Thursday, July 17, 2014

Originally published July 12, 2014 at 2:26 PM | Page modified July 13, 2014 at 9:39 AM

Financing still a mystery as Nicaragua plans giant canal

What went unanswered were two basic questions: Who’s going to pay for a canal with an estimated cost of $40 billion? Is China’s hidden hand at play?

McClatchy foreign staff
MEXICO CITY — The Chinese tycoon behind a plan to build a mammoth interoceanic waterway to compete with the Panama Canal whisked into Nicaragua last week and, in several appearances, including one with President Daniel Ortega, affirmed that “the biggest construction project in the history of mankind” has a green light.
In a lengthy appearance on state television Tuesday night, Ortega sat next to Wang Jing, the Chinese telecommunications magnate who has been pushing the plan, and pledged that the proposed canal “will permit the country to eradicate poverty and misery.”
The two promised that environmental damage during construction of the canal — at 173 miles long, more than three times the length of the one in Panama — will be minimal. Construction is scheduled to begin in December and be finished within five years, they said. As many as 5,100 ships a year would use it to pass between the Atlantic and Pacific oceans.
Wang flew into Nicaragua on a private jet, and his team offered details about the project in a series of appearances that were live-streamed on the Internet from Nicaraguan state television. Wang, 41, told university students the project will bring “radical change” to Nicaragua, the Western Hemisphere’s second-poorest nation, and spread wealth “to the whole country.”
What went unanswered were two basic questions: Who’s going to pay for a canal with an estimated cost of $40 billion? Is China’s hidden hand at play?
Ortega cast the project as unstoppable and historically inevitable. He held up a fraying blue-bound book that he said was a U.S. feasibility study for a canal in Nicaragua signed by President Cleveland and presented to the U.S. House of Representatives in the 1880s.
“This is a document that says a lot about the necessity and importance of a canal for Nicaragua,” Ortega said, opening its pages and pulling out an accordion-folded map.
Technology will allow a canal to be built with minimal impact, he added.
“One hundred eighteen years ago, environmentalism wasn’t even a concern. When a road punched through the forest, it was a matter of joy,” Ortega said.
The chief engineer for the Hong Kong-based company that has the 50-year concession to build and operate the canal said the trans-isthmus waterway could handle 5 percent of world maritime trade.
Wang’s trip came as a Nicaraguan committee made up of government officials, businessmen and academics approved the proposed route for the canal. Although the proposed route faces environmental and social-impact studies that could recommend some changes, work on the canal is not expected to be delayed, said committee member Telemaco Talavera.
Dong Yunsong said the canal would traverse Lake Nicaragua, a huge inland sea, and be roughly 750 to 1,740 feet wide and at least 87 feet deep, able to accept vessels half again as large as the largest that the 100-year-old Panama Canal will handle once an expansion project is finished in early 2016, according to an official account on the government website
Bulldozing land
The project would entail construction of steel and cement factories, highways, a tourist complex and deepwater ports at Brito on the Pacific Coast and Punta Aguila on the Atlantic side, Dong said. An airport with capacity for 1 million passengers a year will be built north of Rivas, a city on Lake Nicaragua’s western shores.
Dong said 50,000 workers would be needed during a five-year construction phase, and some 200,000 direct and indirect jobs would be created once the canal is operational.
The huge amount of earth dug up for the canal would be deposited at 41 sites along its course, Dong said.
Some of those sites are infertile or of little agricultural value and would be bulldozed to create new farm and pasture land, Ortega said.
Dong said the company would create a 155-square-mile lake to hold the water to operate some of the locks for the canal, which he said would be near the confluence of the Eloisa and Punta Gorda rivers on the Atlantic side and near the village of Rio Grande on the Pacific side.
The plans have caught the attention of major world shipping lines, some of whose ships won’t be able to transit even an expanded Panama Canal because they’re too large.
“Our posture has always been that infrastructure is needed to develop trade,” said Ariel Frias Ducoudray, the marketing and communications manager in Panama for Maersk Line, part of a Danish conglomerate that includes what’s widely considered the world’s biggest shipping company.
Pointing out that Maersk isn’t “endorsing the Nicaraguan canal itself,” Frias noted that the company owns six of the world’s largest ships, known as Triple-E vessels. The ships are longer than four football fields — 1,312 feet, to be precise — and can carry up to 18,000 20-foot shipping containers, so large that not a single port in the Americas can handle them; they sail only on routes between Europe and Asia.
Maersk will have 20 of the ships by the end of next year, Frias said.
“It would make sense to have a canal that would take these kinds of vessels, and that cannot go through the expanded Panama Canal,” Frias said.
A connected tycoon
Whether Wang is the man to carry out such a task is an open question. A tycoon whose 19-year-old company, Xinwei Telecom, has operations in Cambodia, Ukraine, Russia, Zimbabwe, Cameroon and two dozen other countries, Wang has been coy about his background and wealth but not about his high-level connections to China’s ruling Communist Party.
Several Nicaraguan businessmen invited to China late last year to meet with Wang and tour his operations came away with the impression that China’s government was behind the canal project.
Opponents of Ortega, a former Marxist guerrilla who has reinvented himself as pro-business, claim the canal project is a “cuento chino,” literally a “Chinese story” but an idiom that means a deception, designed to build hopes in the country.
Wang told students at Managua’s engineering university that he has received sharp criticism.
“I never pay attention to praise, but I welcome criticism,” he said, adding that his team had hired leading global consultants to address environmental concerns.
He urged the university students to study hard.
“This project will be the biggest construction project in the history of mankind. We need a lot of talent,” Wang said.
Material from The Associated Press is included in this report.

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