Monday, December 07, 2015

An uncertain future for the Nicaragua Canal

Construction of the controversial Nicaragua Canal has been postponed until late 2016, prompting doubts about its future.
According to a statement from the canal’s builders, the Hong Kong Nicaragua Development Company (HKND), the heavy engineering work of channel dredging and lock-building has been delayed to allow ‘fine-tuning’ of the canal’s design. Construction of the port of Brito – the canal’s planned Pacific coast terminus, also slated for development as a free trade zone – will proceed early next year, however.
Economic issues
Doubts about the canal are grounded in wider economic uncertainty.
The lion’s share of financing for the $50 billion transoceanic canal appears to have come from one man – 42-year old Chinese telecom mogul and President of the HKND, Mr Wang Jing. According to Chinese state media Xinhua, Mr Wang has invested the equivalent of half a billion U.S. dollars of his personal fortune in the project, but many analysts are now speculating about his financial standing.
Earlier this year, Mr Wang was reported to have lost 84 percent of his $10.2 billion net worth due to turmoil in China’s equity market, leading Bloomberg to dub him ‘the world’s worst performing billionaire in 2015’.
Following the announcement of delays, the Nicaragua canal commission sought to assuage doubts about the canal’s future. Telémaco Talavara, spokesman for the commission, informed theFinancial Times that both the commission and the HKND had secured financing from a consortium of international investors (whose identities were not divulged). Although the canal could serve as a powerful symbol of Asian ascendency, it is unknown whether the Chinese state will have a stake in it.
According to the FT, the HKND are delaying construction in order to amend the canal’s design so that is ‘completely in accordance with best international practice’. The canal’s 14-volume Environmental and Social Impact Assessment (ESIA), authored by the UK-based company Environmental Resources Management (ERM), has yet to be independently analyzed.
Flaws and faults
However, in March 2015, 15 environmental scientists met for two days in Florida International University’s College of Law to review four draft chapters of it. Their findings, published by Circle of Blue, identified 15 significant flaws, including one area they described as ‘scientifically indefensible’.
In the words of ERM, the 276 kilometer canal will have ‘significant environmental and social impacts’. Significantly, its path is set to bisect Caribbean Coast territories traditionally held by marginalized Miskito, Rama, Garifuna and Creole peoples.
The titling and demarcation of their lands – which lie within Nicaragua’s Southern Autonomous Region (RAAS) – began in 2003 as a way to devolve power from Managua to local territorial authorities, and to bolster indigenous and African-descendent land rights. As well as severely impacting their way of life, the canal will also displace numerous campesino communities which migrated to the region after the end of civil strife in the 1990s.
Environmentally, the canal will impact sensitive rainforests, wetlands, and the unique ecology of Lake Nicaragua – Central America’s largest lake.
Historically, the challenge of excavating a canal between the Pacific and Atlantic oceans has been fraught with drama and tragedy.
In the 19th century, French efforts to build a sea-level channel in Panama descended into a mire of corruption, fraud, and tropical disease after its builder, Ferdinand de Lesseps, entirely underestimated the task. Once a national hero, he nearly bankrupted France and died in disgrace.
Today, modern health and engineering advances work in Mr Wang’s favour, but those who see the canal as an opportunity for prosperity – a long time coming to Nicaragua – will be hoping that history does not repeat itself. Those who stand to lose from its construction may welcome the setback as a possible signal of the long-term unravelling of Wang’s plans.
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