Colombia: Can a land route rival the Panama Canal?

BOGOTA, Colombia — A century ago, the construction of the Panama Canal helped make the United States the dominant player in Latin America. Now, a proposed alternative to Teddy Roosevelt’s celebrated “big ditch” symbolizes China’s rise in the region.

Colombia and China are in talks about building a so-called “dry canal.” The project would consist of about 250 miles of railroad linking Colombia’s Pacific coast to a new Atlantic port that would be built near the city of Cartagena.

This ship-to-rail system would make it easier for China to import Colombian commodities — mainly vast supplies of coal — and to export Chinese electronics and other goods to the region. “It’s a real proposal … and it is quite advanced,” Colombian President Juan Manuel Santos recently told The Financial Times.

“This will benefit all of Latin America,” said Zhou Quan, the commercial attache at the Chinese Embassy in Bogota. “If there are problems with the Panama Canal, like too much ship traffic, this would be an alternative.”

Colombia’s new partnership with the world’s No. 2 economy is turning heads in Washington where the South American nation has long been considered the U.S. government’s closest ally in the region.

Since 1999, the U.S. has provided Colombia with about $8 billion in mostly military aid to fight guerrillas and drug traffickers. Colombia, in turn, supported the U.S. invasion of Iraq and has been a loyal soldier in Washington’s long-running war on drugs. As a result, the Bogota government saw little need to follow the path of nearby Peru, Chile and Brazil in bolstering trade with China.

“This obsession with the United States shaded out everything else,” said Arlene Tickner, a professor of international relations at the University of the Andes in Bogota. “That’s why the realization that China was important came so late to the country.”

But now that the guerrillas have been weakened and Colombia is no longer in danger of becoming a failed state, the U.S. government has turned its attention elsewhere. U.S. aid to Colombia has been trimmed in each of the past four years, including a 15 percent cut announced by the Obama administration last week.

More frustrating to the Bogota government is the fate of a trade agreement signed between the two countries in 2006. Due to concerns about human rights violations in Colombia and diminished support for trade agreements at home, the U.S. Congress has refused to ratify the pact.

“This has been a huge slap in the face to the Colombian government,” Tickner said.

Rather than geopolitical influence, China mainly wants a steady supply of minerals, oil, soybeans and other commodities from Latin America. Still, China’s new prominence in the region has alarmed conservatives in Washington. In fact, talk of the Chinese railroad might help persuade some U.S. lawmakers to support the Colombian trade pact, said Cynthia Watson, chair of the department of security studies at the National War College in Washington.

“Ultimately, the motivation for this is political,” said Mauricio Cardenas, a former Colombian government minister. “It’s a symbol that Colombia does not depend exclusively on the United States.”

But there are other factors. Disputes with Venezuelan President Hugo Chavez have provoked a steep drop in exports to neighboring Venezuela, which used to be Colombia’s No. 2 trade partner after the United States. China now fills the No. 2 slot with $5.8 billion in trade with Colombia last year.

Colombia is also eager to secure Chinese financing to build new highways, railroads and ports. Colombia’s rundown transportation network raises the price of doing business here making the country less competitive. China, for example, has expressed interest in upgrading shipping facilities at Buenaventura, Colombia’s only Pacific port.

“There are Chinese companies and banks that want to carry out these projects,” said Alvaro Ballesteros, executive director of the Colombian-Chinese Chamber of Commerce.

Some analysts puzzle over the timing of the “dry canal” announcement. The Panama Canal is currently undergoing a $5 billion expansion that will ease congestion, a key Chinese concern as the country’s exports have boomed.

Watson, however, says a railroad across Colombia would allow China to hedge its bets with an alternative to the canal while sending a sharp message to the Panamanian government — one of the few that still recognizes Taiwan rather than Beijing.

Despite President Santos' upbeat words, the project remains very much on the drawing board. The Chinese Development Bank has expressed interest in helping to fund the railroad and other projects in Colombia, which would cost about $7.6 billion. Yet no one has carried out feasibility studies.

“The real question is whether a business case can be made for it,” Cardenas says. “Would the Colombian railroad be profitable?”

The tracks would have to be laid across the imposing Darien jungle near the Panamanian border, an area teeming with guerrillas and drug traffickers who could sabotage the project. In fact, environmental and security concerns have long discouraged Panama and Colombia from building a cross-border jungle highway to span the so-called “Darien Gap.”

Still, Panama was part of Colombia before breaking away under U.S. pressure in 1903, a year before construction began on the canal. Ever since, Colombia has longed for its own transoceanic route. Thanks to China, Colombia may have finally found a partner with the financial muscle to make it happen.