"No" supporters face a well-funded pro-expansion campaign

I have met the Tailor of Panama. He is not a spy - he is a real tailor, though he has read the John le Carre book.

His name is not Harry Pendel, either, as the book would suggest, but Carlo. And I met him in the city's old quarter, an area not so much full of intrigue as delightful old-world authenticity.

I did not meet Carlo to buy a suit or exchange gossip, but to ask him how he was going to vote in Sunday's referendum on the Panama Canal. And, like everyone else here, Carlo had a strong opinion.

"Si," he said in Spanish when I asked whether he was for the expansion of the canal.

"Because Panama needs the jobs," he added. As he pressed his foot down, his automatic sewing machine burst into vibrant life. It worked, but it was not new.

The same could be said of the canal.

Finished in 1914, it has served world shipping for nearly a century.

Panamanians are now being asked to vote on whether to modernise it. In particular, whether to build new sets of locks at either end to take the super ships that now leave their wake on the planet's oceans.

Looking for volume

"It's not just about size," says Francisco Miguez, of the company that runs the canal. "It's about volume."

PANAMA CANAL FACTS Handles an estimated 5% of world trade The main goods shipped are oil products, grain and container cargo Last year the canal handled 14,000 transits, shipping 200m tons of cargo Traffic between Asia and the east coast of the US accounts for more than 40% of shipping

I have to say that the difference rather escaped me, but Francisco smiled when he told me that the more volume a ship had, the more the canal company could charge it to make the 80-km (50-mile) crossing.

"For a big ship carrying ,say, 5,000 cars," said Francisco, "we can charge US$250,000 (�133,000) just for one crossing.

"Which is why we like big-volume ships and which is why we want to build new, wider channels at either end of the canal to take them."

The same argument oozes out of my television screen as I watch one of the endless number of ads paid for by the "Yes" campaign.

One of them depicts a well-groomed businessman meeting his farm workers. In full soft-focus glory he and the workers agree that expanding the canal is best for Panama and therefore best for them.

Big money

The "No" campaign does not seem to have much money, so it is harder to come across their ads.

PANAMA CANAL - KEY DATES 1880 France attempts to build canal but fails 1903 Panama cedes control of area to the US 1904 Building begins 1914 Canal completed 1936 US and Panama sign first canal treaty 1977 Voters approve new treaty which allows Panama to recover sovereignty gradually 1999 Panama regains total control of the canal Jun 2006 Government approves canal expansion plan

That did not stop Professor Miguel Antonio Bernal from trying to convince me of his position. Sitting in the centre of Panama City, near the Miami-like skyline that now dominates the seafront here, he told me that expanding the canal would be a disaster for ordinary Panamanians.

"Sixty-seven per cent of us live in poverty," he tells me.

"Why not spend the money on hospitals and schools? And, in any case it will be one of those massive projects where the costs spiral out of control, just like the Channel Tunnel between Britain and France."

The estimated cost of putting in new locks at both the Pacific and Atlantic sides is a ship-stopping US$3bn to US$5bn. Big money for a country of three million people.

And all that just to raise and lower ships by 24m (86ft) at either end of the canal.

It reminds you of the quip once made by the British movie mogul Sir Lew Grade. Asked about the crippling costs of his disaster film Raise the Titanic, he replied: "It would have been cheaper to lower the Atlantic."

Impressive sight

For some, money and water just do not mix.

The "Yes" campaigners say the expansion will pay for itself and that, in any case, with 14,000 ships a year the canal is nearly at its full capacity. So, they say, something must be done.

They also eye the competition. Nicaragua has just announced it is looking at building its own canal. Ports like Los Angeles are considering expanding, and there is even talk of sending ships around the Arctic, at least for a few months of the year.

In the old quarter of Panama there is a museum dedicated to the canal. It is housed in a splendid former colonial hotel.

On one of its visitor-friendly screens, a speeded-up video takes you on a boat along the whole canal route in just six minutes, instead of the real time total of eight hours.

It is an impressive sight. Lush jungle and beautiful mountains adorn the sides of this man-made engineering triumph.

Those for expansion want to speed up the whole process of modernisation. Those against it want to reconsider Panama's priorities.

It looks like the "Yes" people will have their day. But, just like the Tailor of Panama, there will be others hoping the outcome of Sunday's vote will be a bit more of a dramatic thriller.