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You are here: Home / Foreign Affairs / I’ve Got a Mule, Her Name Is Sal

I’ve Got a Mule, Her Name Is Sal

by John Cole|  August 17, 20118:22 am| 34 Comments

This post is in: Foreign Affairs

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Interesting story on the current canal building in Panama and the implications it will have on global trade. The only thing I couldn’t figure out from the story was who is paying for it? Who is responsible for this construction?

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34Comments

  1. 1.

    PurpleGirl

    August 17, 2011 at 8:36 am

    In paragraph 14, it says that the cost is being covered by loans from development banks to be paid back by the user fees. Further down the article it says that the Canal Authority is in charge of the project after a national referendum authorizing it. So it’s the Panamanian government who is doing this.

  2. 2.

    Quackosaur

    August 17, 2011 at 8:36 am

    From the story:

    The expansion is being financed with loans from development banks to be repaid through tolls that currently reach several hundred thousand dollars for large ships.

    So, first the banks, then the shippers. Since the Panama Canal Authority owns and operates the canal, I’d imagine that it (and ultimately the Panamanian government) would be responsible for any shortfalls.

  3. 3.

    Reading Up on Sam Houston

    August 17, 2011 at 8:37 am

    I’ve hauled some barges in my day.

  4. 4.

    Bob

    August 17, 2011 at 8:38 am

    “The expansion is being financed with loans from development banks to be repaid through tolls that currently reach several hundred thousand dollars for large ships.” From the story.

  5. 5.

    mai naem

    August 17, 2011 at 8:46 am

    The Red Chinese.
    Also too, I read somewhere that the Red Chinese are studying Climate Change as related to the effects on the ice cap thus changing the shipping routes of goods. Pretty interesting stuff.

  6. 6.

    dmsilev

    August 17, 2011 at 8:48 am

    It’s a tribute to the builders of the original canal that it’s taken nearly a century before there was a real need to expand the thing. Yes, there were abortive attempts to build new locks, and yes shipbuilders have had to keep Panamax in mind, but still.

  7. 7.

    urizon

    August 17, 2011 at 8:57 am

    Oh my god! You mean the people of Panama have gone into debt in order to fund this boondoggle? Won’t someone think of the children? Where’s Chris Christie when you need him?

  8. 8.

    Valdivia

    August 17, 2011 at 8:59 am

    I know that Colombia is now having a dry canal built by the Chinese, to compete with this one. The Chinese are building pretty much all new infrastructure in Lat Am.

  9. 9.

    John Puma

    August 17, 2011 at 9:03 am

    “Who is paying for it?”

    The critical question is: in a global society poisoning itself with the after effects of its unquestioned obsession with hyper-consumption, WHO thinks MORE consumption is the solution?!?

  10. 10.

    Thomas

    August 17, 2011 at 9:29 am

    Socialism! Clearly, if the Free Market had decided it wanted a wider canal, the wider canal would have magically appeared.

  11. 11.

    TD

    August 17, 2011 at 9:29 am

    I’m living in Panama at the moment, and this was passed by a referendum. It seems to be pretty popular, too.

    This country is developing very quickly. It’s quite remarkable. While the “dry canal” in Colombia has a *few* people fidgeting, most people I’ve talked to aren’t very concerned (and for good reason, there really is no way that could possibly be cheaper.)

  12. 12.

    Catpause

    August 17, 2011 at 9:46 am

    We are, indirectly. Here in Savannah, the one of our largest ports, they (Local, State, and Foreign governments and Big Biz) are trying to dredge the 15 miles of the Savannah River up to the Georgia Ports to accommodate the next generation of container ships that are being built to take advantage of the super-sized Panama Canal. Many, many, many millions of USD’s of dredging.
    When you say ships and infrastucture in the same sentence a mega-contractor gets a stiffy.
    I saw some baloney statistic recently that US spending was only 3% Chinese goods. Come to the container berths here and you will be amazed at what 3% of the pie looks like.

  13. 13.

    Skippy-san

    August 17, 2011 at 9:54 am

    I’ve never forgiven Jimmy Carter for giving away the Panama Canal. Would that we still had some US real estate down there.

  14. 14.

    Dave

    August 17, 2011 at 10:22 am

    It’s a consortium called Grupo Unidos por el Canal S.A. The companies involved are Sacyr Vallehermoso (SPN), Impregilo (ITA), Jan De Nul (BEL) and Constructura Urbana, SA (PAN).

  15. 15.

    Bill H.

    August 17, 2011 at 10:23 am

    A cable channel (National Geographic?) had an hour-long segment on “Build It Bigger” showing this construction, and it is pretty impressive stuff. I also got the distinct impression of professionalism and expertise. They did not say so directly, but gave the impression that the project was on time and within budget.

    Usually on this show, if there are time or budget issues they say so. They certainly did on the one about the Three Gorges Dam.

    I’m uncertain about the channel because of the way I use the cable schedule. I just surf by title and half the time don’t pay attention to what channel I’m on.

    @Skippy-san:
    Yeah, but then we would have to be paying for this expansion.

  16. 16.

    Ken

    August 17, 2011 at 10:24 am

    @Skippy-san: Damn that Article VI, paragraph 2 of the US Constitution!

  17. 17.

    JimF

    August 17, 2011 at 10:29 am

    Skippy-san, I disagree. Unless you want to annex Panama, it was the right thing to do. There is no way a country can be sovereign when a foreign nation controls your primary income source.

  18. 18.

    ice9

    August 17, 2011 at 10:29 am

    From the story:

    “Dean Campbell, a soybean farmer from Coulterville, Ill., for instance, expects the expansion will help him compete with farmers in South America — which, he said, “has much poorer infrastructure for getting the grain out.”

    Mr. Campbell seems grateful for help competing. He has already had a lot of help.

    Interesting that he describes the Latin American infrastructure as “poor.” What he means is that the US infrastructure is “rich,” but evidently not rich enough. That’s too bad, because that infrastructure is pretty rich, especially from a tax and ag policy perspective.

    His exported soybeans probably travel by barge down the Mississippi. His farm in Coulterville is less than fifty miles from 3 easy loading points. On the way to New Orleans Mr. Campbell’s soybeans will pass several massive Corps of Engineers projects that keep the Mississippi a reliable infrastructure for grain shipping, at astronomical cost. Some of them were New Deal make-work projects. Very little of that cost is visible in the shipping rates or the delivered cost of Mr. Campbell’s beans. The disastrous floods along the Mississippi, for example, are exacerbated by channelization, dredging, and loss of floodplain space and meanders. Dredging is required by increased sediment load, caused by higher flow velocity and by making tributary rivers navigable. Aids to navigation are maintained by teh Coast Guard. Monstrous construction projects are required to keep the Delta open, and that task is getting bigger every year. The ecological cost, of course, is also hidden deeply within every bite of cheap pork or chicken. It goes on and on.

    That American superior infrastructure, that gigantic, ongoing taxpayer gift, helps American farmers to compete, by which they mean “profit to an industrial standard.” Meanwhile, of course, the terrible tax burden is decried by Tea Party congressmen and Michele Bachmann–who grew up a few miles away from the northernmost New Deal lock/dam on the Mississippi, and who might as well commit seppuku in downtown Des Moines as argue for abandoning the Mississippi River shipping project.

    Little, backward Panama, a banana/cocaine republic, birthplace of John McCain, famous for Manuel Noriega and Roberto “No Mas!” Duran, is not afraid of taxes. They know how to take care of their stuff. By national referendum, they accepts the public debt to update and revise a major piece of public infrastructure.

    American legislators won’t raise taxes to pay for expenditures committed mainly by their own party. They won’t pay for the repair or replacement of bridges and highways built during the New Deal and destroyed by deferred maintenance and much larger vehicles than they were designed to carry, all the while denying that those things exist in the first place. They won’t anticipate the increased cost of maintaining coastal infrastructure (and, in fact, coasts) due to climate change, even as it happens, because they don’t believe in it, thus ensuring that the cost will be much, much higher when it is finally absolutely necessary to undertake it. They don’t acknowledge the hidden value, and therefore cost, that Americans deplete every day in the form of roads and bridges and airports and a stable business climate, preferring to imagine I suppose that Jesus built the Interstates and the Founders just dusted them off and gave them names.

    So Mr. Campbell, without irony, is grateful to a nation with the population of Connecticut (and 1/9 its per capita gdp, canal notwithstanding) because it has the courage and foresight to do what his own nation refuses to do.
    I wonder what farmer Campbell thinks of that? or if?

    ice9

  19. 19.

    benjoya

    August 17, 2011 at 10:35 am

    doug J : punk rock :: john : 100-year-old folk song

  20. 20.

    Quiddity

    August 17, 2011 at 10:48 am

    In the mid 1990’s Fred Barnes wrote in the Weekly Standard that the hand-off of the canal to Panama in 2000 would result in it falling apart because those lazy Latinos just don’t have the kind of American hustle needed. He implied strongly that the canal would shut down due to poor maintenance.

    I guess in light of stories like this one that show the canal still in operation along with a forward-looking Panamanian government, he will write a correction and an apology to Jimmy Carter (who signed the treaty returning the canal).

  21. 21.

    Nemo_N

    August 17, 2011 at 10:52 am

    Damn, it’s almost insane how one single channel affects so much, from ship sizes to dock construction in far away countries.

    Difficult for the mind to grasp.

  22. 22.

    cathyx

    August 17, 2011 at 10:58 am

    The only thing that amazes me about this story is that it took this long to do it. In this day and age, construction projects of this magnitude are not unique. And the benefits have having this done are enormous.

  23. 23.

    The Other Bob

    August 17, 2011 at 11:02 am

    Here in Michigan we are struggling to get our state lawmakers to approve the construction of a second Detroit bridge to Canada. The current one is private-owned, so to maintain the owner’s monopoly, he is fighting the new bridge like mad and through lots of campaign donations.

    Canada has agreed to put up the money, which would be paid back by tolls. Buisness groups and communities on both sides of the river support the bridge, as have the last 2 Governors (D and R) so it is only the will of the State, Republican-controlled legislature that is holding it up.

  24. 24.

    Villago Delenda Est

    August 17, 2011 at 11:13 am

    The only thing I couldn’t figure out from the story was who is paying for it? Who is responsible for this construction?

    You know, John, you don’t need to see behind the curtain. Just sit back and enjoy the pretty lights, as your Village stenographer is doing. Understanding how these things come to pass really should not concern you. Those things are boring. Trust your Village stenographer’s judgement on this.

  25. 25.

    Villago Delenda Est

    August 17, 2011 at 11:19 am

    @Bob:

    Which tells us…nothing. It’s boilerplate. Which development banks? Where do they get their capital from?

    Village vermin can’t be bothered to find out…it’s too boring. All those numbers…

  26. 26.

    Citizen_X

    August 17, 2011 at 11:21 am

    @John Puma:

    WHO thinks MORE consumption is the solution?!?

    I don’t know if you’ve noticed this, but we’re in the middle of a global recession. So yes, more consumption is needed. And lots of that “consumption” should involve the construction of new infrastructure and industries that will put our economies on a more sustainable path.

    So here we have a huge infrastructure project, one that inspires other projects (e.g. the Savannah River work), and will lower shipping costs and energy usage (with all the good things that entails). Are people here actually complaining?

  27. 27.

    greylocks

    August 17, 2011 at 12:49 pm

    They charge ships that use the canal a huge amount of money per passage – well into six figures, IIRC. Ships can also pay extra to get expedited passage.

  28. 28.

    Just Some Fuckhead

    August 17, 2011 at 1:13 pm

    @Reading Up on Sam Houston:

    I’ve hauled some barges in my day.

    Filled with lumber, coal and hay?

  29. 29.

    ice9

    August 17, 2011 at 2:18 pm

    A tax, a plan, a canal: Paxata!

    ice

  30. 30.

    quaker in a basement

    August 17, 2011 at 5:10 pm

    hahaha! Great song reference. I sing that one to my kid at least once a week.

  31. 31.

    phil

    August 17, 2011 at 5:29 pm

    Much larger ships are the future and they wouldn’t fit through the current canal.

    …a comparison between two 8k TEU ships and one 16k TEU shows the same trend. The capital cost for the bigger ship is in the order of 20% less and the fuel cost around 40% less, the exact numbers depend on the building price and fuel price. There is a gain to be made by going for bigger units, in terms of not only the cost, but also the carbon footprint.

    *TEU is Twenty-foot equivalent unit (container)

  32. 32.

    Herbal Infusion Bagger

    August 18, 2011 at 11:21 am

    “The Chinese are building pretty much all new infrastructure in Lat Am.”

    Silly Chinese! Funding infrastructure upgrades in the 2000’s when the real foreign policy experts know the vital issues was fighting Terra by invading nations that hadn’t attacked us and giving money to military contractors to paint schools we’d just bombed.

  33. 33.

    Herbal Infusion Bagger

    August 18, 2011 at 11:23 am

    Anybody remember the wingnut conspiracy theories in the 1990’s about Clinton being bought off by the Chinese because a Chinese company was managing one of the three Atlantic-side Panama canal ports?

    Good times. Even then, if you sought it out, exquisitely crazy wingnut theories were available.

  34. 34.

    Kaleberg

    August 19, 2011 at 12:08 am

    Sal worked on the Erie Canal. The Hudson is the only navigable river through the Appalachians and the Erie Canal connected it to the Great Lakes. That’s why New York City has got the Ways and Means. The state government built a canal.

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