Thursday, August 25, 2011

The Infrastructure Chronicles -- Volume 11

There is a lot to be said about the history of the Panama Canal, a concept that piqued people's imagination almost as soon as the Europeans landed on the isthmus in 1501.  The first serious attempt to dig a canal was led by Ferdinand de Lesseps (honored here in a memorial in the Plaza de Francia in Panama City), who had successfully built the Suez Canal; but this was a different task altogether.  He was stymied by disease, the difficulty of construction, and a failure to secure (from the recalcitrant American owner of the trans-Isthmian railroad) or build an effective railroad link to carry workers, material, and supplies to and from the interior of the country.

After the French gave up, an American team began and ultimately had greater success.  First, though, they had to deal with Colombia, the owner of Panama, which refused to give America a franchise to build.  President Teddy Roosevelt, in a classic move of imperialism and practicality, helped Panama declare its independence from Colombia in 1903.  Shortly thereafter, the new government authorized French businessman Philippe Bunau-Varilla, to negotiate a treaty with the United States. The Hay-Bunau-Varilla Treaty allowed the U.S. to build the Panama Canal and provided for perpetual control of a zone five-miles wide on either side of the canal, creating the political and institutional framework for a successful project.  It was completed in 1914.

Plaque in Plaza de Francia

Plaque on Ancon Hill
Decades later, President Jimmy Carter decided it was time -- in part because of anti-American sentiment -- to divest American interests in the canal and transfer the canal and the Canal Zone to Panama.  A treaty was signed in 1977 which set forth the framework for the ownership and operational transition.  This was controversial in the American Senate, passing by split votes in both political parties.

(The first day cover below is of the last postage stamp issued by the Canal Zone, in 1978.)

From the collection of Henry Fidanque

Full Panamanian control occurred on December 31, 1999.  Notably, still feeling the pressure of American mixed sentiment, President Clinton did not attend the turning-over ceremony a couple of weeks before, nor did he send any high-ranking American officials to share the podium with the leader of Panama.  An assistant secretary of the Army represented the US in handing over billions of dollars in assets to Panama.

However, there remained an underlying design problem in the canal, the inability of the new generation of larger ships to fit through the locks, requiring containers to be unloaded at one end of the canal, transported by railroad (see below), and reloaded on the other coast.

Likewise, oil shipments are sent via pipeline from tankers in one ocean to those in the other.  But that is about to change.

The New York Times recently ran this story about the construction project to widen the Panama Canal.  Here's an excerpt:

COCOLÍ, Panama — For now, the future of global shipping is little more than a hole in the ground here, just a short distance from the Pacific Ocean. Ah, but what a hole it is.

About a mile long, several hundred feet wide and more than 100 feet deep, the excavation is an initial step in the building of a larger set of locks for the Panama Canal that should double the amount of goods that can pass through it each year.

The $5.25 billion project, scheduled for completion in 2014, is the first expansion in the history of the century-old shortcut between the Atlantic and Pacific. By allowing much bigger container ships and other cargo vessels to easily reach the Eastern United States, it will alter patterns of trade and put pressure on East and Gulf Coast ports like Savannah, Ga., and New Orleans to deepen harbors and expand cargo-handling facilities.

I was given a tour of the construction site today, and it is indeed a spectacular project.  Here's a short video:

If you can't see the video click here.  You can read more about the project here and see some images from the tour here on Facebook.

Future site of third set of locks, Pacific side


Anonymous said...

Wow, that's infrastructure on steroids! Great post and images.


John Rogers said...

Who is financing this project, Paul ? It would seem that in these tough economic times worldwide, this would be a very ambitious project to attempt, financially.

Paul Levy said...


Ultimately it is funded by revenues derived from user fees of the Canal. In the meantime, they must borrow money (about $2.3 billion) through the European Investment bank ($500 million); Japan Bank for International Cooperation ($800mm); Inter-American Development bank ($400mm); International Financial Corporation ($300 mm); and Andean Development Corporation ($300mm).

John Rogers said...

Thanks, Paul.... safe travels !!