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Can a coast-to-coast canal solve Nicaragua's poverty problem?

Friday, 1 December 2017 09:23 GMT

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Government says project will bring jobs and protect forests, but opponents decry risks to environment and property rights

Nicaragua is a small country that was praised for eventually signing the Paris climate agreement in October, but has since been criticised for pushing ahead with a planned interoceanic canal, with its uncertain environmental effects. So how does it reconcile these apparently conflicting positions?

Nicaragua and Syria were the only two countries not to sign in Paris last year; both have now done so. Nicaragua’s stance was that the agreement was too weak and didn’t give sufficient help to developing countries striving to transform their energy systems.

Of course, when U.S. President Donald Trump declared that he would pull out of the agreement, his complaint was the opposite – that it was too onerous for the United States. By chance, I met Nicaragua’s climate change negotiator, Paul Oquist, a few days after Trump’s announcement at the start of June.

I suggested it would be an excellent moment for Nicaragua to change its mind, though claim no credit for the subsequent decision - I can’t have been the only one to think so. By signing up, Nicaragua has now sent a signal that if small nations can take the climate crisis seriously then so should the big ones.

But the Nicaraguan government’s critics say it is hypocritical. It is partnering with China to build a huge interoceanic canal, a rival to Panama that will take even bigger ships and – if it goes ahead – could be the world’s biggest construction project. At over 270km, it is more than three times the length of Panama’s, will cut through environmentally sensitive areas, consume huge quantities of materials and – most importantly – cross the biggest body of fresh water in Central America.

Criticism centres on two connected issues: the environment and the disruption to the communities through which the canal will pass. For environmentalists, the biggest concern is its 105km passage through Lake Nicaragua (Cocibolca), a wide but shallow inland sea which will have to be dredged to form a channel 30m deep and up to 500m wide. As well providing a tourist attraction, water supplies and a rich source of fish, the lake feeds the beautiful San Juan River which flows through near-pristine rainforest on its route to the Caribbean.


The effects of dredging are difficult to predict, and the plans for doing it have been criticised. In addition, there are the risks of pollution from the ships themselves or from potential accidents in the shallow water. Wider effects of carbon emissions from shipping were assessed in a detailed impact assessment by British firm ERM. They are difficult to forecast given that the canal might shorten shipping routes but encourage more international trade. However, ERM forecast carbon savings – for example from larger ships that currently circumnavigate Cape Horn to reach New York from Shanghai being able to cut their journeys by thousands of kilometres.

The government argues that the canal’s environmental benefits outweigh the costs. Importantly, because the need for water is fundamental to the project, and much of the catchment area for the rivers that feed the lake is deforested, millions of trees must be planted. Furthermore, the income from the canal will finally give Nicaragua the resources it needs to protect its existing forests, which are being depleted by cattle ranching. There is growing evidence that reforestation can make a significant contribution to the sequestering of carbon emissions needed to reach the target set in Paris. The carbon balance for the canal could, on this argument, be a positive one.

Opposition from communities affected by the line of the canal exists but is surprisingly limited. Overall, the project receives around 70 percent of popular support in national opinion polls, even if there is now more public uncertainty as to whether it will actually go ahead.

The most vociferous protests have occurred in one stretch between the lake and the Atlantic coast, where an energetic campaigner called Francisca Ramírez has organised more than 90 marches against the canal, the latest fronted by Bianca Jagger and championed by Amnesty International. In support of the case, AI say they interviewed “at least 190 people” worried about the canal. The Nicaraguan government and the canal company responds by pointing to its meetings with around 6,000 people in the communities along its route.

Amnesty’s report says that the canal “puts the human rights of hundreds of thousands of people at risk”, whereas the independent impact assessment by British firm ERM put the numbers whose property would be affected at 30,000. The government has made firm promises about compensation and relocation. The process has not yet begun, but AI is already collecting signatures in support of the “thousands” threatened with “forced eviction”.


Inevitably, a complex environmental and land use issue is also a political one. To the government, the canal is a way of boosting Nicaragua’s economy, creating 50,000 jobs in a country which will add over 350,000 to its working-age population in the next five years. Nicaragua’s growth rate is 4-5 percent, but the government believes it needs to be 8-10 percent if extreme poverty is to end. The government believes that only a project of the canal’s magnitude can achieve the change that is needed if Nicaragua is to cease to be the second poorest country on the Latin America mainland.

To its right-wing opponents, the government has sold Nicaragua’s precious sovereignty to China, and is trampling over the wishes of ordinary people. Given the opposition’s weakness in elections (it only won a handful of municipalities in recent local polls), it is campaigning on environmental and human rights issues in order to portray Daniel Ortega’s government as a dictatorship, winning the attention of international NGOs such as AI.

The irony is that, as the protests about the canal achieve more publicity, the project itself is increasingly in doubt. It’s a direct competitor to the recently widened Panama Canal, 600 kilometres to the east. But its greater length means that ships will have to lay-up overnight or else navigate in the dark. The transit costs will be a lot higher than the $450,000 a large ship might pay for a two-way crossing of Panama.

The government says that HKND, the firm due to build the canal, is still carrying out 26 follow-up studies recommended by ERM, hence the delay. But the press in China thinks the project has already been ditched in favour of a massive new container port in Panama. None of the investors required to fund the $50 billion projected cost have yet been named, and little work is evident on the ground. This increases the sense that the protestors’ focus is not so much on the canal itself as on the government that is promoting it.