HKND: ‘Nicaragua is not a very tranquil country’

Company spokesman says Chinese state businesses will ‘finance a great part of this project’

HKND spokesman Ronald MacLean-Abaroa
Tim Rogers/ Nicaragua Dispatch

HKND spokesman Ronald MacLean-Abaroa

Nicaragua is dangerous. That’s why Chinese surveyors mapping the canal route and flagging properties for expropriation in the Nicaraguan countryside need protection from truckloads of police and soldiers, according to the spokesman of Chinese canal concessioner HKND.

“The people go with protection because we don’t know what can happen,” Ronald MacLean-Abaroa, spokesman of HKND, told The Nicaragua Dispatch this week during an interview in Washington, D.C. “Nicaragua is not a very tranquil country, even though it’s a peaceful country now. But there’s always danger.”

Despite Nicaragua’s regional claims to safety, recent attacks by armed groups in rural parts of the country — in Matagalpa last July and in the RAAS last month — have caused a stir throughout the country. But for others living in the countryside, the uncertainty is coming from a military-led Chinese survey team that is scouting land for expropriation to make way for a canal project that will displace an unknown number of Nicaraguan families.

People living along the proposed canal route in Rivas told Confidencial reporter Wilfredo Miranda that Chinese surveyors and their Nicaraguan military guides have been entering private properties without permission or explanation. Some rural residents say they were asked to produce proof of property ownership and asked to sign legal documents presented by the Chinese survey team. Those who could prove land ownership were reportedly propositioned to sell their properties on the spot.

HKND’s MacLean-Abaroa says Nicaraguans need not worry about the impending expropriations. “There is a law and legislation,” he said. “This is a job that the government and state has to do; we [HKND] just indicate where the canal is going to be, and they have to do the expropriations within the law.”

The law, however, isn’t terribly generous to landowners. According to the Canal Law, hastened through congress last year by eager Sandinista lawmakers, the government can expropriate any private property deemed necessary for the canal project. The rightful owners of the land will be compensated only for the cadastral value, which in most cases is a fraction of the land’s real-estate market value — especially in popular tourism areas such as Rivas. Property owners whose lands are expropriated by the government are not allowed to appeal the decision or negotiate a market-value compensation.

“The law establishes a mechanism that gives total power to the Canal Commission, which is above the law and due process,” José Adan Aguerri, head of COSEP, told The Nicaragua Dispatch in an interview last year. “They alone will determine which lands need to be expropriated, and how much they will pay for them. Period.”

But that doesn’t concern HKND’s MacLean-Abaroa, who takes a happy view of the situation. He says Nicaraguans are feeling more confident about the canal now that “it’s evident that the project is advancing.”

The company spokesman said the Chinese surveyors poking about the countryside won’t assume a “belligerent” attitude towards the people living in the canal’s path, despite entering their property with gun-toting soldiers.

“There won’t be any abuses… at least by the company,” MacLean-Abaroa said.

 Is China going to pony up?

proposed canal route

proposed canal route

Nicaragua’s Chinese canal is scheduled to break ground by December, even though no one knows how much it will cost, who’s paying for it, what the plan is for expropriations, what the environmental impact will be, or what the greater implications are for Nicaragua carving a privately owned swath through the middle of the country that will have an economy larger than that of the sovereign state. Also, there’s no contingency plan for what will happen if the project is abandoned halfway through construction, leaving a filthy brackish scar across Nicaragua’s beautiful face…And, what the hell, am I the only person concerned about the long-term implications of a potentially massive influx of poor Chinese labor into rural Nicaragua??? I mean, seriously, WTF!!! (Deep breaths, Tim. In through the nose, out through the mouth…there…now back to the article)

MacLean-Abaroa insists the project is advancing “as anticipated” and that groundbreaking will happen on schedule. He says construction will most likely begin with the ports and other infrastructure needed to get the heavy equipment into Nicaragua.

Also, good news for pesky environmentalists. “The environmental impact studies have advanced a lot,” MacLean-Abaroa said, without offering further detail.

As for the price of the canal — last estimated at $50 billion — MacLean-Abaroa says “there still isn’t a final number.” But that’s okay, he said, because “obviously the money isn’t needed up front.”

Wang Jing

Wang Jing

The issue of raising funds for the project is “a gradual process,” but one that HKND chairman Wang Jing is on top of, MacLean-Abaroa said. And it now appears that the Chinese government is in fact interested in backing the project, he said.

“Mr. Wang is looking at this issue intensely and working with Chinese state businesses that will have a small amount of participation in this project and will finance a great part of this project,” MacLean-Abaroa said. “And then we have to go out into the international markets once we are ready to.”

That’s a different answer than the one he gave Nicaragua Dispatch in an June, 2013 interview.

“This is a totally privately held company and it is going to be private on the international level,” MacLean-Abaroa told The Nicaragua Dispatch. “We are based in Hong Kong because from there we can raise money in Paris, New York and London. But there will be no government involvement whatsoever, not from China or any other country. The minute you get governments involved in this kind of project, the private investors fly away.”

-ND. June 17, 2013

Regardless of who’s picking up the tab, one things is clear: the project is going to start somewhere at some undermined date this year.

“I don’t know exactly where it is going to start, possibly in Brito, but they will probably work from both sides [of Nicaragua], because there is preparation work that needs to be done on both sides,” MacLean-Abaroa said. “And then there will be a more detailed construction plan.”

 

  • jal maraz

    Nicaragua is not a safe country. Not safe for locals. Not safe for tourists. The government pays a tourism pr firm a lot of money to try and convince us otherwise. Good work, Tim.

    • Chad Cuccaro

      Untrue. Been to Nica many times. Put it this way, you are way safer in Nicaragua than all major cities in the US. Just stay out of Managua and you will be fine.

      • dalepues

        Well, sorry to disagree with you. Why do you think the windows and doors of all Nica homes and businesses are covered with metal bars and razor wire? Why do you think that no Nica cars are left on the street over night? You are more likely to be robbed by the police than protected by them. No tourist is ever safe in Nicaragua. That’s a fact. If you have had all good experiences in your travels, then that speaks to your good fortune, not the state of crime in Nicaragua. There are many who haven’t enjoyed your good fortune, who have been either beaten, robbed, raped, and killed.

        • Nut Butter

          you guys, i found the tico you guys!

  • Pepe Turcon

    And that Tim is nothing compared to what’s coming to them, if they ever come. Just do some research as to what happened to the Cuban “teachers” who came during the 80’s to “teach” the Nicas how to love Fidel and poverty.
    The Cuban teachers ended hanged in the trees all over the Nica countryside, specially in the Atlantic coast so I guess the Chinos will build a half canal or from Brito to say….Chontales?
    Just wait and see….

  • mick mordell

    I’ve held since the beginning of this latest Wang Jing circus act, that it’s little more than a game of 3 monte dressed up to look like the Big Top. It’s an act that works especially well in a country like Nicaragua, a wholly owned subsidiary of the Sandinista Party, politically naive, economically unsophisticated.

    Follow the logic: China, a country awash in cash looking for a place to go, abroad, of course. Wang Jing, a master salesman, able to aggregate all that capital. A deal is made–and this is the kicker–“up-front” money–25, 50 million dollars??–is put in the right pockets–Ortega’s and the Orteguistas, and voila, the deal is done, the law is rubber-stamped by the Assembly. If nothing further ever happens, it doesn’t matter because it is all about the front money that’s split between Wang Jing and his Nica partners. Everything else is window dressing. There will never be a canal.

    A second canal in Central America is unnecessary, excessive, financially un-viable. The world of shipping and finance have recognized it as such.

    • markie-n-den

      Mick, you state, “a second canal in Central America is unnecessary, excessive, financially un-viable. the world of shipping and finance have recognized it as such.” I am not disagreeing with you but I have not seen any information to support you statement. Can you provide some links or references?

      • Juanjo Romero

        also, you must state that there is not evidence on the contrary: who saids that the world needs another canal?

  • Ken Morris

    Let’s take the issue of the expropriation of land at a compensation established by the authorities with no right to appeal.

    Yep, this sounds bad, and probably will turn out badly for some displaced propery owners, but what’s the alternative? If left to market forces, prices for land needed for the canal will skyrocket way beyond what the property is worth without the canal, invite unscrupulous speculators to buy up the land first and then flip it to the canal, give guaranteed employment to thousands of lawyers, and kill the project by both making it too expensive and delaying it decades in the courts.

    I DO NOT LIKE THE WAY THIS PROJECT is moving or has moved, and I welcome articles like this that point out the problems. However, I once again ask: What’s the alternative?

    I’m pretty sure that a project this massive can only be built by an authoritarian state (or maybe two of them in this case), as I am also pretty sure that even once under construction, not to mention after it’s operational, the canal will generate the kind of economic foundation for Nicaragua that will enable it to overcome authoritarianism. Thus, we have a really complicated situation, one that requires us to tolerate authoritarianism for the sake of the kind of economic development that ends authoritarianism.

    There is no easy answer, or at least an easy answer that is good for Nicaragua. I think that the best that can be done is to continue firing volleys of criticisms like this article, since hey things don’t have to be as authoritarian as they are, but I doubt the criticisms will do more than chip away at the unfortunately necessary authoritarianism.

    Return to the issue of land expropriation. We can’t let the speculators and lawyers take control, so how about having a hearing board or some such mechanism to handle appeals? I happen to like this idea, but must confess to doubting how well it would work. What’s to prevent the members of the hearing board from being bought off or threatened to make the decisions the powerful want? Last I looked, this is what motivates many judges and legislators in Nicaragua, so I have no idea how you will find impartial members of a hearing board.

    • markie-n-den

      Ken, I agree with you that I am not happy or pleased with how this project has been advanced. I am concerned that much of the deal has been done in secret (whether it is fair or not is difficult to determine because of the lack of transparency) or with little public discussion or debate.
      In the United States (where I currently live) there are what are referred to as condemnation proceedings that must be available to landowners when the government or a concession (as in this case) wants to “condemn” the land and buy it. If the offer from the government or concession is not believed by the landowner to be fair, then the condemnation proceeding requires the government/concession to provide support for its proposal (the burden of proof is on them and not the landowner) to show that the price is fair and this is to an impartial court. The landowner also has the opportunity to show why it believes the amount should be higher. Yes, this involves attorneys and yes it would increase the cost of a project if the original estimates low-balled the value of the land required.
      Nicaragua, unfortunately, does not appear to have similar rights in place for the current land-owners. Further, the “value” (at least according to the author of the article) is based on some value that is not based in reality. Finally, in Nicaragua the impartiality of the judicial system should not be taken for granted – finding an impartial arbitrator for determining values may be difficult if the government or the canal company began to apply pressure. It is my hope (although not necessarily my expectations) that these obstacles can be overcome and that Ortega does not squander this opportunity to leave a positive legacy in what I believe to be a potentially great country.
      Unlike some, I do believe the canal does is viable, although I do have concerns about the environmental impacts and I want those in the path to be fairly compensated. Those that point to the Panama Canal either do not realize or do not acknowledge that some of the super-max ships will still not be able to go through it after the upgrade, and as we are currently seeing in the event of a prolonged drought, the Panama Canal may have to actually limit the size of ships below its potential maximum size (something that that I believe that a Nicaraguan Canal would have less prospective problems with).
      The alternative that I believe is a better alternative is a railroad across Nicaragua. I believe it would have less environmental impact, lower cost and be more resource and energy efficient than the construction and maintenance of a canal (it would also be better at recovery in the event of a natural disaster like a volcanic eruption, earthquake, hurricane or drought like is potentially impacting the Panama Canal). Yes, it would require deep-water ports (something that the canal is also requiring) and facilities to unload and load ships (not required for the canal). If would also require far less land acquisition than the canal is likely to require. Unfortunately, because the process has not been transparent, I do not know if this alternative was given serious consideration or if I am missing something that would argue in favor of the canal.

      • Ken Morris

        No disagreements from me. My emphasis was just on the real Nicaragua world of politics, which I think is very different from the US.

        Interesting point about the railroad alternative. I don’t know enough about shipping to have an opinion. Maybe the hassle of unloading and reloading other ships on the other end is big? I don’t know.

        Other conjectures might follow from asking, “What is this canal really about?” I’m not sure, but I think an oil pipeline is or was part of the project. This is a Venezuelan concern, since it wants to be able to deliver oil to Asia more cheaply. (Or maybe tanker ships are required.) There are also tourism developments and so forth. It’s possible that the canal is only the anchor for a whole slew of projects, whereas a railroad wouldn’t be.

  • Terry Orzechowski

    Hmm, lets see if the new Canal that will take 3 times as long to cross as the Panama canal is able to take all of the business from the Panama canal that would amount to a Gross billion per year. They will have a guaranteed 45 years to recover their 50 billion dollar estimate and are 5 billion shy of making their money back. Forget expenses. But wait the project includes that giant lake? Will that be logged before it fills up? Who gets the money from that? The project includes resorts miles from the canal! Will that land be taken from the people in the same manner as the land needed for the canal? Could they log the lake site and build the resorts then find they do not have enough money to dig a ditch across the Country? I think they could.

  • simplyfantabulous

    The only people with experience building a canal like this are all dead now, so I think the rest of us are in over our heads in at least part of a complicated subject. I know I am. But something I think that’s worth considering is the canal’s customer base — the commercial shipping industry, a key measure of which is the Baltic Dry Index (BDI). It measures the cost of shipping commodities, and it’s one-fifth of what it was five years ago. There are too many ships for what needs shipping now. As it is, only about 10 percent of the world fleet is too big for Panama, and there’s no market for more ships like that since ships last a long time. There’s no viable commercial reason to rush the job, until the existing fleet wears out.