New Nicaragua Canal Draws Critics Over Funding, Lack of Transparency - Global Trade Magazine
  June 12th, 2015 | Written by

New Nicaragua Canal Draws Critics Over Funding, Lack of Transparency

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  • Nicaragua Canal project draws concerns and questions over source of funding and transparency
  • Chinese government repeatedly dismisses reports that it is bankrolling the Nicaragua Canal project.
  • Several major demonstrations opposing construction of the canal have paralyzed the Nicaraguan capital of Managua

A highly-anticipated feasibility study of the proposed Nicaragua Canal project has been completed. The results are intended to provide the Nicaraguan government and the project developer with guidance on how to proceed with the $50 billion project.

“In summary, Environmental Resources Management (ERM) says that the project offers potential benefits for the environment and the people of Nicaragua,” says Telemaco Talavera, a spokesman for the Nicaraguan government Canal Commission.

Construction on the 172-mile waterway—which the Nicaraguan government says will be operational by 2020—began last December and parallels the current widening of the Panama Canal.

But the massive project—one of the world’s most ambitious engineering infrastructure schemes—isn’t without its critics, who voice concerns over the source of its funding and a “lack of transparency.”

The Chinese government has repeatedly dismissed reports that it is bankrolling the project. “This project is the action of the relevant company’s own initiative. The Chinese government has not been involved,” says a spokesman for the Foreign Ministry in Beijing.

The canal’s developer, Hong Kong-based infrastructure engineer group HKND, had previously turned to potential backers in the European Union in a bid to not only find financial support but also much-needed political backing.

Panama Canal Authority CEO Jorge L. Quijano has spoken out over what he says is the ethicality of constructing a canal through Nicaragua “without first seeking permission through a referendum in the same way that Panama did in 2006.”

 

ETHICALITY IN PANAMA CANAL EXPANSION AND NICARAGUA CANAL PROJECT

The difference between both canals comes down to investment. “Panama is investing its own capital,” says Quijano. “As for Nicaragua” he continues, “somebody else is going to do it for them. There is a very basic reason why we went through the process and maybe why Nicaragua is not doing it.”

“One reason is that we have to finance this project, and financing would have to come from certain levels of sacrificing from the people. Every country has its government which is sovereign and can do whatever they feel needs to be done for a particular project,” says Quijano.

Several major demonstrations opposing construction of the canal have paralyzed the Nicaraguan capital of Managua. Since construction began, protesters charge that the work on the project will force them to leave their villages, without proper compensation.

During one of the protests, Opposition Member of Parliament Eliseo Nunez told European media that, “If we let them just move in and displace Nicaraguans who live in the zone where the canal will supposedly be built, no one will have legal protection from then on.”

In a recent statement, the U.S. government expresses its concerns as to the lack of information and transparency surrounding the project  stating that “all relevant project information should be revealed to the public.”

The embassy in Managua “is worried by the lack of information and transparency that has existed, and continues to exist, over many of the important aspects of this project”.


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