Panama Canal 298 88 ap.
(photo credit: AP [file])
Panama's congress approved holding a national referendum on a US$5.3 billion proposal to widen the Panama Canal to allow it to handle a new generation of giant container ships.
It would be the biggest modification to the Panama Canal since it opened in 1914, and supporters said it is needed to guarantee the waterway's future relevance as well as Panama's prosperity. Opponents argued it is too costly and would sink the nation in debt.
On Friday, the proposal easily passed a third and final vote by legislators and President Martin Torrijos will announce the exact date of the referendum after he signs the bill into law. The date is expected to be in about three months. The outcome of the referendum is binding.
"It is a historic moment," said Legislature President Elias Castillo. "For the first time, Panamanians will decide about the future of the waterway."
Polls have shown that a majority of Panamanians favor the expansion.
In all three votes it was approved both by the ruling Democratic Revolutionary Party and opposition parties, who raised minor concerns about when to hold the referendum and how to assure transparency during the construction.
The canal is functioning close to maximum capacity and will be rendered obsolete in several years by larger ships if it is not widened, experts say. The canal, which handles 4 percent of the world's maritime trade, is used principally by the United States, China, Japan and Chile.
Union workers and intellectuals have formed a group called "National Union for No," which is lobbying citizens to vote down the referendum, arguing that the project lacks an accompanying social development plan and solid financial resources, and will put the country in debt.
The widening consists of constructing two new sets of locks, the excavation of access canals and the widening of currently existing navigation canals.
The biggest ships that can pass through the canal's current locks are known as Panamax vessels and can carry 4,000 cargo containers. They barely fit in the locks, which are about 108 feet wide.
The project will allow the large "Post-Panamax" class of cargo ships to use the 50-mile (80-kilometer) waterway between the Atlantic and Pacific oceans.
Authorities have said they would pay for the upgrades through toll increases for ships that use the canal, and through a US$2.3 billion loan from a private bank. The canal had revenues of more than US$1.2 billion in 2005, with the passage of 14,000 ships.
Panama took over the administration of the waterway on Dec. 31, 1999, when the US military presence in Panama ended.
All laws in Panama need to be approved in three votes. The first is taken by a Congressional committee, the second by the whole house voting on each article, and the third by the house voting on the bill in its entirety.