Friday, October 2, 2015

Nicaragua canal faces new setbacks and old problems (Oct. 2, 2015)

It seems increasingly likely that Nicaragua's extremely polemic and mysterious plan to build a $50 billion trans-oceanic mega-canal project will never happen. Government officials announced that construction (which technically began last year) will be postponed at least till March in light of environmental and human concerns. But analysts are also questioning the financial feasibility of the mega project after its backer lost a fortune in the stock market.

Paul Oquist, executive director of the Nicaragua Grand Canal Commission, made reference to the results of an independent environmental impact study that noted several issues to be further investigated before the project proceeds, including seismic risks to the locks and whether there is sufficient water to fill the 175-mile canal, reports the Los Angeles Times.

The study by the British Environmental Resources Management Ltd consulting firm said the project is "fraught with risks and uncertainties," and could cause more harm than good unless the government and its Chinese builder fund a host of mitigation measures, according to Reuters. It urged Nicaragua's government to verify project builder and operator complied with international standards before construction begins. The report also suggests that the project's builders hold further consultations with indigenous communities along the proposed route that would be displaced and relocated.

The 14 tome report, commissioned by the Chinese firm HKND which holds the concession to build and operated the canal which could accommodate ships too large for the Panama Canal, was released in May, but was only made public in the form of a 100 page summary last week.

Environmental groups have voiced serious concerns regarding the canal, which cuts through environmentally sensitive areas as well as indigenous groups' lands. And activists are concerned about the people who will be displaced along the projected canal route. The megaproject could actually benefit certain areas as it would incorporate mitigation projects, according to a piece from EFE earlier this year when the report was originally released. Reuters notes that the report says the project could have a beneficial impact on the country if international standards are followed.

Earlier this year the local NGO, Network for Democracy and Local Development presented an exploratory, participatory and prospective study conducted by an interdisciplinary team on the socioeconomic effects the interoceanic canal and subprojects conceded in the canal law will have on the municipalities to be affected by these Chinese mega-investments.

And wildlife biologists are concerned about the projects potential impact on jaguars and other Central American large mammals, whose pathways will be split by the canal, reports VICE.

Nicaraguan officials hope the project will double the country's GDP. The project foresees a massive free-trade zone where some 5,000 businesses would have operations in manufacturing, logistics and shipping, employing 113,000 people. All of this activity will double Nicaragua's economy, according to government proponents. 

Though ground was technically broken on the project in December, and minor works are being carried out, real construction has not begun and skeptics doubt whether the project will ever actually get off the ground. According to the new schedule tenders for selection of contractor companies for dredging, excavation, construction of two new locks and ports, which will be build under the project will start next year. The construction of Nicaragua Canal will be completed in five years, according to Maritime News.

Wang Jing, the Chinese telecoms tycoon behind the project apparently had 85 percent of his fortune wiped out by China's stock market crisis, reports The Guardian today. Analysts quoted in the piece say his dismal reversal in fortunes (Bloomberg called him the world's worst performing billionaire for this year) could affect the canal's construction.

Earlier this year the Miami Herald ran a four-part series on the Nicaragua Grand Canal project. Though millions of dollars of preliminary work has already begun, the 170 mile megaproject, funded by a Chinese corporation, remains cloaked in secrecy. The series has detailed graphics of the project and speaks to government authorities involved in the canal, who say the canal and its affiliated enterprises, once in full operation, would employ 200,000 people in direct and indirect jobs.

The ERM report notes that the project has the support of a majority of Nicaraguans, according to polls, but is opposed by communities that would be displaced by the canal’s construction, according to the LATimes. Protests over the past year have attracted thousands of demonstrators.

News Briefs

  • The heat is on speaker of Brazil's lower house of Congress Eduardo Cunha after Swiss authorities sent Brazilian officials data on secret bank accounts the PMDB politician and his family members held in that country. Folha de S. Paulo reports that Cunha became the target of an investigation by Swiss prosecutors in April of this year, on suspicion of corruption and money laundering. The accusations are highly relevant in Brazil's charged political atmosphere notes Reuters: Cunha is a key figure in the ongoing political crisis, as he can decided to open impeachment proceedings against President Dilma Rousseff. Defendants in the massive Petrobras corruption scandal have said that Cunha received a $5 million bribe in connection to two contracts for the state-run oil company.
  • Mexican officials denied that the extradition of 13 men to the United States yesterday, the largest number in one day under the current administration, have anything to do with the July prison break of drug kingpin Joaquín "El Chapo" Guzmán. (See yesterday's briefs.) Jose Alberto Rodriguez, head of the international section of Mexico's Attorney General's Office told theAssociated Press that the extraditions had been in the works independently of Guzman's escape, and that U.S. and Mexican authorities had earlier reached an agreement to speed-up the process. But experts seem to disagree with the official statements. They attribute the about face in extradition policy -- the Peña Nieto administration had been loathe to send inmates to the United States -- as a sign of Mexico's weak rule of law and a reaction to the embarrassing jail break earlier this year. "It's clearly a recognition on the part of the Mexican government that they can't depend on their prison system after Chapo, they don't want a future embarrassment," Duncan Wood, director of the Mexico Institute at the Wilson Center told the AP. "They're being forced to accept that it's better for them if their criminals are in the U.S." And El Daily Post's security expert Alejandro Hope told InSight Crime that one of the principal objectives of the recent extraditions was to "mend the rift with the US that was born out of El Chapo's escape." The Los Angeles Times has chilling profiles on the most notorious of the extradited prisoners -- Edgar “La Barbie” Valdez Villarreal and Jorge Eduardo “El Coss” Costilla Sanchez, both with reputations as cold-blooded killers as drug cartel sicarios (hitmen). And a new report from Mexico's National Commission on Human Rights emphasizes that deplorable conditions in the country's prisons present a significant obstacle to security improvements, reports InSight Crime. The piece notes that Guzmán's escape might have been the most publicized, but hundreds of inmates have broken out of jail in recent years and mass killings inside facilities are also regular occurrences.
  • The results of Mexico's oil auction on Wednesday were mixed. Three out of the five contracts for production blocks in the Mexican Gulf were successfully awarded. Government officials are hailing this as a win, after an auction earlier this year largely failed (only two blocs out of 14 were awarded). But El Daily Post's Dwight Dyer notes that the investments these contracts will bring are far less than what the government originally expected and that the process of making the auctions more attractive to bidders opens up the possibility of unfair advantages for politically connected companies.
  • Remittances from Mexicans living in the U.S. to relatives back home are six percent in the first eight months of this year, totaling $16.6 billion so far reports EFE.
  • Silla Vacía has an interesting analysis of the Colombian Defense Ministry's announcement that it will continue to use the contested herbicide glyphosate in manual eradication of coca fields. (See yesterday's post.) The approach goes against the new community oriented coca substitution strategy announced by President Santos last week, and shows a rift inside the government regarding how to combat cocaine production, explains the piece. The ongoing use of glyphosate surprised authorities in the National Drug Commission who have ultimate control over the policy and represent a throwback to previously discarded strategies, according to the piece.
  • Ecuador reversed its drug strategy yesterday. The National Assembly voted to modify the criminal code and toughen penalties for small-time dealers, reports El Comercio. This goes back on a reform from last year that differentiates between possession of small amounts of narcotics and larger amounts with intent to sell, while the previous legislation gave the same penalty regardless of amount. The reformed law had permitted the release of over 2,000 prison inmates, condemned for having small quantities of illicit drugs. (See August 18th's post.) Yesterday's reversal comes after President Rafael Correa said micotraffickers were "poisoning" the population last month. (See September 17th's briefs.)
  • In an interview with the Associated Press former Colombian President Alvaro Uribe, an avowed opponent of the peace process with the FARC, criticized the international communities warm welcome of last week's breakthrough in peace talks in Havana. (See Sept. 24th's post.) According to Uribe, many of the peace gestures of the current Santos administration are unnecessary. He plans to emphasize the deal's risks in the run-up to an eventual referendum on the topic.
  • Dire though the security situation is in El Salvador, citizens still aren't willing to pony up the funds to new security initiatives, reports InSight Crime. Proposals to finance a recently-launched security initiative anticipated to cost $2 billion over the next five years -- including a cell-phone tax -- have met with significant controversy. "Overall, this back-and-forth over how to fund "Secure El Salvador" suggests that the country's elites and powerbrokers do not yet feel enough pressure to compromise on a solution," according to InSight Crime. 

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