What is happening in Panama reminds us of a reality that we sometimes forget: what happens in that small country can affect millions of people thousands of kilometers away. Panama had a record year of high temperatures in 2023. Its lakes and rivers reached historic lows, which is bad enough anywhere, it's just that on the isthmus water takes on additional importance. And these lakes and rivers feed one of their most important sources of income: the interoceanic canal.
Without its waters, the locks through which ships carrying no less than 6 percent of world trade cross do not function. Waters that, at the same time, are scarce to supply millions of Panamanians.
Only the Suez Canal, with 10 percent of the planet's cargo ships, exceeds the traffic of the Panama Canal. But there is a big difference between the two. The first does not need to inject water to function, since it is basically a ditch that connects the Red and Mediterranean seas. But the second works with a system of locks (a type of pool) that serve as steps for ships to reach the artificial Gatun Lake, in the center of Panama and 26 meters above sea level. To do this, the locks must be filled with fresh water.
For a single ship to cross the Panama Canal, it is necessary to inject 200 million liters of water that is not recovered: it ends up in the sea. In addition, the process generates salinization of Gatun Lake, which also supplies drinking water to a large part of the country.
The effects
Given the current lack of rain, the administration of the interoceanic waterway reduced the number of ships that can pass daily from 38 to about 24. It also restricted the draft of these ships. This gave rise to an auction system. Last November, a Japanese shipping company paid almost 4 million dollars to ensure its transit and not wait in line.
Shipping companies are already passing the costs on to their customers. According to Bloomberg, Hapag-Lloyd AG, Maersk and Mediterranean Shipping Co. announced surcharges related to Panama. Economist Inga Fechner explained to that medium that higher transportation costs, due to having to take longer routes, will have a long-term trickle-down effect that will end up affecting consumers around the world.
And although the United States and China are the countries that use the channel the most, there are others in Latin America, such as Chile and Peru, that are also being affected. The fact is that the crisis coincides with the fruit harvest season in those South American countries. Fruits that were destined for cities in Europe and the east coast of the United States.
Possible solutions
To face the crisis, the canal administration proposes building a new reservoir on the Indio River, which would necessarily mean flooding populated areas and very possibly facing a social conflict.
It must be considered that currently the drinking water that around 2 million people need is competing with the needs of the canal.
Jorge Luis Quijano, former administrator of the anal, maintains that we must also consider that currently “the drinking water that around 2 million people need is competing with the needs of the canal.” For Quijano, this will become even more complex, since there will be more pressure in a scenario with less available water resources. “In 2012 we detected that the water consumption projection that we had for 2025 had already been met,” he exemplifies.
For this reason, explains Quijano, the contracted technical studies defined that a reservoir on the Indio River would provide continuity to the canal and the demand for drinking water for the population. “In 2019 I spoke with each of the presidential candidates, because whoever became president should take charge of this problem… obviously nothing has happened in these four years.”
For Quijano, building new reservoirs would be the best and fastest alternative both to give continuity to the Panama Canal – maintaining its position as the busiest route in the West – and to meet the growing drinking water needs of the population.
The thing is that other countries already see what is happening in Panama as an opportunity. And it is not about the eternal Chinese project of a canal through the Great Lake of Nicaragua. In Colombia, President Gustavo Petro proposes an interoceanic canal through the Chocó. “The only department of Colombia that has coasts on both oceans is Chocó. Shouldn't he be the richest? (…) That makes canals possible, whether railway or water. Of course it is possible and more than one is thinking about it,” the president said, as quoted by him. Infobae.
And in Mexico, an interoceanic corridor already operates in the isthmus of Tehuantepec, which separates the Pacific Ocean from the Caribbean Sea by 200 kilometers and which hopes to move 300,000 containers by 2028 by land.
This is in addition to the diversion of ships through the Strait of Magellan, in southern Chile. A maritime route that was the only possible one to cross from the Atlantic to the Pacific until the beginning of the 20th century.
The challenges of Colombia and Mexico give arguments to those who maintain that a reservoir is a priority for the canal country. But there are many voices critical of the initiative.
“Only yesterday I saw a tank truck discharging water in Arraiján, which is an urban area 20 kilometers from Panama City,” explains William Hughes, economist and professor at the University of Panama. For him this is an example that the channel has been placed as a priority over citizens.
The academic (who is part of the National Front for the Defense of Economic and Social Rights) maintains that Panama must realize that it is not logical to continue flooding lands to inject fresh water into the canal just because world trade demands it. “We say that we have to internalize that this idea that Panama is the canal and that without the canal Panama does not exist, we must break it, we must accept that the canal has a physical limit.”
“We say that we have to internalize that this idea that Panama is the canal and that without the canal Panama does not exist, we must break it, we must accept that the canal has a physical limit.”
Hughes also claims that both the previous referendum that approved the expansion of the canal (in 2006) and the current proposal for a reservoir do not take into account the impact of climate change. “We do not want to lose the current position of trade transit, but we must assume that climate change has already arrived, that we are seeing its effects and that we will have to set limits on the number of ships and their size (…) we cannot continue searching for water from wherever to inject it into the canal.”
Hughes adds that although
The world will resent these limits, climate change itself is opening new routes, as in the Arctic. “New possibilities will open up, but we cannot sacrifice ourselves for global trade,” he says.
Environmental defense
Environmental activists and farmers who live in the area affected by the new dam share Hughes' position. The Peasant Coordinator for Life, the Despierta Donoso / Ómar Torrijos Movement and the Peasant Coordinator for the Land have already declared their opposition to a reservoir on the Indio River.
The architect Ricardo Bermúdez has an intermediate vision. Although he maintains that the works are necessary to ensure the continuity of the canal, he also explains that there are many efficiency problems. One of them is that the passage fee is based on the size of the vessel and its load, not on the amount of water used (for the crossing). “Without water there is no Panama Canal, and although it is difficult to understand, water is not part of the rate. If a canoe or a ship passes by, the same amount of water is used and that is why the toll rate should be the same, but it is not.”
In addition, Bermúdez maintains that better use should be made of the infrastructure complementary to the canal, such as the pipeline that crosses the country and that allows ships carrying oil from Alaska to unload it on the Pacific coast and send it through the pipeline to the coast. from the Caribbean, where it could be shipped again.
“If we correctly manage all the potential of the existing basin, we put water as the main component on which the collection of rates is based, and we coordinate, in a coherent manner, the interoceanic route with the rest of the transfer operations (such as oil pipeline and railways), we will have a service infrastructure that is very difficult to overcome.”
However, the canal discussion divides Panamanians between those who maintain that the country's economic future is at stake and those who believe that limits should be set in a small and fragile territory. Precisely in a country that comes from a period of social protests against mining, in which the use and abuse of water was a central part of the citizen's plea.
Can Panama balance the interests of global trade with those of its thirsty residents? We must not forget that the channel has both real and symbolic value in the competition between the United States and China for global supremacy. In other words, the decisions of Panamanians will have repercussions many kilometers from their borders.
Cristian Ascencio
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