This could be major news over the next couple of years...

Panama is wrestling with the biggest decision in its history - build a new canal at a cost that may be not much less than the value its annual output, with all the risk that implies, or do nothing, and let the existing waterway deteriorate, along with the country’s ports and terminals.

Within a few years, much of the world’s cargo fleet will be too big to pass through Panama, unless the country accepts the huge risk involved in building a new canal.

The first big hurdle would consist of financing the project, which will cost at least $5 billion and maybe twice as much.
This money would have to come from foreign investors.
But the annual value of Panama's output is only around $14 billion, and the country already owes national and foreign creditors close to $9 billion.
As a result, few investors would want to lend more money to the Panamanian government, especially since it will take ten years before the new canal produces any revenue.
Private investors might be willing provide funds specifically for a new canal, including the right to seize it if Panama defaults on the loan.
On the other hand, it is hard to imagine Panama agreeing to surrender sovereignty over part of its national territory.

While new technology will allow such an effort to be accomplished with far less people and danger, than the original project, a new canal would be a boon to the regional economy. It will be interesting watching how this one shapes up. Read the whole article.

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Posted by: tas at November 29, 2005 07:59 AM