Nicaragua: Mega-canal project stirs controversy

Note:  This is a very good overview regarding the ‘Mega Canal’ project in Nicagraua from our friends, Wales Nicaragua Solidarity Campaign – Ymgyrch Cefnogi Nicaragua Cymru, a Welsh group doing solidarity work since 1986.  They are also struggling to maintain the the Welsh language, a hard task considering that the British and the English language ‘control the British Isles.’  But that is another story.  The Welsh group brought me to Wales in 2002 for a speaking tour that also traveled through England, and Ireland.  The tour also addressed the Plan Puebla Panama–a series of massive development schemes and transportation corridors running from Puebla, Mexico to Panama–which was a major target of solidarity activists internationally.

I have travelled to Nicaragua many times and have always been a critic of proposed Dry or Wet Canals in that country as well as the Dry Canal planned for the Isthmus of Tehuantepec for two major reasons: 1) the indigenous peoples and the community organizations we spoke to were against it, and 2) it will have an unimaginable impact on the ecology of the region.  A debate is well underway in Nicaragua.

There is a lot at stake for the leftist Sandinista Nicaraguan government, indigenous sovereignty, autonomy and of course the environment itself.  This is an important topic that spans many issues of neoliberal globalization, including climate change.  Ironically the following quote in this article points out, “Nicaragua’s dream of building the canal might now be too late to work in practice. One of the clear effects of climate change is the opening up of the Northwest Arctic passage, which might make both the Nicaraguan and Panamanian canal uneconomical for part of the year.”

-Orin Langelle for the GJEP Team

June 28, 2013. Source: Wales Nicaragua

Following our last post, the world has suddenly woken up to a new story about Nicaragua – the inter-oceanic canal. The Guardian carried its second story in as many weeks about the project (see here). Though the idea of the canal might be new to most of the media, it isn’t new to the Campaign.

Anyone who knows the history of Nicaragua will know that the country was in the frame to be the original crossing for the isthmus. That it eventually ended up in Panama had much to do with the geo-politics of the time – and what the United States decided was in its best interests. Throughout the following century, a second canal has been proposed, usually through Nicaragua, sometimes through Mexico. It also has undergone many different permutations – a canal, pure and simple; a canal to Lake Nicaragua, and then make use of a natural waterway; or a ‘dry canal’, Pacific and Atlantic ports connected by a railway. Or, indeed, various combinations of the three.

The last bout of ‘canal fever’ started to gather pace at the end of the 90s. The Plan Puebla Panama was envisioned as a grand mega-project, linking the telecommunications, energy and road networks of Central America (for an unusual take on the PPP, see here for the Beehive Collective). It stemmed from an off-the-cuff remark by the Mexican President. It soon turned into multi-billion dollar plans, backed by the international finance institutions and various Western governments, who could smell the contracts. One of the proposals on the table was the canal. At the time (at the beginning of the noughties) the most probable route was going to be a dry canal, making use of the port of Bilwi in the North Caribbean, or in another variation, Monkey Point in the South Caribbean. The Campaign spent many months (and years) following the proposals, highlighting the deficiencies of the Plan Puebla Panama in general, and the dry canal in particular. During that time there were no serious proposals to build the canal. To the Campaign it looked to be a means of land speculation along its proposed route, something which would effect indigenous lands particularly.

For about a decade the idea for the canal has bumbled along. However, for the Caribbean Coast, far more important has been the demarcation of indigenous land, under Law 445. The Coast has, for the first time, also been included in the National Development Plan, with many communities receiving electricity since the Sandinistas came to power in 2007. The Coast has also been integrated into the various social programmes associated with the ALBA, which has done much to start to tackle the severe poverty of the country.

Nationally the social programmes have halved the numbers suffering from hunger, eradicated illiteracy, taken steps to improve the health service (see our previous posts). More importantly for most Nicaraguans, the Sandinista government has stablised the economy. Against a backdrop of the world financial crisis and major recessions in the US and Europe, the Nicaraguan economy has grown by 4-5% annually under the Sandinistas. Despite this, most Nicaraguan commentators, from both Left and Right, agree that to eradicate poverty the economy needs a sustained bout of growth of around 10% (even this, though, doesn’t guarantee tackling poverty. Much of sub-Saharan Africa has achieved this growth figure during the past decade, coupled with a widening of the gap between the rich and poor).

It was against this backdrop that Nicaragua announced its plans for the canal. Perhaps the Campaign was less surprised than some. In February we had a presentation, as part of our delegation, by Dr Paul Oquist, responsible for National Policies and Plans under the Sandinistas. Previous to this government there was a joke about the National Development Plan – the only thing wrong with it was that it wasn’t national, it wasn’t about development, and it wasn’t a plan. Oquist’s presentation outlined the current plan, the achievements of the Sandinista government, and the latest on the canal. According to Oquist the canal will cut the journey time between China and Europe from 18 to 11 days. It was this fact, and the evidence of Sandinistas delivering during their first five years, that made some of us realise that the plan for the canal was serious this time, and not just a speculator’s dream (though speculators will still be happy to see the canal being built).

The Sandinista government has already commissioned two pre-feasibility studies into the canal. The press have been reporting that the first was carried out by the Chinese Railway Construction Corporation, China’s second largest construction company, which looked at several routes. The second, prepared by the Dutch consortium Royal HeskoningDHV and Ecorys, apparently only examined the route along the Rio San Juan. Between them the studies have helped generate the possible routes, with those along the Rio Oyate looking to be favoured at the moment. The CRCC will carry out the next phase of the work, developing a full feasibility study.


The plans for the canal were announced at the beginning of the month. Dr Oquist says the development will deliver 10-15% growth over the next five years. Without it, growth will be half of this figure (there are still some major projects on the cards in Nicaragua over the next few years, including the Tumarin dam). At the same time the Government announced
some of the major players who will carry out the feasibility study. They include: the Chinese capitalist Wang Jing, head of the Hong Kong Nicaragua Canal Development HKND) Co; Bill Wild; Ronald Maclean Abaroa; David McArthur, ERM; Stefan Matzinger and Jimmy Hexter of McKinsey; and Stephen Donehoo of Maclarty.

The consultants have strong connections with China, Hong Kong and Latin America. Maclean Abaroa is a former Bolivian presidential candidate, World Banker, and an expert on governance and anti-corruption issues in Latin America. David McArthur is Environmental Resources Management for the Americas. ERM is a major player in the corporate environmental world, with 5,000 employees in 39 countries, and counts many of the major transportation and extraction MNCs as their clients. Matzinger and Hexter of McKinsey both work in the company’s Hong Kong office. Hexter, a fluent Mandarin speaker, has over two decades of experience developing projects both with the Chinese government and private sector. He is also on various US/Chinese bodies and foundations. Donehoo is responsible for Maclarty’s operations in Central America and the Andes. His past jobs including working as a military intelligence officer providing advice to the US Southern Command, amongst others.

Much of the focus on news reporting has focused on the ‘mysterious’ Wang Jing, head of Xinwei Telecom. Given the background of the consultant team, Wang Jing’s position would seem to be the least mysterious. Xinwei moved into the Nicaraguan telecoms mobile market last year, challenging Mexican and Russian providers. It also has numerous business ventures, both with the Chinese government and private sectors, and SE Asia. This experience, and that of the consultants, looks like an ideal way of creating a bridge to the $40 billion needed to finance the canal.

Before looking at the problems with the canal, one thing needs to be clear. The Nicaraguan government is serious about developing the country, and lessening its dependence on foreign aid. With everyone agreed about the level of growth needed to do this, if the canal does not go ahead, where will the engine to drive this forward come from? Other ALBA countries have recognised these tensions, leading to internal conflicts, but also to innovative ways for funding development. Ecuador is receiving international support to leave some of its oil in the ground, though not as much as was first promised them. Any critics of the canal must also be thinking seriously which ways the Nicaraguan economy can grow, with equity, and without trashing the country. The Nicaraguan people are already formulating their own answer, as 70% were in favour of the canal in a poll conducted immediately after the announcement.

Two commentaries on Tortilla con Sal (see here) have highlighted the economic benefits. They also say that the canal, through tackling poverty, will deal with the main cause of Nicaragua’s environmental problem, campesinos extending the agricultural frontier into Nicaragua’s rainforest (and indigenous land).

So what have the critics said? First off the mark were the group of 21 organisations and political parties, with their manifesto ‘In Defense of National Sovereignty’. Instead of analysis (which the canal proposal sorely needs), the organisations (some of whom are funded by the United States) accused Ortega of looting the country and presiding over a dictatorship.

A more serious criticism has been leveled by the likes of Maria Acosta, a Coast lawyer who has worked with indigenous communities for over a decade. She says the law passed by the Nicaraguan Assembly granting the concession allows for the ‘expropriation’ of land. This would seem to directly contradict Law 445, which has advanced steadily under the Sandinistas. It grants communal land rights to Nicaragua’s indigenous people. Since the Sandinistas returned to power in 2007, seventeen of the 22 indigenous land areas have been demarcated, with some already receiving their land titles. Depending on the route, the canal could impact on land which hasn’t been demarcated yet. For example, one of the areas where there has been problems resolving the conflict over demarcation has been in and around Bluefields.


As worrying is the impact on the environment. Nicaragua lies at the heart of the Mesoamerican Biological Corridor. Although this is a construct, it is also the reality that the region contains 8% of the world’s bio-diversity, and the maintenance of this is dependent on the free migration of plant and animal species. Such a huge project, effectively slicing the isthmus in two, will put further pressure on fauna and flora already threatened by climate change.

The environmental impact will not only be felt by non-humans. As a member of our old friends the Humboldt Centre commented after the bill was passed in the National Assembly:

“We’re at a crossroads because either you use Lake Cocibolca for floating boats or you use it for drinking water, but you can’t use it for both things at once.”

China maybe gives an indication of what could happen if things go wrong. A generation of double digit growth has lifted 400 million out of poverty. The cost has been huge environmental degradation, which the Chinese government are struggling to cope with. However, it is worth noting that the Sandinistas’ Presidential Environmental Advisor, Jaime Incer Barquero, has not given a knee jerk reaction to the canal. He is reported by the Nicaragua Network as saying “that any likely negative impact to the environment must be weighed fairly against the positive economic effects”. He said that his environmental concerns were always received by the President but that the government at times “may have other visions and other priorities.” Incer Barquero’s environmental credentials go back to the Revolution, and he is well-respected in the country. The fact that he is waiting to see what emerges from the feasibility study should give pause for thought to those who have offered immediate condemnation.

Also absent from the debate (so far) has been the impact the development will have on indigenous languages. The favoured routes look likely to affect Rama and Garifuna communities, whose languages are both struggling. The Rama Kriol Territorial Government has announced it’s opposition to the project, as it was not consulted about the development, as mandated in law.

The economic benefits are also not as clear cut as at first seems. Nicaragua’s dream of building the canal might now be too late to work in practice. One of the clear effects of climate change is the opening up of the Northwest Arctic passage, which might make both the Nicaraguan and Panamanian canal uneconomical for part of the year.

A huge debate over the canal has started. It’s a subject that the blog will undoubtedly return to.

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  1. A sea-level canal would also affect aquatic species. Emeritus Director of the Smithsonian Tropical Research Institute, Dr. Ira Rubinoff said 30 years ago that it would be a vast experiment, bringing two faunas together that have been apart for 3 million years. Given the devastation to Caribbean reefs caused by the sea urchin die-off in the early 1980s probably caused by a Pacific organism released in bilge water released at the mouth of the Panama Canal, and the subsequent death of the acroporid corals in the Caribbean, is this wise? Another Pacific organism, the lionfish, is chowing its way through fish stocks in the Caribbean. Do we want, for example, crown-of-thorns starfish added in to the mix?