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LatinNews Daily Report - 14 June 2013

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Protests over Nicaragua’s Canal

Development: On 13 June representatives from the political opposition, social movements and NGOs demonstrated outside Nicaragua’s national assembly against the bill granting the Hong-Kong head-quartered HKND Group a 50-year concession to build and operate an inter-oceanic canal (‘Gran Canal’).

Significance: The demonstrations came after the bill (as expected) was ratified yesterday by the ruling Frente Sandinista Liberacion Nacional (FSLN, Sandinistas)-controlled 92-member national assembly. The Gran Canal is Nicaragua’s biggest ever development project, with an estimated cost of US$40bn spanning an area of 40,000km2, just under a third of total territory. Organisations like the Mesa Nicaragüense ante el Cambio Climático, which groups some 20 environmentalist lobbies cite the project’s lack of environmental feasibility studies as a major cause for concern; while others such as FSLN Deputy Brooklyn Rivera complain that those communities likely to be affected have not yet been consulted – which could be seen as a violation of the right to prior consultation as stipulated under International Labor Organization (ILO) Convention 169, which Nicaragua signed in 2010. José Adán Aguerri, the head of the main private sector lobby, Cosep, has warned that the lack of transparency also raises major doubts over private property rights which could impact the country’s short-term investment climate.

Key points:

  • According to a press release by HKND Group (whose chairman is Chinese telecom tycoon, Wang Jing) the “special law for the development of Nicaraguan infrastructure and transportation involving the canal, free trade zones and associated infrastructure” grants the company “exclusive rights for the planning, design, construction, operation, and management of the Nicaragua Canal and other potential projects, including port projects, free trade zones, an international airport, and other infrastructure development projects”. The new law establishes that the transfer of the Canal to Nicaragua will be gradual starting 10 years after it begins to operate, with the country to receive US$10m a year until all of the shares are handed over. Opposition politicians like Dora María Téllez of the dissident Movimiento Renovador Sandinista (MRS) suggest this represents a loss of Nicaragua’s sovereignty.
  • While the route has yet to be defined, any design will likely affect Lake Nicaragua, which at 8,265km2 is Central America's largest lake – prompting environmental concerns. The NGO, Humboldt Centre, has warned that overall the construction of the Canal represents the “biggest threat to the country’s environmental conditions in its history".
  • Government officials like Paul Oquist, Ortega’s private adviser, estimates that the project will allow Nicaragua to more than double its economic growth from a projected 4.2% this year to 10.8% by 2014, rising to 15% by 2015.