Mexico Wants Its Own 'Panama Canal' - Without US

In December 1859, the United States and Mexico signed a treaty granting the US full use "in perpetuity" of Mexico's Tehuantepec Isthmus, the narrowest point of the country between the Gulf of Mexico and the Pacific Ocean. The Panama Canal was not yet built, and the Americans were looking for a quick and secure interocean trade route.

The McLane-Ocampo Treaty never took effect, because the US Senate failed to ratify it. But this dusty historical event, which Mexicans today consider a "near miss" loss of sovereignty over a strategic chunk of their country, is resurfacing.

That's because Mexico is debating a "megaproject" to turn the Tehuantepec Isthmus into a major east-west trade and industrial corridor that would rival the Panama Canal.

It's a project many Mexicans worry could lead to a loss of national sovereignty in the 21st century.

The idea is to build an overland trade route, using modernized rail lines and a zippy divided highway, to allow quick transport of containerized goods between the Gulf port of Coatzacoalcos and the Pacific port of Salina Cruz.

By taking advantage of this transportation infrastructure, promoters say, the area could become a manufacturing and assembly zone similar to Mexico's northern border with the US. Asian products could be assembled on the isthmus before shipment to the United States and beyond. And US products shipped out of Houston or New Orleans would have quick access to the Pacific.

The problem many Mexicans see is that neither the Mexican government nor Mexican companies have the deep pockets to make the multibillion-dollar project a reality.

So foreign investment will be necessary. Most of the rail transport, port operation, and large construction companies considered likely to be participants in such a project are US-owned.

Old concerns reemerge

This foreign involvement has resurfaced old fears of lost Mexican sovereignty and US hegemony here.

"What worries us is a dividing of the country in two, with creation of a band across this strategic area where sovereignty could be lost and control left in the hands of international companies," says Hctor Snchez Lpez, a senator from Oaxaca state, on the Pacific side of the isthmus.

Mr. Snchez, a member of the left-of-center Party of the Democratic Revolution, spices his comments on the Tehuantepec project with references to "the old dream of the United States" to control a transoceanic route across Mexico.

But he says his concerns would be the same regardless of what foreign country might end up, through investments, with de facto control of the isthmus. Mexico's sovereignty "would be at risk not only if the US, but if Japan or Canada or any other country, were to predominate," in such a project, he says.

Others are even more strident.

"First, the government delivers our most frightening bankruptcy and then tells us that, since there's no money, we have to sell Tehuantepec's sovereignty," says Jos Angel Conchello, a senator for the center-right National Action Party.

"The ominous McLane-Ocampo Treaty has reached maturity a century and a half later," he says.

Mexican President Ernesto Zedillo Ponce de Len and the country's transportation ministry insist a transportation corridor project is far from being a reality and that concerns are premature.

But the transportation ministry did commission a feasibility study on the corridor. And perhaps most important, Mexico is proceeding with a railway and ports privatization program that critics say could leave the region's infrastructure in private and foreign hands before Mexicans have a chance to comment on the project.

Francisco Cano Escalante, a prominent business leader who has generally favored Mexico's privatization process, says that the process should become more "nationalist" by keeping such strategic routes as the interoceanic corridor under state control.

Majority control sought

"If privatizing the ports and railways of the isthmus implies creating a land version of the Panama Canal, that means a part of our national territory would fall into private hands, and that should be stopped," he recently told the Mexico City daily La Jornada.

Critics such as Mr. Snchez emphasize that they are supportive of a trade route across the Tehuantepec isthmus. "It just must be nationalist and patriotic," he says.

This means that Mexico must retain majority control, he says, with local organizations and small landowners in the area participating in creating and carrying out the plan.

Foreign participation should be limited to 49 percent, and even that 49 percent should be spread among several countries, he says.

Vote in Mexico's Congress

Finally, the plan should include the petrochemical complexes on the isthmus, Snchez adds, which means that plans to privatize them should be dropped.

Mexico's Transportation Secretary Carlos Ruiz Sacristn recently acknowledged a vote in the Mexican Congress in favor of majority Mexican participation in the project. But he calls the vote only a "recommendation."

Snchez bristles at that word, saying it suggests the government's desire to bypass congressional concerns.

"It's not a recommendation; it's a law," he says, although he recognizes that Mexico's National Foreign Investment Commission has the right to approve up to 100 percent foreign investment in privatizations such as those involved in the isthmus project.

COLOMBIA, SALVADOR, OTHERS MAY BUILD COMPETING LINKS BETWEEN OCEANS

Controversies over foreign involvement in Mexico's proposed trade corridor across the Tehuantepec Isthmus could frighten away investors and derail the whole project just as ideas for other routes between the Atlantic and the Pacific are popping up like mushrooms.

Panama, which takes full control of its canal from the United States in 1999, is already promoting plans to expand the capacity of the canal. Earlier this year, Colombia proposed building a canal of its own. And in July, El Salvador unveiled a "dry canal" project linking the Salvadoran port of La Unin on the Pacific with the port of Corts on the Gulf in Honduras.

"We know Mexico must take advantage of the moment," says Hctor Snchez Lpez, a Mexican senator who is cautious about Mexico's isthmus plan. "We are simply thinking of the best interest of our homeland, of our nation, the way people in any country would.

"So that shouldn't frighten away anyone."