PANAMA CANAL EXPANSION REFERRED FOR LEGISLATIVE

UNCLAS PANAMA 001287 SIPDIS SIPDIS C O R R E C T E D COPY DEPT FOR WHA/CEN-SCHIFFER E.O. 12958: N/A TAGS: ECON ETRD SUBJECT: PANAMA CANAL EXPANSION REFERRED FOR LEGISLATIVE APPROVAL This is Part I of a two part series on the Panama Canal expansion. Part I describes the current status and expected process for the referendum. Part II discusses the legal, financial and economic implications of the referendum. ¶1. (U) SUMMARY. The GoP has submitted its proposal to expand the Panama Canal to the National Assembly. The Assembly must approve having a national referendum on the expansion project by July 15. Legislative approval is expected. If approved, the referendum will be held on October 15. END SUMMARY. -------------- Canal Expansion Referred to National Assembly -------------- ¶2. (U) On June 26, President Torrijos' Cabinet approved the Panama Canal Authority's (ACP) canal expansion plans and sent to the National Assembly the proposed law setting forth the framework for the expansion and seeking Assembly approval to call for a national referendum on the issue. Since the current legislative session ends on June 30, Torrijos ordered an Extraordinary Session through July 15 to debate the proposal. Torrijos said he would consider extending the deadline if additional time was needed. Torrijos' party, the Revolutionary Democratic Party (PRD),holds 32 seats in the 78-person unicameral Assembly. A simple majority is required to approve the proposal and approval is widely expected. If the proposal is approved by July 15, the referendum would be held on October 15. ¶3. (U) The Assembly cannot modify any aspect of the proposal. It must accept or reject the proposal as presented. Opposition party legislators said they would nonetheless seek changes to the proposal and complained that three weeks is insufficient time for debate. ¶4. (U) The question on the referendum ballot will be very simple: Do you approve of the proposed construction of the third set of locks on the Panama Canal? -------------- Two Additions to the Proposal -------------- ¶5. (U) The expansion proposal is as follows: construction of two additional locks, one on the Pacific and one on the Atlantic, excavation of new entrances to the locks and widening and deepening of the existing navigation routes, and deepening of Gatun Lake. There will be no dams (a persistent concern of people living in the area who feared being displaced). ¶6. (U) A persistent sore point between the citizens of Colon and the GOP has been the need for a bridge over the Atlantic canal entrance. The proposal now calls for the ACP to commence a study to determine the most convenient option for building a vehicular bridge or tunnel. Construction of the bridge or tunnel would begin no later than the conclusion of the expansion project in 2014. ¶7. (U) The proposal also establishes a six-person ad hoc committee to review the contract bidding and awards process, along with the progress of the expansion. The committee will consist of one representative from each of the National Council of Organized Workers, the National Council of Private Businesses, a collection of civic groups, the Council of Academic Rectors, the Assembly and the Executive Branch. Panama's two largest unions, each of which opposes the expansion, have complained that the National Council of Organized Workers represent only 10% of union labor. However, the committee has no real power other than to review the information the GoP and the ACP provide and respond to public concerns over malfeasance. The committee will meet every three months with the President of the Board of Directors and the Administrator of the ACP. -------------- Opposition Continues But Reaching a Plateau -------------- ¶8. (U) On June 27, various intellectual, university professors, lawyers and other professional formed the National Union for the No (UNNO). UNNO goal is to unite all groups opposed to the expansion. The opposition group FRENADES, which consist of the country two largest unions, said it will not join UNNO. -------------- COMMENTS -------------- ¶9. (SBU) Inclusion of the Colon bridge or tunnel crossing study appears to be an attempt to placate the Coloneses who complain the canal has done nothing for them. The Colon business community has been calling for this bridge for years. They have asked that the bridge be built before the expansion project is completed. Post believes it unlikely Colon residents and business leaders will be happy with this proposal. Post believes this will add to their feeling of being neglected by the GoP. Additionally, the proposal does not address who and how the bridge or tunnel will be financed. The proposal explicitly states that the bridge or tunnel crossing is not part of the expansion project. ¶10. (SBU) It appears that opposition groups to the expansion have lost momentum. They appear disorganized and with no coherent theme. Most people believe they have not made a compelling case against canal expansion and the referendum is expected to pass but not by an overwhelming majority. EATON