BANGKOK, Thailand — The dream of digging Asia's version of a Panama Canal across Thailand for ships plying between the Indian Ocean and the Pacific has been revived by mysterious financiers who offered 50 million US dollars to study the project.

Dubbed the Kra Canal, it would enable international commercial and military ships to save time by not having to sail around Singapore when traveling between the Indian Ocean's Andaman Sea and the Pacific's South China Sea.

Currently, ships negotiate the narrow, congested Strait of Malacca which is wedged between Indonesia's northern Sumatra island and southwest Malaysia -- a route serviced by Singapore's huge port.

Other vessels choose a longer, less crowded route by traveling south of the Equator and skirting below Indonesia's archipelago.

If the Kra Canal were built, ships could be rerouted 720 miles north of Singapore and cross southern Thailand's mountainous Kra Isthmus.

The canal would span Thailand's narrowest stretch of land -- about 30 miles across. The area is bordered on the west coast by the southern tip of Burma, a country also known as Myanmar.

Traveling east from there, the canal would involve dredging a 40-mile-long stretch of the Kra Buri River between Burma's peninsula and Thailand's bustling port of Ranong along the Andaman Sea.

Upriver at Kra Buri town, very difficult digging would need to etch a 30-mile-long, east-west canal alongside Highway Four, across low mountains.

The canal would eventually link the east coast town of Chumphon, where the Chumphon River dumps into the Gulf of Thailand, which opens to the South China Sea.

In the 17th century, European and Thai leaders talked about hacking through the jungle but lacked the will, finances and technology to make the Kra Canal.

If completed, the canal would make the sleepy southern zone a money-spinning region profiting Thailand and investors, according to its boosters.

But the dream always remained on the back-burner, until now.

Mysterious Deal

In August, Hong Kong-based Phuket Passproject Ltd. Co. made a surprise offer of 50 million U.S. dollars to finance a feasibility study of the Kra Canal.

But the company demanded Thai officials immediately sign a contract, which caused opposition politicians and others to suspect it was a shady deal.

The contract reportedly stipulated that the results of the study would become joint property of the Thai government and the company, and not be released to competitors or the public without the company's permission.

Thailand's powerful Gen. Chavalit Yongchaiyudh, who is defense minister and deputy prime minister, eagerly pushed for the contract to be signed -- a move which raised additional concern among the deal's critics and the general's long-time opponents.

"This is, of course, highly irregular and gives us good cause to be suspicious of the deal Gen. Chavalit supposedly struck with the company," said the Bangkok Post in an editorial.

"This mega-project could easily collapse if the bidding process is not conducted with transparency," said Pakdee Tanapura, a member of a screening panel studying the canal.

"The screening committee had strongly opposed the [Phuket Passproject] move since we were all doubtful of the firm's financial status," Mr. Pakdee added.

Others have opposed construction of the Kra Canal by any group, amid fears that it would force Thailand to borrow huge amounts of money and plunge the country into massive debt.

Estimates of the cost to dig the canal start at around 20 billion US dollars, but no one really knows the full price tag.

Thais call it "the mother of all mega-projects."

Gen. Chavalit, who also chairs the committee studying ways to dig the canal, insisted the deal was good for Thailand and worldwide shipping.

But Thai officials also complained they did not know much about the Phuket Passproject Co.

Thai media identified Phuket Passproject's chairman as Adisak Techa-adisak, and its two directors as Leong Wangkee and Sakae Torisawa.

Some Thai media expressed confusion, however, alternately describing the Hong Kong-based firm as "Singaporean-Malaysian," "Singaporean-Australian-Japanese" and "Japanese-Australian-American-Singaporean."

"Most of its money comes from Japan," the Bangkok Post said.

The Dream Is Alive

As a result of the murky details and lack of transparency, the contract for the two-year study was not signed.

But the Kra Canal dream is not dead.

"The prime minister even pushed for a committee to study the issue," Gen. Chavalit said on Aug. 27. Prime Minister Thaksin Shinawatra reportedly wanted to hear about joint ventures that offered more involvement for Thai firms, instead of the Phuket Passproject deal.

China could build the canal cheaper than many other foreign countries, and would be attracted by the canal's shorter shipping routes, a Thai senator said.

Kra Canal Management and Transport, headed by a retired Thai general, was earlier said to be interested in the project and had attracted investors from China, the United States, Japan and South Korea.

Three other Thailand-based firms also previously expressed interest in the canal, including Chanoknat International Co., Wang Kanai Construction, and Siam River Kwae Forest.

Critics of the canal said it would need to handle super-tankers to be profitable, but that meant the possibility of oil spills and environmental havoc.

Shipping would also cause sea pollution in the area, threatening coastal fishing.

The peaceful stretch of Thailand would also become a major focus for international security concerns if a canal was dug.

Ships hoping to use the canal might also change their mind if Thailand were unable to support the route with extensive port facilities capable of handling a continuous flow of vessels.

The digging and other work could take a decade to complete, according to some estimates.

During World War Two, Japanese forces were suspected of planning to attack the Kra Isthmus from the sea on December 1, 1941, to soften the zone for a land attack from the east coast, according to official archives kept by Pearl Harbor History Associates.

Japan apparently wanted to occupy the territory between Bangkok and Singapore so Japanese forces could block all land routes between the two capitals.

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Richard S. Ehrlich has a Master's Degree in Journalism from Columbia University, and is the co-author of the classic book of epistolary history, "HELLO MY BIG BIG HONEY!" -- Love Letters to Bangkok Bar Girls and Their Revealing Interviews.

His web page is located at http://www.oocities.org/asia_correspondent and he may be reached by email at animists *at* yahoo dot com