Panama Voters Overwhelmingly Approve Canal Expansion Plan in Referendum

PANAMA CITY, Panama Voters overwhelmingly approved the largest modernization plan in the 92-year history of the Panama Canal on Sunday, backing a $5.25 billion (€4.15 billion) expansion that will allow the world's largest ships to squeeze through the shortcut between the seas.

About 79 percent of Panamanians voted in favor the canal expansion, with 66 percent of 4,416 polling stations reporting, according to preliminary results released by the country's electoral tribunal. Nearly 21 percent opposed the plan and there weren't enough ballots remaining to be counted reverse the trend.

Early returns pointed to an abstention rate approaching 60 percent among the country's more than 2.1 million voters.

The overhaul would allow the canal to handle modern container ships, cruise liners and tankers that are too large for its current 33-meter-wide (108-foot-wide) locks by building a third set of locks on the Pacific and Atlantic ends by late 2014 or the following year.

The Panama Canal Authority, the autonomous government agency that runs the canal, says the project will double capacity of a waterway already on pace to generate about US$1.4 billion (€1.11 billion) this year. Expansion will be paid for by increasing tolls to produce annual revenue of over US$6 billion (€4.8 billion) by 2025.

Critics contend that expansion will benefit the canal's customers more than Panamanians, and worry that costs could balloon for this debt-ridden country.

President Martin Torrijos, an outspoken supporter of expansion, called the referendum "probably the most important decision of this generation," after voting.

On the sweltering streets of Panama City, some wore red shirts and smocks supporting a 'No' vote. But they were far outnumbered by those in shirts, bandanas, caps and vests supporting expansion. Cars and trucks with "Yes" bumper stickers and flags jammed streets.

"Voting 'no' is like closing the door on the canal. It's the top source of income for Panama and improving it means more money for the government and less poverty," said boat salesman Leonardo Aspira, who sported a "Yes" shirt and baseball hat in Kuna Nega, a largely Indian town of dirt roads and banana trees on the outskirts of Panama City.

Some opponents of the expansion plan complained about electoral foul play.

Former President Guillermo Endara, who dressed in red from head to toe against the expansion, said that polling place workers wore "Yes" clothing and handed out cards with directions on where and how to vote that contained propaganda supporting the plan on the opposite side.

"That's vote buying," Endara said.

Yellow public school buses and vans with "yes" signs stuck to the side were also seen whisking voters from poor, crowded neighborhoods to polling places to vote.

But Albert Ramdin, assistant secretary-general for the Washington-based Organization of American States, said polling place and transportation workers showing which side of the referendum they were on did not violate electoral law in Panama.

Ramdin, heading a mission of 50 observers, said voting had been orderly but that "generally I believe most people say that this turnout is a bit lower than they had seen before in general elections."

Panama has called a pair of other recent referendums and both drew low voter turnout. In 1992, a proposal to do away with the army after the U.S. invasion of 1989 was rejected, but only 41 percent of eligible voters cast ballots.

Six years later, then-President Ernesto Perez Balladares called a referendum on a proposal to allow for presidential re-election that was rejected with voter abstention under 35 percent. During presidential elections, at least 70 percent of voters usually participate.

The canal employs 8,000 workers and the expansion is expected to generate as many as 40,000 construction jobs. Unemployment in Panama is 9.5 percent, and 40 percent of the country lives in poverty.

But critics fear that the expansion could cost nearly double what Torrijos' government has let on and stoke corruption and uncontrolled debt.

"The expansion is necessary, but we all have to watch closely, make sure there isn't embezzlement and corruption," said Igor Meneses, a 34-year-old advertising executive who was waiting to vote in an older section of Panama City. "With that kind of money there's a lot to steal."

The United States arranged for Panamanian independence from Colombia to build the canal, and ran it from 1914 to 1999. Torrijos' father, strongman Omar Torrijos, signed a treaty with President Jimmy Carter in 1977 to cede control of the waterway back to Panama, a decision that also was approved by Panamanians in a referendum.

Canal administrator Alberto Aleman Zubieta said that if the plan is defeated it could have grave consequences for Panama. "Shippers will have to look for other routes because Panama won't have the capacity for them," he said.

International shipping companies have generally backed the plan as a way to create further options for the growing trade route between Asia and the U.S. East Coast.

"We've got to recognize that things have changed," said Fernando Rivera, the Puerto Rican president-elect of the Caribbean Shipping Association. "Boats are bigger and business needs this expansion."