Since the late 17th century, the massive seawall surrounding Panama City’s Casco Viejo has protected the historic district against pirate attacks and stormy seas.

But residents of this quaint neighborhood fear their old seawall might no longer be able to defend them from the onslaught of a rapidly modernizing city.

Government plans to build a $776 million superhighway — phase III of the coastal beltway megaproject — call for a giant landfill stretching out into the ocean around Casco Viejo, eliminating the neighborhood’s historic maritime boundaries and burying part of its 338-year old seawall beneath a new roadside park.

Though the final plan has not yet been approved, the project has created tensions that pit the poor from surrounding slums against wealthier residents of Casco Viejo. The rich say the government is creating a dangerous social rift by manipulating the poor to support the project. Panama officials insist the highway project is needed to ease traffic in the city and make way for new development. Residents of Casco Viejo, however, say the landfill highway would destroy their beaches, ruin historic structures, and remove the neighborhood from UNESCO’s World Heritage list.

And once that happens, residents fear there will be nothing standing between their historic district and the giant skyscrapers they’ve watched go up across the bay for the past decade.

“In a country like Panama, where each government can come into office and change the laws, international declarations like UNESCO protect us,” says Patrizia Pinzon, president of the Association of Friends and Neighbors of Casco Antiguo (AVACA).

“If we didn’t have UNESCO, the bulldozers would be here tomorrow and they would build a financial tower here,” she said.

UNESCO is also concerned about the government’s plans. On July 7, the U.N.’s World Heritage Committee advised the Panamanian government that the highway project would “potentially have an impact” on the Outstanding Universal Value of Casco Viejo. It urged the government to “discontinue” the highway project for six months to develop an “updated report on the state of conservation of the property.”

The government, however, insists everything will work out fine.

“I have met personally with UNESCO for eight months. I understand the complex issue perfectly and I can tell you there’s zero risk to our historic patrimony,” Minister of Public Works Federico José Suárez told The Miami Herald.

Casco Viejo is an intriguing combination of revived and crumbling buildings that UNESCO has recognized for its preservation of the city’s original street plan and an “unusual mixture of Spanish, French and early American architectural styles.”

Suárez insists that President Ricardo Martinelli’s government values the world heritage designation and has invested more than any previous administration to restore Panama’s heritage. But many remain leery of the government’s intentions. Throughout the historic district, residents have marched against the highway, hung protest flags and banners from storefronts and homes, and spray-painted graffiti messages denouncing the government project. More than 17,000 people — mostly young Panamanians — have joined the Facebook page “No to the Cinta Costera around Casco Viejo.”

The government has joined in the battle for public opinion. Pro-highway demonstrators have festooned abandoned homes with “Sí” banners and organized countermarches in favor of the project.

Some Casco residents claim the government is buying its support in the impoverished neighboring slums of El Chorrillo, San Felipe and Santa Ana — the former stomping grounds former dictator Gen. Manuel Noriega. The ruling party and its political allies have allegedly been offering Panamanians money and food to protest in favor of the highway.

“For the first march, they paid people $6, but that didn’t go too well. So in the second march they came around and offered $10 cash and food bonuses,” said Felix McElfresh, an evangelical community activist and resident of El Chorrillo.

McElfresh says high levels of poverty and unemployment in his neighborhood make the promises of road construction jobs and new development enticing to many.

But opponents argue those promises are false. The jobs would be only temporary, they say, and the highway is not designed to bring progress to the ghetto, rather bypass the poor neighborhoods on the way to a luxurious new office and residential development planned farther to the west.

Critics argue the superhighway would just give the marginalized communities of El Chorrillo, San Felipe and Santa Ana a front row seat to watch development speed pass them at 80 miles per hour.

Whether manufactured or genuine, the highway row is causing a social rift along class lines. Some residents of the poor barrios claim “wealthy foreigners” are attempting to block the highway and the progress it will bring. During a July 17 pro-highway protest, residents from San Felipe gathered in Casco Viejo and shouted disparaging remarks at another group marching against the project.

“Go back to Europe! Panama is for Panamanians!” yelled one highway defender. “Get out foreigners! Get out invaders — Americans and Italians!”

Casco residents allege the government is manipulating the poor, and opening a Pandora’s Box in the process.

“This is an old Noriega tactic,” says AVACA’s Pinzon, a Panamanian. “We haven’t seen this since the dictatorship; how is it possible that we are returning to these tactics?”

K.C. Hardin, a Miami-born developer who has been instrumental in Casco Viejo’s urban renewal, likens the recent social clashes to “state-sponsored xenophobia.” Hardin, who has also helped build low-income housing and reintegrate neighborhood youth gangs, says those who live in the historic district have worked hard to make it an inclusive community — one that’s proud of its human heritage as well as its architectural style.

“This is a functional, mixed-income community that works. And you don’t have that in Latin America,” Hardin says. “Now the government wants to turn this into class warfare and throw it all in the garbage for a road!”

Minister Suárez, however, insists that the city has no other direction to grow. Panama City, he says, is boxed in by the Pacific Ocean, the canal and the canal’s watershed — a protected national park that can’t be touched.

“The road is necessary,” he said. “The only option is to continue development along the coast.”