Cutting Through Central America

Panama has a traffic problem. Congestion is backing up traffic and decreasing the efficiency of travel. Rather than demanding that the world engage in less trade and thus fewer shipments, the country decides to expand capacity to meet need. What a radical idea.

Panama votes for a bigger canal: VOTERS in Panama have decided, by a margin of four-to-one, to go ahead with a proposal to expand their famous canal. … Some 5% of the world's seagoing traffic passed through it in 2005, including over a third (by weight) of cargo going from north-east Asia to the United States' east coast. Rapid growth in world trade means that the canal is suffering congestion.

Nicaragua has a poverty problem. They also have some dusty old plans for a canal of their own and an idea that if the passage was wide enough to handle oil supertankers going from Venezuela to China, shippers may pay a premium for the shortcut.

Nicaragua canal: just a pipe dream?: Proponents of the Nicaragua plan have already been at pains to stress that their canal will meet a real need - that of the new breed of super-tankers too large to fit through even a widened Panama waterway.

Of course really big boats of consumer goods would also be potential customers.

Giant rival for Panama Canal: The new route would cut 500 miles - or at least a day - off the route between California and New York, and could considerably shorten and cheapen the journey from China to Europe for large ships.

Of course that poverty problem means the country is short the $20 billion or so dollars to build anything. Since President Enrique Bolanos is leaving office, the individual who wins the elections beginning November 5th gets the task of charming the international capital markets. That individual could well be Daniel Ortega.

Back by Unpopular Demand: From 1979 until 1990, Ortega led a Cuban-style dictatorship, denying Nicaraguans their basic political freedoms, confiscating private property to benefit his cronies, and wrecking the Nicaraguan economy.

Reportedly mellowed with age, the old school leftist leads the four way race with an outside shot at claiming a first ballot victory.

Ortega could win Nicaragua presidency outright: An Ortega presidency would revive Latin America's "pink tide" of leftwing leaders but analysts say that Nicaragua, with just 6 million people and a near destitute economy, is a regional minnow.

Panama probably has no reason to worry about competition unless China, fresh from blocking the waters of the Yangtze River with the worlds biggest dam, decide they need another big dig project to keep all those workers employed.