Sacyr and Panama Canal Row Gives Nationalists Some Ammunition

“If for any reason the agreement fails, then we will have to make an abrupt move”, said the administrator of the Panama Canal Authority (PCA), Jorge Luis Quijano, in an appearance before the National Assembly on Wednesday.

The pre-agreement with Sacyr and Grupos Unidos por el Canal (GUPC) is firm, but the door for a new tragedy remains open. “There is no agreement signed yet”, but only a proposal by the PCA initially approved by GUPC, an internal source pointed out on Thursday.

“We had conversations and by Tuesday night most of the main points were clear”, explained Quijano.

However, he said Panama will only allow one more week to settle the dispute, sign an agreement and get back to normal. If disagreements arise again in a week time, Panama Canal will unleash its ‘Plan B’ – terminate the contract, take control of the works through a subcontractor and use the $400 million insurance by Zurich IG to finish the project.

This scenario would add a new overrun of $400 million to the current $3.118bn, and it is by no means PCA’s preferred option. Under the assumption that this time the deal between Panamanian authorities and GUPC is firm, the construction of the third set of locks will end in December 2015, “a delay that will generate loses of $95 million,” according to Quijano.

 “Give it to Bechtel!,” was one of the cries heard at a demonstration before the Embassy of Spain in Panama City on Wednesday.

Despite the new agreements, many Panamanians still don’t trust the Spanish-led consortium. Several politicians, lawyers and activists gathered in front of the embassy to protest against “extortion” and “blackmail” by Sacyr. “Panamanians will never tolerate GUPC’s plan of blackmailing us for an asset that cost blood, pain and economic sacrifice to the country”, said the leader of provincial party Frente Amplio por Colon, Edgardo Voltier, to the national broadcaster TVN. Others, like lawyer Miguel Antonio Bernal, denounced that Panama Canal is negotiating on its own benefit and against the national interest.

The United States is “closely following the conversations” between the Panama Canal and GUPC, as its ambassador in Panama, Jonathan Farrar, admitted. Farrar said that the US “has invested a lot of money in adapting its ports for the canal enlargement” and so it is rightfully interested in the final outcome of this crisis.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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