Speculating about the Nicaragua Canal Project

“Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”
― Fred Schwed Jr.


from La Prensa Newspaper

from La Prensa Newspaper

Yesterday, October 24, 2014, over 4,000 people protested on Ometepe Island against the Nicaragua Canal Project. Ron and I didn’t go to the protests because we are guests in this country and we didn’t feel it was appropriate to demonstrate. However, that doesn’t stop me from speculating about the effects this canal will have on our adopted country and its resilient people.

Since there has been absolutely no transparency from the Nicaraguan government or the Chinese, we are left to speculate. Conspiracy theories abound. Rumors are rampant. Have letters of expropriation of land been sent to the property owners? Is it true that the property owners have until December 5th to vacate their land? Are the Chinese building a resort on Ometepe Island near our house and the new airport or is it a military base or a place to store materials for construction? No one knows and the information we receive is scarce and scattered.

All I know is that the Nicaraguan people are angry and nervous. A peaceful protest in Rivas erupted in violence on Friday when a young group of FSLN supporters were sent from Managua. They pelted and stoned the peaceful protesters with rocks. On Ometepe Island, after the protests, the ferry was prohibited from leaving the dock for the mainland by the Nicaraguan Navy. March on Ometepe Island

Apparently Daniel Ortega has a lot to lose in this impulsive deal, too. According to the La Prensa, Orlando Murillo Barquero’s land was expropriated by the unconstitutional president. Ortega hired the company Alba de Nicaragua SA (Albanisa) to build 44 windmills for his energy initiative, and now they are sitting right in the path of the proposed canal route. If you can read Spanish, this is a very interesting article from La Prensa. Business Alba affected by the Gran Canal.

Tim Rogers wrote an article including a comprehensive history of the Nicaragua Canal Project. This article, Nicaraguans rise up against Chinese Canal, will give you more background information.

In order to understand more about Chinese investments in developing countries, I did some research today. And now I’m more confused than ever! China has been a heavy investor in Africa for at least ten years. Presently, China has invested $10 billion in the development of a massive port in Bagamoyo, Tanzania.

Words and phrases in this article sounded eerily familiar…discreetness of the project… pushed through Parliament by the ruling party, which has an absolute majority, with barely any debate…Parliament was not informed about the deal…against the lease reportedly granted to China to operate the port for forty years…and military potential and implications.

“China’s Sichuan Hongda Company Limited is to invest US$ 3 billion in an iron ore and coal mining [in Tanzania] that will last for more than a century,” according to Fair Forum for African Investigative reporters.

Although this article comprehensively lists the advantages of the Chinese investments in many areas such as road construction, iron ore and coal mining industries, and hydroelectric plants, I’m still not convinced that the Chinese investments in Nicaragua will yield improvements to the infrastructure, the environment, and provide jobs for the Nicaraguans to help them rise out of poverty.

I am not convinced because

  • I have no idea if China is a reliable partner for Nicaragua. There is little evidence that Chinese investments in other developing countries provided needed relief from poverty. Is China a philanthropist or only wooing developing countries to exploit their natural resources?
  • I have no proof that Nicaraguans will be hired to work on the canal project, which will lift them out of poverty, as the unconstitutional president, Daniel Ortega states. Could the Chinese create slave labor conditions with little regard for safety or the local culture? “In January 2013,  international media reported that Nigerian workers at Lagos-Badagry highway construction site protested because of poor salary and the Chinese company management had no medical facilities,” according to Fair.
  • There is no transparency, and no public environmental impact study. What are the Chinese hiding? Will China grab Nicaragua’s huge natural resources, such as Lake Cocibolca, the central watershed for all of Central America, and in turn dump only shoddy substandard products in Nicaragua for its own national interests?
  • As far as I can tell, the Chinese company, HKND, has no experience in canal construction. They obviously see the potential in their investments, but fulfilling this potential and avoiding all the social and environmental problems will be difficult.

Should we trust the Dragon? Most people in Africa doubt the Chinese companies, which are said to have a poor record when it comes to delivering on commitments to their African communities. Construction of the giant port in Bagymoyo, Tanzania, has been pushed forward by the Tanzania government from January 2015 to the last trimester of 2014. The Chinese iron ore and coal projects are yet to begin, as Tanzania waits for the Environmental and Social Impact Assessment to be verified.

Will the Chinese investments in Nicaragua stimulate Nicaragua’s economic growth or will the Dragon spit fire on Nicaragua’s natural resources? It’s all a matter of speculation.







13 thoughts on “Speculating about the Nicaragua Canal Project

  1. The Chinese are everywhere! They are building all the roads in Africa and now it looks like they have their hands in Central America too. It kind of scares me. A bit of imperialism.

    • Nicole, the more research I do, the more frightened I am. They are investing in many places in the world. Canadian friends of mine have been posting about the Chinese investments in Canada, too. My only hope is that the canal is never built. If the Chinese want to expropriate wilderness land for tourism resorts, that may not be as damaging to Nicaragua as the canal. I’m holding my breath waiting to see what is going to happen.

  2. I shared this on Friends of Puerto Morelos FaceBook — Puerto Morelos has been fighting to prevent the Chinese DragonMart, but with all the money involved, this massive project is being built in spite of injunctions….Same questions and lack of transparency as you outline….

  3. Everyone that has Chinese products are co-conspirators, although I know it is now impossible to not buy Chinese made shit. It is the greed of big businesses along with everyone that wants to save a dime by buying products made in China a communist country. Even though a third of their country stil live in poverty working for peanuts (like the Nicas) they have built up a powerful army and plenty of money to buy what they want. The world has screwed it’s self! If the US would have shipped those jobs to Latin America we wouldn’t have this Chinese problem not to mention all the illegals in the USA…
    I would be careful if I were you Debbie seeings how your property rights are in dispute as you have mentioned by not making waves……….

    • Unfortunately, Dean, it’s too late to speculate about what we should have done. As far as our property rights, we have everything legally settled, now. According to Law 840, that was pushed through by Ortega, article 12 discusses the rules for expropriation of land. I translated it yesterday, and the Chinese must pay the assessed value of the property for compensation. Unfortunately, much of the property they want to take is assessed at very, very low values because it was inherited and passed down through generations. What I’m wondering is if it is possible to reassess all the property to be expropriated at a very high market value, so the Chinese would have to pay a fair price to the people who are going to have their land taken. It may be one way to help the people. I’m just spreading the word, Dean. It’s the least that I can do. I love the people of Nicaragua and they need some major publicity for this atrocity.

  4. Thank you for providing the links; I will open the pages and read when I get home later today.

    I’m glad that the Nicaraguan people are speaking up, and I admire your reasons for not attending the demonstration… My natural curiosity would have nudged me there to witness the event, and your reasons will make a good example for people like me to remember: we are guests…

    Thanks so much for the update. Z

    • Lisa, like you…the only thing I can do is spread the word through my blog that the people in Nicaragua are going through some very difficult times. I can’t predict what is going to happen. I’d like to think that the Chinese will only improve Nicaragua with better infrastructure, but after researching Chinese investments in Africa, I still know very little.

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