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HomeTopicsEconomy, trade & employmentNicaragua's Grand Canal: 2 --The environment vs the economy

Nicaragua’s Grand Canal: 2 –The environment vs the economy


2. The Environment vs the Economy

The proposed Inter-Oceanic canal has pitted environmentalists against the government and trade unions. LAB editor Russell White investigates, in the second of a series of articles analysing the impact of the Canal.

Writing in Revista Envio, Victor Campos Cubas, head of the Nicaraguan Climate Change Alliance, charged that the construction of the Canal ‘represents the greatest threat in history to the country’s environmental conditions and the greatest risk of rendering the Nicaraguan population unable to meet its basic water and food security needs’.

Other critics have waded in, accusing the government of gambling with Nicaragua’s patrimony, and describing the Canal project as an ‘Ecocatástrofe’. 

Noted Uruguayan writer Eduardo Galeano has accused the Ortega government of selling ‘Nicaragua to a Chinese businessman’ and of falling for a ‘dubious Chinese yarn’. 

Former Sandinista Ernesto Cardenal, has issued a stinging rebuke to the government accusing it of devising a law that runs counter to the constitution, of dividing the country in two as if it were the two Germanys or the two Koreas, and of issuing a carte blanche concession to Wang without imposing any obligations in return.

Meanwhile, for the government, Minister and Private Secretary for National Policies Paul Oquist stated bluntly, ‘We need a way out of poverty; the canal will provide this’. And the company in charge of the project, HKND has promised that construction of the canal will generate 50,000 jobs with some 200,000 jobs being generated once the canal comes into operation. The government anticipate that Nicaragua’s Gross Domestic Product (GDP) would double with the building of the canal.

Thus construction of the interoceanic canal through Nicaragua has pitted environmental organisations against the government and trade unions. Debates are raging about whether the canal will have a positive or negative environmental impact, and whether its construction will provide the government with a ‘magic bullet’ that will enable the second poorest nation in the Western Hemisphere to eradicate extreme poverty.

Canal as ‘Ecocatástrofe’

Ever since the Ortega government announced its decision to grant a 100 year concession (50 initial years with the opportunity to renew for a further 50) to Chinese billionaire Wang Jing and the Hong Kong Nicaragua Development (HKND) group to build and operate a 173 mile canal through Nicaragua, environmental groups have expressed concerns about the effect that the canal will have on the ecosystems of the huge area through which the canal will pass. 

The government and HKND chose the so-called route 4 running from the mouth of the Brito Rito on the Pacific Coast through Lake Cocibolca (Nicaragua) to the mouth of the Punta Gorda River on the Caribbean seaboard allegedly because it represented the best option in terms of minimising the canal’s environmental impact. 

However, organisations such as the Nicaraguan Academy of Science and the Humboldt Centre point to a raft of issues including the threat of soil erosion, the increased risk of seismic activity, habitat destruction and the threat of foreign organisms being introduced into the environment when ships crossing the lake dump ballast water.

A clear and present danger for Lake Cocibolca?

Lake Cocibolca (Nicaragua)Much of the discussion of the environmental impact of the canal has centred on Lake Cocibolca, the largest source of freshwater in Central America and a key part of the country’s patrimony.

Environmental groups are particularly concerned about the pollution likely to be brought about by the canal’s excavation as well as by the enormous post-Panamax ships (those that are too big to traverse the Panama Canal) that will be crossing the lake. 

The Nicaragua Climate Change Alliance estimates that building the canal will require the removal of a mind-boggling 832 million cubic metres of sediment from the bottom of the lake. The problem with this is that in dredging the lake and removing the sediment, it is inevitable that sediment will disperse throughout the water once it is disturbed. This will have serious effect on water quality and, critics argue, could potentially render the water undrinkable.

A decision antithetical to the law

The decision to build the canal through Lake Cocibolca appears to run counter to the General Water Law (Law 620) which states that the lake ‘should be considered a natural reservoir for drinking water, as this is of highest national interest and priority for national security’.

It also seems to run counter to past pronouncements made by President Ortega. In 2007 following his re-election, Ortega stated ‘We can’t risk Lake (Cocibolca) for all the gold in the world. There won’t be enough gold in the world to make us yield on this, because the Great Lake is Central America’s greatest water reserve, and we’re not going to put it at risk with a megaproject like an interoceanic canal’.

Environmentalists are concerned that the law granting the concession includes a section suggesting that current environmental laws should be amended. This conveys the impression of a government willing to ride roughshod over the environment. As Jean-Michel Maes wrote in Revista Envio, ‘the [canal] law gives the impression of being more concerned with economic development than the nation’s natural heritage’.

The realisation of a dream…

Of course, Ortega would not be the first president to change his mind. His administration believes that the canal represents an once-in-a-lifetime opportunity to change the dynamic of Nicaragua’s economic development, and to increase the country’s standing on the world stage, in decline since the end of the Cold War.

The idea of an inter-oceanic canal is not a new idea. It is, as a Borge & Asociados report noted, ‘a foundation narrative of Nicaraguan national identity’.

Maersk Line Triple-E container ship. Photo: WikimediaIt was floated by Hernán Cortes and was also proposed by Simón Bolívar as well as by Napoleon Bonaparte. American industrialist Cornelius Vanderbilt launched an initiative to build the canal in the middle of the nineteenth century, while national hero Augusto César Sandino also raised the possibility of building a canal. According to Jon Lee Andrson, Sandino saw the canal as a something that ‘could help to free Latin America’.

Now, the government argues, the dream of a canal is actually within reach. 

…and the key to prosperity?

While the last seven years or Sandinista Government have seen Nicaragua’s GDP grow, exports double, inequality levels decline, the amount of investment from foreign investors increase and single-digit inflation, the government believes that this is not enough to break the cycle of poverty.

The government estimates that for Nicaragua to eradicate extreme poverty, the economy needs to grow at 8 percent a year rather than the 4 percent it is currently growing. About half of Nicaragua’s population lives below the poverty line.

Unemployment and underemployment are rife with only 700,000 of Nicaragua’s population employed in a formal capacity according to the Nicaragua Solidarity Campaign. The Canal, it is argued, will generate hundreds of thousands of jobs and double the country’s GDP.

Support for the government’s position comes from other sources as well. The trade unions have taken the side of the government. The Central de Trabajadores por Cuenta Propia (CTCP -Self-employed Workers’ Union) has come out in favour of the project citing its potential for job and wealth creation. Other trade unions including the Jose Benito Escobar Sandinista Workers Central (CST-JBE) and the Sandinista Workers Central (CST) are in the process of certifying labourers for the canal.

Opinion polls suggest that the majority of the population are behind Ortega and the canal. The last poll undertaken by Borge & Asociados indicated that some 75.3 percent of Nicaraguans believe that Ortega is doing a good or very good job, with only 9.1 percent characterising his performance as bad or very bad. The canal is clearly crucial to this rating. As Borge & Asociados noted, ‘The announcement of the interoceanic canal has captured the dreams of the majority of the people’. 

An environmental boon?

The government and HKND argue that the Canal will benefit the environment. They contend that in shaving between 5000 and 7000 miles off the length of the journey from Asia to the Atlantic Ports, carbon emissions will be drastically reduced. The government and HKND argue that the canal’s ability to accommodate the largest ships, including the Triple-E ships of the Maersk line, will help to reduce the number of freight ships traversing the oceans. 

Camilo Lara of the Nicaragua Recycling Forum argues that the canal could indeed leave a very positive environmental legacy. He argues that the canal’s very viability is dependent on the government and HKND enacting a proactive environmental and conservation policy to ensure that the canal has sufficient water to operate effectively. 

Supporters argue that the doubling of GDP would, together with the government’s policy of redistribution, lesson the likelihood of poor rural families migrating into protected areas such as the Indio Maiz reserve. Again, this would have a positive environmental impact.

While no-one denies the validity of the concerns depressed by environmentalists, government supporters claim that the Ortega administration and HKND are listening. The interim report on the project’s environmental impact, produced by the London-based consultancy Environmental Resource Management (ERM), has led changes in some of HKND’s plans to mitigate the environmental impact of the canal’s construction. 

Among these changes, the Canal will no longer cross the Sistema de Humedales de San Miguelito, one of the country’s Ramsar sites (wetlands deemed to be of international significance); the moving of the port at Brito on the Atlantic Coast; the building of a bridge to preserve the mangroves that form part of the Rio Brito delta as well as the construction of a concrete wall to reduce the flow of salt water into the river; an undertaking to avoid the use of explosives in the dredging of Lake Cocibolca; and a commitment to avoid any further infractions into the Indio Maiz Biological Reserve. 

Whether the potential economic benefits of the canal will offset the possible serious environmental consequences is a moot point, and one that will doubtless continue to be debated over the course of the canal’s construction. 

One thing is sure though: this is a game of extremely high stakes.

With thanks to Helen Yuill of the Nicaragua Solidarity Campaign.

In his next article, Russell White will examine the protests generated by the canal plan.

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