Back on Track

Panama has just significantly enhanced its canal services.  In November, 2001, and a few months behind schedule, the railway line which was built in 1855 and which crosses the isthmus from the Pacific to the Atlantic oceans carried its first passengers since being abandoned more than a decade ago. The railway is, however, more of an extension of the canal operations than anything else and passengers are not a priority:  the railway’s prime purpose is to serve as a “dry canal”, a subject which I mentioned in the May, 2001, issue of SA Banker.  Optimism is strong with the reincarnation of a railway whose original investors saw their stock once become the most valuable on the New York stock exchange.  Even though that success may not be repeated, it is hoped that by 2003 the railway will be transporting up to a million containers per annum between the Pacific and Atlantic canal ports with the potential of eventually doubling this figure.  The initial goal is 300,000 containers per annum, with a transfer time between ships of 3 hours.  The railway, called Panama Canal Railway Company, is owned by Kansas City Railway and Mi-Jack Products who have invested US$80 million in the project but expect to reap substantial profits from the transport of 20ft and 40ft containers, the staple conveyance today of world trade.  

The isthmus railway line, which was the American continent’s first transcontinental railroad, was originally built to transport gold.  During the US gold rush that started in 1849, the quickest and safest way for prospectors and other adventurers to reach California and make their fortunes was via Panama.  This meant boarding a ship at one of North America’s east coast ports and sailing down to the Atlantic port of Colón in Panama, now famous for its free trade zone, and then making the railway journey to the city of Panama on the Pacific side of the country where they could board a steamer bound for California.  Today containers have replaced the gold and, almost, the people – it was, in fact, the Panamanian government that requested a passenger service be provided as a means of attracting more tourists to the country.  It is, after all, a convenient way of encouraging visiting cruise ship passengers to disembark for a few hours and travel between the Caribbean and Pacific coasts of Panama. 

Even though the railway owners were hesitant about the prospect of making profits from passengers (there are 200 seats) the preliminary results have been encouraging, and I can see why.  The coaches are from another era, originally built in 1955 (the year I boarded my first train in Africa) and have luxuriant wood-panelled interiors complemented by wooden blinds, carpeting and soft lamp lighting.  There are similarities with my own rail journey back in 1955 from Cape Town to Bulawayo, except that it was then a steam and not a diesel engine and the level of comfort offered by the PCRC coaches is more akin to South Africa’s Blue Train.  The trip across the isthmus along the 47 miles of track is also much shorter (mine took 2 nights and 3 days whereas this one takes an hour) and the only railway journey which I have known to be shorter, only some several minutes, in fact, was in the Channel Islands in the Bailiwick of Guernsey on the tiny island of Alderney where the only railway in the Channel Islands operates.

Tunnel Vision

Enormous picture windows offer the rail passenger in Panama impressive views of the tropical landscape with its many palms and occasional caimans moving through the canal waters, all of which is vastly different, of course, to the views I saw both in Africa and the Channel Islands.  It is a unique experience, this journey through lush primal jungle, where the canal is never far away because the line runs through the canal zone, the strip of land which was ceded to the United States between 1903 and 1979.  It is a rich green vista interspersed with the sight of tugs, dredgers and enormous cranes.  This diversity is symptomatic of Panama which has always been different from the rest of Central America due to its canal, free trade zone and banking; even today Panama has remained outside the Central American Common Market made up of Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica. 

Besides streamlining its canal operations with the addition of the railway, Panama has been polishing its offshore banking image as well.  Here’s an extract from an International Monetary Fund report published in 2001 about the offshore banking system in Panama:  “The authorities and the banking industry are very aware of the prudential risks associated with money laundering and have in place adequate safeguards to deter improper use of the banking system for illegal purposes.  While no system is infallible, the mission team concludes that the legal, regulatory and supervisory system in place in the banking sector compare favourably with internationally accepted prudential supervision practices…  The legal and regulatory requirements are strict and many requirements exceed those in place in industrial countries.”  This encouraging endorsement of the banking environment comes at a time when Panama’s economy is sluggish, with near-term prospects offering little comfort.  Perhaps there is light at the end of the tunnel for Panama after all.  If, as some cynics might say, the light in question is a train then perhaps it is one which is hauling containers, keeping Panama’s economy, literally, on the move.