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Panama set to begin $5bn project Panama set to begin $5bn project
(about 6 hours later)
Panama is set to start work on a $5bn (£2.4bn) building project to widen the Panama Canal to increase its capacity. Panama has started work on a $5bn (£2.4bn) building project to widen the Panama Canal to increase its capacity.
The project involves adding a third set of locks that will enable modern ships to use the canal. Many tankers are now too large for the 50-mile (80km) route. The project, which was officially unveiled on Monday, involves adding a third set of locks that will enable modern ships to use the canal.
Many tankers are now too large for the 50-mile (80km) route and supporters say the modernisation is vital to maintain trade and increase jobs.
Panama residents overwhelmingly backed the plan in a referendum held in 2006.Panama residents overwhelmingly backed the plan in a referendum held in 2006.
Supporters say modernisation is vital to maintain trade and increase jobs, but critics say it will lead to huge debts for Panama. 'Exceptional act'
Opponents have also attacked the project on environmental grounds. But opponents have attacked the project, due to be completed by 2014, arguing that it will damage the environment and widen the gap between rich and poor.
It is estimated that, in volume terms, around 5% of the world's trade passes through the Panama Canal.It is estimated that, in volume terms, around 5% of the world's trade passes through the Panama Canal.
The government has said the scheme will be financed by raising tolls on the waterway as well as through foreign credit.The government has said the scheme will be financed by raising tolls on the waterway as well as through foreign credit.
The beginning of the huge project will be marked by a ceremony attended by Panamanian President Martin Torrijos and foreign dignitaries. Panamanian President Martin Torrijos launched the project before a crowd of leading businessmen and foreign dignitaries.
"We are witnesses to an exceptional and unique act," he said.
The US ceded control of the canal, which it built in the early 20th Century, in 1999.
Former US President Jimmy Carter, who signed an agreement in 1977 paving the way for Panama to take control of the waterway, said he was "proud" of the expansion plans.