TUESDAY, AUGUST 31, 2004

Nicaragua’s Proposed Dry Canal


Nicaragua's Proposed Dry Canal


Alternatives to the Panama Canal:
Globalization and the Meso-American Megaprojects

In the Central American nation of Nicaragua, plans are quietly being hatched for new interoceanic transportation routes, both water routes and rail lines, that would compete with the Panama Canal. While the proponents of these routes claim that their development projects will provide economic salvation for the people of Nicaragua (the second poorest nation in the hemisphere after Haiti), voices from within Nicaragua are asking: Who will truly profit from the proposed megaprojects, and what will the real costs be? Genesis of a Mega-Project Throughout most of the twentieth century the canal across Panama has served the needs of interoceanic traders and travelers well. Yet as a new century is dawning, the Panama Canal is no longer considered sufficient to satisfy the growing demand for shipment of goods between the Atlantic and Pacific Oceans. This is true for a number of reasons, including:

  • The Panama Canal has been increasingly unable to meet the growing quantity of interoceanic trade. The container trade between Asia, North America, and Europe has been increasing by between 6% and 8% annually since 1990. As a result the Panama Canal has lost a large share of its potential trade to overland rail and truck routes in the U.S. In addition, congestion in the canal area is increasing, causing frequent bottlenecks and delays. For as long the global economy continues to grow, the canal will be increasingly unable to meet the demand for trade between the continents.1

  • In the modern transport industry, the largest ships are considered the most economical, but the Panama Canal is too small to allow passage of the "postPanamax" supertankers. It has been predicted that "in less than 20 years more than half of the world's ocean-going cargo vessels may be too large to pass through the canal's locks."2

  • Widespread doubts have been expressed in international commerce journals about the ability of the Panamanian government to oversee successful operation of the Canal. On December 31, 1999, the Panama Canal was placed fully under Panamanian control. During the gradual transfer of control from the U.S. to Panama in the 1990s, the Panamanian government had some problems in effectively managing the Canal Zone. For example, uncontrolled deforestation in the Canal Zone by landless peasants has caused soil erosion and siltation, and is damaging the water supply that is vital to the Canal's operation. Lowered water levels in the canal set limits on the size of vessels that can pass through. In addition, many fear that Panama will increase the tolls charged for use of the canal.3


Based on the political uncertainties and technical shortcomings of the Panama Canal, in recent years a number of proposals have surfaced for alternative routes from sea to sea. Several of these proposals have targeted Nicaragua for interoceanic routes, both by land and by water. One set of proposals would be based on the historical water route of the Rio San Juan and Lake Nicaragua. The other proposals are variations on a "Dry Canal", a rail line that would extend between Caribbean and Pacific ports.Of all the proposals made for alternatives to the Panama Canal, the proposal for a Dry Canal in Nicaragua appears to be among the most feasible. Nicaragua's physical features make it a natural choice for an interoceanic canal. If one were to travel all along the Continental Divide of the Americas, the mountainous spine that extends from Alaska in the north, down through the Canadian and U.S. Rocky Mountains, into the Sierras of Mexico and Central America, and all along the Andes to the southernmost tip of South America at Tierra del Fuego, the lowest elevation that one would reach along the way would be in southern Nicaragua. Approaching the problem from another angle, if one wished to take a shortcut across the Americas, from the Atlantic Ocean or Caribbean Sea to the Pacific Ocean, while having to do a minimum of climbing over hills, the best possible route one could find would be across southern Nicaragua. From the Caribbean Sea one can travel 119 miles up the Rio San Juan to Lake Nicaragua, which is only 110 feet above sea level. After a 45-mile lake crossing, all that remains to be done to reach the Pacific shore is a 12-mile jaunt across the Isthmus of Rivas, which rises to only 154 feet above sea level at its lowest point. Thus, although the distance from sea to sea is much shorter across Panama (48 miles), the divide is higher than in Nicaragua (300 feet vs. 154 feet). The Nicaragua Route also has other natural advantages, such as being closer to major U.S. ports. Given Nicaragua's geographical advantage, it has faced many canal proposals. The first feasibility study for an interoceanic route in Nicaragua dates back to 1567 and the reign of King Philip II of Spain. Since then Spain, Britain, and the United States have tried to maintain influence in Nicaragua and thereby control over the many proposed interoceanic rail and water routes. This multinational power grab has made Nicaragua the country most invaded by the United States.
Chapter 2: Present Day Canal ProposalsConsidering the history of grand plans for a canal or railway across Nicaragua, any new proposals may be looked upon with suspicion as just the latest in a long litany of dead-end schemes. Yet currently the proposals for a Nicaragua Route are being promoted and debated with as much earnestness as ever. Given the potential impacts that a canal megaproject could have on Nicaragua's natural environment, indigenous people, and national sovereignty, the latest proposals need to be taken seriously. In the recent dialogue on potential routes across Nicaragua, any proposals for construction of a traditional all-water route like the Panama Canal, in which large ships traverse the isthmus entirely by water, have been discounted as being prohibitively expensive. The leading recent proposals in Nicaragua have been variations on the old theme of a coast-to-coast railway. Yet the idea of a canal that would utilize the Rio San Juan and Lake Nicaragua has not been entirely abandoned either.The Dry Canal. During the 1990s various companies came forth with proposals to build a Dry Canal across Nicaragua. All of the proposals were variations on the old theme of a cross-country railway with ports at either end. The railways would be modern high-speed lines, and would be used only for shipping standard cargo containers. The Hong Kong-style ports would be able to accommodate the largest "post-Panamax" ocean vessels, and would be fully-equipped with machinery for loading and unloading cargo containers to and from trains and ships. The modern proposals would also utilize the natural deepwater harbor at Monkey Point on Nicaragua's Caribbean Coast. Monkey Point is located on an isolated stretch of coastline in a region inhabited by Rama Indians and longtime Creole residents. The entire region currently lacks road access. From the Caribbean rainforest the railway would ascend into the hills that lie to the east of Lake Nicaragua, and would then pass to the north of the lake.From this point westward, the recent proposals differ mainly in the routes chosen to reach the Pacific Ocean. One option for the western portion of the route would be to have the railway pass north of Lake Managua and reach the Pacific at the existing port of Corinto. This is the plan being promoted by the company SIT-Global (Sistema Intermodal de Transporte Global), and would include a major renovation of the port at Corinto. An alternative route would have a 225-mile (377-km) railway bend around the northern end of Lake Nicaragua and reach the Pacific further to the south along the Isthmus of Rivas. This is the plan being promoted by the consortium Canal Interoceanico de Nicaragua (C.I.N.N.). In addition to proposing to build an entirely new port from scratch on the Caribbean coast, C.I.N.N.'s plan also calls for another entirely new port to be built at a spot on the Pacific coast called Pie de Gigante ("the Giant's foot"). Other companies have periodically surfaced with slightly different variations on the Dry Canal proposal, but the two leading proposals have been those of C.I.N.N. and SIT-Global. After a few years of negotiations between Dry Canal promoters and Nicaraguan government officials and a "pre-feasibility" study conducted by the U.S. firm Woodward-Clyde, the leading Dry Canal proposal was reportedly that of the multinational consortium Canal Interoceanico de Nicaragua (C.I.N.N.).














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Alternative Proposals for Central American Dry Canals


The C.I.N.N. proposal was widely reported to have the support of Nicaraguan President Arnoldo Aleman, as well as the Nicaraguan Army, whose officials were "rumored to hold at least 15 percent of the company's shares". The retired commander-in-chief of the Nicaraguan armed forces, General Joaquin Cuadra Lacayo, stated in the Nicaraguan press that his father, the prominent Nicaraguan lawyer Joaquin Cuadra, owned a number of shares in C.I.N.N.4 As for the Sandinistas, reportedly Daniel Ortega and Bayardo Arce are associated with SIT/Global while former Head of the Army Joaquin Cuadra is involved with CINN. The U.S. government has also gotten involved, in support of the CINN group. U.S. Ambassador to Nicaragua, Oliver Garza, wrote a letter to the President of Nicaragua's National Assembly, Oscar Moncada urging a quick vote on the pending legislation. Garza reassured Moncada that "the majority of the CINN partners are US citizens and belong to some of the most prestigious construction design companies in the world. CINN promoters have waited patiently for the approval of the law and are ready to move forward as soon as possible."Like many of the multinational corporations that operate in Nicaragua, C.I.N.N. is officially based in Managua, and has a small office there, but the money and decision-making power lie abroad. The companies that comprise the consortium are said to be mainly from Asia and Europe. The president of the consortium is a New York lawyer named Donald Mario Bosco that has ties with the law firm Parson and Brown. Bosco has prior experience in China, and the greater part of the funding for the project would reportedly come from investors from China, Taiwan, Japan and South Korea.5 Another key player in C.I.N.N. is reported to be Dr. Juan Manuel Rodriguez, a former World Bank consultant and advisor to the Carter administration. Rodriguez is currently the financial advisor to Carlos Lahe, the Vice Prime Minister and Coordinator of the Counsel of Ministers of Cuba.6 The Dry Canal's construction consortium is said to include the companies Wimpey Construction, Ltd. (England), BESIX (Belgium), Renfe and COMSA (Spain). In the event that the project is actually built, the operations consortium would include Europe Combined Terminals (Netherlands), Port of Tianjin Authority, China Merchants Holding, Ltd., China Marine & Seamen Service Corporation, the Japan Container Association, and the Japan Cargo Handling Equipment Association.7

The role of the major international financial institutions that have typically promoted mega-projects such as the Dry Canal is unclear as of yet. In 1995 Nicaragua's Construction and Transport Minister Pablo Vigil reported the following: "We have officially made a request to the World Bank, which has unofficially told us of its interest in assisting the Nicaraguan government so that steps towards the achievement of this goal will be the most beneficial for the country and the most advantageous for Nicaragua as well as for the investors."8 Concessions Granted


On March 27, 2001, the Nicaraguan National Assembly approved two decrees that 1) authorized a concession for exploration, and 2) established the conditions for a future concession for construction and operation of the high-speed inter-oceanic railroad across Nicaragua. Both Sistema Intermodal de Transporte Global (SIT/Global) and Canal Interoceanico de Nicaragua (CINN) were given concessions. Several organizations in Nicaragua, including the Humboldt Center and the Center for Legal Assistance to Indigenous Peoples lobbied hard against the concessions. They were able to achieve the separation of the concessions into two steps: the viability study and the actual construction. They state that they will continue to speak out in support of the interests of Nicaragua's indigenous and of the environment. The National Assembly's Communication, Transportation, Energy and Construction Committee noted that between 20 and 50 thousand jobs would be created but many of these would be temporary jobs that would only last until the construction is completed. Supporters maintain that the "canal" would serve as a catalyst for further investment, especially maquiladoras in the free trade zones that would be established at either end of the railroad line. But, maquiladora jobs have yet to pay workers enough to feed their families so it is hard to say if those jobs are better than the subsistence agriculture to which rural families have until now dedicated their working lives. Other critics of the dry canal are skeptical about its viability. According to Costa Rica-based transport economist Warren Crowther, for example, "These same outfits came here with the idea of selling the Costa Ricans big on this," he said. "My own hypothesis is that these guys are really more interested in getting feasibility studies done and getting consulting fees than in getting any dry canal done."9 A 1995 report noted that "even if Nicaragua's landbridge could capture all of Panama's $64 million in container traffic, it would not cover half of the annual finance charges on the investment nor operating costs."10It bears emphasizing that the proposed Dry Canal mega-project is not merely about creating a shortcut between the seas for the global shipping industry. Rather, the project's promoters also see it as the key to intensifying the neoliberal economic development model in Nicaragua. Phrased in another way, international businessmen are seeing the Dry Canal as a means for facilitating exploitation of the remaining natural resources of Central America, especially of Nicaragua's Atlantic Coast region. Among these resources are gold and other minerals, valuable tropical hardwoods, petroleum, and seafood. In addition, the Dry Canal would make it easier for transnational corporations to exploit the cheap labor of Nicaraguans in "maquiladora" factories. During a January 1999 meeting at the C.I.N.N. office in Managua, consortium representative Francisco De Escoto candidly explained that the Dry Canal project if successful would "completely transform Nicaragua".11 The entire economic geography of the nation would be shifted, with two focal points at the new ports on either coast.
Chapter 3: Potential Impacts of the "Dry Canal" on Nicaragua's Environment: Industrial Corridor or Biological Corridor?All along the proposed route, and especially at the two ends on the Pacific and Caribbean coasts, the Dry Canal would cause unavoidable ecological impacts. On the Caribbean side, the associated industrial development would occur on the Miskito Coast, the juncture of two of the most biologically-rich habitats in the world, rainforests and coral reefs. On the Pacific side, the railway and port facilities would threaten one of the largest areas of intact tropical dry forest remaining in Central America, as well as rich coastal areas including sea turtle nesting grounds. Any realistic assessment of the Dry Canal proposal needs to carefully consider these impacts.Impacts on Nicaragua's Atlantic Coast Rainforest. Nicaragua's Atlantic Coast region contains the largest remaining relatively pristine rainforest in Central America. The Indio-Maiz Biosphere Reserve in southeastern Nicaragua along with the Bosawas Biosphere Reserve in northeastern Nicaragua and adjacent forests in Honduras represent one of the best opportunities in the Americas to protect large intact rainforest habitats north of Amazonia. Yet these forests are rapidly disappearing. Of the estimated 3 to 4 million hectares of forest remaining in Nicaragua, deforestation is estimated to be claiming 200,000 hectares per year.12 Thus the claim is frequently cited that if current rates of deforestation are allowed to continue or worsen, Nicaragua stands to lose its remaining rainforest within 10-15 years. The proposed Dry Canal would only exacerbate the deforestation that is already rampant on Nicaragua's Atlantic Coast due to commercial logging and the spread of the nation's agricultural frontier. Both from the direct need to deforest land for construction of the rail line, port facilities, and associated factories and buildings of the proposed free trade zone, and from the secondary wave of deforestation that would be caused by the influx of settlers that would surely follow, it is realistic to assume that the Dry Canal would lead to deforestation of a large portion of southeastern Nicaragua. Construction of the Dry Canal would strike a severe blow against efforts to protect a Central American biological corridor. The idea for such a corridor was originally promoted by conservation organizations in 1990 as "Paseo Pantera" (Path of the Panther) and has recently been adopted by the World Bank's Global Environmental Facility (GEF) as the Mesoamerican Biological Corridor. The goal of the biological corridor is to safeguard a north-south network of protected natural areas that would extend from Mexico to Colombia. The proposal has a social component, in which communities along the corridor would be targeted for assistance in sustainable development initiatives, and an ecological component, in which large intact natural areas would be linked via corridors of protected habitat. Certain species need large blocks of intact rainforest habitat to survive, especially large animals such as jaguar and puma, tapir, monkeys, and certain birds such as the harpy eagle. In addition, biological corridors are vitally important in the context of global climate change. Many plant and animal species thrive only in specific climatic conditions, and as regional climates undergo changes these species will presumably need to migrate to regions with hospitable conditions. Without north-south natural corridors, many species will be stranded in islands of habitat that may no longer be hospitable. [--- Graphic Goes Here ---]Proposed Dry Canal and Protected Sites. Nicaragua's intact forests are vital to the success of the Atlantic Biological Corridor. In southeastern Nicaragua the Cerro Silva Forest Reserve and the Rio Indio-Maiz Biosphere Reserve are the keys to protecting the region's endangered forests and biological diversity. Although the precise route of the proposed Dry Canal has not even been disclosed to the public by C.I.N.N., the most likely route would have the rail line pass from Monkey Point on the Caribbean coast, inland across Cane Creek, and to the north of the Rio Punta Gorda. Much of this area is still covered in forest and is included in the Cerro Silva Reserve. The Cerro Silva area has been identified by the World Bank's Global Environmental Facility (GEF) as a "Priority Biodiversity Area", and an essential link in the Atlantic Biological Corridor.13A north-south corridor of protected natural habitat and an east-west corridor of industrial development would seem to be mutually exclusive. Without even considering the secondary development which would be certain to occur along much of the length of the proposed rail corridor, the minimum 500-meter right-of-way through the forest preserve would in itself compromise the natural corridor and inhibit movement of some wildlife species. In addition to impacting southeastern Nicaragua's biological diversity, deforestation caused by the Dry Canal would also lead to severe soil erosion. Parts of the area are hilly and are dissected by many tiny streams that flow through steep ravines. The deforestation that would occur during and after construction of the Dry Canal would leave the shallow soils of these steep slopes exposed to the region's torrential rainfall and vulnerable to severe erosion. The resulting soil erosion would not only degrade the landscape, but would also degrade the aquatic environment by burdening the region's streams and rivers (such as Cane Creek, Monte Cristo Creek, and the Rio Punta Gorda) with sediment.Impacts on the Marine Ecosystems of Nicaragua's Atlantic Coast. The bounty and diversity of Nicaragua's rainforest has its marine counterpart in coastal and nearshore habitats. Where land meets sea along the Nicaragua's 450-km long Caribbean shore, palm-fringed beaches alternate with a series of mangrove-lined lagoons. The mangroves with their dense web of interlocking roots serve as essential nurseries for the fish and shrimp that make the coastal waters so rich, as well as important habitat for the largest population of West Indian manatees remaining in the Caribbean. Further offshore, the shallow waters of Nicaragua's continental shelf extend for up to 200 km into the Caribbean Sea, and support a mosaic of sea grass beds, coral reefs, and offshore cays. The Miskito Coast sea grass beds serve as the primary feeding grounds for the Caribbean's largest remaining population of green turtles, while the reefs are home to lobster, conch, and countless fish species.













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Competing Dry Canal Routes


(map courtesy of C.I.N.N.) Proposed port at Monkey Point The impacts of the proposed Dry Canal on the coastal resources of Caribbean Nicaragua are difficult to quantify, but potentially enormous. At the very least, construction of the port facilities would have localized impacts. In order to construct a port that could handle the largest post-Panamax vessels, dredging would be needed to deepen the waters off Monkey Point. In addition, the C.I.N.N. proposal calls for construction of a breakwater that would extend from Monkey Point over a mile into the sea, and would be necessary to protect the port area from the Caribbean surf that normally pounds Monkey Point. The combined effects of the breakwater, dredging, and pollution from ships and port facilities would degrade southeastern Nicaragua's coastal habitats.An even larger threat to the region's coastal habitats is posed by the potential for shipping accidents at or near the Monkey Point port, such as an oil spill. The impacts of oil spills on western Caribbean habitats have been demonstrated by repeated spills at Bahia las Minas in Panama. Following the spills, reefs, sea grass beds and mangroves in the vicinity immediately died. Further damage ensued when oil was absorbed into the soil beneath the mangroves, and was slowly released into surrounding waters for several years. To date, "there has been virtually no recovery of corals, sea urchins, or oysters at any of the most affected sites."14 The prevailing nearshore current along Nicaragua's southeastern coast flows from north to south.15 Thus if an oil spill was to happen at or near Monkey Point, the areas most likely to be affected would be the beaches of the Rio Indio-Maiz Biosphere Reserve and farther down the coast the beaches of Tortuguero in Costa Rica. The beaches at Tortuguero are protected as the most important nesting site for green turtles in all of the Caribbean, and contamination of this vital stretch of coastline would drive the endangered turtles closer to extinction. The risk of an oil spill appears more acute when one considers the potential of the Dry Canal to help jumpstart a petroleum industry in Nicaragua. Although previous exploration has indicated that the continental shelves on both sides of the country hold commercially viable petroleum deposits, no production has yet resulted. Over the past few years, the Nicaraguan Energy Institute (INE) and transnational oil corporations, with assistance from the Inter-American Development Bank, have been negotiating toward a new round of exploration. Nicaragua's central government is scheduled to begin offering exploration concessions in the Spring of 2000.16 Furthermore, the proposed canal would create regional demand for oil, and the C.I.N.N. board has strong ties to the oil industry. These petroleum connections indicate another dimension of the environmental threat that the canal brings. Ecological Impacts of the Dry Canal in the Pacific Coast region The proposal promoted by C.I.N.N. and favored by the Nicaraguan government calls for construction of a brand new port and free trade zone at a relatively isolated spot on the Pacific Coast called Pie de Gigante. As with Monkey Point on the Caribbean coast, the site of the proposed Pacific port is in an ecologically sensitive area, both with regards to land and sea. To an even greater extent than the proposed Caribbean port at Monkey Point, a port built at Pie de Gigante would cause direct harm to endangered sea turtles. Pie de Gigante lies at the heart of a stretch of coastline that is used by sea turtles for nesting. Female turtles visit the region's beaches every year to lay their eggs in the sand. Most of the turtles land at a stretch of beach that lies within the Chacocente Wildlife Refuge approximately 20 miles north of Pie de Gigante. "The Chacocente beach is the third most important olive ridley sea turtle nesting beach in Central America. From June to December the female turtles come to Chacocente in synchronized arrivals called "arribadas," where as many as 10,000 turtles arrive within a few days to lay their eggs. Over 20,000 olive ridley turtles come there each year. The beach is also important for nesting of globally endangered leatherback turtles."17 [--- Graphic Goes Here ---]As with the proposed new Caribbean port, perhaps the greatest potential damage that the Dry Canal could bring to Nicaragua's Pacific Coast would be an oil spill. Nicaraguan scientists have pointed out that a spill of oil or other chemicals at the proposed Pacific port would get carried by the prevailing northerly current toward the beach at Chacocente. Such a disaster might entirely prevent the reproduction of the turtles that use the coastline north of Pie de Gigante, as sea turtles have a powerful homing instinct and return to the same beach to nest each year.In addition to its impacts on coastal habitats, the Dry Canal megaproject would also undermine efforts to protect the endangered tropical dry forests of Nicaragua. The Pacific side of the nation experiences a pronounced dry season between October and May each. The region's forest is adapted to the annual dry season, with trees shedding their leaves in times of scarce water. The tropical dry forest once extended in a narrow belt along the Pacific coast from northern Mexico to Panama, yet because of concentrated human activity in this zone, this forest type is actually more threatened than tropical rainforest. Due to habitat destruction, only 2% of Central America's previous dry forest remains.18 Typical animals of a healthy tropical dry forest include white-tailed deer, peccaries, rabbits, agoutis, iguanas, coatimundis, white-faced monkeys, armadillos and coyotes, yet in Nicaragua's Pacific lowlands wildlife sightings have become increasingly rare. The proposed port of Pie de Gigante would be built on southwestern Nicaragua's Isthmus of Rivas, the narrow corridor of land that separates Lake Nicaragua from the Pacific Ocean. The low coastal hills of the Isthmus of Rivas are said to contain the largest remaining extent of tropical dry forest remaining in Nicaragua, including 12,000 acres protected in the Chacocente Wildlife Refuge. Construction of a port and free trade zone at Pie de Gigante would likely attract thousands of impoverished settlers to the Rivas region. This influx would be difficult to control, and would place enormous pressure on the region's forests for firewood and building materials, and also for clearing as agricultural plots. As in other parts of the nation, the resulting deforestation would lead to soil erosion and overall land degradation.Ecological Impacts Elsewhere Along the Route Although the ecological impacts of the proposed Dry Canal would be felt most acutely in coastal regions at either end of the route, countless places along the 377-km route would also be affected. A few examples of areas that would be impacted include:

  • the Laguna de Tisma along the Rio Tipitapa between Lake Managua and Lake Nicaragua. This lagoon is reported to be an important feeding and resting area for migratory birds on the flyway from North America.

  • the natural corridor between Laguna de Apoyo and Volcan Mombacho.


Efforts are currently underway to protect a forested corridor between the two protected areas. The Dry Canal would sever this connection. The extent of the damage incurred would depend largely on what type of additional development occurs along the route. If the route remained an "express", with no intermediate stops, then the impacts would be largely limited to those caused by the rail corridor itself. If, however, "exit ramps" were provided all along the route, the resulting development and settlement of previously natural areas would likely proceed unchecked. In fact, the Dry Canal consortium C.I.N.N. has claimed that a free trade zone with user and shipper services will be established "along the route", and the consortium's president Donald Bosco has described the railroad as a "kind of a spinal cord across the country," along which development will occur.19 In its eagerness to entice investors into the Dry Canal's free trade zones, it is difficult to believe that the Nicaraguan government, at least in anything resembling its present form, would make environmental protection a top priority.
Chapter 4: Impact on Nicaragua's Indigenous Peoples and on Atlantic Coast AutonomyIf built, the proposed Dry Canal would fundamentally change the lives of Nicaragua's Rama Indians. Numbering approximately 1000 people, the Rama are the smallest of Nicaragua's indigenous nations. The Rama have a distinct language, distinct cultural identity, and have traditionally had a distinct territory. Despite the proximity of Rama communities to southeastern Nicaragua's largest town, Bluefields (11 km away by boat), the Rama have managed to keep their cultural identity intact. [--- Graphic Goes Here ---] Rama settlements and proposed Dry Canal.The Rama have traditionally lived a subsistence lifestyle rooted in the rich coastal and rain forest habitats of southeastern Nicaragua. Depending on the season, fish, shrimp, sea turtle, and other foods are harvested from the coastal lagoons and near-shore marine waters. In the forest the Rama hunt a variety of animals including peccary, deer, tapir, and currasow. Along the rivers, Rama agriculture has traditionally been practiced in a low-impact manner, and is based largely on perennial root crops and a great variety of fruits, in addition to annual grains and beans. Although they now catch fish for the markets in Bluefields and beyond, for the most part the Rama still live a subsistence lifestyle, and are directly dependent on the surrounding sea, lagoons, and forest for food. Families that live inland along the rivers maintain a lifestyle quite consistent with that of previous generations. This lifestyle has served to keep the forests of southeastern Nicaragua among the most intact in all of Central America, and stands in sharp contrast to the western half of Nicaragua, which has been all but denuded of its forest cover by unsustainable agricultural practices. There will be radical changes for the Rama if the Dry Canal is approved and built. The proposed site for the eastern terminus of the Dry Canal, Monkey Point, lies 30 miles south of Bluefields, and is right in the heart of the Ramas' traditional lands. The likely route of the Dry Canal would cross Cane Creek, a quiet forest-lined stream where Rama families maintain a traditional lifestyle. The potential impacts of such a mega-development project to the landscape and marine environment, and thus the Rama culture, are hard to underestimate. Yet, rather than being approached in advance by the canal advocates, the Rama first learned about the proposed Dry Canal, a project that could forever change their land and culture, via radio and newspaper reports.For many years, dating back to 1815 by one account, a mixed community of black Creoles, Mestizos, and Rama Indians has lived at Monkey Point. Along with the Rama, the Creoles and Mestizos are concerned about what will happen to their community as plans for the Dry Canal move forward. Recent events have demonstrated that these concerns are valid.20 These communities are under attack as titles surface from a railroad proposed one hundred years ago. These titles were awarded through political patronage to land the title-holders never saw without alerting those who lived on the lands. One of the old titles materialized in early 1999 when a former Atlantic Coast government official named Percy Spencer suddenly claimed to hold the title for 500 acres (200 ha.) of land at Monkey Point. Spencer in turn sold the land to U.S. businessman John Vogel. Vogel's hired hands have proceeded to begin clearing the land of its forest, planting citrus trees, and trying to evict the inhabitants of Monkey Point from their lands.21 Spencer and Vogel have been heavily criticized both by the Nicaraguan press and the diverse "Commission of Support to the Communities of Monkey Point and the Ramas" for attempting to get rich off the Dry Canal at the expense of the community at Monkey Point and the Ramas. Critics of Spencer and Vogel's land claim point out that under Nicaraguan law a title is nullified if not exercised within 30 years. Furthermore, the alleged land claim violates the Nicaraguan Constitution and the Atlantic Coast Autonomy Statute, which has since 1987 recognized the validity and inalienability of the Atlantic Coast's indigenous and ethnic communal land rights.22Having received a glimpse of what will likely lie ahead if the Dry Canal is approved, the Ramas and the community at Monkey Point are fighting back. In fact, they have gone right to the top and filed a lawsuit against none other than Nicaraguan President Aleman himself, as well as Nicaragua's Attorney General, Julio Centeño Gomez, who in his official capacity would actually be the one to sign any concession granted for construction of the Dry Canal. According to the Ramas' lawyer, the Nicaraguan indigenous rights expert and public advocate Maria Luisa Acosta, given the potential of the Dry Canal to profoundly impact the Ramas' traditional lands and culture, it is reprehensible that they have been excluded from the planning process. The legal action filed in Nicaragua's Supreme Court of Justice in November 1999 admonishes President Aleman for having presented a bill for the "Approval of the Contract for the Feasibility Study, Final Design, Construction, and Operation of the Canal Interoceanico de Nicaragua (C.I.N.N.) project" for consideration by the Nicaraguan National Assembly. The lawsuit cites numerous ways in which the proposed Dry Canal concession violates Nicaraguan law, the nation's constitution, and international human rights and environmental. The suit calls for termination of the processes leading toward authorization of the Dry Canal within the Nicaraguan government, and states that no further negotiation on the Dry Canal should proceed until the Rama Indians and the community at Monkey Point are given a seat at the negotiating table.23The Dry Canal and Atlantic Coast Autonomy. Although the communities on the Atlantic coast have legal autonomy under the 1988 Atlantic Coast Autonomy Law, Nicaragua's post-war neo-liberal governments have not respected this autonomy. The central government in Managua continues to dictate affairs on the coast in the interest of the nation's Mestizo majority. Rather than giving Costeños (inhabitants of the Atlantic Coast region) a real role in resource management decisions, the central government has awarded logging, mining, and fishing concessions to large companies and then made a token effort to persuade the Atlantic Coast's regional and municipal government officials to sign off on the concessions.In addition to violating the principles outlined in the Autonomy Law, the resource concessions awarded by the central government have often been located on indigenous lands. Many of Nicaragua's indigenous communities have never had formal legal titles to their traditional lands, and the central government often takes advantage of this situation by referring to indigenous lands as "national lands", for which resource concessions may be awarded. Handling of the concession being sought by the consortia C.I.N.N. and S.I.T.-Global to build the Dry Canal is consistent with the trend of how Nicaragua's central government has treated other concessions for logging, mining, and fishing on the Atlantic Coast. The substantive discussions have been made in Managua without participation by residents or leaders from the Atlantic Coast. Another move that observers within Nicaragua claim is an attempt by the central government to wrest further control over the Atlantic Coast and Dry Canal is a piece of proposed legislation that would create a new department (province) by removing land from the R.A.A.S. (Southern Atlantic Autonomous Region). The new political unit, Departamento Zelaya Central, would reduce the size of the R.A.A.S. by over 38%. According to accounts in the Nicaraguan press, among the motives behind the redistricting are clearly to place control over as much of the route of the proposed Dry Canal as possible in the hands of the country's Mestizo majority.24 Residents of the Atlantic Coast became further incensed when a representative of one of the rival Dry Canal consortia, Gilberto Cuadra of S.I.T.-Global, was quoted in the press as saying that Nicaragua's central government would simply be declaring land all along the route of the Dry Canal a "public utility".25 According to the Sandinista official Victor Hugo Tinoco, any efforts by President Aleman to take land for the Dry Canal by eminent domain could lead to an armed insurrection on the Atlantic Coast. Tinoco speculated further that Aleman may even be trying to promote a situation on the Atlantic Coast in which a state of emergency could be declared and the violation of indigenous communities' rights could then be more easily justified.26Land grab on the Pacific Coast. Nicaragua's wealthy and powerful have expanded their attempts to appropriate lands along the route of the proposed Dry Canal beyond the area surrounding Monkey Point. The fishing communities in the vicinity of the proposed port at Pie de Gigante have recently been feeling the threat of the Dry Canal. Authorities from Nicaragua's central government, along with the municipality of Tola on the Pacific coast have recently dusted off a 1917 law that states that all land up to two kilometers from the coast is national property. Never before has this law been enforced or even mentioned in the Tola area where under the agrarian reforms of the 1980s land was distributed to peasants that now make their living from farming and fishing.27 In February of 1999, members of the Pedro Joaquin Chamorro Cooperative took up arms and vowed to defend their lands in the municipality of Tola against the incursion of developers of tourist projects and the Dry Canal. The situation was defused after a brief standoff. Members of the local cooperative at Tola stated that instead they will join together with other cooperatives and pursue legal means to protect their land rights.28 The similarity between the sudden appearance of hundred year old land titles at Monkey Point and the sudden revival of a 1917 property law at Pie de Gigante is beyond coincidence. The frenzied pace at which land is being snapped up by the Nicaraguan elite at both ends of the proposed Dry Canal hearkens back to the rampant corruption in the days of Nicaragua's Somoza dictatorship. Recently the Nicaraguan press, including the respected periodical Envio, has been closely following the machinations of the current President Arnoldo Aleman with respect to his real estate acquisitions in the vicinity of the proposed Dry Canal.
Chapter 5: The Response of Nicaraguan Civil SocietyIn addition to the previously mentioned "rebellion at Tola" and the lawsuit filed by the Rama Indians against President Aleman, other efforts are underway to involve Nicaraguan civil society in the debate over the proposed transportation megaprojects. On November 16, 1999, a session was held in Bluefields of the Regional Council of R.A.A.S. (the Southern Atlantic Autonomous Region). Because the R.A.A.S. and R.A.A.N. Regional Councils are so poorly funded, and because many of the representatives on the councils live in remote parts of the Atlantic Coast region, meetings of the Regional Council are rare, and are usually called only when a vote on an important issue is needed. In this case the issue before the Regional Council was that of the feasibility study necessary for the proposed Dry Canal. To date C.I.N.N. has completed only a "pre-feasibility study" for the proposed Dry Canal. Before the Nicaraguan government will issue C.I.N.N. a concession for construction of the canal a full-scale feasibility study is required that will assess in detail the viability and potential impacts of the megaproject. In addition, C.I.N.N. requires approval from the Regional Council of R.A.A.S. in order to construct the project. Fearing that the canal consortium might invest millions of dollars in consultants' fees on a feasibility study, only to have the project rejected, C.I.N.N. has been attempting to obtain pre-approval of the study before it is actually conducted. In hopes of obtaining this pre-approval, representatives of the C.I.N.N. flew into Bluefields from Managua for the November 2000 Regional Council meeting. In the days leading up to the Regional Council meeting council members had been receiving a great deal of pressure from local and national NGO's and the local population, including the Ramas and the Creole community at Monkey Point. As a result, and much to the dismay of C.I.N.N., the Regional Council did not vote as the consortium would have liked. While C.I.N.N. and presumably Nicaragua's central government had hoped for a quick and easy approval by the Regional Council, instead the Council ruled that no further negotiations on the Dry Canal should proceed until representatives of the Regional Council, the Municipalities of Bluefields and Nueva Guinea, the Rama Indians and the community at Monkey Point are included on the multisectoral commission that oversees negotiations on the Dry Canal. In response to this pronouncement C.I.N.N. has reportedly attempted without success to negotiate directly with the Rama Indians, rather than with the commission of NGOs and local government representatives formed to address the Dry Canal issue on the Atlantic Coast.29 In a separate decision the government of Municipality of Bluefields also released a statement summarily rejecting pre-approval of the Dry Canal's feasibility study. The statement declared that no progress will be made until Nicaragua's central government recognizes the land rights of the Rama Indians and the community at Monkey Point, as well as the rights of the regional government of R.A.A.S. and municipal government of Bluefields to have authority on natural resource management decisions within their respective jurisdictions.30 These recent decisions represent a victory for Nicaraguan civil society, as well as the people of the Atlantic Coast. Too often the nation's regional and local government officials are intimated or won over with favors to the side of the central government.Following these surprising decisions, pressure on the local and regional government officials to concede to the powerful interests behind the Dry Canal project will certainly increase. Nicaraguan NGOs, cooperatives, and indigenous communities, in addition to local and regional governments, have several demands in regard to the proposed Dry Canal or water canal projects:Information. So far only a sketchy outline has been provided to the Nicaraguan public (via the media) of what the Dry Canal and or water canal would actually entail. These megaprojects hold the potential to transform Nicaragua in profound ways, and it is unacceptable that the project details should be known only by the heads of the canal companies and the nation's highest government officials. On the other hand, it is likely that detailed analyses of the potential environmental and social impacts of the megaprojects simply do not exist.Respect of the nation's laws. So far President Aleman and the Dry Canal entrepreneurs have seemed far more concerned with personal benefit than with respecting the nation's laws regarding the environment, indigenous rights, Atlantic Coast autonomy, and property rights in general.Indigenous lands demarcation. Before Nicaragua's central government awards any further resource concessions of any type on the Atlantic Coast, the matter of indigenous land demarcation needs to be settled. The failure to address land demarcation is leading to growing social tension in the nation, especially on the Atlantic Coast.Participation in decision-making. Several commentators within Nicaragua have stated that following extensive public education and discussion of the canal proposals that the proposals should be modified as needed and a public referendum should be held. What is democracy about if not allowing people to have an influence over the events that shape their own lives? Sustainable development. Civil society is calling for the adoption of economic, social, and environmental policies that promote long-term stability and social equity within the nation, rather than huge engineering works that obliterate all in their path and potentially carry large unintended consequences.
Chapter 7: Summary: The Dry Canal, Nicaragua, and the Global EconomyThere can be little doubt that some portion of Nicaragua's population would derive economic benefit from the nation's proposed rail and canal schemes. The question remains, however, of who would truly reap the profits from the megaprojects, and who would suffer. While Nicaraguans are unanimous in their desire for improvement of the nation's overall living standards, many in the country have become skeptical of development strategies that claim to be for the benefit of all but ultimately enrich only a select few, often foreigners, while degrading the nation's resource base. This pattern has characterized Nicaragua's development over most of the past 500 years, and there is reason to believe that the proposed transportation megaprojects might continue the trend, especially the Dry Canal. The sentiment expressed by Hector Mairena of the Nicaraguan organization MAN (Movimiento Ambiental Nicaraguense or Nicaraguan Environmental Movement) is representative of many Nicaraguans' critiques of the Dry Canal: "Poverty is Nicaragua's principal environmental problem. . . .Neither the Suez Canal nor the Panama Canal solved the problems of poverty in those countries. Poverty plus the resulting destruction of the environment and natural resources to survive equals more poverty. So it turns into a vicious circle, which we have to break." [--- Graphic Goes Here ---] (Cartoon by Antonio Canal_as)Does the Dry Canal really offer Nicaragua's "Economic Salvation"? The true significance of the Dry Canal and similar schemes to Nicaragua may be better understood within the larger context of economic globalization. The question of "Would the Dry Canal be good for Nicaragua?" is closely related to the question, "What role will Nicaragua play in the global socioeconomic order?" The severity of this global order was described concisely by the Founding President of the European Bank for Reconstruction and Development, Jacques Attali: "In the coming world order, there will be winners and there will be losers. The losers will outnumber the winners by an unimaginable margin."31It is unlikely that any megaproject scheme such as the Dry Canal will suddenly launch Nicaragua into the small group of "winners". Thus, a better question still may be, "How can a nation such as Nicaragua best insulate itself from the profoundly exploitative, unequal, and unsustainable global economy?" If the global economy continues to be characterized by unsustainable capitalism, then there surely will be an enormous mass of "losers", for wealth and power are being consolidated within a smaller and smaller sector of the global population. If Nicaragua's central government chooses a development strategy that prioritizes pursuing dreams of affluence above meeting the basic needs of the nation's citizens, most Nicaraguans will surely remain clinging to the lowest rungs of the global socioeconomic ladder. A nation such as Nicaragua is simply too weak and disadvantaged to rise to a position of global prominence --at least in the present system. By permitting construction of the Dry Canal, Nicaragua would be resigning itself to a future of servitude to larger nations and corporate powers. These larger powers would in turn like to see Nicaragua fill the following niches in the global economy:

  • The site of a stable and efficient interoceanic transportation route.

  • A source of cheap, willing, non-unionized labor that will staff maquiladoras in the nation's free trade zones. For pennies these workers can produce material goods that will be exported and sold to northern consumers at enormous profits.

  • A source of inexpensive natural resources such as tropical hardwoods, fish, lobster, and shrimp, gold, and silver.

  • A strategic military location from which the entire region can be policed.


Nicaragua's central government seems more than willing to shape the nation accordingly. But is this what the people of Nicaragua really want? A seemingly better option for Nicaragua than further entrenching itself in a subservient role in the global order would be to focus on its own internal development. Types of activities that might be promoted toward this end include: Sustainable agriculture that emphasizes staple crops and strives for food security for Nicaragua, rather than producing luxury crops for northern consumers. Pesticide-intensive monocrop agriculture would be abandoned in favor of a diverse polyculture that emphasizes nutrition and soil conservation techniques. --Sustainable natural resource use including sustainable fishing and forestry. --A diversity of small businesses that produce a variety of goods used by Nicaraguans. --Renewable energy systems utilizing Nicaragua's potential for solar and wind power, rather than relying on costly oil imports or risky off-shore drilling programs. --A dynamic public service sector emphasizing education, health care, and the arts. --Local or regional currency systems that allow Nicaraguans to at least partially bypass the global economy.According to this line of thinking, only after the domestic needs of Nicaraguans are being satisfactorily met would some of the nation's economic activity be oriented toward external markets -- but on Nicaraguans' terms, rather than the unfavorable terms set by the global marketplace. Nonexploitive externally-oriented activities might include eco-tourism and the export of value-added goods rather than raw commodities.As much sense as it might seem to make for a nation such as Nicaragua to recede from the increasingly hostile global economy and focus on its own internal development, at present there are powerful forces that conspire against this option. In addition to internal resistance to "turning inward", foreign economic powers will go to great lengths to discourage this option. Nicaragua's own experience during the 1980s demonstrated what fate can befall a small historically oppressed nation that refuses to quietly accept its subservient role in the global order. The U.S.-funded counterrevolution targeted exactly the types of projects that were aimed toward rebuilding Nicaragua from within, such as schools, health clinics, cooperative farms, and reforestation projects. In addition to the constantly looming threat of military and economic intervention, a further inhibition to Nicaragua's potential redevelopment is the nation's need to service its crushing external debt. Nicaragua "owes" approximately six billion dollars to foreign banks. Until this unpayable debt is erased, the nation will be trapped by international financial institutions into pursuing a "neoliberal" approach to development that favors deference to multinational corporations more than it favors the nation's internal development. An International Campaign of Action Given the powerful external forces that influence the course of political and economic affairs in Nicaragua, clearly Nicaraguan activists and their allies abroad need to be working in unison. With respect to the proposed canal projects in Nicaragua, an international action campaign is warranted that will:

  • Help spread the word about the canal proposals for Nicaragua and stimulate discussion of the likely implications of such projects.

  • Lend support to the Nicaraguan activists and community leaders who are struggling to assure public participation in decisions that will shape the future of their nation.

  • Provide Nicaraguans with an independent perspective on the potential social and environmental impacts of the proposed megaprojects.

  • See to it that the canal projects are not being funded by any institutions over which U.S. taxpayers (at least theoretically) have some influence (e.g. the World Bank, the United Nations, the U.S. government).

  • Help to link the struggles against neoliberalist canal projects in Nicaragua with similar efforts in Mexico and elsewhere.


The proposed dry canals may never materialize. Nicaraguan history is littered with proposed interoceanic routes that have never been completed. However, we cannot rely on past scrapped canal plans to guarantee the failure of this proposal, for on the slim chance that one of the proposed projects may move forward, the potential impacts are too immense to not take the proposals seriously. If nothing else, the time and energy devoted to considering the canal proposals is well-spent if it helps us to realize how rich Nicaragua truly is, and what stands to be lost if not valued and protected. [--- Graphic Goes Here ---] (photo J. Mueller) Girls of the Rio San Juan rainforest. FOOTNOTES 1 Hernandez (1998, July 22) 2 Economist (1999, June 12) 3 Quinn (1997) 4 Fonseca, Roberto (1998, August 6). 5 Canal Interoceanico de Nicaragua, S.A. (1996). 6 Cuadra Clachar, Carlos (1999, January 4) 7 Canal Interoceanico de Nicaragua, S.A. (1996). 8 British Broadcasting Company (1995, April 11). 9 Costantini, Peter (1996). 10 Coone, Tim (1995) 11 Interview with Francisco De Escoto, January 14, 1999, at the C.I.N.N. office in Managua. 12 ( 1 hectare (ha.) is 100 meters x 100 meters, or approximately 2.5 acres. See unit conversion table in Appendix. 13 World Bank, Global Environment Facility. (1997). Pp. 50-52. 14 Jackson, Jeremy B. and Luis D'Croz (1997) Pp. 67-68. 15 See Murray, S.P. and Young, M. (1985) 16 Eisen, Peter (1999, May 27) 17 Furchgott, Jane (1999, Spring) 18 Weinberg (1991) p. 9. 19 Costantini, Peter. (1996, October). 20 Mairena Martinez, Mario (1999, May 7) 21 Monterrey, Carlos Eddy (1999, August 8) 22 Mairena Martinez, Mario (1999, May 7) 23 Acosta, Maria Luisa (1999, November 3). 24 Ellis, Clifford Hall (1999, February 26) 25 Lopez, Vladimir (1999, May 15). 26 Barbarena, Edgard S. (1999, May 15). 27 Palma, Flor de Maria (1999, February 17). 28 ibid; Mairena Martinez, Mario (1999, February 16). 29 Centro Humboldt (1999, November 17) Personal communication. 30 ibid. 31 Athanasiou, Tim. (1996). p. i.Paper prepared by the Nicaragua Network, 1247 "E" Street, SE, Washington, DC 20003; Tel: 202/544-9355; Fax: 202/544-9359; e-mail: nicanet@afgj.org. Web Address: nicanet.org

Materials for this paper came from Canary for the World: A Nicaragua Environmental Primer by Jerry Mueller and the Nicaragua News Service.) This paper may be reproduced without permission

See also Nicaragua's "Dry Canal" - A Vital Focus of Resistance to Neoliberalism and for Building the "Globalization-for-People" Movement.
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