A Very Bad Plan

The Nicaraguan government, in league with a Chinese company, wants to dredge an 800-foot-wide canal through one of the world’s richest, most biodiverse regions, connecting the Pacific and the Caribbean. What could possibly go wrong?

It’s a truism in trip planning and in life: You are courting disaster when you start getting brash.

For example, you’re asking for trouble if, when planning a four-day trip to Nicaragua, instead of being satisfied to travel by bus, you start getting ambitious. It’s a recipe for failure if you start thinking, hey, I could visit twice as many sites if I chartered a small plane and planned my itinerary down to the precise minute. And it is clearly inviting catastrophe if you then find a Cessna, offered for a price that should make any reasonable person suspicious, and even when the company asks you to pay up front with cash, zero alarm bells go off because you’re thinking, “Bam, I got this! What could possibly go wrong?”

This is how you find yourself—shall we do away with pretense?—how I found myself standing on a hardscrabble runway in a goat pasture outside of Managua, arguing fruitlessly with a stone-faced twenty-something over the suddenly skyrocketed cost of a charter flight. With me was John Myers, senior Latin American program manager for Audubon’s International Alliances Program, and Tess Herman, a documentary filmmaker from Connecticut, the three of us slowly realizing that our grandiose plans were collapsing around our ears.

John, Tess, and I had come to Nicaragua looking for answers about another grandiose plan: to link the country’s Caribbean and Pacific coasts with a 173-mile canal, capable of carrying the world’s largest container ships. It would be more than three times longer than Panama’s, and be wider and deeper, accommodating ships of more than twice the deadweight tonnage, even after the Panama Canal expansion now underway. And while the Panama Canal, completed in 1914, took 10 years to build, Nicaragua’s canal backers intend to knock this one out in five.

Proposals for a canal across Nicaragua have surfaced every half-century or so since the mid-1800s, but nothing ever came of them. When the United States got serious about building a Central American canal in the early 20th century, for instance, Nicaragua was the preferred route. At least until lobbyists for the French Panama Canal Company successfully convinced Congress to buy out its concession—in part by spooking the politicians, sending each a Nicaraguan stamp featuring an exploding volcano.

The current plan was approved in June 2013 by the country’s National Assembly, shepherded through by President Daniel Ortega. Ortega is the 69-year-old socialist who led Nicaragua in the 1980s after his Sandinista National Liberation Front overthrew the dictatorial (and U.S.-backed) Somoza government in 1979. He was reelected in 2006 and 2011, and has aligned himself with the “Bolivarian Alliance” of populist Latin American nations that was established by former Venezuelan president Hugo Chávez. A canal has been on Ortega’s radar since his return to power. The previous administration laid the groundwork in 2006, circulating a proposal to lure investors. In 2012 the Ortega government announced that investors from China, Russia, Venezuela, and elsewhere had expressed interest.

For the Orteguistas, the canal represents an unrivaled opportunity for economic growth in Nicaragua—the second-poorest nation in the Western Hemisphere after Haiti—which may be why they seem so eager to start construction. The legislature authorized the passageway following just three days of debate and no public comment. It granted the concession to China’s Hong Kong Nicaragua Canal Development Investment Company (HKND), led by a little-known Chinese telecom exec named Wang Jing. Writing for The New Yorker, veteran Latin American reporter Jon Lee Anderson cites a source with close government ties saying that Wang first made contact in 2012 with Ortega’s son, who had visited China as a private citizen. When Nicaragua approved HKND’s bid a year later, there were no competitors. Nothing on Wang’s resume suggests experience overseeing large development projects; HKND nonetheless received a 50-year contract, renewable for another 50, to develop, operate, and build infrastructure, including roads and ports, for what’s being billed as the largest civil engineering project the world has ever seen.

Builders were planning to break ground near Brito, a speck of a Pacific coastal community, which is where John, Tess, and I headed in a hired Toyota Corolla after getting the gringo bait-and-switch on our hastily hired Cessna. From Brito, the canal would ascend through a series of locks—exchanging saltwater for fresh—to the edge of Lake Nicaragua, crossing Central America’s largest freshwater lake before wending through the country’s eastern half to the Caribbean. Tess had visited tiny Brito months before, filming scenes for her documentary-in-progress. Now she was shooting B-roll and playing guide. John was in Nicaragua for recon purposes, scouting the canal route and conferring with colleagues in the NGO community, many of whom have expressed concerns about how the project is being fast-tracked without sufficient environmental assessments—a worry that’s reverberating through the local scientific community as well.

We pulled onto the beach where the Río Brito meets the sea. It was a crystal clear day in mid-August, and there was no sign yet of the port construction slated for December. Nicaragua’s wet season was well underway, but with the country in the grips of a brutal drought, the river was a thin, wet cord snaking its way across the sand—easily wadeable at its deepest point. Boys fished with lines tied to plastic soda bottles. Their moms looked out from inside a row of brick-and-scrap-wood shanties.

“Dude, I’m stoked we made it here,” said Tess, who, at 24, is impressively capable and driven and talks in a way that makes me, at 34, feel old. On her last visit, soldiers operating a beachside checkpoint had turned away her crew (the checkpoint was unmanned when we arrived). She kicked off her sandals and grabbed her camera. “This place is rad,” she said, and wandered off to film the young fishermen.

The beach at Boca del Brito is indeed rad: Clusters of mangroves flank it, and the skyline to the south is a receding tableau of wooded coastal mountains. It was easy to see why HKND plans to build a 1,400-room resort nearby. It was easy, too, to see why one nervous biologist later told me that the area represents “probably the best coastal forest we have on the Pacific,” with pockets of old growth scattered within a half-mile of the river’s mouth, which is crowded with Brown Pelicans, Yellow Warblers, and a mess of herons, parrots, and parakeets.

It was difficult, however, to envision that trickle becoming a watery artery 800 feet wide, surrounded by a towering port complex.

A mile up the road, fishermen were stretching nets across the slim brown river, and we asked them whether they could visualize the area’s transformation. “There are some people here who say perhaps,” said Eduardo José Cortez Alvarado, a pastor at a local Protestant church. “But the impact is going to be massive.”

Cortez said that he and his neighbors got conflicting information about the canal. The state-run newspapers promised jobs and community consultation, but nobody had consulted the Briteños, who had also heard stories of people being told they’d soon be kicked off their land. They could use the jobs, sure, but Cortez’s people were also concerned about losing the trees, beaches, rivers, and wildlife that were part of their lives and livelihoods.

“I’m not getting my hopes up about how many jobs might come,” Cortez said, “but rather I’m concerned about the impact this is going to have because of how many animals will disappear.”

Looking out across the Río Brito, the pastor turned philosophical. Comandante Ortega loved the poor, he said, but perhaps the president had lost his way. Cortez asked if we’d heard of King Nebuchadnezzar from the Book of Daniel. We shook our heads. Nebuchadnezzar was also a big fan of infrastructure projects. He built up Babylon with canals, temples, bridges, the works. One day he climbed to his palace roof and boasted aloud, challenging the Lord to look upon his achievements. “And so what happened,” said Cortez, “was that God came and brought him down, took his glory away and sent him—says the word of God—to eat with the livestock.”

In other words, you are courting disaster when you start getting brash.

Even Nebuchadnezzar had his domestic critics, I imagine. So, too, does Ortega. In July, shortly before HKND announced the canal’s proposed route, a group of scientists from Nicaragua’s National Academy of Sciences (ACN) published a collection of papers (freely available online, in Spanish) raising concerns about what struck them as conspicuously unanswered questions about the project’s scope, transparency, and potential ecological fallout. I spoke and swapped emails with a handful of them—and a dozen other Nicaraguan biologists and activists besides—and the litany of distinct concerns they raise defies easy summary.

Some highlights: habitat fragmentation as a result of bisecting the country; the threat of faulty locks leading to saltwater infiltration in Lake Nicaragua; the effects on water quality, oxidation levels, and temperature of dredging a shipping corridor across the shallow lake; the possibility of oil spills, industrial pollution, and invasive species; doubts about whether lake levels can be sufficiently maintained without damming the biologically rich San Juan River, the lake’s primary outlet; the long odds of volcanic or earthquake activity inhibiting construction or traffic; risks to coral reefs near either ocean outlet; questions over where to store millions of tons of dredged-up muck; the possibility that displaced people will simply press deeper into tropical forest reserves already under pressure from illicit settlement; the precise costs of the project (estimated at between $40 billion and $50 billion); a loss of sovereignty to a Chinese company; the identities of the canal’s investors, which HKND has so far declined to disclose; and the rumors (denied by HKND) that one major investor is the Chinese government itself, for which the canal has geostrategic importance regardless of its commercial value, and which has much less to lose than a private investor from being associated with an environmental boondoggle (plus a less-than-stellar track record).

Woven through all of this, however, is one common thread: frustration over a lack of data to properly evaluate these risks.

“The fact that they first approved the concession,” said Jorge Huete-Pérez,
vice president of the ACN and director of the University of Central America’s Molecular Biology Center, “instead of first having all the studies, and only then—knowing the data and knowing that it is feasible—approving the project, makes us think that they are going about it from the wrong direction.”

“There is no information about the canal,” agreed Maria Dolores Monge, an agronomist and adviser to the Nicaraguan Foundation for Sustainable Development, often known as Fundenic. “The government and investors don’t want to give to citizens the precise information, and they don’t want to give us the results of the studies that they’re supposedly doing.”

Such studies are essential, argue Monge and others, not just to outline a canal’s environmental consequences but even to gather the basic data necessary to build one, since research on Nicaraguan geomorphology is skimpy. “They don’t know where the basal rock is,” said Pedro Jose Alvarez, a native Nicaraguan, founding ACN member, and chair of Rice University’s Department of Civil and Environmental Engineering. “They don’t know where all the seismic faults are. So there are all these geotechnical and hydrologic potential uncertainties for which they don’t have any data.”

All the necessary studies are underway and can’t be rushed, said David Blaha, a partner at Environmental Resource Management (ERM), a London-based sustainability consultancy. HKND (which did not respond to interview requests for this story) contracted ERM to perform its environmental- and social-impact assessment. Blaha told me in September that research teams on the ground had only just wrapped up their baseline studies (and indeed, I spoke in Nicaragua with members of such teams, who were bound by confidentiality clauses).

“There are lots of issues for a project of this size that’s cutting all the way across the country,” Blaha said. “We’re evaluating those, and I appreciate people’s concerns and frustrations.”

Results from the impact studies, said Blaha, would likely be public sometime in December—the same month that HKND and the Nicaraguan government said they’d begin port construction at Brito and on the Caribbean coast. (That was still the plan when Audubon went to press.) Is it normal, I asked Blaha, for clients to trumpet their resolve to forge ahead on a project, even while baseline data are still being researched? To set a start date that might well precede the public release of the impact studies? Blaha allowed a beat before answering. “It’s an aggressive schedule,” was all he said, and the silence that followed felt conspicuous.

Part of the study process, he went on, involved a series of “scoping meetings” held in July in communities along the route, a chance for the public to learn more about the project and approach HKND and ERM reps with concerns. But Huete speaks for many of his colleagues when he calls such meetings “a simulacrum of transparency.”

Another ACN member, Jean-Michel Maes, attended a scoping meeting in Managua. “The meeting was only and exclusively a presentation of ERM,” recalled Maes, an entomologist, ecologist, and president of Nicaragua’s bird-focused Alliance for Wild Areas. “There were very few questions about really technical aspects, because nobody knows. All people know is the discourse of the guy who’s making the presentation, and he’s making it very, very blurry.”

Critics also protest that Nicaragua isn’t getting much out of the deal. In exchange for wide-ranging rights to build and operate the canal and accompanying infrastructure—and no legal liability for accidents or environmental damage—HKND will pay the Nicaraguan government up to $10 million a year for 10 years, starting upon the canal’s completion (an amount so low, it prompted one opposition lawmaker to declare, “We can’t even call you ‘sellers of the fatherland,’ because you’re just making a gift out of it!”). The generous terms have prompted speculation that the president’s family plans to profit on land speculation along the canal route, or that the project is simply an attempt to keep Ortega in power. Under the terms of the deal, 10 percent ownership reverts to Nicaragua every 10 years, so it would be 50 years before the country receives even half the canal’s profits.

Assuming, that is, the canal would be profitable. It’s an open question whether there’s enough global shipping traffic to even justify its construction. HKND spokespeople point to a projected rise in commercial ocean traffic due to increased global trade, but few American ports can actually dock the enormous ships that Nicaragua’s canal would be designed to accommodate. And while a Nicaraguan canal would theoretically compete with the Panama Canal, many industry experts are skeptical that the huge costs of building it would allow Nicaragua’s passageway to charge transit fees competitive with Panama’s. Alvarez and others have pointed out that, for better or for worse, the loss of Arctic sea ice may even render both canals obsolete in the coming decades.

“It may be that this is about China looking to ensure its energy security in the future, finding a way to construct a passage for hydrocarbons that come from the Gulf of Mexico or from Venezuela or the Alberta tar sands,” said Rice University’s Alvarez. “Or they may just be planting a flag on the ground to exert a reaction by current players and negotiate better deals with, for example, the Panama Canal.” Such flag-planting wouldn’t necessarily be out of character. In recent years Chinese businesses have invested heavily in commodities and infrastructure in places like Brazil and sub-Saharan Africa—moves often interpreted as bids for geopolitical influence as much as sound financial enterprises.

For every Nicaraguan expert who spoke with me about his or her reservations, another declined an interview, sometimes citing the project’s controversial nature in a country not known for tolerating political dissent. One source, concerned he had spoken too frankly, asked me to run any quotes by him, “so that I don’t get in trouble and that I don’t end up in jail.” Such concerns help explain why there is little large-scale, organized opposition in Nicaragua. Some doubt the project’s viability and see little cause for protest. But many scientists, environmental leaders, and others are simply withholding full-blown condemnation for lack of information. Nicaragua could use some economic growth, after all, and several sources said they might even be willing to support the canal, if only they didn’t feel like they were getting the runaround as to its details. As Fundenic’s Monge put it, “It’s not easy to say I am against something I don’t know.”

“When you pay attention to the spokespeople for the canal, unfortunately, they don’t give you enough information,” says Alvarez. “They remind me of this lady I knew when I was a child who used to sell shirts. You would try on the shirt, and if it was too small, she would say, ‘Oh, don’t worry about it. It will expand and fit you just perfect.’ If it was too large, she’d say, ‘Don’t worry about it. It’s going to shrink and fit just perfect.’ ”