinners. In contrast, Chinese President Xi Jinping left hundreds of millions of dollars in loans for projects, which are, of course, well tied to the convenience of Chinese companies.

Xi Jinping did not visit Nicaragua. However, it could become the most important country for China on the American continent, in this century and the next.

Nicaragua is, under its current institutional conditions, with a Sandinista government which rules with the factual and dubiously democratic style of leftist Latin American governments – often going above the heads of opposing minorities – the Central American country where it is possible to develop this brilliant geopolitical Chinese operation.

Clearly, franchising the Inter-oceanic Canal directly to the Chinese state would have been much resisted and even unfeasible in political terms, both inside and outside of Nicaragua. As we have seen, the government of President Ortega found no obstacle to giving ownership of this concession to a nearly non-existent company. However, given the style of Chinese developmental policy, it is highly unlikely that the company will not be dependent on a government that has a clear need to ensure mastery of global sea routes, not only in terms of trade but also of military strategy.

It is clear that the construction of the Inter-oceanic Canal – if realized – would revolutionize and boost the economy of Nicaragua, to the well deserved benefit of its inhabitants, but it could also convert the country – and region – into a focus for geopolitical tensions, with unpredictable consequences.

What is absolutely certain is that we should hurry up and learn Chinese …

And just the other day the LAS VEGAS SUN ran this Associate Press article.  And what I find particularly interesting about this article is the references to the boom in Panama attributed largely to the Panama Canal.  Now frankly I don’t think Panama’s success is just due to the Canal, although it certainly is a major factor.  Fortunately the US built the Canal and ran it as a service generally breaking even.  When the Canal was turned over to Panama many naysayers in the  US predicted either that Panama would be unable to run the Canal independently, or that it would run it into the ground.  Panama decided to run the Canal as a business and it has become a hugely profitable business.  Although run by an independent, mostly non-political, authority, each year the Canal contributes huge amounts directly to the government in addition to all the residual contributions of the country’s major industry.  Even with the downturn in the economy and fewer containers from China bound for Wal-Mart, the Canal has continued to make money.

Panama’s boom helps drive Nicaragua canal dreams

Curundu used to be a warren of ramshackle wooden houses and reeking open sewers, one of Panama City’s most notorious refuges for street gangs and drug dealers.Then, three years ago, the government tore down the shacks and built a bustling new neighborhood of concrete apartment buildings, freshly paved streets, basketball courts and fields with artificial turf.

“We live more decently here now. People see a prettier neighborhood, kids playing soccer,” said Ronny Murillo, a 45-year-old ex-convict who helped build one of the billions of dollars in projects made possible by an economic boom driven largely by the $5.25 billion expansion of the Panama Canal. Behind him, enormous cranes loomed over a skyline that has been transformed by dozens of new skyscrapers, many filled with luxury apartments, high-end stores and fashionable boutiques.

In a little more than five years, Panama has slashed its unemployment rate by two-thirds and nearly tripled the rate of government spending as the double-digit growth of the canal-fueled boom has made it the hemisphere’s hottest economy. Just to the north, Nicaragua has watched years of slower growth fail to move it out of its position as the hemisphere’s second-poorest nation, after Haiti.

The deep discrepancy between the fortunes of two Central American neighbors goes a long way toward explaining the Nicaraguan government’s fervent promotion of a Chinese company’s vague proposal to build the hemisphere’s second trans-ocean canal across Nicaragua. Despite deep reservations among opposition lawmakers, environmentalists and independent shipping experts, the country’s leftist-controlled National Assembly voted overwhelmingly Thursday to grant Hong Kong-based HK Nicaragua Canal Development Investment Co. an exclusive, renewable 50-year concession to measure the feasibility of a new canal, then build it and take the lion’s share of the profits.

Underlying much of the enthusiasm in Nicaragua is the hope that the massive new canal could bring a bit of Panama-style prosperity.

“I don’t think we’re going to be just like Panama, because they’re already 100 years ahead of us. But yes, I think this is going to help Nicaragua put poverty behind it and generate jobs,” said Roberto Pasquier, an electric appliance salesman in a market in the Nicaraguan capital, Managua.

Panama’s prosperity has drawn tens of thousands of job-seekers, mostly from Nicaragua and nearby Colombia, Venezuela and the Dominican Republic. Almost 40,000 such workers have been granted legal status in Panama since 2010 under a government program meant to feed the roaring demand for labor to build projects that include Central America’s first subway, a $1.452 billion investment.

Panama has the highest level of human development in Central America according to the United Nations Development Program, which measures factors including life expectancy, health care access and education.

“You can make money here in Panama, buddy,” said Mauricio Hernandez, a 29-year-old Colombian who sells food in the streets of Panama City. “We’re all coming for dollars.”

Panamanian Abel Aparicio, a 49-year-old hotel chef, earns $1,000 a month, twice what he made when he started 20 years ago, and has bought two small apartments that he rents out to supplement his income.

“Nobody’s that worried about losing their job,” he said. “If you leave one job, other opportunities open up, and there are ways to make money besides hotels, which there are a lot of these days,” he said.

Panama’s economy started booming around the time that authorities began the Panama Canal expansion in 2007. By 2010, the annual growth rate rose to around 10 percent, where it’s stayed.

The canal expansion generated 30,000 direct jobs and the administration of populist right-leaning President Ricardo Martinelli estimates that the government will have put $16 billion into public works between 2009 and 2014. That amount was $4.4 billion between 2000 and 2004. A 13.5 percent unemployment rate in 2004 dropped to 4.6 percent in 2012, in a workforce of 1.6 million. The poverty rate dropped from 36 percent in 2002 to 26 percent today.

Wealthy investors, many from Colombia and Venezuela, have built real-estate and tourism projects, restaurants, clothing stores, car dealerships and computer businesses around Panama City.

Nicaragua, meanwhile, doesn’t have any obvious means, besides the possibility of the canal, of rapidly accelerating its growth.

The government says it has created 700,000 jobs since President Daniel Ortega took office in 2007 and poverty has dropped from 50 percent in 2006 to 42 percent last year. But 1 million people remain out of work in a country of 6 million. If the canal is built, the Nicaraguan government says, within five years GDP would go from $11 billion a year to $25 billion, generating hundreds of thousands of new jobs.

“Those who oppose the canal want this country to keep suffering from underdevelopment and poverty,” said Edwin Castro, congressional leader of Ortega’s Sandinista Front.

Nicaragua is betting on businessman Wang Jing, who first appeared in Nicaragua last year as the head of the Xinwei Telecom Enterprise Group, which signed a contract with the government to improve the country’s telecommunications system and promised to invest as much as $700 million dollars. So far, there’s virtually no sign of any spending yet.

“We can’t believe that they’re going to build an inter-ocean canal, when from here it looks like they haven’t even built a single telephone line, or done anything else since they made the announcement. It’s all a lie,” said opposition congressman Eliseo Nunez.

The head of Nicaragua’s state telecommunications institute told reporters last week that the first new telecommunications antennas would be installed by Xinwei in late July or early August, and the delay had been caused by Xinwei’s high manufacturing standards. Still, such problems have fueled widespread doubts inside Nicaragua, where many are skeptical about dreams of Panama-style riches.

“It’s all a grand illusion that they’re selling us, it’s untrue that we’re going to turn into another Panama,” taxi driver Francisco Siles said as he picked up fares outside a Managua hospital. “We’re going to keep being the same poor Nicaragua.”

Weissenstein reported from Mexico City. Luis Manuel Galeano contributed from Managua, Nicaragua, and Kathia Martinez contributed from Panama City.

A couple of additional comments about the points I’ve highlighted.  If you are thinking about retiring abroad, about an expat life style, about escaping your home land for one reason or another, wouldn’t you choose a country with an established democratic government [albeit at times just as raucous, screwed up and maybe corrupt as the government in your homeland]?  Wouldn’t you choose a country not at war with anything except poverty?  Wouldn’t you choose a country that didn’t need a military? [The second US-Panama Canal Treaty promised that the US would protect the neutrality of the Canal in perpetuity - than you very much! - so who needs an army when the US spends so generously on its industrial/military complex?]  Wouldn’t you choose a country that is building its infrastructure and is in the midst of an economic boom?

And a second point usually just a by-the-way in this discussion, but one which has enormous world-wide implications: no one has done any environmental impact study.  It is said that had de Lesspes been successful in his original plan to create a sea level canal across Panama that the result would have been an ecological disaster.  A sea level canal across Nicaragua using Lake Nicaragua might well create environmental chaos.

For more about the fascinating history of Panama and the Panama Canal read my book Cruising The Panama Canal: Centennial Edition. 

I’m very pleased that one private university in Panama which specializes in teaching students American-style English is using Cruising The Panama Canal: Centennial Edition as a text in their history classes.  They like my presentation of Panamanian history, a wow to me as a guest in their country, and it forces the students to read and discuss in English, and not in a formal, rigid, boring style.

Canal Expansion Unearthing Fantastic Paleontological Findings

Although the Canal is all about business and getting the job completed, the Panama Canal Authority (ACP) recognizes that this is a once in a lifetime opportunity for scientific exploration and discovery.  Working closely with the Smithsonian Tropical Research Institute, which has had a presence in the Canal almost from its inception, scientists are making amazing discoveries about the bridge between the continents.  This video, although in Spanish – not English or Chinese! – is fairly easy to follow even if you don’t know a lot of Spanish.