10 December 2014 - 07:20 PM
Who's Afraid of the Nicaraguan Canal?
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Anyone depending on North American or European corporate or alternative media for news on Nicaragua has always faced an uphill struggle to get accurate, factual coverage of events there. The latest example of this phenomenon has been reporting and commentary on Nicaragua's interoceanic Canal. Work on the Canal's auxiliary projects, initially one of the two proposed deep water ports and related highway links, starts in December this year. The project is the realization of a nation building infrastructure project envisaged one way or another for over 150 years.

Map of Nicaraguan interoceanic canal


Nicaragua's Canal has featured in Central American and Caribbean geopolitical reckonings ever since the United States began vying with the great European powers for strategic influence in the region. For example, the 1850 Clayton-Bulwer Treaty formalized an agreement between the U.S. and Britain to respect each other's interest in relation to a Nicaraguan canal. One of the main reasons the U.S. government forced Nicaragua's liberal president Zelaya from office in 1909 was Zelaya's advocacy of a Canal in Nicaragua to rival the Panama Canal, then still five years from completion.

When the ten year long construction of the Panama Canal ended in 1914, that same year the U.S. government bullied Nicaragua into accepting the Chamorro-Bryan Treaty, ensuring U.S. control over any future proposed canal across Nicaragua. That treaty was one of the main grievances cited by Nicaragua's national hero Augusto C. Sandino during his campaign against U.S. intervention in Nicaragua until his murder at the behest of the U.S. government in 1934. By mutual consent, the treaty was anulled in 1970.

Given that history, it is no surprise that diverse U.S. and allied countries regard the canal with reserve, suspicion or outright hostility, now that the canal is going ahead with the clear support of the People's Republic of China. Foreign opponents of the canal tend uncritically to recycle inaccurate scaremongering by Nicaragua's minority political opposition and associated activists. In general, the canal's critics cursorily dismiss the arguments in its favour.

For and against

The arguments for the canal and its auxiliary projects are that it will:

  • more than double Nicaragua's gross domestic product over the next ten years, generating around 200,000 jobs for Nicaragua's economy, thus allowing the government to eliminate extreme poverty

  • finally fully integrate the under-resourced Caribbean Coast into the nation

  • help overcome Nicaragua's current chronic deforestation, ensure resources to save endangered protected natural reserves and also remedy the chronic sedimentation and contamination of Lake Nicaragua and Nicaragua's Rio San Juan

  • facilitate global trade by accommodating ships too big for the Panama Canal while increasing the strategic autonomy of Latin America and the Caribbean.

The corresponding arguments against the canal are that it;

  • violates Nicaragua's constitution and is being executed without due transparency by an unknown entrepreneur, effectively handing Nicaragua's sovereignty to foreign interests

  • is economically, commercially and environmentally unviable, likely to damage Lake Nicaragua, and also endanger irreplaceable protected species and natural reserves as well as unfairly displacing indigenous communities.

Democratic mandate

In 2011, the people of Nicaragua re-elected the current Sandinista government under President Ortega by a huge majority of over 60 percent. After eight years, Daniel Ortega still maintains popularity levels of over 70 percent. His government created the National Interoceanic Canal Authority, approved by the National Assembly in a law passed in July 2012 to supervise the canal and its related projects. Nicaragua's legislature passed another law in June 2013 regulating the canal's auxiliary infraestructure. Through 2013, various legal challenges were made in the courts to this legislation facilitating the canal.

In December 2013, Nicaragua's Supreme Court ruled against all the outstanding legal challenges. Its judgments categorically place the juridical legitimacy and constitutional integrity of the canal project beyond legal argument within Nicaragua. Diehard opponents may take their grievances to the regional Inter-American system, but it is difficult to see any outcome in that instance likely to affect the execution of the canal and its associated projects.

Earlier this year, eight months after confirmation of the Canal's construction in June 2013, local support for the canal project was implicitly confirmed by the results of the regional Caribbean Coast elections. The governing FSLN Sandinista party won 59 percent of the vote. In addition, to that electoral validation, even current centre-right opinion polls consistently indicate that over 70 percent of people in Nicaragua approve the canal. It is against this democratic reality that the canal's opponents within Nicaragua have failed to make their case, even though Western news reports, analysis and opinion suggest the opposite.

Protest and doubt

The concession to build the canal and its associated projects was made to the Chinese HKND consortium in June 2013 after a six month long pre-feasibility study by the Dutch company Ecorys. The final route of the canal was announced on July 7 this year, along with its associated auxiliary projects, two deep water ports, an international airport, a manufacturing and commercial zone, a major regional tourism complex and two large people-made reservoirs to recycle water for the canal's locks.

Since the July 2014 announcement on the definitive route of the canal, hundreds of government functionaries and HKND staff have spent months working with local communities along the canal route, conducting a census, assessing possible impacts and gathering local opinion and objections. As recent protests indicate, opinions differ on whether the process could have been more participatory.

But until the hard business of negotiating relocation of any communities affected by the project actually gets underway, the real grassroots level of determined protest, as against opposition activist rhetoric, is impossible to gauge. Given the huge scale of the construction projects, some level of protest is probably inevitable. Even so, since January 2007 to date, the Sandinista government has proved exceptionally adept at defusing conflictive protests via dialogue and conciliation.

Economic viability

Canal opponents associate the issue of lack of transparency with the adjudication of the canal concession to Chinese entrepreneur Wang Jing and his Hong Kong based company, HKND. Western commentators and reporters describe Wang Jing as “enigmatic, “obscure,” or “inexperienced.” But despite very determined efforts, they have failed to discredit Wang Jing or his businesses.

Wang Jing built up a domestic business conglomerate in China through the first decade of the century. In 2010, he acquired the Xinwei company, an established but declining telecommunications enterprise. Wang Jing turned Xinwei's business around. But while strong domestically within China, the company has struggled to do well in fiercely competitive foreign telecommunications markets.

Now, with clear support from the Chinese government, Wang Jing is diversifying his businesses by undertaking construction of the Nicaraguan Canal. In terms of Western multinational corporations’ overseas operations, usually strongly supported by their respective governments, Wang Jing's trajectory is entirely unexceptionable. Even so, most Western reports on the canal continue to be dismissive of Wang Jing and suggest the Nicaraguan government is unwisely ceding the country's sovereignty to his HKND company.

In an interview of October 2013, Dr. Paul Oquist, Executive Secretary of Nicaragua's Interoceanic Canal Authority, rebutted claims that the canal concession is too generous to HKND. Dr Oquist noted, "The incentives have to be strong because Nicaragua isn't giving a sovereign guarantee." This means the overall risk for HKND's investment is very much greater than otherwise. In that same interview, Dr. Oquist explained the canal's financial benefits for Nicaragua, “Nicaragua has a 1 percent share on signing the concession and will receive US$100 million to start with, after the passage of the first boat. But ten years later, Nicaragua will get 10 percent of the shares in the concession. After 20 years, it will get 20  percent. After 30 years it will get 30 percent. After 50 years Nicaragua will already have 50 percent of the profits from the canal. Then in the second 50 years the share goes up 60 percent, 70 percent, 80 percent, 90 percent.”

“Finally, Nicaragua will take over after benefiting by over 50 percent for 50 years. While considerable, that benefit is tiny compared to doubling the economy, and reducing poverty because between now and 2018 we expect to be able to cut extreme poverty in half. And with the economy we will then have we'll be able to launch a final offensive against extreme poverty," he said.


The July 2014 announcement of the preferred canal route was based on large scale feasibility studies now in their final stages. Since June 2013, these studies have involved around 4,000 professional personnel from around the world and will finally cost well over US$100 million. The complete environmental and social feasibility studies are unlikely to be finished before early 2015, according to a presentation by the government canal authority and the HKND company made last November 20. That presentation also announced that work on the Pacific deep-water port and related highways will begin in December.

Environmentalists opposed to the canal have made useful contributions to the canal debate about specific issues of concern but evade addressing Nicaragua's fundamental environmental dilemma. The country's natural environment is suffering from decades of poverty-driven environmental depredation. Protected areas are threatened by chronic deforestation. Lake Nicaragua and the Rio San Juan already suffer chronic sedimentation and contamination in the context of decades-long, under-funded, inadequate water resource management.

The government argues that by doubling Nicaragua's gross domestic product, the canal will ensure the resources necessary to reverse deforestation, to better control sedimentation in Lake Nicaragua and the Rio San Juan and to greatly improve water resource management in both the southern Pacific Coast and the southern Caribbean Coast. By contrast, environmental critics offer little by way of practical remedies to Nicaragua's chronic environmental problems, focusing instead on questioning the canal's viability. In that regard, the canal has broad support in the international shipping industry, for example from the Maersk global shipping conglomerate.

Wider global trends

That judgment by one of global shipping's pre-eminent corporations is also confirmed by academics who argue the importance for global trade of another Central American canal to complement the Panama Canal. The wider strategic importance of the Nicaraguan Canal is closely related to trends in China's economy which are of international concern in the current global economic crisis. China and its allies are investing hundreds of billions of dollars in infrastructure in Latin America, Africa and Asia.

In Latin America, apart from the Nicaraguan Canal, proposals for a transcontinental rail link between Peru and Brazil, perhaps including Bolivia are well advanced. China and Russia recently announced massive joint investment in energy infrastructure. Countries throughout Africa are benefiting from large scale Chinese infrastructure investment. China is also committed to a modern Great Silk Road involving the construction of transport infrastructure across Central Asia to Europe. ASEAN member countries also benefit from Chinese infrastructure investment.

All that investment will have multiple beneficial effects, perhaps not sufficiently recognized. For the global economy, the resulting infrastructure will greatly facilitate international trade by enabling significant savings in transport costs. For China itself, its overseas infrastructure investment projects boost its own engineering construction and transport industries and provide better incomes for the families of the hundreds of thousands of Chinese workers remitting money home from overseas. China's financial system also benefits from recycling dollar surpluses and facilitating the activities of its banks and financial markets.

Another result of Nicaragua's canal is likely to be greater ship-building and port infrastructure development around the world. For example, U.S. ports along the country's Atlantic seaboard are already preparing to receive the huge post-Panamax container ships and tankers. A similar process will certainly happen once construction is well underway of Nicaragua's inter-oceanic canal. All of this context explains why, from the point of view of an ambitious Chinese entrepeneur like Wang Jing and his country's government, Nicaragua's canal is a supremely rational strategic investment.

This is also true for the corporate elites of North America and Europe. A Nicaraguan canal would facilitate the supranational, global corporate-welfare trade and investment structures those elites are desperate to achieve, like the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership. The interesting paradox is that China and its allies in Brazil, Russia, India and South Africa have the same strategic need for a Nicaraguan canal as the West's corporate elites, but for entirely opposite reasons, defending national sovereignty while building a multipolar world.

For Latin America and the Caribbean, the Canal is also of enormous strategic importance in terms of the regional integration processes, embodied in organizations like the Union of South American States (UNASUR) and the Community of Latin American and Caribbean States (CELAC). For the countries of the Bolivarian Alliance of the Americas (ALBA) and their Petrocaribe partners, the canal will end the historic U.S. chokehold on regional trade and development in Central America and the Caribbean. For the economy of Cuba and other Caribbean island nations, the Nicaraguan Canal will promote investment in new infrastructure and facilitate increased flows of trade and tourism.

The Nicaraguan Canal is also of tremendous importance to Central America, both in terms of its economy and in terms of progress towards regional integration, which is a priority of both Nicaragua's Sandinista government and El Salvador's FMLN government led by President Sanchez Ceren. As the so called C-4 (El Salvador, Guatemala, Honduras and Nicaragua) countries progress, Costa Rica will have to decide whether or not to continue staying aloof from its northern neighbours.

For Nicaragua and in particular for the Sandino Front, the realization of Nicaragua's interoceanic Canal is the ultimate homage to its national heroes who fervently advocated Latin American unity, the poet and diplomat Ruben Dari­o and the indomitable visionary Augusto C. Sandino. In March 1929, Sandino argued in his manifesto The Supreme Dream of Bolivar for a single Latin American nation. Among much else, he wrote, "We have come to understand the absolute necessity of how the intense drama experienced by Central America's mothers, wives and orphans, stripped of their much loved men by the soldiers of North American imperialism on the battlefields of Nicaragua's Segovias was not sterile, nor wasted, so long as it enables the establishment of a Latin American Nationality; one rejecting all those treaties, pacts or agreements, feigning legality, that damage in one way or another, the absolute sovereignty of Nicaragua and the other Latin American States. To achieve that, nothing is more logical, nothing more decisive and vital than the union of the twenty-one states of our America into a single unique Latin American Nationality, which may make possible, as an immediate consequence, the right to the route of an Inter-oceanic Canal through Central America.”

Eighty-five years later, Sandino's Supreme Dream of Boli­var is finally coming true.

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