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We’re Not Going Down Without a Fight’: Nicaraguans Draw Battle Lines Over $50 Billion Grand Transoceanic Canal


Vice News

By Reese Erlich

January 29, 2015 | 7:17 am

In a bustling Managua marketplace, hundreds of vendors hawk everything from towels to tomatoes. Music blares as they entice customers with promises of the lowest prices. And pretty much everyone has a noisy opinion too about the controversy rocking the country: whether to build Nicaragua’s Grand Transoceanic Canal.

If completed, the Canal will stretch from the Pacific to the Caribbean, speeding up transit time for world shipping, particularly oil and gas supertankers. But opponents say the ambitious project will generate a host of problems — not least of which could be the destruction of Central America’s largest fresh water lake.

Soyla Medina, a short, feisty woman who works at a food stall, strongly supports the Canal, which could bring in tens of billions in foreign investment and tens of thousands of jobs.

“It’s great for investment because we need the revenue,” she said. “It’s going to create lots of jobs and people will benefit from the taxes paid to the government.”

She shrugs off the environmentalists who fear the Canal will pollute Lake Nicaragua and destroy animal habitats.

“They are stupid and don’t know what they are talking about,” said a defiant Medina. The Panama Canal isn’t polluted, she added. “How many of these people have been to Panama? I’ve been to Panama, and it’s beautiful.”

But vendor Manuel Aguilar begs to differ. Sitting at a small stand selling house wares, he concedes that the Canal will provide economic benefits but criticizes the developer, Hong Kong Nicaraguan Development (HKND). HKND has the legal right to confiscate land to build the Canal and other projects.

“The farmers and are really worried about their land being taken away,” he said. “They worry that the compensation won’t be fair. They don’t want to leave the land.”

‘The Canal has united the Nicaraguan people for a common purpose, leaving behind political differences.’

According to Nicaraguan authorities, the Canal will be one of the world’s largest construction projects, cost an estimated $50 billion, and provide 50,000 building jobs — as well as tens of thousands additional posts in secondary infrastructure such as a free trade zone, ports, airport and tourist resorts.

Its impact will be felt around the world, benefiting international commerce by reducing a ship’s travel time from the Atlantic to the Pacific, compared to using the Panama Canal. US, Canadian and even some European goods will have an easier journey to the expanding markets of Asia, particularly China.

But at home, the divisions of the marketplace are writ large across the nation. The Canal has split Nicaraguans perhaps like no issue since the civil war that pitted the leftist Sandinista Front (FSLN) against the US-backed Contras (counter revolutionaries) in the 1980s.

This time the battle lines have brought together an unusual alliance on both sides. The Sandinistas, under the leadership of Nicaraguan President Daniel Ortega, have moved towards the political center. FSLN leaders who led the socialist revolution against the old Somoza dictatorship today ally with big business and the Catholic Church leadership. Construction, agribusiness and large tourism companies foresee big profits from the Canal.

The anti-Canal cause has united leftist critics of the government — including former FSLN leaders — with peasant farmers and small-scale tourist businesses worried about land confiscation, as well as the traditional sources of anti-Ortega vehemence: Contras, conservative political parties and the right-wing daily La Prensa.

The phrase “politics makes strange bedfellows” takes on a whole new meaning in Nicaragua these days.

“The Canal has united the Nicaraguan people for a common purpose leaving behind political differences,” Monica Baltodano, an environmental lawyer and leftist protest leader, told VICE News, adding that it had also energized young people who had never previously been politically engaged.

The anti-Canal lobby has formed itself into a vocal campaign group, the “National Council for the Defense of the Land, the Lake and Sovereignty.” It says the project will ruin the fragile environment and displace some 35,000 people from their land. The Canal would also, according to critics, turn Nicaraguan sovereignty over to a mysterious Chinese investment company. Some see a darker conspiracy in which the Chinese government controls the Canal and eventually Nicaragua itself.

In a controversial contract signed between HKND and the Nicaraguan government, Nicaragua will only receive $1 million a year in fees and take 10 percent ownership every 10 years, becoming the majority partner only after 51 years. Critics call the contract a sellout of national sovereignty.

On December 22 last year the government and Canal developer HKND opened an access road to mark the initial stage of construction. Thousands of Nicaraguans protested, some blocking the Pan American highway, Nicaragua’s main artery to other countries. Hundreds more demonstrated in 18 cities on January 17.

While the opposition is vocal, it faces an uphill battle. A December poll by M&R Consultants showed a majority of Nicaraguans in fact support the Canal. But not everywhere: an overwhelming 71 percent of those living far from the Canal route support it, but that drops to just 42 percent of those living directly along its path.

The Canal will stretch 172 miles (278 kilometers) from the Pacific Ocean to the Caribbean Sea. A senior Canal official showed VICE News the latest version of the route, which is still subject to possible modification and thus not yet public. Starting at the Pacific port of Brito, the Canal will run six miles (10km) along the rerouted Brito River. A series of locks will raise ships by 98 feet (30 meters) to Lake Nicaragua, the journey up preventing sea water from contaminating the freshwater lake, according to the official. Locks on the other end will lower the ships to continue on to the mouth of the Punta Gorda River on the Caribbean coast.

To accommodate the largest ships, Canal developers plan to dredge to a depth of between 85-98 feet (26-30m), a process that will certainly disrupt local fishing and tourism near Lake Nicaragua. Dozens of cities and towns rely on the lake for drinking water. Maintenance of the Canal channel will require regular dredging, according to critics.

“The Canal will destroy Lake Nicaragua, the most important lake in our country,” said Ernesto Cardinal, a former FSLN leader. At age 90 Cardinal is the nation’s best known poet and widely admired Catholic activist. “There won’t be any fish or water to drink.”

But Canal supporters argue that the lake is polluted anyway.

“We are already destroying the environment ourselves without the Chinese,” Benjamin Lanzas, a member of the Canal’s governing body and head of one of the country’s largest construction companies, told VICE News. “The lake already is suffering from a lot of sedimentation from rivers bringing everything into the lake.”

Lanzas said the HKND has plans to mitigate any environmental impact of the dredging. And he says the Canal will enforce rules against dumping waste or leaking diesel into the lake. He notes that ship pollution is kept under control in the US Great Lakes and elsewhere. “Why aren’t Panama and Suez Canals contaminated?” he asked rhetorically.

But the opposition simply doesn’t believe assurances by the Nicaraguan government and HKND. That became crystal clear during a visit to Ometepe Island in the middle of Lake Nicaragua.

‘The Canal will destroy Lake Nicaragua, the most important lake in our country. … There won’t be any fish or water to drink.’

The ferry chugged slowly out from the port at San Jorge, headed for the island, ground zero for the anti-Canal movement. Backpackers looking for a cheap vacation mingled with locals bringing home vegetables, and even a motorcycle tire. Ometepe is home to some 42,000 residents who lead quiet lives fishing, growing food crops and catering to low-impact tourism.

Waves lap gently against the shore where fishermen still go out in small, wooden row boats. The beach offers spectacular views of the lake and the two volcanoes that form the island.

Ometepe locals fear the Canal and related tourism projects will upend their lives. The island falls within a zone bordering the Canal that allows HKND to confiscate land and build tourist resorts. Locals are convinced that their land will be stolen, and they’ll be forced to leave their traditions behind.

One afternoon earlier this month, 60 mostly older peasant farmers gathered at an anti-Canal meeting. Seventy-eight-year-old Hipolito Gonzalez said his family has owned the same land for generations. Like everyone else at the meeting, he’s scared.

“The Chinese say we are going to be paid according to the official tax assessment value,” said Gonzalez. “But no one has consulted me about it.” He derisively calls the Chinese surveyors “short frogs” because they wear shorts and go into the water.

Under terms of the Canal law passed by the Nicaraguan National Assembly, the HKND can take land not only along the route but elsewhere, to develop the ports, airports and even tourist hotels. The developer is only required to reimburse land owners at the assessed tax value. Since everyone wants to pay less taxes, the assessed value is often well below market value. In case of an unresolved dispute, HKND can impose its price on the seller, according to the law.

Under pressure from large land owners, however, the HKND has recently said it will pay fair market value for all land. And those owners note that, in case of disagreement, they can appeal by presenting independent assessments. But Ometepe residents and peasant farmers remain bitter and distrustful.

Opponents mix legitimate concerns with wild and sometimes xenophobic conspiracy theories. For example, local protest leader Jairo Carillon claimed that no Nicaraguans will work on construction of the Canal, a potential concern given that in other large infrastructure projects, Chinese companies often hire their own nationals.

“Forget about jobs,” said Carillon. “The Chinese are going to bring their own workers.”

But Carillon claimed that even after the Canal is completed, all the jobs on the waterway, as well at ports, the airport, and free trade zone factories, will also go exclusively to Chinese workers. “It’s guaranteed,” he said. “They just want to take over.”

Canal supporters point out, however, that it is unlikely tens of thousands of Chinese workers would permanently emigrate to Nicaragua to work in low-wage jobs in a country with a worse standard of living than their homeland.

Construction company executive Lanzas concedes that some 25,000 Canal construction jobs will go to skilled Chinese and other foreign workers. But he estimates that up to another 30,000 jobs will go to Nicaraguans. He confirms that HKND officials have already met twice with Nicaraguan construction unions to ask for names and qualifications to hire future workers.

“It’s definitely a good sign,” Lanzas told VICE News. “Nicaraguans are already working on the project.”

Many Canal opponents also believe that the Chinese will establish military bases in Nicaragua. Juana Juarez, another Ometepe anti-Canal leader, said there are already plans for a base on Ometepe to protect the Canal. And there’s an even more sinister reason for the facility, she claimed.

“The Chinese know that Nicaraguans are not going peacefully. So they have to militarize the entire island because we’re not going down without a fight. ”

Canal supporters note that China has no military bases outside of China, and it was the Nicaraguan military and police who clashed with protesters, not the Chinese.

Antonio Granados, a businessman whose land lies along the Canal route, expects tough but fair bargaining over the price of his land. He discounts rumors about Chinese military bases or other intentions to dominate Nicaragua.

“The Chinese want to make money building the Canal,” he said. “And then they’ll go home.”

Nicaragua’s political and business leaders were caught by surprise by the breadth and anger of the anti-Canal movement. The government cracked down hard against the December protests, arresting and injuring dozens. The repression added a new dimension to the protests with peasant farmers warning they would take up arms, a threat that so far has remained rhetorical.

Canal supporters concede that their side has done a poor job communicating with ordinary people. “The biggest enemy of the Canal is the lack of information,” said Lanzas. He argues that as environmental and other reports are completed, people will change their minds.

Over the next few months HKND plans to release a full version of an environmental study by the respected British environmental firm ERM. At this point, however, Canal opponents won’t trust any study paid for by HKND and are demanding an independent environmental impact report, which could potentially delay construction for many months.

Meanwhile HKND plans to buy up land directly along the Canal route over the next six months. If HKND and large land owners reach agreement on fair market value, smaller farmers might feel compelled to do so as well. If a significant number of peasant farmers no longer feel threatened, a key constituency of the anti-canal movement would be weakened.

Towards the end of this year, HKND plans to begin construction on the support projects: the sea ports, airport, worker housing and Canal access roads. The Pacific port of Brito, for example, must be greatly enlarged to accommodate the earth-moving and dredging equipment needed to build the Canal itself. Canal construction -— including dredging Lake Nicaragua — is many months, if not years away, leaving many environmental issues unresolved.

The Canal is slated for completion by 2020, and supporters claim it will be finished on time and on budget. But as with other massive infrastructure projects around the world, delays and cost overruns are likely. Leftist critic Baltodano says Canal financing looks shaky and continuing demonstrations could discourage foreign investors.

She vows to keep fighting the project. “The benefits that were supposed to be there for Nicaragua aren’t there,” she said.

It seems both sides are digging in for what promises to be mega protests over a mega Canal.

Follow Reese Erlich on Twitter: @ReeseErlich

Reese Erlich is an award winning foreign correspondent who has covered Central America for 30 years. He is author of five books, the latest of which is “Inside Syria: the Backstory of Their Civil War and What the World Can Expect,” foreword by Noam Chomsky, from Prometheus Books, New York.