Work on the ambitious Panama Canal expansion project was halted on Wednesday after talks broke down on how to settle a dispute over US$1.6 billion in cost overruns.
Panama Canal Authority Administrator Jorge Quijano told a press conference that the stoppage would give authorities time to analyze how to proceed on the project to widen the canal.
“I don’t even want to suggest that the next steps will be easy or risk-free,” Quijano told reporters in Panama. “What I do want to make clear is that we will not yield to blackmail.”
The Panama Canal Authority and the Spanish-led construction consortium leading the expansion blame each other for the overruns. They were negotiating how to pay for the unplanned extra costs when talks broke down.
An agreement “is now no longer possible,” Quijano said, adding that the consortium had ordered its employees to stop work.
Other foreign contractors and project managers have expressed an interest in completing the 30 percent of the work that remains on the third canal lock, officials said, but Quijano declined to provide details about a plan B except to say that under no circumstances would next year’s deadline to complete construction be pushed back.
“They are leaving and we are staying. The project is going to be finished. It must go ahead with or without them,” Quijano said.
The consortium, which is led by Spain’s Sacyr SA and includes firms from Italy and Belgium, says that 10,000 jobs are at risk.
In a strongly worded statement on Wednesday, it said Panama’s failure to resolve the impasse threatens to overshadow a summit of 34 world leaders, including US President Barack Obama, which the Central American nation is set to host next year.
EU Commissioner for Industry and Entrepreneurship Antonio Tajani said news of the work stoppage was “unexpected” after Panamanian President Ricardo Martinelli had made a statement on Tuesday indicating that the parties were close to an agreement.
“I trust and hope that the parties reconsider their positions in the coming days,” Tajani said. “Interruption of the work would be bad news for employment, for the worldwide economy, for the expansion of the canal and for the parties themselves.”