NOT since the civil
war of the 1980s have so many helicopters been clattering over remote parts of
Nicaragua. But now the guys squinting down through the tree canopy are in
suits: lawyers and business consultants from the United States, Australian
engineers, British environmental auditors, even Chinese executives. Their per diems are being paid by Wang Jing, a Chinese businessman whose
$40 billion quest is to build a canal from Nicaragua’s Atlantic coast to its
Pacific one.
The dream of such a
canal, three times as long as the one that cuts through Panama, is centuries
old, and has made fools of all who ever believed in it. But Mr Wang has already
pulled off one remarkable feat: he has persuaded the former revolutionaries in
the Sandinista government to put Nicaragua’s sovereignty in hock to make the
dream come true.
To do so, he has
deployed little more than his personal chequebook and a bit of old-fashioned
swagger in the style of Cornelius Vanderbilt, the tycoon who blazed a trail by
shipping migrants from the eastern United States to its west coast via
Nicaragua during the Gold Rush years of the 1840s and 1850s. “He’s a person who
radiates confidence,” says Manuel Coronel Kautz, president of Nicaragua’s canal
authority. “His company headquarters alone would cover half of Managua.” The
chutzpah has played well with a government eager for someone new to believe in
now that its former benefactor, Venezuela’s Hugo Chávez, has died. “This lad is
a revolutionary,” Mr Coronel purrs.
Since June, when the
Sandinista-stuffed National Assembly rubber-stamped a law granting a 50-year
concession, renewable up to 100 years, to Mr Wang’s HKND Group, many have
wondered whether the 40-year-old telecoms boss is a crank. In August the
Associated Press reported that in many countries, including Nicaragua, where he
has claimed to be doing business, his companies are barely noticeable. Although
both Mr Wang and President Daniel Ortega insist that the project will go ahead,
people who have worked with HKND say it has more of an option to build than an
obligation. In effect, the cost of the option is the tens of millions of
dollars that Mr Wang is expected to pay from his own pocket to find out which
route is most physically and financially feasible.
Hence ERM, a British
consultancy, is looking at the environmental and social impact of digging a
deep channel through Lake Nicaragua, one of the largest in Latin America, and
carving through ancestral indigenous lands. Australian engineers are pondering
how to remove millions of truckloads of dirt in a country with no large
excavators, let alone nearby roads or railways. McKinsey, a business
consultancy, is said to be working out how the project could make enough money
to entice sovereign-wealth funds to bankroll it.
The economic case is
not easy to make. And if the engineering challenges are too severe, even some
supporters of the project say it may be impossible to raise the billions of
dollars necessary to go any further. HKND argues that large volumes of globally
traded goods are being carried on ships already too big for the Panama Canal,
even after its current expansion. Nicaragua’s canal, with twice the draught of
Panama’s, would aim to accommodate such giants. But world trade is sluggish;
and meanwhile, new routes may develop through the Arctic.
The project may also
rest on shaky legal ground. Gabriel Álvarez, a law professor at Nicaragua’s
National Autonomous University, says there have been 32 charges of
unconstitutionality—a number he reckons unprecedented in Nicaragua. He points
out that the law gives the company unfettered and tax-free rights over vast
tracts of land, which would violate the country’s sovereignty. It also requires
the supposedly autonomous Central Bank to waive its right to sovereign
immunity, which has alarmed economists.
At the same time, the
government pledges to expropriate all land along the chosen route at
potentially below-market rates, which has outraged indigenous groups and
businessmen. In return, the Nicaraguan state gets no more than $10m a year,
plus a stake in the company that rises about ten percentage points every ten
years. “It’s like there’s an unwritten slogan: ‘The canal at any cost’,” says
Manuel Ortega Hegg, vice-president of Nicaragua’s Academy of Science.
Mr Coronel rejects
such arguments. He believes that the company will work in the interests of
Nicaragua, overseen by a canal commission that will safeguard sovereignty. He
says the economic benefits of investment and jobs will easily outweigh the
costs (though he acknowledges that much of the construction may be carried out
by Chinese technicians). Mr Wang, he adds, was given the concession because
HKND was prepared to raise the money itself. Mr Coronel is coy about where the
cash would come from, but hints that he hopes for official Chinese investment.
“No American company would do this if their government wasn’t supportive,” he
says. “It must be the same with the Chinese.”
Among those who oppose
the concession are many who, under different circumstances, would see it as a
lifesaver for impoverished Nicaragua. Like many in Central America, they
believe the first country to find a new way across the isthmus would reap enormous
gains. The trouble, they say, is that Mr Ortega’s Sandinistas control all
organs of government, including the Supreme Court, which means that legal and
environmental challenges are unlikely to get a fair hearing. There was almost
no public debate before the law was approved.
As a result, Mr Wang’s
contract may not be safe if the government changes. That does not worry Mr
Coronel. The white-haired son of one of Nicaragua’s most famous poets, he has
long dreamed of the canal as a way of raising Nicaraguan living standards—an
unfulfilled pledge of the Sandinista revolution. His only concern, he says, is
that, at 80, he may not live long enough to see the dream fulfilled. But by
then, in Mr Ortega’s words, Nicaragua will have reached the “promised land”.
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