Letter from Managua: A canal dividing a country

The proposal to build a trans-oceanic canal across Nicaragua seems mostly like the scenario for a slightly implausible summer blockbuster movie.

The movie would have it all. Powerful business forces, environmental risks, social upheaval and conflict and even global intrigue - Chinese interests are behind the project. And lots and lots of mystery. I can see Matt Damon and Angelina Jolie racing from Caribbean villages in Nicaragua to skyscrapers in Hong Kong in a race to uncover the truth.

The canal would be about 280 kms long, more than twice as long as the Panama canal. A short 24-km section would let ships travel through locks from the Pacific to Lake Nicaragua (or Cocibolca, its indigineous name). Giant container ships would travel about 70 kms across the lake, the largest in Central America, and then through a canal across some 180 kms to the Caribbean. 

Der Spiegel

Details are sketchy, but the goal is to allow ships capable of carrying 18,000 containers, about 50 per cent lager than the ones the new locks being built in Panama can handle. (For a fascinating look at how shipping containers transformed the world, I hihgly recommend Marc Levinson’s The Box.)

All that comes with an entirely unsupported price tag of $50 billion, about three times the combined cost of B.C.’s Site C dam and Enbridge’s Northern Gateway pipeline project. And while Site C represents about 3.7 per cent of British Columbia’s GDP, the new canal would represents about 250 per cent of Nicaragua’s GDP. 

Sounds like a crazy project for a poor country. (Nicaragua was ranked 132 in the 2014 UN Human Development Index report, ahead of only Haiti in the Americas.) 

The canal project is being backed by Wang Jing, China’s 12th richest man with a fortune of some $6.4 billion, according to Forbes magazine. President Daniel Ortega, one-time revolutionary, supports the project and his son Laureano is the link with the government. The largest business group backs the megaproject.

But there is fierce opposition, based in part on the secrecy and lack of real planning. Last week about 3,500 Nicaraguans marched in the streets of Managua. They arrived despite efforts by government transportation officials and the police to keep groups from travelling to the capital. The military has moved into the countryside where canal opposition has been strongest.

There are four big concerns about the project.

First, a lot of people – perhaps 30,000 - are going to get pushed off their land to make way for the canal. That´s no big deal in China, where some 1.5 million people were relocated to make way for the Three Gorges Dam. But it will be in Nicaragua, where land can mean survival.

Second, there have been no real studies of the environmental impact. The project would mean dredging rivers and blasting a 70-km channel across Lake Nicaragua, a beautiful, largely unspoiled treasure. Thousands of hectares would be cleared, new lakes built to hold water to operate the giant locks and both coasts would be affected. The country would literally be cut in half, with plans for one bridge at this point.

Third, there have been no social or economic impact studies, or publicly released information on the business case for the canal. 

Shipping experts are skeptical. The canal would knock about 1,300 kms off the sea route from China to the East Coast of the U.S., but the canal would take longer to transit then Panama. 

The government is claiming the canal will create 50,000 construction jobs and 200,000 permanent jobs, but it hasn’t set out the value of the concessions granted to Wang´s company, which include the right to operate two ports, an airport, tax-free industrial zones, a railway and pipeline and other potentially profitable businesses. One fear is that the canal will never be built while Wang will cash in on the other opportunities.

And fourth, there is wide speculation that the canal is less a commercial venture and more an effort to extend Chinese government influence in the region. Wang hasn’t revealed where the $50 billion will come from, and investments from Chinese state-controlled companies are considered likely. For analysts who doubt the plans commercial rationale, the geopolitical strategy makes sense.

Work is scheduled to start on Monday, with the first projects a new dock on the Pacific coast and roads to receive the heavy equipment and supplies needed for the project. 

The idea for a canal has been around for a long time. In the to-be-read section of my Kobo is the 1852 book ¨Nicaragua: Its People, Scenery, Monuments, and the Proposed Interoceanic Canal.¨ U.S. tycoon Cornelius Vanderbilt was awarded a canal concession in 1849. He never built it, but made money off a train and stagecoach route.

It´s always been controversial. And it still is.