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Panama's Boom Helps Drive Nicaragua Canal Dreams

By JUAN ZAMORANO and MICHAEL WEISSENSTEIN

PANAMA CITY (AP) â¿¿ Curundu used to be a warren of ramshackle wooden houses and reeking open sewers, one of Panama City's most notorious refuges for street gangs and drug dealers.

Then, three years ago, the government tore down the shacks and built a bustling new neighborhood of concrete apartment buildings, freshly paved streets, basketball courts and fields with artificial turf.

"We live more decently here now. People see a prettier neighborhood, kids playing soccer," said Ronny Murillo, a 45-year-old ex-convict who helped build one of the billions of dollars in projects made possible by an economic boom driven largely by the $5.25 billion expansion of the Panama Canal. Behind him, enormous cranes loomed over a skyline that has been transformed by dozens of new skyscrapers, many filled with luxury apartments, high-end stores and fashionable boutiques.

In a little more than five years, Panama has slashed its unemployment rate by two-thirds and nearly tripled the rate of government spending as the double-digit growth of the canal-fueled boom has made it the hemisphere's hottest economy. Just to the north, Nicaragua has watched years of slower growth fail to move it out of its position as the hemisphere's second-poorest nation, after Haiti.

The deep discrepancy between the fortunes of two Central American neighbors goes a long way toward explaining the Nicaraguan government's fervent promotion of a Chinese company's vague proposal to build the hemisphere's second trans-ocean canal across Nicaragua. Despite deep reservations among opposition lawmakers, environmentalists and independent shipping experts, the country's leftist-controlled National Assembly voted overwhelmingly Thursday to grant Hong Kong-based HK Nicaragua Canal Development Investment Co. an exclusive, renewable 50-year concession to measure the feasibility of a new canal, then build it and take the lion's share of the profits.

Underlying much of the enthusiasm in Nicaragua is the hope that the massive new canal could bring a bit of Panama-style prosperity.

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