Panama votes on ambitious canal expansion

PANAMA CITY, Oct 22 (Reuters) Panama voted tday in a referendum seen backing an ambitious .25 billion expansion plan to give its famous canal its biggest ever face-lift in a move the government hopes will lift the nation out of poverty.

Opinion polls ahead of the simple ''yes'' or ''no'' plebiscite showed more than two-thirds of voters supported the project that will double the canal capacity and allow mammoth modern cargo ships to pass between the Atlantic and Pacific oceans.

The expansion of the canal, which is one of the engineering wonders of the world and was opened in 1914, will create a jobs bonanza for Panama's three million people and boost economic growth, supporters say.

Critics warn the plan could bankrupt the small nation, which is already laden with huge debts and where most people live in poverty, if costs spiral. Taxpayers could be forced to pick up the tab and investors could lose money.

Long lines of voters formed today at polling stations across Panama City under the already stifling morning heat.

Wealthy Panamanians jumped out of shiny new vehicles and joined the lines in one upscale residential district where President Martin Torrijos was due to vote later. Torrijos' father, populist leader Gen. Omar Torrijos, helped clear the way in the 1970s for the canal's handover from the United States.

''This country needs this project to join the first world,'' said Joaquin Rodriguez, 48, a businessman wearing a green T-shirt, the color of the ''yes'' vote, to denote he supports the expansion.

Across the city in a more modest suburb, voters walked to cast their ballots in a school where palm trees waved in the grounds in a light breeze.

''I voted against the plan because it is too much money and too risky,'' said Belinda Hernandez, 20, a hairdresser sporting a bright red dress, the color of the ''no'' vote campaign.

LOSS OF 25,000 LIVES Opened in 1914 at a cost of 5 million and 25,000 lives, the canal was dynamited and dug out by thousands of laborers who braved deadly malaria and yellow fever. It saves ships a long haul around South America's treacherous Cape Horn and carries around four per cent of world trade.

But the canal's lock system is too small for many modern tankers and ships making the passage, mainly from the United States, Japan, China and Chile, also face longer waits to make the 80-km inter-oceanic trip as global shipping grows.

The expansion plan would build new sets of wider locks and deeper and bigger access channels, and let ships with 12,000 containers pass through, up from around 4,000 containers at present.

The Panama Canal Authority, which runs the waterway, warns the route will become log-jammed in seven years if nothing is done, meaning business will be lost to competitors like the US intermodal system of ports and cross-country rail links.

The project, due to start in 2008 and finish in 2014, needs PANAMA CITY, Oct 22 (Reuters) Panama voted tday in a referendum seen backing an ambitious $5.25 billion expansion plan to give its famous canal its biggest ever face-lift in a move the government hopes will lift the nation out of poverty.

Opinion polls ahead of the simple ''yes'' or ''no'' plebiscite showed more than two-thirds of voters supported the project that will double the canal capacity and allow mammoth modern cargo ships to pass between the Atlantic and Pacific oceans.

The expansion of the canal, which is one of the engineering wonders of the world and was opened in 1914, will create a jobs bonanza for Panama's three million people and boost economic growth, supporters say.

Critics warn the plan could bankrupt the small nation, which is already laden with huge debts and where most people live in poverty, if costs spiral. Taxpayers could be forced to pick up the tab and investors could lose money.

Long lines of voters formed today at polling stations across Panama City under the already stifling morning heat.

Wealthy Panamanians jumped out of shiny new vehicles and joined the lines in one upscale residential district where President Martin Torrijos was due to vote later. Torrijos' father, populist leader Gen. Omar Torrijos, helped clear the way in the 1970s for the canal's handover from the United States.

''This country needs this project to join the first world,'' said Joaquin Rodriguez, 48, a businessman wearing a green T-shirt, the color of the ''yes'' vote, to denote he supports the expansion.

Across the city in a more modest suburb, voters walked to cast their ballots in a school where palm trees waved in the grounds in a light breeze.

''I voted against the plan because it is too much money and too risky,'' said Belinda Hernandez, 20, a hairdresser sporting a bright red dress, the color of the ''no'' vote campaign.

LOSS OF 25,000 LIVES Opened in 1914 at a cost of $375 million and 25,000 lives, the canal was dynamited and dug out by thousands of laborers who braved deadly malaria and yellow fever. It saves ships a long haul around South America's treacherous Cape Horn and carries around four per cent of world trade.

But the canal's lock system is too small for many modern tankers and ships making the passage, mainly from the United States, Japan, China and Chile, also face longer waits to make the 80-km inter-oceanic trip as global shipping grows.

The expansion plan would build new sets of wider locks and deeper and bigger access channels, and let ships with 12,000 containers pass through, up from around 4,000 containers at present.

The Panama Canal Authority, which runs the waterway, warns the route will become log-jammed in seven years if nothing is done, meaning business will be lost to competitors like the US intermodal system of ports and cross-country rail links.

The project, due to start in 2008 and finish in 2014, needs $2.3 billion in loans or bonds to be paid back with revenues from higher tolls from ships using the canal, whose upgrade will not interrupt traffic. Construction would create 7,000 jobs and up to 40,000 indirect jobs.

France's Ferdinand de Lesseps, builder of the Suez Canal, started the Panama Canal in 1880 but abandoned it nine years later when the project went bankrupt.

The US government bought the canal in 1904 and 10 years later opened the waterway. With an eye on naval supremacy and control of the Western Hemisphere, the United States ran the canal for most of the past century.

In treaties signed in 1977 by then US President Jimmy Carter and Omar Torrijos, the United States agreed to hand over the canal to Panama in 1999.

REUTERS AB BST2124 .3 billion in loans or bonds to be paid back with revenues from higher tolls from ships using the canal, whose upgrade will not interrupt traffic. Construction would create 7,000 jobs and up to 40,000 indirect jobs.

France's Ferdinand de Lesseps, builder of the Suez Canal, started the Panama Canal in 1880 but abandoned it nine years later when the project went bankrupt.

The US government bought the canal in 1904 and 10 years later opened the waterway. With an eye on naval supremacy and control of the Western Hemisphere, the United States ran the canal for most of the past century.

In treaties signed in 1977 by then US President Jimmy Carter and Omar Torrijos, the United States agreed to hand over the canal to Panama in 1999.

REUTERS AB BST2124