China’s $40 Billion Cross-Nicaragua Canal Stirs Controversy

Monday, March 10th, 2014
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Ambitious plans to build a canal across Nicaragua have triggered controversy due to their potential environmental impact, as well as the circumstances surrounding the conferral of the winning bid.

The construction of a canal across Nicaragua has been the lofty ambition of eminent statesmen and empire-building tycoons since the colonial era, yet only now in the early 21st century is it set to become a reality.

The Hong Kong Nicaragua Development Group (HKND) has managed to cinch the exclusive rights to the construction of a canal spanning the Central American nation of Nicaragua, which will serve to provide an additional water bridge between the Atlantic and Pacific Oceans.

The $40 billion canal will cross approximately 290 kilometres of Nicaraguan soil and will encompass the construction of seaports, an airport, free-trade zones as well as a trans-isthmian freight railroad.

It could permit the passage of vast container ships even before the decade draws to an end, superseding the Panama Canal to its south which is too narrow to grant access to today’s seagoing cargo behemoths.

While the canal will serve to greatly facilitate international trade flows and serve as a major boon for global logistics, its construction has already triggered controversy as a result of peculiar circumstances surrounding the conferral of exclusive rights by the government, as well as its potential impact on the environment.

Mystery still surrounds the process by which HKND – which has no prior experience in the building infrastructure – managed to grab the rights when no bidding appears to have taken place.

HKND is a newly formed Chinese company which is headed by 41-year old Wang Jing, a Beijing-based entrepreneur and telecom executive, whose official biography refers to him as a “very ordinary Chinese citizen,” who just happens to also be the “board chairman of more than 20 enterprises which operate businesses in 35 countries.”

Chinese Entrepreneur Wang Jing shaking hands with Nicaraguan President Daniel Ortega

Chinese Entrepreneur Wang Jing shaking hands with Nicaraguan President Daniel Ortega

The source of funding for the canal also remains enigmatic, with some analysts suspecting that money is likely to come from the Chinese government despite HKND’s claims that the project is entirely private.

According to Sino-Latin American relations expert Evan Ellis from the US National Defense University, the Chinese government is one of a very few players with enough capital to fund the immense costs of the project.

Another major source of controversy is the potential impact of the canal on the environment, particularly given that one of its proposed routes will pass through Lake Nicaragua – the waters and surrounding forests of which contain teeming ecosystems filled with diverse animal and plants species.

In the science journal Nature, two leading environmental scientists said the project could end up being an “environmental disaster” for the country, threatening “some of the most fragile,pristine and scientifically important regions” of Central America.

According to the paper by Jorge A. Huete-Perez, director of the Centro de Biologia Molecular at the Universidad Centroamericana in Managua, Nicaragua, and Axel Meyer, professor of zoology and evolutionary biology at the University of Konstanz in Germany, the canal could destroy 400,000 hectares of rain forest and wetlands in the area.

Meyer said a major source of concern is the dredged depth required for the canal, which is 90 feet as compared to the Lake Nicaragua’s average depth of only 50 feet. This could generate large amounts of sediment, severely compromising water quality in both the lake and adjacent wetlands.

Huerte-Perez and Meyer are now calling for the government to conduct its own feasibility studies and environmental impact assessment for the project instead of relying solely on an environmental review by consulting firm Environmental Resources Management which HKND has commissioned.

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