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10/22/06-PANAMA CITY, Panama

Panama Votes On Canal Extension

A ship navigates the Panama canal. A ship navigates the Panama canal.

 Voters are expected Sunday to approve the largest modernization project in the 92-year-history of the Panama Canal, a US$5.25 billion plan to expand the waterway to allow for larger ships while alleviating traffic problems.

President Martin Torrijos' government has billed the referendum as historic, saying the facelift will double the capacity of a canal already on pace to generate about US$1.4 billion in revenue this year.

Critics claim the expansion will benefit the canal's customers more than Panamanians, and worry that costs could balloon, forcing this debt-ridden country to borrow even more.

The project would build a third set of locks on the Pacific and Atlantic ends of the canal by 2015, allowing it to handle modern container ships, cruise liners and tankers too large for its current 33-meter-wide (108-foot-wide) locks.

The Panama Canal Authority, the autonomous government agency that runs the canal, says the project will be paid for by increasing tolls and will generate US$6 billion (euro4.75 billion) in revenue by 2025.

There's nothing Panamanians are more passionate about than the canal.

"It's incomparable in the hemisphere," said Samuel Lewis Navarro, Panama's vice president and foreign secretary. "It's in our heart, part of our soul."

Public opinion polls show the plan should be approved overwhelmingly. Green and white signs plastered across the country read "Yes for our children," while tens of thousands of billboards and bumper stickers trumpet new jobs. "The canal needs you," television and radio ads implore.

"It will mean more boats and that means more jobs," said Damasco Polanco, 50, who was herding cows on horseback in Nuevo Provedencia, on the banks of Lake Gatun, a 260-square-kilometer (160-square-mile) man-made reservoir that supplies water to the canal.

The canal employs 8,000 workers and the expansion is expected to generate as many as 40,000 new 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 poor continue to suffer while the rich get richer," said Jose Felix Castillo, 62-year-old high school teacher who was one of about 3,000 supporters who took to Panama City's streets during the official close of the "No" vote campaign Friday.

Lewis Navarro said portions of the revenue generated by each ton of cargo that passes through the waterway go to education and social programs.

"We aren't talking about 40 percent poverty as a consequence of the canal, it's exactly the opposite," he said.

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 was also 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."

U.S. engineers first laid the groundwork for a third set of locks in the 1930s and the expansion would require relatively little new underwater dredging. By some accounts, the original construction of the canal displaced 50,000 people. The new project will not require new man-made lakes or dams, meaning no one will lose their homes, the canal authority says.

"I live right on the water and I'm still voting yes," said Elena Hall, who lives near Lake Gatun. "I wouldn't support it if I were going to lose my house."

Copyright 2006 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

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