Last I heard, the proposed Nicaraguan canal was a pipe dream that had little chance of being built.
But that was months ago. Since then, Sandinista leader Daniel Ortega has signed off on the project, which is being funded by a Chinese billionaire telecommunications CEO Wang Jing. The Nicaraguan assembly approved the deal, which includes “a 50-year renewable concession to build a canal more than three times the length of the Panama Canal, as well as tax-free side projects including ports on Nicaragua’s Pacific and Atlantic coasts, an oil pipeline bisecting the country, a cargo railway, two free-trade zones and an international airport.”
Wang is making out like a Chinese bandit, as he is apparently also getting a lot of land along the canal at discount prices.
Needless to say, environmental groups are having apoplexy over a canal that destroys so much of the rain forest. And economics experts question whether the project is viable.
The deal pays Nicaragua $10 million a year for 10 years and gradually transfers ownership to Nicaragua, handing over 100 percent after a century. But the payments and the transfer only begin if and when the canal begins operation. Under the agreement, Wang can skip building the canal altogether but plow ahead with the other projects.
Critics fear this will leave Wang with a host of lucrative tax-free enterprises, and Nicaragua without the centerpiece of the deal or revenue from what actually gets built.
‘This is an astounding giveaway,’ said Noel Maurer, a Harvard Business School expert on Latin American development. ‘It’s just kind of like here’s a bunch of privileges, go build something.’
‘This is a worse deal than the original Panama Canal deal, which was not a good deal and not a deal that Panama voluntarily signed,’ Maurer said.
Manuel Coronel Kautz, a veteran Sandinista leader who manages Nicaragua’s Great Inter-Oceanic Canal Authority, said the government was confident the canal would ‘generate an enormous number of jobs for an impoverished country.’
Chief project adviser Bill Wild said Wang is spending large amounts of his own money to dispatch dozens of Chinese, Nicaraguan and Western experts around the country to conduct environmental and geological feasibility studies to be completed in coming months.
‘He’s not out there just to build these sub-projects,’ Wild said. ‘The canal is his vision, there’s no doubt of that if you talk to the guy.’
Wild said the heavily criticized canal concession was designed in good faith to fairly compensate Wang for taking a bold financial risk.
‘People expect a reasonable return, a good return,’ Wild said. ‘The return for Nicaragua in my books comes from the social benefit that comes from the existence of the canal.’
The legislation allows Wang to petition the state to confiscate any land needed. It requires him to pay owners the assessed value, but much of the property outside major cities has never been officially assessed, risking what private businesses fear could be a land grab for pennies on the dollar.
I smell boondoggle — a $50 billion hole in the ground that will massively harm the environment and fail to compete in a meaningful way with the Panama Canal.
Many legal and environmental experts charge that the canal deal violates national sovereignty, and construction could cause profound ecological damage to this rugged nation of lakes, cloud-wreathed volcanoes and thick tropical forest, by damming rivers, splitting ecosystems and moving untold tons of earth.
‘It’s basically handing over the whole country – water, air and land, without any studies,’ said Luis Callejas, an opposition congressman who was invited to join a 10-day trip to China sponsored by Wang in October for a group of prominent Nicaraguan businessmen and politicians.
After he announced he would present Wang with a letter decrying the secrecy and constitutional violations of the canal concession process, Callejas did not receive the promised visa to China, and the group left without him. A Sandinista lawmaker who abstained from voting in favor of the canal law was ejected from the party’s congressional caucus days later.
Well, that’s one way to sell the deal. Just stifle all opposition and threaten anyone who speaks up about how bad the agreement is.
Construction is supposed to start next year and take 5 or 6 years to complete. But Nicaragua being a communist country, expect that timetable to slip…and slip…and probably slip again. It is a massive engineering challenge. No one has ever attempted anything this big in such inhospitable terrain. We will follow their progress — or lack thereof — with great interest.