PANAMA CITY — The explosions that shatter the early morning quiet here are perfect metaphors for another kind of boom, the economic one transforming Panama's capital.
The blasts a few miles north of the city are part of the first phase of the $5.25-billion Panama Canal expansion project. They are clearing a path for new locks that will modernize the historic waterway and, in 2014, enable bigger ships to traverse the isthmus.
This country's economy grew 11% last year, in large part because of expectations of continued prosperity resulting from a bigger and busier canal. But there is more going on in Panama than just a massive public works project.
Attracted by the climate, favorable tax policy and laid-back lifestyle, home buyers and investors are flocking here from Venezuela, Colombia, Ecuador, Europe and the United States.
The skyline increasingly resembles a mini-Sao Paulo, a dense forest of steel and concrete towers that includes dozens of new high-rise condominiums and apartment buildings. (Not enough of the buildings are hotels, apparently, because room rates have doubled in the last two years.)
The city is still redolent of the intrigue that fascinated John le Carre and Graham Greene, both of whom wrote books about Panama and its murky politics. It's long been a meeting ground and place of exile for characters such as former President Juan Peron of Argentina, the shah of Iran and Colombian drug trafficker Pablo Escobar.
Its cosmopolitan ambience has a renegade element: Panama has long been and still is a staging ground for illegal arms going south to Colombian armed groups and for drugs traveling north to U.S. consumers.
But Panama's leaders insist their country is on a trajectory toward First World status and respectability.
It's received a series of boosts recently with the relocations here of several multinational companies that tout Panama's location and friendly atmosphere.
This month, 3M joined other corporate giants Hewlett-Packard, Sinopec and Singapore Aerospace in announcing that it was opening an operation here.
All told, Panama added 51,000 jobs last year, double the number in 2006.
But the rapid growth has exposed the country's infrastructure as woefully inadequate for its good fortune. Monumental traffic snarls, shortages of housing, electricity and water shortfalls and ugly land-use spats are the flip side of the bonanza.
