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Story Publication logo May 28, 2015

Timing May Be Right for Nicaragua Canal


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Nicaragua says a $50 billion interoceanic canal would give the country the economic boost it needs...

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Schoolteacher Jorge Gonez is concerned that a proposed canal would ruin his favorite fishing hole on the Brito River, which lies in the project's path. Image by Chris Kraul. Nicaragua, 2015.

Over the last two centuries, promoters from Napoleon III to Howard Hughes have put forth some 70 proposals to build an interoceanic canal in Nicaragua. But most quickly evaporated after the principals acquainted themselves with the daunting geographical, social and financial barriers to the undertaking.

But this time the timing may finally be right.

Backers of the $50 billion proposal by Chinese businessman Wang Jing to complete a new 175-mile canal by 2020 say his proposal has a big leg up due to the strong backing of President Daniel Ortega who controls Nicaraguan politics. The connections of Wang Jing to moneyed investors with ties to the Chinese military are another plus.

The Ortega government sees the canal as a transformative event for an impoverished economy whose annual output of goods and services equal that of Wilmington, N.C. The canal project will generate billions of dollars in much needed infrastructure and a wave of follow-on developments, such as resorts, a free trade zone resembling Panama's Colón and a new international airport, officials say.

The government's touting of the canal as a massive economic stimulus has generated overwhelming support among most Nicaraguans, although opponents insist support is declining as the public learns more about potential environmental impacts and the advantageous deal given Wang Jing.

Benjamin Lanzas, president of Managua-based Llamsa Engineering and a member of the canal's board of commissioners said Wang Jing's plan to build two deep water ports at either end of the canal will give the country something it currently lacks and desperately needs if it is ever to become a competitive trader.

"We have the poorest infrastructure in Central America. Everything we import or export has to go through Honduras or Costa Rica, which is humiliating," Lanzas said. "Even if the canal doesn't happen but Nicaragua gets the two ports, one on the Pacific side and another on the Atlantic, then the country will be a winner."

The five- to seven year construction project will require 50,000 workers, half of whom will be brought in from China and other foreign countries. Nine different housing complexes will be built for workers, with four of those sites to be turned into permanent tourist resorts once the canal is complete, Lanzas said.

One such housing center is to be built on Ometepe Island, an iconic site for most Nicaraguans, with its active volcano and location in Lake Nicaragua, Central America's largest body of fresh water. It is a sacred place for indigenous communities whose prehistoric ancestors left petroglyphs and strange stone idols on the scene.

Lanzas downplays the negative environmental impacts of the project insisting that the country has already been largely deforested. He describes some canal opponents as "presumptuous" because they are insensitive to the poverty too many Nicaraguans experience and which the canal could mitigate.

He also refuted criticism that Wang Jing was getting too sweet a deal with exclusive rights to build an airport, oil pipeline and other side projects, in addition to control over a large chunk of Nicaraguan real estate. Wang Jing will get control over the 5-km buffers on either side of the canal for its entire 175-mile length.

"Are we giving away too much to the Chinese? It's complicated but I would say no. We don't have anything right now so I don't see what we have to lose," Lanzas said.

Telemaco Talavera, a university rector who is also project spokesman, admitted that Wang Jing will pay Nicaragua a relatively low sum of $10 million a year to operate the completed canal. The good news is that the nation will get majority ownership after 50 years since terms call for Wang Jing to transfer 1 percent per year of canal equity to the government.

Manuel Coronel Kautz, president of the Nicaragua Interoceanic Canal Commission, said in an interview that the canal once complete could add 50 percent to Nicaragua's total economic output and is the key to "an economic transformation." He also dismissed opponents' claims that the terms given to Wang Jing amounted to ceding sovereignty.

"The canal won't stop being Nicaragua," Kautz said. "It will be subject to Nicaraguan police, the army and municipal authorities. We have been very impressed with the respect shown by the Chinese to the sovereignty of our country. So we don't see any danger in that sense."


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