Nicaragua canal, a Chinese tycoon and an unanswered US$50b question

As Ortega and Chinese tycoon hail the 'biggest construction project in history', who will pay for ambitous inter-oceanic waterway is unclear

PUBLISHED : Friday, 11 July, 2014, 12:04am
UPDATED : Friday, 11 July, 2014, 12:04am


The Chinese tycoon behind a plan to build a mammoth inter-oceanic waterway to compete with the Panama Canal flew into Nicaragua this week and, in several appearances, including one with President Daniel Ortega, affirmed that "the biggest construction project in the history of mankind" will go ahead.

In a lengthy appearance on state television, Ortega sat next to Wang Jing, the telecoms magnate who has been pushing the plan, and pledged that the proposed canal "will permit the country to eradicate poverty and misery".

The two promised that environmental damage during construction of the canal - at 275km long, more than three times the length of the one in Panama - would be minimal. Construction would begin late this year and be finished within five years, they said. As many as 5,100 ships a year would use it to pass between the Atlantic and Pacific oceans.

It would make sense to have a canal that would take these kinds of vessels

Wang, 41, arrived in Nicaragua on a private jet over the weekend, and his team has been offering details about the project in a series of appearances that have been live-streamed on the internet from Nicaraguan state television. The entrepreneur told university students that the project will bring "radical change" to Nicaragua, the western hemisphere's second poorest nation, and spread wealth "to the whole country".

What went completely unanswered were two basic questions: who is going to pay for a canal with an estimated cost of US$50 billion? And is China's hidden hand at play?

Ortega, in his appearance on Tuesday night, cast the project as unstoppable and historically inevitable. He held up a fraying blue-bound book that he said was a US feasibility study for a canal in Nicaragua signed by then-President Grover Cleveland and presented to the US House of Representatives in the 1880s.

"This is a document that says a lot about the necessity and importance of a canal for Nicaragua," Ortega said, opening its pages and pulling out a folded map.

In a presentation a day earlier, the chief engineer for the Hong Kong-based company that has the 50-year concession to build and operate the canal said the trans-isthmus waterway could handle 5 per cent of world maritime trade.

Dong Yunsong said the canal would traverse Lake Nicaragua, a huge inland sea, and be roughly 225 to 525 metres wide and at least 26 metres deep, able to accept vessels 50 per cent bigger than the largest that the 100-year-old Panama Canal will handle once an expansion project is finished in early 2016.

The plans have caught the attention of major world shipping lines, some of whose ships won't be able to transit even an expanded Panama Canal because they are too large. "Our posture has always been that infrastructure is needed to develop trade," said Ariel Frias Ducoudray, marketing and communications manager in Panama for Maersk Line, part of a Danish conglomerate that includes what is widely considered the world's biggest shipping company.

Pointing out that Maersk isn't "endorsing the Nicaraguan canal itself", Frias noted that the company owns six of the world's largest ships, known as Triple-E vessels. The ships are almost as long as four soccer fields - 397 metres to be precise - and can carry up to 18,000 20-foot shipping containers, so large that not a single port in the Americas can handle them; they sail only on routes between Europe and Asia.

Maersk would have 20 of the ships by the end of next year, Frias said. "It would make sense to have a canal that would take these kinds of vessels, and that cannot go through the expanded Panama Canal," he added.

Whether Wang is the man to carry out such a task is an open question. A tycoon whose 19-year-old company, Xinwei Telecom, has operations in Cambodia, Ukraine, Russia, Zimbabwe, Cameroon and two dozen other countries, Wang has been coy about his background and wealth but not about his high-level connections to China's ruling Communist Party.

Several Nicaraguan businessmen invited to China late last year to meet Wang and tour his operations came away with the impression that China's government was behind the canal project.

Political opponents of Ortega, a former Marxist guerilla who has reinvented himself as pro-business, claim the canal project is a cuento chino, literally a "Chinese story" but an idiom that means a deception, designed to build hopes in the country.

Wang, dressed in a stylish suit and light blue tie, told students at Managua's engineering university on Monday evening that he has received sharp criticism over his project plans.

"I never pay attention to praise, but I welcome criticism," he said, adding that his team had hired leading global consultants to address environmental concerns.

He urged the university students to study hard. "This project will be the biggest construction project in the history of mankind. We need a lot of talent," Wang said.