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Panama's canal needs an upgrade. Can it's politicians deliver one?

Watching their ship inch through the last lock gates of the Panama Canal into the Pacific is grand entertainment for cruise passengers. It also represents good business for the canal, which charges around $250,000 per passage. But with just two feet on each side, it is a tight squeeze.

With up to 38 big ships passing through it each day, the 90-year-old waterway is now at the edge of its capacity. Still more worryingly for its operators, those locks are too narrow to handle today's biggest container vessels (of a size undreamed of by the canal's engineers), many of them carrying Chinese exports. So Panama is increasingly missing out on some lucrative custom. To survive, The canal needs to grow. Whether it does so will partly be determined by whoever wins Panama's presidential election on May 2nd.

In theory, the management of the 80km (50 mile) canal and the election of a new government are unrelated, since Panama's constitution guarantees the autonomy of the Panama Canal Authority (P.C.A). The PCA has won high praise since the United State's government finally handed over administration of the canal to it in 1999. In practice, the fate of the canal, and those of the country are inextricably linked. The government is the sole shareholder in the PCA; about one-third of Panama's GDP comes from canal-related revenues. And the current debate about the canal's future will entwine it and the Panamanian government still further.

The PCA has been pondering modernisation schemes for at least a decade. But now, finally, it is on the verge of presenting a "master plan" of the waterway's future. If, as expected, it proposes a major enlargement of the canal, the overhaul will have to be put to a vote in a referendum.

Article from The Economist, 1st May.