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Divisive 'Christmas present'

Jan D. Walter / ccDecember 22, 2014

Nicaragua's canal project is intended to lift the country to greatness. But for this, paradoxically, President Daniel Ortega is prepared to surrender a degree of national sovereignty. The project also has many critics.

Protest gegen Kanalbau in Nicaragua
Image: AFP/Getty Images/I. Ocon

It could become one of the mega-projects of the 21st century: the 300-kilometer-long Nicaragua Canal, connecting the Caribbean with the Pacific Ocean. One hundred years after the completion of the Panama Canal, this would be the second channel through the Central American mainland.

The Chinese company Hong Kong Nicaragua Canal Development (HKND) intends to invest $40 billion (32.6 billion euros) in the project, with the first ships due to sail down the canal in 2019. Construction began on Monday.

A spokesman for Nicaragua's president, Daniel Ortega, described it as a "great Christmas present" for the people of Nicaragua. The government is celebrating the canal as an unprecedented opportunity to help Latin America's second-poorest country out of its plight. It says the construction will initially create 50,000 jobs.

Nicaragua Präsident Ortega mit HKND Vertreter Wang Jing
Ortega and HKND chief Wang Jing are said to have negotiated behind the backs of NicaraguansImage: picture-alliance/dpa/EFE/Presidency of Nicaragua

But not everyone is enthusiastic about this project of the century. According to a study by the Nicaraguan research institute CINCO, resettlement and expropriation would directly affect around 120,000 people. Opponents of the contract protest that the president and his son negotiated it with the Chinese in secret, without public involvement.

Environmentalists are also sounding the alarm about the planned construction, and human rights activists and political observers regard the whole process as dubious.

According to Anika Oettler, a sociologist at the University of Marburg and an expert on Central America, "the canal project is supported by the majority of the people, but for the most part the government procedure was not transparent."

Nicaragua - Demonstrationen gegen den Kanalbau
Many Nicaraguans object to the planned canal projectImage: Getty Images/Inti Ocon

A 160-year-old dream

The Nicaraguan parliament passed the draft law for the construction of the canal in mid-2012. One year later the National Assembly awarded the concession contract to the Chinese firm HKND. In addition to the canal itself, the mammoth project also includes two ports, an airport, a holiday resort and a free trade zone.

Ortega's "Grand Canal" is the revival of a 160-year-old plan. In the mid-19th century the connection between the two oceans was envisaged through Nicaragua. The country's elites were delighted - but the decision eventually went in favor of Panama.

Oettler believes that, with the canal, Ortega hopes to secure his presidency and lead Nicaragua to national greatness. However, she points out that the paradox of his vision is that he is apparently willing to accept, at least initially, a clear loss of sovereignty. Nicaragua will retain the majority interest in the canal with 51 percent, but it will give its Chinese partners in the consortium a usage guarantee of 50 years that can be extended to a whole century.

Critics say that, if this is implemented, the government would effectively be transferring sovereignty over part of the country to the Chinese company. An analysis by the Central American University in the capital, Managua, found that the agreement would not even prevent HKND from selling usage of the canal to the Chinese state.

So far, though, a lease is only being sought for the first 10 years, worth up to 8 million euros a year. There appears to be no provision for liability for any environmental damage - and yet this damage is inevitable.

Ecological consequences

The various elements of the canal project would requisition a total of around 4,000 square kilometers of land, affecting not only large expanses of primeval forest but also several nature reserves - and Lake Nicaragua.

A third of the ocean shipping lane would run through this, Latin America's second-largest freshwater lake, which is only slightly smaller than Lake Titicaca. Pollution in Lake Nicaragua would not only compromise the country's already precarious supply of drinking water, it would also compromise the lake's entire ecosystem.

"Forget about the Deepwater Horizon," writes Andres Oppenheimer, the Latin America editor of the US daily Miami Herald. Referring to analyses by numerous environmental associations, Oppenheimer has warned that the ecological consequences of the Nicaragua Canal would be far worse than those of the oil rig explosion in the Gulf of Mexico in 2010.

The Association for Tropical Biology and Conservation (ATBC), one of the biggest scientific centers for tropical research, intends to present a comprehensive study on the ecological and socio-economic consequences of the construction of the canal in April 2015. In October it called on the Nicaraguan government to postpone the start of construction and await the forecasts from the study.

Neither Ortega nor HKND want to wait that long, and protests in the center of Managua haven't detered them either. However, points out Oettler, given the massive scale of the project it remains to be seen whether the canal will ever actually be built.