NPR Story
2:23 pm
Fri May 16, 2014

How A Quarrel In Panama Is Making Waves In Miami

The brand new PortMiami tunnel is set to open next week. It’s a billion dollar project that’s been in the works for more than four years. The tunnel will take trucks and cruise passenger traffic under Biscayne Bay, rather than through downtown Miami.

It’s the centerpiece of the $2 billion makeover of the Port of Miami, which was done largely so the city can capitalize on another major expansion going on more than 1,000 miles to the south: the widening of the Panama Canal, to accommodate bigger ships carrying more cargo.

But the Panama Canal project is now in limbo.

Tim Padgett, has been covering the story for WLRN-Miami Herald News and joins Here & Now’s Robin Young to discuss what’s happening with the canal, and what it could mean for Miami.

Guest

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Transcript

ROBIN YOUNG, HOST:

It's HERE AND NOW.

A brand new tunnel is set to open next week in Miami, one that bypasses downtown and goes directly to the port. It's the centerpiece of the $2 billion makeover of the Port of Miami, which also included a major dredging project and the installation of massive cranes for loading and unloading cargo. All of it so that Miami can capitalize on a major project happening a thousand miles to the south, the widening of the Panama Canal to accommodate bigger ships carrying more cargo.

But the Panama Canal project is now in limbo, and that has some people in Miami a little nervous. Tim Padgett is America's editor for WLRN-Miami Herald News and he joins at with more. Tim, welcome.

TIM PADGETT: Hi, how are you?

YOUNG: I'm good. How are you? But more important, what's going on in Panama? What's the dispute over the project there?

PADGETT: Well, right now, the work has continued. So we can say that the expansion of the canal is still going on. The problem is the cloud of uncertainty that's hanging over the project, which is about 75 percent done.

But as I said, there's this cloud of uncertainty hanging over the remaining 25 percent because of this dispute that's going on between the Panama Canal Authority and its main contractor, a consortium of European construction firms over what the consortium claims is kind of an alarming $1.6 billion cost overrun.

And until the two sides get this dysfunction hashed out in international arbitration, which is going on right, as I said, that cloud is going to be hanging over this whole omission.

YOUNG: Right. In the Panama Canal there's such a sense of, you know, romance to it, but also it's got a rich history of controversy and conflict. And why was Miami widening its port or enlarging its port in anticipation? Was it just because of anticipation of more cargo?

PADGETT: Well, it's widening and it's expanding the port here for the same reason that so many ports along the Eastern and Gulf Coast of the United States are doing the same thing. They want to take advantage of this greatly increased cargo traffic that they see coming through the Panama Canal as a result of the expansion.

So what they're doing is they're retrofitting their ports to accommodate more massive vessels that are known as post-panamax ships, which can handle more than twice the amount of cargo that conventional ships can.

And what they're hoping, as I said, is that we'll be seeing a lot more of those ships coming in and out of the western hemisphere because of the Panama Canal expansion, coming to ports like Miami, like New York, Baltimore, New Orleans, et cetera, and that should be a real economic boom for these coastal cities.

YOUNG: Oh boy, trying to picture something that's twice the cargo, because already they are huge. So, you know, how significant will this be? Are people nervous in Miami that they will have spent all this money on their expansion for naught?

PADGETT: Well, exactly. What makes them nervous, and publically, you know, they're putting a good face on this, they're saying that, well, you know, whatever happens in Panama, we can still receive post-panamax ships. Well, the reality is until the Panama Canal expansion is finished, they probably won't be receiving as many post-panamax ships.

And what makes them nervous is the fact that they need the Panama Canal traffic coming to them so that they can maximize their post-panamax business and thereby recoup these billion dollar investment that they've made in their own port expansions more quickly.

YOUNG: Well, and meanwhile, what's the impact on Panama that there's a hang-up there?

PADGETT: This has been a--I won't say a black eye, but it has been a real concern in terms of Panama's reputation. What stands out of this whole controversy is that the Panama Canal Authority, ever since the United States handed ownership of the Panama Canal over to Panama 14 years ago, Panama has run the canal much more effectively and profitably than the United States ever did. It's been very successful.

And so what Panama is hoping is that it can turn this expansion into making Panama more like the Hong Kong of the Americas, a global maritime and financial hub. So those are the very large stakes that are riding on this canal expansion.

YOUNG: So it's a story we are going to keep an eye on. Tim Padgett, America's editor for WLRN-the Miami Herald News. Tim, thanks so much.

PADGETT: Thank you. Transcript provided by NPR, Copyright NPR.

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