Reality catches up with the ACP

In 2006 Martín Torrijos and Alberto Alemán Zubieta waged a government-financed campaign that convinced the PRD faithful and hardly anyone else to approve their particular canal expansion plan. Since 57 percent of the voters stayed home on referendum day, that was enough to win by a wide margin.

Let's not forget how Torrijos and Alemán Zubieta spent all those millions of dollars in public funds on their propaganda campaign. Recall how the Panama Canal Authority (ACP) predicted that US imports from China would continue to increase at the rate they did from 2000 to 2005 through 2025. Recall the ACP estimate that the North American intermodal system wouldn't be a big competitor because Pacific coast ports are jammed up. Recall the ACP projections that we wouldn't be getting competition from Arctic routes until about 2050. Recall the mantra "self-financed" --- an expansion paid for not by borrowing but by higher tolls which we were assured the market had no choice but to bear.

Just the other day, French shipping company CMA CGM announced that instead of using our canal, its Asia to the Caribbean routes will now go around South Africa's Cape of Good Hope. "You cannot avoid looking very closely at the accounts," company vice president Laurent Falguiere told the Florida Shipper. "Looking at the expense, we are all aware the Panama Canal tolls are too expensive for the trade when you don't have anything to load."

Shipping industry giant Maersk Line is thinking in similar terms. The company's chief operating officer, Morten Englestoft, told the Journal of Commerce that "given the significant cost of going through the [Panama] canal, we have to explore all the alternatives."

Months ago, when oil prices were high, shipping agents here told me that longer competing routes would not benefit from higher Panama Canal tolls --- unless the price of fuel went down. That day has come.

The foolish prediction that the United States could export all of its manufacturing to China and still be able to afford ever more imports blew up a couple of years ago.

We're in a world economic downturn and the ACP now predicts a five percent reduction in traffic for this year as compared to 2008.

The weak economy has decongested North America's West Coast ports.

This past year, a ship bearing tourists circumnavigated the Arctic Ocean, something never before possible because of an ice pack that's now quickly receding. This past year, the Northwest Passage saw its first commercial cargo voyage.

The locks design contracts have yet to be awarded, but we do now know the sources from which the ACP plans to borrow more than $2 billion for this "self-financed" project.

As the "no" campaign warned, the finances of the Torrijos - Alemán Zubieta Plan to expand the Panama Canal always were shaky. Now things are falling out of whack sooner than the gloomiest pessimists expected.

Come May, there will be a rough sort of accountability for Mr. Torrijos's party. Sooner or later --- let's hope sooner --- there needs to be accountability for Mr. Alemán Zubieta and his highly paid in-house acolytes.