Caribbean & Central America - February 2014 (ISSN 1741-4458)

Work on the US$5.3bn Panama Canal expansion project has come to a halt. The Panama Canal authority (ACP) made the announcement on 5 February, the day after the second deadline set by the international consortium Grupo Unidos por el Canal (GUPC) for a solution to the dispute over who should pay for the US$1.6bn cost over-run of the project [RC-14-01]. The suspension of the works has raised major doubts as to whether the June 2015 project completion deadline will be met.

According to an ACP statement “after two weeks of negotiations, which saw activity levels drop to 25%, almost all activity has ceased”. This followed a mid-January statement by ACP administrator, Jorge Quijano, who pointed to a 70% slowdown in activity on the expansion project since November 2013. While the ACP’s 5 February statement adds that the “ACP continues to keep the door open for a reasonable resolution within the contract”, in a press conference the same day, Quijano accused the GUPC of intransigence and was clear that “we will not yield to blackmail”. Quijano said that the project, which is 70.7% complete, would be finished “by 2015 with or without the GUPC”.

With complete hermeticism surrounding the ACP’s plan B, however, the GUPC is sending out mixed messages. On the one hand, it maintains that it is trying to find a solution, warning that failure to do so could see the project delayed by “three to five years”. At the same time it has remained on the offensive, accusing the ACP of being inflexible and, most recently, of failing to pay out some US$50m owed to workers and subcontractors. With some 10,000 jobs in the air, Panama’s construction workers’ union, Suntracs, has declared itself on the alert, adding to the existing pressure on both the ACP and GUPC.