Nicaragua canal project is approved despite few details

A worker prepares a flag to hang on a wharf at Lake Nicaragua. A Hong Kong company won the concession to build and operate the Nicaragua canal, which is expected to include the lake.
(Esteban Felix, Associated Press)

MEXICO CITY — The project is of mind-boggling proportions: It would cost $40 billion, take a decade to complete and be more than twice the length of the mighty Panama Canal.

Yet on Thursday, the Nicaraguan legislature controlled by President Daniel Ortega approved just such a plan, for a sea-to-sea canal from the Pacific to the Caribbean, with a little-known Chinese firm footing much of the bill.


Proponents say the canal megaproject could bring to Nicaragua and the region a major share of the expanding global maritime trade business, especially from U.S. and Asian markets, worth trillions of dollars.

By creating competition for Panama Canal traffic, it could lower the cost of shipping for major American importers such as Wal-Mart and could become a tourism destination for cruise lines. It also could siphon off some business from West Coast ports in the United States by making it easier for Asian companies to reach the East Coast.

Despite the grandiose scale, Ortega revealed few details to the public and fast-tracked a bill granting the concession to build and manage the canal. The measure sailed through the legislature with little debate or scrutiny and was approved by a 61-25 vote and one abstention, with one Ortega supporter arguing in the National Assembly that failure to approve the project would be unpatriotic.

Ortega has said the project will provide tens of thousands of jobs for Nicaraguans and dramatically improve the economy in one of the hemisphere’s poorest nations, perhaps even doubling the GDP by 2020.

But the lack of transparency, which critics say is typical of Ortega’s secretive way of governing, has raised innumerable doubts about the canal, its real benefits, its potential environmental toll and whether another such waterway is really necessary so close to Panama’s.

Many Nicaraguans suspect that the project, which grants a 100-year concession to the newly formed Hong Kong-based HK Nicaragua Canal Development Investment Co. (HKND Group) to operate the canal, is another example of Ortega cutting a deal to earn millions of dollars for his family and inner circle.

“He is selling off the national patrimony, without firing a single shot,” said Carlos Langrand, an opposition congressman who opposes the deal.

Not that many in Nicaragua don’t relish the idea of a canal.

In fact, for a couple of centuries, through the brazen eras of exploration and exploitation by the likes of Cornelius Vanderbilt and the filibusterers, 19th century adventurers who periodically invaded Nicaragua, Nicaraguans have nursed the dream (some would say fantasy) of carving a land-and-water route across their section of the Central American isthmus.

The dream was raised and dashed time and again. The opening of the Panama Canal in 1914 seemed to relegate the idea to the realm of fanciful musings. Nicaraguan politicians started floating the idea again in the 1990s but the last serious set of studies was shelved in 2006.

Now, Ortega, taking advantage of his steady takeover of nearly all the decision-making institutions in the country, has revived the dream in hope, perhaps, of sealing what he sees as his legacy.

Opponents are not convinced and staged a small protest outside the National Assembly building Thursday as legislators discussed the project.

“Despite this having been the dream of Nicaraguans for more than 150 years, the way this is being approved without consultation is unacceptable,” Langrand, the legislator, said by telephone from Managua, the Nicaraguan capital. “Without taking into consideration environmental issues, without taking into consideration the impact on towns along the route, nor the impact on indigenous communities and protected biospheres.”

In fact, a lot of behind-the-scenes work has gone on in preparing the project that ordinary Nicaraguans are not aware of. The Chinese firm, HKND Group, says it is assembling a team of world-class consultants and engineers to work on plans. It is standard practice in a developing country such as Nicaragua for the concession for such an enormous project to be granted before the multimillion-dollar feasibility and environmental studies are conducted, they said.

“In Nicaragua, they don’t have the funding available to do all the upfront work before they’ve chosen a concessionaire,” HKND senior project advisor Bill Wild said in an interview from Managua. So HKND assumes the risk, he said, “but no one can do it without the certainty of [the] concession.”

Several routes for the canal are under consideration. HKND officials say the one route that has been eliminated is a highly controversial previous proposal that would have taken the canal along the San Juan River bordering Costa Rica. Nicaragua and Costa Rica maintain a dispute over that border.

Any route is likely to incorporate the great Lake Nicaragua, the vast, ecologically sensitive inland water body that dominates the western half of the country.

Wild said the changing nature of maritime trade — including the increasing volume, expanding customer base in Asian markets, and the size of ships — makes the Nicaragua canal an important, bigger alternative to the Panama Canal, currently undergoing a $5.25-billion expansion. Especially as the United States eventually moves toward becoming an exporter of oil, the kinds of supertankers it and other suppliers would use would not fit in the Panama Canal, he said.

The Panama Canal is about 50 miles long. Nicaragua’s version could be more than twice that and much wider.

“Up to now, nobody has taken the plunge” of building the Nicaragua canal, Wild said. “The timing is right now.”

The megaproject is reported to include free-trade zones, deepwater ports and many miles of waterways and railroads.

HKND put up a website within the last week or so to begin explaining the project in fairly vague terms, and appointed Ronald MacLean-Abaroa, a former mayor of La Paz, in landlocked Bolivia, and World Bank official, as a spokesman to make the rounds in Managua.

HKND is owned by Chinese tycoon Wang Jing, whose vast holdings include the Xinwei Telecom Enterprise Group, which also has lucrative contracts with the Ortega government totaling more than $2 billion.

Ortega, once a leftist revolutionary leader of the Sandinista movement who battled U.S.-backed forces in the 1980s, has become an increasingly autocratic president, his critics contend.

Ousted in Nicaragua’s first post-civil-war elections in 1990, he repeatedly ran for president until finally winning in 2006. Then, critics say, he went about stacking most of the state’s institutions, including the legislature, the Supreme Court, the electoral council and the media, with his supporters. He largely co-opted or neutralized the business community and the church, erstwhile fierce opponents of the Sandinistas.

Ortega was elected to a third term in 2011 after orchestrating a change in rules that had imposed term limits.

What was left of Nicaragua’s historically divided opposition has failed to mount much of a challenge to the canal project.

“The only opposition Ortega faces is reality,” said Tim Rogers, editor of the Nicaragua Dispatch Web-based newspaper. “Reality is the only thing that can stop the project.”