China's Deepwater Port by Panama Likely to Sink Nicaragua Canal
Science, politics and perhaps a little business may have dealt the final death blows to Nicaragua’s long-delayed and very expensive alternative to the Panama Canal.
For years, there has been a need either to expand the Panama Canal to allow more shipping or to find another route connecting the Caribbean Sea to the Pacific Ocean.
That other route of choice has been, up until very recently, the ambitious $50 billion transoceanic canal in Nicaragua. Planning for the canal has come a long way, with the proposed route passing from the city of Bluefields on the east, across a large land portion first, then into Lake Nicaragua itself and eventually to Rio Brito on the west. In all, when complete, the canal would total some 278 kilometers in length.
The developer for the project, if it were to continue, would be the Hong Kong Nicaragua Canal Development Investment Company of the Hong Kong-based HKND Group. It was granted a 50-year lease for the project, plus concessions for the rights to build a rail system, oil pipelines, multiple industrial centers along the way and even airports. The company was also given the right to seize land where needed to do the work as well as the right to many natural resources that might be uncovered as part of the canal development. The lease was also renewable for another 50 years, at the developer’s request.
With the completed canal, Nicaragua would itself be looking at a major boost in economic growth on multiple fronts, surging from only 4.5% annually as of 2013 to an estimated 14.6% some two years after completion of the canal. This would mean significant boosts in tax revenues and significant job growth in this extremely poor Central American nation that, as of 2014, was the second poorest in all the Americas.
Besides being ambitious, however, the Nicaragua canal is also seen as being massively destructive to the environment. Part of why is the wide swath it would make across so much of the country. If it proceeded, it would lay waste to major wetlands in and around Bluefields itself, damage the coastal Cerro Silva Natural Reserve immediately below it and slice into the northern parts of the San Miguelito wetlands near the center of the project. In all, an estimated 400,000 hectares of rain forests and wetlands would be destroyed just in those areas alone. In addition, numerous endangered species would be impacted and possibly pushed into extinction, with others being brought into endangered status.
Another big concern is what might happen to the 8,264-square-kilometer Lake Nicaragua right in the middle of the canal’s path. Freshwater Lake Nicaragua, the largest lake in Nicaragua and the 19th largest in the world, would be sliced in two by the canal, with extensive dredging required to take its average depth of only 15 meters before construction to 27 meters after. There would also likely be the destruction of multiple critical biological ecosystems from construction damage, saltwater seepage and various canal-introduced sources of pollution.
Collateral ecological damage is also expected on either side of the projected route of the Nicaragua canal. There are the two million hectares of the Bosawas Biosphere Reserve located just 240 kilometers north of the canal, a location identified as one of the last places in the world for many valuable species already near extinction. Only 110 kilometers south of the canal route is the Indio Maiz Biological Reserve, an important 318,000-hectare tropical dry forest. While the
canal might not dig into either of these reserves, the fact that they are both on a migration path connecting across the canal, and with many species linked by waterways and other connections, the likelihood that the canal would impact them appears high to many scientists who have looked at the situation.
The proposed canal has already been the subject of considerable pushback in the scientific community because to build it requires dredging deep into the bed of Lake Nicaragua. With the likely destruction of multiple major biological ecosystems ahead, many scientists have spoken out with concerns about what might happen.
Environmental Resources Management (ERM), a consultant headquartered in the United Kingdom, was hired to analyze the possible harm that building and operating the Nicaragua canal might cause. It completed that research, which eventually amounted to 14 volumes and 11,000 pages in total. The work started in 2013 and was completed in May 2015.
The sheer volume of the report suggests that ERM conducted a very thorough look at the situation. As the developer, HKND Group, said, the report utilized “a wide range of scientific disciplines, including geology, soil, groundwater, surface water, air, noise, vibration, marine, freshwater and terrestrial ecosystems” and even considered issues such as “social resources, community health and cultural heritage, together with the local economy and employment.”
This may all be true, but from those who have seen the preliminary report, the initial comments suggest it was more of a whitewash than anything else. Michael T. Brett, a professor at the University of Washington’s Department of Civil & Environmental Engineering, was quite blunt in his comments. As he told Circle of Blue, a research organization that focuses on global water issues, “It seemed to me that the environmental impact assessment process was to create the illusion of science.” He went on to say that, after reading the report, he “had the impression that most of the sections presented to us were of the quality of a weak master’s thesis at any major research university.”
With that kind of flack coming in, a third-party evaluation of some of the chapters in the ERM report was conducted over two days in March 2015. The summary conclusions of that brief look said that the ERM environmental study was flawed and that the whole project deserved a much more thorough look to consider what might happen.
With all that talk floating around, one might have expected the government of China, connected with HKND
from the Hong Kong autonomous region, to make some public comments on the situation. Many had expected China to back the Hong Kong group’s development publicly and stand behind it. It was, after all, the project of a major Chinese billionaire, Wang Jing.
That did not happen, however. Instead, first, Nicaragua did something that business and political leaders considered quite stupid. Its president, Daniel Ortega, came out with strong backing for Taiwan as an independent nation, something that would have drawn the attention and ire of China anyway. Second, China quietly did its own analysis of the situation, studying the grandiose and wasteful nature of the Nicaraguan project – perhaps angry about Nicaragua’s position on Taiwan and also considering the environmental mess China might be blamed for just as it was beginning to take a position at the top of the world political stage.
China then pivoted – with the full force of its money, position, power and even state-run media – in an entirely different direction. Instead of supporting Nicaragua’s canal plan, it made the decision, via the company China Landbridge, to build the 13th-largest container port at Margarita Island, just outside the mouth of the Caribbean side of the existing Panama Canal. Its media praised the decision as a “huge boost” for the country’s global “Belt and Road” initiative, and the die was cast that how to expand sea traffic in the Panama Canal region was clearly China’s choice.
As final evidence of what was really happening in the background, guest author Chris Dalby recently wrote about the issue in the pro-china "Global Times" newspaper in a piece that clearly identified the final stake in the already-almost-dead Nicaragua canal effort. In the article, Dalby wrote, “Some saw it as a chance to rival the U.s.-dominated Panama Canal; others saw it as a massively wasteful boondoggle that had little chance of succeeding.” He also suggested that Wang Jing was likely less interested and/or involved now because he had lost much of his wealth during the 2015 stock market crash. Finally, Dalby also pointed out that the alternative project, off the eastern shores of Panama, was far more likely to be backed by China because “although Landbridge is ostensibly a private company, its management is directly tied to the Chinese government, making it a good stepping stone toward diplomatic ties. For China, the deal makes complete sense.”
With a bloated budget, the potential for a grand environmental disaster, and politics against it, then, the Nicaragua canal project now appears to be doomed. Look to China to start talking up the Panama Canal expansion as the new “wave of the future” and be locked in tightly with full “Belt and Road” plans for the future.