When the United States gave Panama control over its canal, many international observers predicted the international waterway would be plagued by problems at best and chaos at worst.
But the tiny country bucked popular opinion. On Friday, five years to the day after Panama took control of the canal, the country is looking forward, not back, proudly noting that the canal has doubled its income, lowered its accident rate and is considering its most ambitious expansion plan ever.
“At the end of 1999, there was a lot of worry at the local and international level about whether Panamanians could operate the canal or not,” canal administrator Alberto Aleman Zubieta told The Associated Press.
But, Aleman Zubieta said, none of the doomsday predictions came true. Panama is running the government-owned canal much like a private business that is operating at maximum capacity.
Panama mulls expansion
In fact, the country is planning to hold a referendum on whether it should invest the estimated $5 billion to add new, state-of-the-art locks that would allow larger ships to cross the canal. No date has been set for the vote, which must be approved with a simple majority.
Ten percent of the world’s ships are unable to pass through the narrow waterway, and the canal says the expansion would help it remain one of the fastest and easiest shipping routes between the Pacific and Atlantic oceans.
But many worry that the project will mean too much debt for the small country. Officials are investigating international financing for the project, which will likely require expanding Lake Gatun and flooding nearby communities.
“If the United States was still the canal’s owner, it wouldn’t have the headache of coming up with the money,” said Fernando Manfredo, a former assistant administrator of the canal who cautions that the government must make sure the expansion project will pay for itself. “But Panama is a small, vulnerable country, and this would put us at a great risk.”
Still, the 90-year-old canal, which uses water from lakes and canals to raise and lower ships, is doing well.
Increase in income, decrease in accidents
For the first time in its history, the canal raised more than $1 billion during the last fiscal year, which ended Sept. 30, and had a record surplus during that time of $183 million, administrators said. In 1999, it recorded only $500 million in income.
The waterway registered 10 accidents last fiscal year among the 14,035 boats that crossed it. That was the lowest accident rate since 1923, when only 3,967 boats passed through the waterway.
The increase in income and decrease in accidents is attributed in part to a $300 million project that widened an eight-mile stretch called the Culebra Cut, boosting the canal’s traffic potential by 20 percent.
In 2002, the canal also eliminated a 1912 pricing system that charged all ships a flat per-ton rate and it began setting rates based on the type of ship and cargo.
“The United States managed the canal according to its interests,” said analyst Marco Gandasegui. “Now the canal is in Panamanian hands, and technically, it is running better than when it was under the United States’ control. Shipping companies are very happy.”
1999 handover
The United States opened the canal on August 14, 1914. But under treaties signed in 1977 by former President Jimmy Carter and Panamanian strongman Gen. Omar Torrijos, the United States handed over control of the canal on Dec. 31, 1999, a few hours before midnight.
The treaties gave Panama 360,240 acres of real estate that made up the Canal Zone, a fenced-in U.S. civilian and military enclave that was a sort of miniature, tropical United States.
Some initially complained about the loss of the estimated $300 million the Americans spent in Panama each year.
But most believe an increase in tourism, due in large part to the development of former U.S. lands, has created new jobs.
“The situation is much better,” said Ivonne Campos, a swimming instructor. “The country has progressed, changing its image and creating large shopping centers and other businesses in the old military zones.”
Still, Campos worries that the country is less secure without the thousands of U.S. troops once stationed here.
“Lots of foreigners come here now, and they stay, including undocumented workers,” she said.