Panama Canal talks break down

The Panama Canal Authority (PCA) broke off talks on financing $1.6 billion (1.18 billion euros) in cost overruns, needed to complete the expansion of the waterway, the construction consortium Group United for the Canal (GUPC) announced Wednesday.

The consortium, which is led by Spanish builder Sacyr and includes firms from Belgium, Italy and Panama, said in a statement the collapse would pose an imminent risk to 10,000 jobs associated with the project. The GUPC statement, however, left open if the breakdown was final.

Work on the project was halted following news of the breakdown, PCA Administrator Jorge Quijano told reporters at a press conference.

"I don't even want to suggest that the next steps will be easy or risk free," he said. "What I do want to make clear is that we will not yield to blackmail."

An agreement "is now no longer possible," Quijano added.

#video#The collapse of negotiations is the latest setback to a project mired in disputes ever since GUPC in 2009 won a bid to double the capacity of the 50-mile (80km) shipping route. The $5.2 billion project is scheduled to be completed by 2015, but it is already nine months late due to the disagreement.

On Wednesday, GUPC warned that completion could be delayed by 3 to 5 years if no agreement was reached, citing an estimate by insurance group Zurich. GUPC also said it had offered $800 million in new and existing funds, while asking Panama to put in $100 million.

“It is unjust and impossible for the PCA and Panama to expect that private companies will finance $1.6 billion on a project that was to be fully funded by PCA,” the consortium said.

EU Industry Commissioner Antonio Tajani, who's been mediating in the dispute, said the interruption was bad news for employment and economies worldwide.

uhe/dr (AFP, Reuters, dpa)