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Infrastructure

Panama Canal helped 'a new nation alight'

One hundred years after its opening, the Panama Canal has transformed from a United States military project into a symbol of Panama's economic rise.

The Panama Canal expands for the future

Ever since the packed vessel "Ancona" made its way through the 80-kilometer long Panama Canal on August 15, 2014, the waterway has sustained the livelihoods of 3.8 million people living in this small Central American country.

"Of course we celebrate the 100th birthday," said Francisco Miguez, executive vice president of administration and finance of the Panama Canal Authority (ACP).

According to the ACP, the state of Panama collects $1 billion (748 million euros) from businesses that use the canal, and that figure is expected to swell to $4 billion by 2025.

That would not have been the case had the United States government not relinquished control of the channel in 1999. Under American supervision, only 200,000 containers passed through in 1995. Now, that number is 5 million.

The big ditch

Since Panama began overseeing the canal in 2000, it has developed into one of the world's most important transport routes, with China, the US, Ecuador and Chile making up its biggest customers.

Construction of the Panama Canal

The Panama Canal Authority has spearheaded an ambitious project to widen and deepen the waterway, tapping investors from all around the world.

But back in 1902, when the US bought the plans for the canal's construction from a French company, business interests were not at the forefront of people's minds. The following year, US troops occupied the area and negotiated a treaty, establishing indefinite usage of the waterway.

During construction between 1905 and 1914, about 6,000 people died from accidents and diseases. After the Second World War, the Panama Canal lost its geostrategic and economic importance as soon as the development of roads and railways began decreasing transport costs of traveling between the eastern and western US coasts.

"The United States could have improved its administration and should have returned the channel considerably earlier than 1999 to Panama," said Noel Maurer, an associate professor at Harvard Business School and author of "The Big Ditch," which examines the history of the canal from an American perspective.

Moving mountains

The canal's centennial motto is "expansion."

It seems that Panama wants to see whether the canal - already regarded as the eighth wonder of the world - could be good for another miracle.

Around $5 billion has been poured into its expansion to date and construction was supposed to be finished for the anniversary. But now, it looks more likely that it will not be completed until late 2015.

Mountains were blasted, driveways excavated and huge floodgates assembled on the bottom of the waterway in order to make it deeper. This would allow larger ships to pass through.

In the future, so-called "post-Panamax" vessels should be able to pass through the canal carrying up to 14,000 standard containers. But even that has not been enough.

The ACP is already thinking about constructing a fourth lock system, the authority's Miquez told DW in an interview.

"We're in the process of looking into the demand and technical requirements," Miguez said. "Although the third lock is not ready yet, we are already thinking about the next stage."

So far, the expansion work has been carried out by the consortium "Grupo Unidos por el Canal" (GUPC), the contractor responsible for the design and construction of the third set of locks.

Companies from around the world have also gotten involved with the project, which has so far seen people from Spain, Italy, Belgium and Panama work together. China has also been keen to play a role in the canal's expansion in the future.

China ventures into Central America

The construction company "China Harbour Engineering Company" (CHEC) last week expressed (08.08.2014) interest "in all development projects of the Panama Canal in the coming years, particularly contributing to the development, construction and financing of a fourth lock system."

In neighboring Nicaragua, other Chinese companies are also pursuing big plans.

Nicaraguan President Daniel Ortega stands with Wang Jing

Nicaraguan lawmakers approved a controversial deal that would allow a Hong Kong company to build a $40 billion oceanic waterway to rival the Panama Canal

According to media reports, the firm "Hong Kong Nicaragua Canal Development," backed by Chinese billionaire Wang Jing, wants to build a 278 kilometer-long canal between the Pacific and the Atlantic there.

Costs for the controversial project are expected to be around $50 billion, for which at least 400,000 hectares of jungle must be cut down.

"I don't believe that China really wants to build a new channel. The project is simply too huge," said Harvard's Maurer. "It's probably about the Chinese nailing down the rights for a free trade zone, which is also a part of the contract with Nicaragua."

ACP's Miguez deemed the proposal simply utopian.

"The current inquiry is perfectly covered by the Panama Canal," he said. "We doubt that this ambitious and risky project will ever become profitable."

But time is one thing the Nicaraguans have. After all, 385 years passed before the plans for the Panama Canal were eventually carried out following a regal order from Emperor Charles V in 1529.

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