The Panama Canal and the Caribbean

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In two years time, significantly larger ships will be able to pass via an enlarged Panama Canal between the Pacific Ocean and the Caribbean Sea. Together with other infrastructural developments this is leading some Caribbean governments to hope that with the support of investors from outside the region, Panama's development as a hub for the hemisphere could significantly improve the region's economic prospects.

There is a growing body of opinion that when in 2014 the enlarged Panama Canal opens, and the size of vessel able to pass across the isthmus will more than double, this could bring economic growth to nations at the western end of the region.

At present, the canal is limited to ships carrying 3,500 TEUs (twenty foot containers equivalent units) but after 2014 it will be able to convey post-Panamax vessels with a greater draught carrying up to 12,000 TEUs. This is expected to result in cargo volumes increasing by an average of three percent per year, the canal handling 510m tons of cargo per annum by 2025 compared with 313m tons 2007, and earnings for Panama projected to reach more than US$6 billion annually.

Because of the Caribbean's location at the intersection of east-west and north-south shipping routes, it is anticipated that one outcome will be for the region's deepwater ports to become significant transhipment and logistics centres and hubs for international commerce.

Jamaica is particularly well placed geographically to take advantage of the widening of the Canal. Minister of Industry, Investment and Commerce, Anthony Hylton, said that the Jamaican Government was moving quickly to encourage a broad range of investments aimed at taking advantage of the opportunity that changes to the Panama Canal will present. He told potential investors that Jamaica was well placed to become one of a small number of large trans-shipment and logistics centres that are going to emerge. The Port of Kingston, he said, would be at the heart of plans which involved the dredging of the Kingston harbour and expansion of port facilities; the establishment at various locations on the island of a dry dock, a bunkering facility, construction of a cargo and maintenance, repair and operations facility; and the development of an Economic Zone.

Panama has also made clear that it intends becoming the hub for Caribbean and Latin American air services.Until recently, the biggest disincentive to the creation of a deeper relationship between Latin America and the Caribbean has been the absence of any significant scheduled air services. This has been especially frustrating in the case of geographically near neighbours in Central America where the hoped for development of closer ties through commerce and tourism has largely remained unfulfilled. The only option for hundreds of thousands of Caribbean citizens, visitors and business people wishing to travel from the Caribbean to Latin America has been to fly to Miami and be subjected to delay, irritation, idiosyncratic security and unnecessary expense.

Now, the privately owned and profitable Panamanian airline, COPA, is rapidly developing air services into the Caribbean through its hub at Tocumen International Airport in Panama City. This provides, for most, a visa-free alternative to Miami, enabling rapid transfers to virtually everywhere in Latin America as well as to Caribbean destinations including Jamaica, the Bahamas, Haiti, Aruba, Trinidad, the Dominican Republic, Cuba, Puerto Rico, and St Maarten with o Barbados and elsewhere to be added shortly.