Tue, Dec 17, 2013 - Page 9 News List

Nicaragua in thrall of canal dream, worries remain

Plans to build a canal three times the length of the Panama have been approved for a Beijing-based telecom CEO, while critics’ warnings are being ignored

By Michael Weissenstein and Luis Manuel Galeano  /  AP, MANAGUA, Nicaragua

Wild said the heavily criticized canal concession was designed in good faith to fairly compensate Wang for taking a bold financial risk.

“People expect a reasonable return, a good return,” Wild said. “The return for Nicaragua in my book comes from the social benefit that comes from the existence of the canal.”

The legislation allows Wang to petition the state to confiscate any land needed. It requires him to pay owners the assessed value, but much of the property outside major cities has never been officially assessed, risking what private businesses fear could be a land grab for pennies on the dollar.

Nicaragua is required to compensate Wang for legal changes that delay the canal or cause it to lose money. Compensation can come from state coffers, including the reserves of the central bank, under a waiver of Nicaragua’s sovereign immunity.

Many legal and environmental experts charge that the canal deal violates national sovereignty, and construction could cause profound ecological damage to this rugged nation of lakes, cloud-wreathed volcanoes and thick tropical forest, by damming rivers, splitting ecosystems and moving untold tonnes of earth.

“It’s basically handing over the whole country — water, air and land, without any studies,” said Luis Callejas, an opposition congressman who was invited to join a 10-day trip to China in October, sponsored by Wang for a group of prominent Nicaraguan businesspeople and politicians.

After he announced he would present Wang with a letter decrying the secrecy and constitutional violations of the canal concession process, Callejas did not receive the promised visa to China, and the group left without him. A Sandinista lawmaker who abstained from voting in favor of the canal law was ejected from the party’s congressional caucus days later.

Wild said the canal would improve Nicaragua’s environment, in large part because large-scale reforestation would be needed to guarantee water to the canal.

“What we’re going to do will be an absolute positive for the environment,” he said.

Environmentalists, academics and non-governmental organizations have filed dozens of challenges to the constitutionality of the canal deal. They expect that a Supreme Court dominated by allies of Ortega’s party will dismiss the cases in the coming months, removing the last legal barriers to what some portray as a gambit to burnish Ortega’s popularity ahead of the nation’s 2016 presidential elections.

The Sandinistas last month proposed a set of constitutional changes that would allow Ortega to run for unlimited re-election. The reforms, approved last Tuesday in the first of two required votes, would also write the canal laws into the constitution.

The canal is “a personal family project about President Ortega maintaining power through a mega project that’s generating illusions of profits among the people,” Central American University sociology professor Manuel Ortega Hegg said (he is not related to the president).

Critics say that regardless of what happens in Nicaragua, global trade will not support a second Central American canal, particularly as the Panama Canal completes a massive expansion more than doubling the size of the ships it serves. Shipping experts say that the proposed canal, with an original price tag of US$40 billion, would have to earn US$1 billion annually to turn a profit, meaning it would have to immediately draw half of Panama’s current ship traffic.

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