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Is the Nicaraguan mega-canal failure good news for indigenous communities?

The issue of the mega-canal project is very telling of how Nicaragua's ruler, Daniel Ortega, deals with public affairs, and particularly with indigenous communities. Español

Indigenous Women/Daniel Ortega. Beverly Goldberg.

Nicaragua has been saturating the news lately following an outburst of violence and repression as a consequence of increasing social unrest in one of the poorest and most corrupt countries in the region.

However, beyond the violent reaction to a protest that turned violent itself, the issue of the mega-canal project is very telling of how the country’s ruler, Daniel Ortega, and his government, deal with public affairs, and particularly with the indigenous communities directly affected by their policies. 

The Grand Nicaraguan Canal project hit the headlines in 2013 after mysterious Chinese telecoms billionaire Wang Jing brokered a deal with the Sandinista government for $50 billion (US) to create a waterway connecting the Pacific and Atlantic for ships too large to pass through Panama.

The Nicaraguan “dream” project was, according to president Daniel Ortega, to lift the country out of poverty and set the nation on the road to development, a promise that struck a chord in the second poorest nation of the Americas after Haiti

But when it appeared the project had come to a standstill early this year, many had already begun to perceive it as less of a dream and more of a nightmare. 

The Canal Law 840 posed a threat to Nicaragua’s most vulnerable groups from its inception. It specified that any property or land in the area needed to construct the project would be expropriated by the authorities, affecting up to 100,000 rural and indigenous families without their prior consultation, threatening their wellbeing and survival.

Then there is the issue of government repression and corruption. Questions arose over how the project could have been used to legitimise a leader who has systematically and violently repressed civilians since the beginning of his mandate, but most strikingly since an outbreak of protests in April that have resulted in the deaths of around 300. 

The government of the indigenous Rama-Kriol territory was apparently threatened and co-opted into signing the “Free, Prior, and Informed Consent Agreement of the Grand Interoceanic Canal” by Ortega’s government.

With a ranking in the bottom 30 out of 180 countries in Transparency International’s Corruption Index, doubts were also raised over the ability of the Nicaraguan government to distribute the profits to its population and those in need. 

A mysterious end for Wang Jing

Suspicions surrounding the state of the project began in 2017 when both the local and international press picked up on the fact that 4 years after the infamous deal had been brokered with Chinese entrepreneur Wang Jing, not a single brick had been lain.

Jing’s Hong Kong Nicaragua Canal Development (HKND) group had promised to have the canal finished by 2020, but around June 2017, they began emitting messages to the public that construction had yet to commence because they were in talks with international partners to create the designs for the canal. 

The end of the mega-canal project appeared imminent earlier this year when Panama decided to cut its ties with Taiwan in exchange for opening relations up with Beijing.

As a consequence, Beijing committed to developing Nicaragua’s competitor, the Panama Canal, with concessions of up to 40 years on the projects they develop. This would potentially complicate Chinese involvement in the mega-canal project for the foreseeable future. 

Confusion surrounding the project was also fuelled by Jing’s inability to confirm where he would source the $50 billion needed to carry out the project, feeding rumours that his fortune was not as secure as he had claimed.

In April this year, the Hong Kong offices of his Canal Development group were mysteriously abandoned with no explanation and no information left regarding a potential relocation to another address.

The project has yet to be officially annulled by the government but for now all the signs point to a collapse in Jing’s investment potential.

The massive level of investment required to carry out the project, new Chinese investment in Panama and the negative externalities the project would aggravate make it unlikely another investor will take his place any time soon.

A simultaneous victory and defeat for Nicaragua’s indigenous groups

The Canal Law 840 was passed in 2013 after days of clandestine negotiations between the government and Wang Jing, and its construction was agreed without respecting the right to ‘consulta previa’ (prior consultation). 

Nicaragua committed to adhere to the principle of ‘consulta previa’, the fundamental right of indigenous people to be fairly consulted and fully informed about any measure taken that may affect their communities, upon ratifying Convention 169 of the ILO and the UN Declaration on the Rights of Indigenous Peoples. The principle is even enshrined in the Nicaraguan constitution

Despite this, the government of the indigenous Rama-Kriol territory, which was granted autonomy over its lands in 2009, was apparently threatened and co-opted into signing the “Free, Prior, and Informed Consent Agreement of the Grand Interoceanic Canal” by Ortega’s government, leading indigenous organisations to refer to the agreement as fraudulent as it failed to comply with the necessary ethical procedures. 

It is estimated by the Center for World Indigenous Studies that around 10,000 indigenous people have been killed by Sandinista governments whilst trying to defend their territories and their way of life, therefore the approval of the mega-canal project in 2013 may not have come as a surprise for many.

52 % of the project sanctioned by Ortega’s Sandinista government would have cut through indigenous territories including the lands of the Miskito, Rama and Rama Kriol communities, reinforcing a painful history that indigenous people have suffered under Sandinista rule.

52 % of the project sanctioned by Ortega’s Sandinista government would have cut through indigenous territories including the lands of the Miskito, Rama and Rama Kriol communities, reinforcing a painful history that indigenous people have suffered under Sandinista rule. The Canal Law 840 included a provision that allowed the expropriation of land needed for the canal which would have threatened up to 100,000 rural and indigenous families.

The canal project would not only have implied the displacement of indigenous communities from their lands, but it would have also affected the wetlands and forests on which they depend to survive.

The proposed canal would cut through Lake Nicaragua, the largest lake in Central America used as a source of water for all Nicaraguans, but most importantly as a food source for the indigenous communities of Urbaite Las Pilas and San Jorge Nicaraocalí located on the lake.

As the lake is too shallow for the super tankers that would be passing through, it would have to be dredged, devastating the bed of the lake, causing the water to become polluted, and harming species native to the area.

Opening up the lake to the Atlantic and the Pacific would also cause a surge in invasive species that would threaten the survival of local fish and could have a devastating knock on effect on the local ecosystem. 

The failure of the great canal project will bring simultaneous security and dread to local indigenous groups, who have seen the process of ‘consulta previa’ greatly undermined by the Ortega government but who will no doubt feel relieved at the possibility of the canal no longer being constructed on their land.

Benefitting a repressive, corrupt regime instead of promoting development 

Current president Daniel Ortega has struggled to consolidate democracy and has proved himself incapable of dealing with civil unrest since his mandate began in 2006. 

Prior to the current crisis, Ortega was already known to repress protests with force, evident in the case of the 2014 peaceful demonstration against the canal which was shut down aggressively by the military police, leaving dozens injured and unjustly imprisoned. 

A recent wave of protests in Nicaragua that began over reforms to the government pension scheme has led however to unprecedented levels of violence throughout the country as government forces and allies of Ortega target protesters.

The Pro-Human Rights Organization of Nicaragua estimates that 2100 have been injured and 329 have disappeared or been kidnapped since April, and additionally there have been reports of torture being used against civilians.

Pro-Sandinista paramilitary groups bankrolled by the regime have made a comeback. Reportedly, these paramilitary police groups, comprised of ex-guerrilla members, gang members, and members of the Sandinista youth, were aiming for the head or the chest of protesters, causing numerous fatalities. 

As Ortega has control over the Judiciary, it is highly unlikely any corruption charge against his government or his allies relating to the canal will be taken to court, yet politically motivated cases implicating the opposition are common.

Ortega is also responsible for significant democratic backslides since his presidency began, and corruption levels remain high. His elimination of term limits from the constitution and the centralisation of the Judiciary allowing for serious crimes to be dealt with by loyal judges as opposed to by a jury are particular causes for concern. 

Every branch of government and almost every public institution is now under the control of Ortega’s party and he has recently rejected demands for early elections claiming they will only destabilise the country further. 

Ortega has done little to reassure those concerned about a corruption so strong that it has seeped through every layer of Nicaragua’s government and its institutions.

As Ortega has control over the Judiciary, it is highly unlikely any corruption charge against his government or his allies relating to the canal will be taken to court, yet politically motivated cases implicating the opposition are common. To add to the air of nepotism and impunity, many of Ortega’s family members, including his wife Raquel Murillo (the current vice president), and his sons and daughters, have been promoted to high ranking public positions. 

In the case of the canal the issue of corruption immediately became apparent, with Wang Jing’s company being provided with a concession to operate the canal and enjoy the profits for up to 100 years after its construction, a move that would ensure Nicaragua’s elite and Jing get richer whilst the people of Nicaragua see little benefit. 

As Chinese aid and investment is provided without conditions regarding the state of governance and respect for human rights within a nation, it is unlikely investors would detract as violence increased.

Therefore, there exists a fear that a mega-project of this kind could help provide political legitimacy to an increasingly violent and corrupt regime in the same way that oil provides legitimacy to many undemocratic regimes in the Middle East.

Ortega could use profits to provide handouts that would increase his clientelist networks, or make his population dependent on government aid – like we are currently seeing in Venezuela, without simultaneously promoting development projects.

The end of a nightmare

The end of the mega-canal project is a cause for celebration for many Nicaraguans. Indigenous communities such as the Miskito, Rama, and Rama Kriol will find hope in the seeming desertion of the project that their eco-systems are safe and that they will be free from eviction for the time being. 

However, the Canal Law and Ortega’s underhanded strategy of coercing the Rama-Kriol government into signing an illegitimate ‘consulta previa’ deal has undermined further prior consultation processes and sets a precedence for a similar unlawful deal to be drawn up in the future. 

Many in Nicaragua will be undoubtedly relieved that the mega-canal may never become a reality. 

Many in Nicaragua will be undoubtedly relieved that the mega-canal may never become a reality. Rather than promoting development, the project would have simply strengthened and legitimised a regime that has been responsible for significant democratic backslides and indiscriminate violence targeting civilians.

Has this nightmare really come to an end? Only time will tell, but if Jing’s investment truly falls through, it is highly unlikely anyone else will be willing to assume both the financial and environmental risks of the mega-project of a megalomaniac. 

About the author

Graduate in Hispanic and Latin American Studies from the University of Glasgow, Beverly Goldberg is currently based in Barcelona, where she is interning for democraciaAbierta whilst completing a masters in International Relations. 

Graduada en Estudios Hispánicos y Latinoamericanos en la Universidad de Glasgow, Beverly Goldberg está actualmente residiendo en Barcelona, donde hace prácticas en democraciaAbierta mientras completa su maestría en Relaciones Internacionales. 


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