MCLC: Chinese to build canal in Nicaragua

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: Chinese to build canal in Nicaragua
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Source: The Guardian (6/11/13):
http://www.guardian.co.uk/world/2013/jun/11/nicaragua-chinese-plan-canal-pa
nama

Nicaragua fast-tracks Chinese plan to build canal to rival Panama
Congressional committee gives go-ahead to project despite objections
raised by opposition
By Associated Press in Managua

A Nicaraguan congressional committee has approved giving a China-based
consortium the concession to build and operate a canal between the Pacific
and Caribbean, fast-tracking the huge development project despite
objections from the opposition.

The infrastructure committee president, Jenny Martínez, said the bill had
immediately been sent to the National Assembly, which is expected to
approve it on Thursday. President Daniel Ortega's Sandinista Front
controls the national legislature with 63 out of 92 politicians.

Opposition politicians voted against the proposal, saying the initiative
was being rushed.

The Chinese company, HK Nicaragua Canal Development Investment, is working
with the Nicaraguan government on the canal project, which was announced
last week. Experts say it may take 11 years to finish, cost $40bn and
require the digging of about 130 miles (200km) of waterway.

Canal proponents say the waterway could create 40,000 construction jobs
and double the per-capita gross domestic product of Nicaragua, one of the
poorest countries in Latin America. The government plans to grant the
Chinese company a concession for an initial 50 years, with the possibility
of doubling it.

Critics say there needs to be more information before politicians approve
the construction of a canal whose location and environmental impact has
not been determined. Others have questioned the plan's viability just a
few hundred miles north-west of the Panama canal.

"Since there is no defined path, we can't measure the degree of
seriousness of this project," the opposition member Javier Vallejos said.
"This is like putting the cart before the horses," he added, referring to
the fact that legislators are approving the canal's construction before
knowing where it would be built.

Jaime Incer, an adviser to the presidency on environmental issues, agreed
with Vallejos and said authorities needed to define a specific route
before approving a concession. "There are at least six proposed routes and
five of them include Lake Nicaragua, but there is nothing definite, that's
all part of the unknown," he said.

Ortega has not presented an economic feasibility study or research into
the potential environmental impact of the project. Last month he said the
project would start in Bluefields Bay on the southern Caribbean coast, go
through the centre of the country and into Lake Nicaragua and end at the
southern Pacific coast.

The deputy foreign minister, Manuel Coronel, chairman of the Grand Canal
Authority, said on Monday that awarding the concession to the Chinese
company guaranteed the project would be carried out. "It's a very serious
company, very responsible and recognised," he said. "To doubt [the
company] is to oppose the project for political rather than realistic
issues."

The Hong-Kong-registered HK Nicaragua Canal Development Investment has an
office in the Nicaraguan capital. It has said it is willing to fully study
the technological, economic, environmental and social impact of the
project.

"This is a great project that has the potential to transform international
trade and bring significant economic and social benefits to Nicaragua,
their neighbours and Latin America," the company spokesman, Ronald
Maclean-Abaroa, said on the group's website.

Under the deal, the Chinese company would pay Nicaragua $10m annually
during the first decade, followed by a share of canal revenues that would
begin at 1% and rise to an unspecified percentage over the duration of the
concession.

After completing the concession, the Chinese company would have to turn
over to Nicaragua all buildings and other canal infrastructure. The
legislation says the government may expropriate any property or rights
over property needed to develop the canal.

José Aguerri, president of an association of the chambers of commerce in
Nicaragua, said it was crucial for the government to specify the canal's
route. "We have told the committee that until you define the path that the
canal will have, it will be difficult to attract investment to the area
because there is no legal certainty," he said after a meeting with
committee members.

Aguerri said politicians also should consult civic groups and
organisations working with the environment before approving the project.
Panama, which has a steady income flow from its canal, deliberated before
embarking on a seven-year, $5.2bn expansion to allow bigger ships to use
its waterway. That project is scheduled to be finished next year.

Nicaragua, on the other hand, has been rushing its canal's approval
despite questions being raised by critics. Supporters of the construction
argued in a 2006 presentation that they could capture 4.5% of world
maritime freight traffic and earn a 22% profit margin by 2025, although
their cost estimates at that time were much lower than those of the
current project.