Colombia Wants Own Canal, An Idea Panama Ridicules

Another Central American shipping canal? The idea has been kicked around Colombia off and on for 30 years, and now the nation's beleaguered president has dredged up the idea again.

"An interoceanic canal could be our trademark," Colombian leader Ernesto Samper said a few weeks ago. "This country needs to think about big things." (What Mr. Samper does not want people thinking about are allegations that his 1994 election campaign was partly financed by drug money.)

Samper contends the rival canal could be built for $1.65 billion and draw traffic from large ships such as oil tankers that currently cannot fit through Panama's channel.

But the initial reaction to his talk of a new canal has been laughter, at least here in Panama.

"It's totally ridiculous," says Michael Ross, manager of Norton Lilley Lines, reflecting the attitude of many Panama City shipping executives.

For one thing, critics say Colombia's canal, traversing perhaps 240 miles versus 50 for Panama's, would cost more than Samper allows - by one estimate $45 billion, or twice Colombia's current foreign debt.

And the market for "post-Panamax" ships, those too large to fit through the Panama canal, is slim, analysts say. About 35 container ships are too big to use the canal, and 60 more are under construction. But many of these have routes that don't take them from the Atlantic to the Pacific, or vice versa. As for tankers, a transisthmus oil pipeline in northern Panama recently closed, reflecting a decline in demand.

Though scoffing at talk of Colombia, Costa Rica, or Guatemala creating economically viable canals, Panamanians are laying plans to improve their own trademark waterway.

The Galliard Cut - currently the narrowest part of the canal - is being widened to allow traffic to flow in both directions simultaneously. Currently, canal traffic is near the 50 ships per day that the waterway can handle.

Another possibility being explored is a third set of locks that would be big enough to allow the larger post-Panamax class of ships.

The locks could be self-financed by canal funds, Mr. Ross says.

Currently, the Panama Canal grosses about $600 million a year in tolls from transiting ships. "Profits look set to increase, without a rise in tolls," says Richard Waino, the Panama Canal Commission's director of executive planning. The canal "should have a bright future. As long as it is run efficiently, it will be a good revenue earner for Panama.

Any new canal, Mr. Waino adds, would not merely compete with Panama's, but also with the intermodal system in the United States, by which freight is transferred in containers from ships to railroads between the Atlantic and Pacific Coasts. He says the intermodal system can be four to 10 days faster than sending a ship through the Panama Canal.

Some figures within Panama's shipping community are worried that the coming handover of the canal, agreed under the 1977 Torrijos-Carter Treaty, will throw the canal's administration into the domain of Panamanian politics. Concerns that the canal could end up like Panama's government ministries - some of which are viewed here as blatantly corrupt - are unfounded, Waino says.

"The intent is to prevent that," he says. A bill awaiting legislative approval would establish a legal framework for ensuring the political independence of the canal. "Systems, procurement, finance, and labor management will all be protected by the law," Waino says.

Assurances by the Panama Canal Commission are taken lightly by some skeptics. But Waino says, "I think the current government understands that the economic and social future of the country depends on the canal."