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The future of proposed ‘new Panama Canal’ in doubt

Development Policy

The future of proposed ‘new Panama Canal’ in doubt

The pristine waters and diverse habit of Lake Nicaragua is under threat by the proposed project.

[E. Krall/Flickr]

Nicaragua’s planned development of a competing waterway to the Panama Canal has faced massive opposition due to the impact the project will have on the environment and society. EurActiv’s partner El País – Planeta Futuro reports.

In June 2013, the Nicaraguan government passed legislation relating to the planned construction of a canal linking the Pacific and Caribbean. Shortly after, a deal was struck with a Hong Kong company to design, construct and operate the waterway. The Hong Kong Nicaragua Canal Development Group (HKND) plans to build a 278 kilometre-long canal, which would make it three times the length of the Panama Canal, as well as being twice as wide and twice as deep.

The company will also be responsible for additional infrastructure projects, such as the largest airport in Central America, a number of highways, factories, several tourist resorts and two deep-water ports. The cost of the project is estimated to cost at least a staggering $50 billion and promises to create jobs for some 200,000 people in the second poorest country in Latin America after Haiti, according to the World Bank. However, the downside is hugely significant: HKND has been given a blank cheque when it comes to land, water, and air use, as well as free reign over natural resources.

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Opposition groups have sprung up since the project was greenlit and have highlighted the financial, political and environmental risks of the canal. The alleged unconstitutional nature of the project has also been criticised, due to the lack of consultation carried out. Additionally, there are fears that Nicaragua will lose its sovereignty as a result of the deal.

From an environmental point of view, the project poses a significant threat to the country’s most precious source of water, Lake Nicaragua. A third of the canal’s total length will incorporate the natural body and water and it is feared that the dredging needed to accommodate the largest vessels will have a devastating impact on the ecosystem.

In May of this year, HKND is scheduled to give the Nicaraguan Grand Canal Commission its environmental and social report, which has already been significantly delayed. 

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Octavio Ortega, a member of a Nicaraguan organisation that champions the rights of farmers, indigenous people and other ethnic groups, said that the legislation passed by the government “adversely affects the rights of the Nicaraguan people”.

Despite a watertight study, the canal still threatens human rights and to cause huge environmental damage. The Nicaraguan government has not effectively consulted with indigenous communities, despite the fact that 52% of the planned route passes through the traditional homelands of the Rama and Kriol peoples. Many fear that construction of the canal would destroy their livelihoods and basically act as a death sentence. Their very culture would be jeopardised, for example, the Bankukuk Taik community still speaks the Rama language, an ancestral tongue that only has a few dozen native-speakers left.

The upheaval caused by the project would almost certainly consign it to the history books. Additionally, construction will destroy an estimated 4,000 square kilometres of tropical forest and swamps, including vast swathes of nature reserves and wetlands on which the indigenous peoples of the Caribbean coast depend.

This flies in the face of previous legislation, United Nations agreements and the constitution of the country itself, which protect the rights and freedom of indigenous people.

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In addition, a lack of transparency in the project has caused farmers and local populations that live within ten kilometres of the planned route to fear for their land once the heavy machinery and construction equipment starts to roll into action. The profound lack of information has caused a large number of movements and protest groups to take up the cause and demonstrations have taken place as a result. Slogans such as “(President) Ortega=Traitor”, “Chinese, get out” and “NO CANAL” have all been seen.

Citizens began to worry about the planned canal once they saw officials from the Chinese company surveying the planned route, accompanied by the army, police and the Nicaragua’s Attorney General. Chief among the protestors concerns are that their land can be expropriated and that there will be no guarantee of relocation.

Land will be bought by the Chinese company at cadastral value, i.e. the price will be set by the government, not market value. This has, naturally, only added fuel to the fire.

Mauricio Fonseca, a farmer with around 34 hectares of land, has invested over €15,000 in his business, but has been told it is only worth €1,250. “With this money we won’t even be able to build a worthless hut,” said Fonseca.

Other farmers and landowners have complained about the same issue, with some people being offered money that is only 10% of what they have invested. Others have been so disgusted by the situation that they have taken down the Nicaraguan flag and now say they do not identify with the government and country.

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An independent report produced by the Humboldt Centre found that the likely impact of the project will be far larger than what the government has predicted. It found that 282 settlements and 24,100 houses lie in the way of the proposed route and calculated that far more individuals will be displaced than the 119,000 people estimated by the government. Octavio Ortega warned that more than half a million people could be displaced, not just because their homes lie in the way, but also by the planned sub-projects that are in the pipeline.

In addition to forcing hundreds of thousands of people to leave their homes, the construction of the canal will also cause irreversible environmental damage. The loss of indigenous communities would go hand in hand with the loss of some of Nicaragua’s most valuable resources: its ecologically diverse habitats. Most worrying of all is that HKND has been granted the right to seize whatever land it wants along the route of the canal. Furthermore, the legislation passed in 2013 means that the construction company will not be responsible for safeguarding the environment or preventing damage from being done to it.

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President Daniel Ortega’s government has injected some confusion into the matter in recent months. On 15 July, Ortega visited Taiwan and floated the idea of building a massive sea point at Monkey Point, on his country’s Caribbean coast, despite the site lying near to where the outlet of the planned canal would be. The proposal has cast doubt on the viability of the mega project. Furthermore, the President of HKND, Wang Jing, has recently lost around 84% of his personal fortune and 57% of his stake in the company, leading to increased rumours that the canal project is dead in the water.

Other critics have pointed out that the Panama Canal is currently not at capacity and is actually undergoing expansion and renovation, calling into question whether there is an actual need for the Nicaragua project.