June 22nd 2013

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Articles from this issue:

EDITORIAL: Kevin Rudd's last hurrah

CANBERRA OBSERVED: Can Australia afford Abbott's paid parental leave scheme?

SOUTH AUSTRALIA: New prostitution bill does nothing to protect women

SOCIETY: Gay activism encouraged in Australia's armed services

WORLD WAR II: Remembering D-Day with Ike and Reagan

NATIONAL AFFAIRS: Labor to lose seats over boat people policy

OPINION: Has trade liberalisation helped or harmed Australia?

FOREIGN AFFAIRS: China to build rival to Panama Canal

UNITED STATES: Why Obama's scandals are worse than Watergate

MIDDLE EAST: No winners in Syrian civil war

MARRIAGE: Pity the child of same-sex union

LIFE ISSUES: Doctors who recommend abortion

SCHOOLS: How students can rediscover truth, beauty and goodness

CINEMA: Gatsby makes The Great Gatsby

BOOK REVIEW How Marxist was Marx?

BOOK REVIEW The mystery behind Mallory's quest

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China to build rival to Panama Canal

by Peter Westmore

News Weekly, June 22, 2013

The left-wing Sandinista government of Nicaragua has fast-tracked a plan for China to build and operate a rival to the Panama Canal, linking the Pacific and Atlantic Oceans.

The plan was pushed through the Sandinista-controlled Nicaraguan national assembly, with the strong support of the president, Daniel Ortega. Ortega led a popular uprising which overthrew the former Somoza dictatorship in 1979, and held onto power until defeated in a democratic election in 1990.

He was elected president again in 2006, and re-elected in 2012. However, Nicaragua remains one of the poorest countries in central America.

The plan for a canal through Nicaragua has been talked about for over a century. Before the Panama Canal was built in the early 20th century, plans were made for a canal crossing through Nicaragua, capitalising on the two large freshwater lakes which exist in the country, Lake Managua and Lake Nicaragua.

The main impediment to the construction is the mountain range, which rises above 1,000 metres through the middle of the country.

Legislation to formalise the project has been accelerated through Nicaragua’s national assembly in just a week.

It will involve construction of a 300 km waterway through Nicaragua at a cost of $40 billion, and take an estimated 12 years to complete.

It will comprise canals, massive locks and traverse the fresh-water Lake Nicaragua.It will be far longer than the Panama or Suez canals.

A Hong Kong-registered but Chinese-owned company, HK Nicaragua Canal Development Investment Co. Ltd, is working with the government on the massive project.

Eduardo Lugo, a Panamanian private consultant who worked on traffic-demand calculations on the $5 billion Panama Canal expansion, says: “Forty billion dollars is an extremely high amount and, based on my experience and the studies we have done on world trade flows, the amount of traffic that would be needed to pay for a project of this size doesn’t exist.”

However, with Chinese capital and expanding international trade, the project will be able to count on use by Chinese ships, now large users of the Panama canal, as well as ships too large to traverse the Panama canal.

The new canal will permit the transit of ships of up to 250,000 tonnes, twice as large as those which can pass through the Panama canal.

With 1.7 billion gallons (6.6 million cubic meters) of water per day needed to run Nicaragua’s proposed locks, and tens of millions of tonnes of excavation needed, the project is daunting.

The proposed route outmatches the challenges of building the Panama Canal, which took 10 years (1903-1914) and cost the lives of about 5,600 workers. According to the 2006 project details, Nicaragua’s canal would have to be more than three times longer than Panama’s, which cuts through Central America’s narrowest point.

Promoters point to advantages, such as the incorporation of huge Lake Nicaragua into the crossing. Once inside the lake, big ocean-going freighters could travel about 80 kilometres before passing through a pair of locks, and into a waterway dug across the waist of the country to the low, swampy Atlantic coast.

With President Ortega’s allies controlling the national legislature, the Chinese company was able to secure legislation through the Nicaraguan Congress.

An opposition congressman, Luis Callejas, said lawmakers were only asked to discuss the bill a few days before a vote was held to approve the project. “I do not understand what the rush is,” Callejas said. “It’s such a sensitive topic that the population should be consulted.”

The strategic implications of the new canal are also profound. Because the Panama Canal is run by the US, it is able to control both civilian and military ships passing from the Pacific to the Atlantic Ocean.

The new canal, to be part-owned by the Nicaraguan government, will be given to the Chinese operators with a 100-year lease. This will effectively give China control over this strategic access route.

While the United States has remained silent on China’s initiative, there is no doubt that it will view the development with great concern.

Since the 19th century, the United States has acted vigorously to prevent foreign powers extending their spheres of influence into the Western hemisphere.

Initially, this was directed against European powers; but in the 20th century the United States intervened politically and militarily to try to prevent Latin American countries falling into the Soviet sphere of influence. Its efforts to isolate communist Cuba for over 50 years was a clear example of this policy.

The project will tie Nicaragua’s economy into China’s to a large extent, and the scale of the project will make it the largest employer in the country for many years.

The Chinese initiative will widen the range of areas of potential conflict with the United States, which has disputes with China over North Korea, trade and exchange rates, Chinese claims to sovereignty in the South China Sea, and Beijing’s persecution of minorities, among others.

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