Doubt Cast On Nicaragua Canal Project

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A new report published by Yale Environment 360 is casting new doubts on the Nicaragua Canal project, expected to cost at least US$50 billion.

The report identifies obstacles such as environmental concerns, natural disasters, and a lack of public consultation for the project, which began work in late 2014 before environmental impact studies were complete.

The canal would threaten Lake Nicaragua—Central America’s largest body of fresh water—along with beaches, forests, swamps, and other waterways, according to the report. One scientist in the report claims that around 400,000 hectares of rain forests and wetlands would be destroyed.

Beyond the environmental impact, the report identifies the danger of natural disasters as cause for doubt that the project is viable, with frequent seismic and volcanic activity and Caribbean hurricanes along the proposed canal route. One expert claims that the cost to fix the canal after a strong hurricane could be as much as much as the initial construction cost.

The report also raises concerns about the rush of the project and lack of transparency and consultation with Nicaraguans who may be affected by the canal’s construction. The canal is expected to displace an estimated 30,000 to 100,000 people. With the approval of Nicaraguan President Daniel Ortega, the project was rushed through the National Assembly with little to no debate and granted to the Hong Kong Nicaragua Canal Development Group in a no-bid concession.

The report asserts that Wang Jing, the Chinese entrepreneur behind the project, may not be serious about building the canal. One glaring indication of this is that the Hong Kong Nicaragua Canal Development Group has not yet released an economic feasibility study. The report cites skeptics who claim that Jing is instead planning smaller projects along the proposed canal route, for which he has a 50-year concession on land rights. These smaller projects include an airport, a free trade zone, and major tourist resorts.

Meanwhile, about 450 miles south, Panama’s own US$5.25 billion expansion project on the Panama Canal is nearing completion.

Began in 2007, the project has been mired in cost overruns, payment controversies between the construction consortium and the Panamanian government, and work stoppages, pushing back the original 2014 completion forecast. Recently, the last lock gate was finally installed, and the new set of lock gates is expected to be operational in 2016.

With the expanded capacity of the Panama Canal, Panama’s monopoly on interoceanic shipping in the Western Hemisphere appears to be strengthened. With the concerns and doubts raised by the Yale Environment 360 report about the Nicaragua Canal project, Panama should be at ease about losing that monopoly.

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