Nicaragua Network

1. Inter-oceanic canal bill reported out of National Assembly committee
2. Canal concession meets with mixed reactions
3. Government announces plan for new agricultural season
4. Rains cause damage and deaths
5. San Cristóbal and Cerro Negro Volcanoes active again
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1. Inter-oceanic canal bill reported out of National Assembly committee

The National Assembly Committee on Infrastructure and Public Services, late on June 10, completed its hearings and reported out the bill introduced last week for the “Development of the Nicaraguan Infrastructure and Transportation for a Canal, Free Trade Zones, and Infrastructure.”   Committee Chair Jenny Martinez said that the committee heard testimony from the government, the private sector, and the regional council of the South Atlantic Autonomous Region (RAAS).  She said that the bill was being sent to the secretary of the Assembly and was expected to be put on the calendar for June 13.  Passage of the law will allow feasibility studies for the building of the canal to go forward, according to Martinez. 

President Daniel Ortega told a group of ambassadors on June 5, “We will have until May 2014 to prepare the feasibility study and in May of 2015 the work will begin.”  He added, “After so many centuries of struggle to make this canal a reality, at last the moment has arrived, with this Sandinista government, to carry it out and make the dream come true.”  He said it will help eradicate poverty and unemployment in Nicaragua and will mean the development not only of Nicaragua but of the region.  He noted that the project includes a canal, a railroad, two deep water ports, two airports, an oil pipeline, and free trade zones.

Ortega’s secretary for public policy Paul Oquist said that the canal project would raise Nicaragua’s GDP growth rate from the current 5% annually to 10% in 2014 and 15% in 2015.  It would increase formal sector jobs from the current number of 623,458 to 1.9 million, Oquist said.  He added that the environmental impact would not be a problem because the economic resources would be available to enforce preservation of the rainforest and carry out reforestation where necessary. While the canal would be expected to have an important impact on Nicaragua’s job picture, the head of the Canal Authority and vice-minister of foreign affairs, Manual Coronel Kautz, told the committee hearing that, “Nicaragua does not have the capacity to structure a company capable of carrying out a project like the building of an inter-oceanic canal; there will have to be foreign personnel. That is inevitable.” 

The bill approved by the committee would give a concession to the HK Nicaragua Canal Development Investment Co. Ltd. (HKND Group) to find investors and contract the construction of the canal with rights for 50 years. Ronald Maclean-Abaroa, spokesman for the company said, “It is a complex project, so first-class international independent experts are already carrying out pre-feasibility studies to evaluate the engineering, economic, financial, social and environmental impacts.  We have contracted with a business leader in sustainability consulting, ERM [Environmental Resources Management], to evaluate in an independent manner the environmental and social impact of the several routes that are under consideration.  The ERM team has ample experience in Nicaragua and will work closely with local experts who will add their ideas and knowledge and it will make contact with the parties involved in this project to take their opinions into account.”

According to the Deed of Cooperation, which can be read at: http://c3323503.r3.cf0.rackcdn.com/1370480738_ANEXO%20C%20-%20ACUERDO%20DE%20COOPERACION%20(1).pdf, the company would receive tax exemptions and would also be protected from changes in Nicaragua law, including tax law and environmental law, and from “political events” such as revolution.  Arbitration over any differences between the parties would be carried out by the International Chamber of Commerce with headquarters in Paris. Nicaragua would be paid US$10 million yearly and would receive 1% of shares the first year, and 10% of shares each decade until the first period of 50 years of the concession was reached when it would hold 50% of the shares.  If the concession were to be extended for another 50 years, Nicaragua would own 99% of the shares of the canal consortium by the end of the 100 years. 

The HKND Group is looking for investors and sources said that companies in the United States, Brazil, Spain, Russia, China, South Korea, and Taiwan had expressed interest in forming part of the consortium that would put up the US$40 billion that the project is expected to cost.  Spain’s ambassador to Nicaragua, Leon De la Torre Krais, said that, “Spain, in fact is already participating in a way because it supported [the work of a Spanish company in] the pre-feasibility studies of the railroad which is included in the project.”  Taiwan confirmed that shipping companies from the island nation were looking at investing in the company and Russian Ambassador Nikolay Mikhaylovich said, “The serious work of the canal has already begun.” 

The announcement of the canal concession made news around the world.  Informe Pastran reported that it was headlined in The Wall Street Journal, Spiegel Online, The Diplomat, The Guardian, China Digital Times, El Pais of Madrid, along with Reuters, Bloomberg, and CNN Money, among others.

The canal bill’s introduction comes at a moment immediately after China’s new President Xi Jinping completed a visit to Latin America, visiting Costa Rica, Mexico, and Trinidad and Tobago, opening what was called a new era of diplomatic and trade relations.  Informe Pastran said that “China has elevated Latin America to the position of a strategic associate” adding that the presentation of the bill to the Assembly now can be seen as part of a strategy to take advantage of that visit. (Radio La Primerisima, June 5, 10; Informe Pastran, June 7, 10; El 19 Digital, June 9; El Nuevo Diario, June 10; La Prensa, June 9)

2. Canal concession meets with mixed reactions

The bill before the National Assembly to grant a concession to a Chinese company to build a shipping canal across Nicaragua met with mixed reactions among Nicaraguans.  Indigenous leader and Assembly Deputy Brooklyn Rivera told the National Assembly Infrastructure Committee hearing that indigenous leaders, through whose lands the project would run, had not been consulted about the project.  Committee chair Jenny Martinez said that the Regional Council of the South Atlantic Autonomous Region (RAAS) was consulted and approved the project.  Rivera, however, said that the council had not consulted with the indigenous communities before making that decision and that it was obligated to do so under Nicaraguan law and International Labor Organization (ILO) Convention 169 on the rights of indigenous peoples. Rivera, who belongs to the YATAMA Party allied with the governing Sandinistas, added, “The communities are in agreement with the project; but they can’t be against their legal rights.”

The political opposition was adamant in its opposition to the plan.  Edmundo Jarquin, economist and candidate for vice-president on the losing Independent Liberal Party ticket in 2011, said that the proposal was not serious.  He stated, “As a proposal it is not serious and I believe that it has sinister goals: first, the enrichment of a few with the sale and resale of the concession rights to the canal; second, the creation of the illusion in the population that, from one day to the next, they will move out of poverty; and finally, the selling of the idea that [President Daniel] Ortega is indispensible and must remain in power indefinitely.”  He questioned whether a feasibility study for a giant project like the canal could be ready in a year when a similar study for a highway can take more than that.  The opposition Nicaraguan Democratic Bench in the National Assembly announced that it would vote against the measure when it comes before the entire body.

Former foreign minister Francisco Aguirre Sacasa pointed out that the idea for a canal goes back to when Philip II was king of Spain [1556-1598] and has been taken up numerous times.  He said about this project, “Nicaragua renounces its sovereign immunity in the case of a dispute with the company and it goes to arbitration.  And what does Nicaragua get in return? Just one percent ownership [each year] during the first decade rising to 50% at the half century.”  He added that “Ortega is trying to sell hope to the population and what better vehicle than the most long-lasting collective dream that we have—that of a trans-oceanic canal.  The image is powerful.”

In a communiqué, the Sandinista Renovation Movement (MRS) compared the terms of the concession to the Chamorro Bryan Treaty of 1914 which gave the United States a concession in perpetuity to build a canal through Nicaragua.  The document said, “Ortega robs the Nicaraguan people of their ability to decide about the building of an inter-oceanic canal which, if this law is passed, will be put in the hands of false Chinese businessmen and their local partners.”

Jaime Morales Carazo, who is not a Sandinista but who served as Daniel Ortega’s vice-president from 2007-2012, said he was awaiting the feasibility and environmental studies in order to make any decision about the canal project.  However, he added that for him the most important factor would be “that it [the canal] not affect in the most minimum way Lake Nicaragua.”

The business community in general expressed qualified support.  At a press conference on June 5, Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP), said that COSEP would support the bill with reservations that he would present at committee hearings, among them proper environmental studies and the inclusion of Nicaraguan companies and workers in building the canal.  At the hearing on the bill held by the National Assembly Infrastructure Committee, Aguerri added that the mechanisms for expropriation of properties along the canal route must be laid out and the payment for those properties guaranteed.  He said that the different sectors of society should be consulted about the project.

Diego Vargas, president of the Nicaraguan-American Chamber of Commerce (AMCHAM), expressed the support of his organization for the canal and asked for space for Nicaraguan businesses in the oversight of the project.  He said, “In reality, for a project as important as this, we have had very little time to analyze it and there are technical matters that we are studying.  Nevertheless, we believe that any proposal for a Nicaraguan canal is welcome.” He asked for clarity and openness in the management of the canal project and said that, wherever possible, Nicaraguan companies and workers—laborers, technical personnel, professionals—should be used.  Finally, Vargas also said, “We believe that if at any time our environmental sustainability is put at risk, we must think very hard about moving forward with the project.”

Gustavo Porras, Sandinista Deputy in the National Assembly and head of the National Workers’ Front (FNT), said that the number of direct and indirect jobs created will permit the country to resolve the principal demand of the population which is employment.  He predicted that between 300,000 and 400,000 people would be hired with the possibility of four more jobs created indirectly for each person employed in the project.  He added “We cannot be opposed to the possibility of moving this country out of poverty.”   (Informe Pastran, June 5, 6, 7; Radio La Primerisima, June 10; Confidencial, June 10, 11; La Prensa, June 7, 9; El Nuevo Diario, June 8)

3. Government announces plan for new agricultural season

President Daniel Ortega, on June 7, officially launched the new agricultural cycle saying that farmers were expected to plant 700,000 acres of small red beans with an expected harvest of 5.2 million hundredweights, 900,000 acres of corn with an expected harvest of 12.1 million hundredweights, and 250,000 acres of rice with an expected harvest of 6.1 million hundredweights.  He said that the government wanted to increase the production of black beans and root vegetables for export to the United States, Venezuela, Honduras and Puerto Rico.  He said that the production of cacao will increase in the North and South Atlantic Autonomous Regions (RAAN and RAAS) with 27,000 acres expected to be cultivated there.  In the RAAS, 46,000 acres of African palm will be planted to produce palm oil for export.

With regard to the leaf rust plague that has affected over one third of the nation’s coffee groves, Ortega announced the National Plan for the Transformation and Development of Coffee, which will provide funding for the replanting of damaged groves.  He said it will be financed by a tax of US$2 on each hundredweight of coffee exported during the first year and will grow by one dollar per hundredweight each year for five years.  Ortega also explained his government’s plan for the reforestation of 37,000 acres which would mobilize local governments, youth groups and farmers.

In total for the coming agricultural season, Ortega said that financing for farmers from public and private sources would total US$616 million.  He said that environmentally friendly norms for the production of sugar cane, peanuts, rice and African Palm and norms for the conservation of water and of the soil were being developed.  Programs to guarantee access to water in the dry regions of the country to strengthen the production of food products were also being developed, he said. (El Nuevo Diario, June 8; Radio La Primerisima, June 8)

4. Rains cause damage and deaths

On June 5, Communications Coordinator Rosario Murillo reported that between May 26 and June 5, the government had deployed forces throughout the country to help the population affected by the heavy rains which she said included 936 families with a total of 4,020 people.  She said that five deaths had been attributed to the rains, adding, “We have been supporting those families that lost a loved one; for us the highest priority is saving lives and for that reason we mobilized and prepared.”  Murillo stated that 833 homes had been damaged or destroyed in ten departments.  The rains did not abate.  On June 10, Bluefields reported over twelve straight hours of heavy rain with flooding and damage in four neighborhoods and in other critical points in the city. 

The Ministry of Health announced that it was beefing up its campaign against the Aedes aejypti mosquito, carrier of the dreaded dengue, sometimes known in English as bone-break fever.  In Managua, health brigades will cover 740 neighborhoods and on the national level they will focus on those areas where dengue appeared in 2012, when four people died of the illness.  One death, that of an eight month old baby, was reported already this year.  (Informe Pastran, June 5; Radio La Primerisima, June 10; El Nuevo Diario, June 6, 10)

5. San Cristóbal and Cerro Negro Volcanoes active again

Carlos Caceres , head of Civil Defense for the Department of Chinandega, said on June 8 that 3,000 people could be evacuated from the area if San Cristóbal Volcano has a major explosion. He added that 18 small explosions inside the mountain had been registered since 1:20 p.m. June 7. He added that the explosions were accompanied by ashes and gases.  San Cristóbal is located 135 kilometers northwest of Managua and is surrounded by 10 farms and 15 communities. Caceres said that no families had been evacuated. However, in a press conference in Managua, authorities stated that the volcano is unpredictable.  Angelica Toruño, director of Seismology at the Nicaraguan Institute for Territorial Studies, INETER, said that observation of the volcano had been increased.

The Cerro Negro Volcano is also under increased surveillance due to an increase in seismic activity. Although this activity was not felt by the surrounding communities, authorities warned the surrounding population to stay away from the volcano. Given that Cerro Negro is one of the most active volcanoes of Nicaragua the bulletin recognized that “It is difficult to predict what can happen in the short term in the volcano based on the few hours of information that we have at the moment.”  Fifteen thousand people live in the 25 communities surrounding the volcano which could potentially be affected. The volcano’s largest eruptions occurred in 1992 and 1999 and which resulted in ashes covering the city of Leon and rural zones near the volcano. (El Nuevo Diario, June 8; La Prensa, June 5)