As I struggle with learning Spanish, some are suggesting I should be learning Chinese instead. While in Seattle I visited a contact at Holland America’s corporate offices: he was learning Chinese. Why? China is emerging as one of the hottest markets for cruise passengers going! On my last contract on a cruise ship for three Med cruises in a row we had groups of over 250 from China. And what is generating a lot of discussion is the approval of Nicaragua to grant a canal concession to a Chinese businessman.
There was this, for example, at Newsroom Panama:
The delivery of a 100 year concession award for an Inter-oceanic Canal to a company without the capital or experience to carry out a project of this magnitude could be the result of a brilliant long-term operation by the Chinese government.
Jorge Cobas, writing in CentralAmericanData says:
As a commercial project, the Inter-Oceanic Canal in Nicaragua is economically unfeasible, in particular because the uncertainty over the return on investment to be made is so large. But for a country destined to be a world leader, as is China, for whom finance of $40 billion is no small thing, possession of a dominion over a waterway in the backyard of its greatest commercial competitor makes this investment a bargain.
President Obama conducted a routine visit to Central America in his second presidential term, and the most important thing he left behind was stories about the menus at the formal dinners. In contrast, Chinese President Xi Jinping left hundreds of millions of dollars in loans for projects, which are, of course, well tied to the convenience of Chinese companies.
Xi Jinping did not visit Nicaragua. However, it could become the most important country for China on the American continent, in this century and the next.
Nicaragua is, under its current institutional conditions, with a Sandinista government which rules with the factual and dubiously democratic style of leftist Latin American governments – often going above the heads of opposing minorities – the Central American country where it is possible to develop this brilliant geopolitical Chinese operation.
Clearly, franchising the Inter-oceanic Canal directly to the Chinese state would have been much resisted and even unfeasible in political terms, both inside and outside of Nicaragua. As we have seen, the government of President Ortega found no obstacle to giving ownership of this concession to a nearly non-existent company. However, given the style of Chinese developmental policy, it is highly unlikely that the company will not be dependent on a government that has a clear need to ensure mastery of global sea routes, not only in terms of trade but also of military strategy.
It is clear that the construction of the Inter-oceanic Canal – if realized – would revolutionize and boost the economy of Nicaragua, to the well deserved benefit of its inhabitants, but it could also convert the country – and region – into a focus for geopolitical tensions, with unpredictable consequences.
What is absolutely certain is that we should hurry up and learn Chinese …
And just the other day the LAS VEGAS SUN ran this Associate Press article. And what I find particularly interesting about this article is the references to the boom in Panama attributed largely to the Panama Canal. Now frankly I don’t think Panama’s success is just due to the Canal, although it certainly is a major factor. Fortunately the US built the Canal and ran it as a service generally breaking even. When the Canal was turned over to Panama many naysayers in the US predicted either that Panama would be unable to run the Canal independently, or that it would run it into the ground. Panama decided to run the Canal as a business and it has become a hugely profitable business. Although run by an independent, mostly non-political, authority, each year the Canal contributes huge amounts directly to the government in addition to all the residual contributions of the country’s major industry. Even with the downturn in the economy and fewer containers from China bound for Wal-Mart, the Canal has continued to make money.
Panama’s boom helps drive Nicaragua canal dreams
Curundu used to be a warren of ramshackle wooden houses and reeking open sewers, one of Panama City’s most notorious refuges for street gangs and drug dealers.Then, three years ago, the government tore down the shacks and built a bustling new neighborhood of concrete apartment buildings, freshly paved streets, basketball courts and fields with artificial turf.
“We live more decently here now. People see a prettier neighborhood, kids playing soccer,” said Ronny Murillo, a 45-year-old ex-convict who helped build one of the billions of dollars in projects made possible by an economic boom driven largely by the $5.25 billion expansion of the Panama Canal. Behind him, enormous cranes loomed over a skyline that has been transformed by dozens of new skyscrapers, many filled with luxury apartments, high-end stores and fashionable boutiques.
In a little more than five years, Panama has slashed its unemployment rate by two-thirds and nearly tripled the rate of government spending as the double-digit growth of the canal-fueled boom has made it the hemisphere’s hottest economy. Just to the north, Nicaragua has watched years of slower growth fail to move it out of its position as the hemisphere’s second-poorest nation, after Haiti.
The deep discrepancy between the fortunes of two Central American neighbors goes a long way toward explaining the Nicaraguan government’s fervent promotion of a Chinese company’s vague proposal to build the hemisphere’s second trans-ocean canal across Nicaragua. Despite deep reservations among opposition lawmakers, environmentalists and independent shipping experts, the country’s leftist-controlled National Assembly voted overwhelmingly Thursday to grant Hong Kong-based HK Nicaragua Canal Development Investment Co. an exclusive, renewable 50-year concession to measure the feasibility of a new canal, then build it and take the lion’s share of the profits.
Underlying much of the enthusiasm in Nicaragua is the hope that the massive new canal could bring a bit of Panama-style prosperity.
“I don’t think we’re going to be just like Panama, because they’re already 100 years ahead of us. But yes, I think this is going to help Nicaragua put poverty behind it and generate jobs,” said Roberto Pasquier, an electric appliance salesman in a market in the Nicaraguan capital, Managua.
Panama’s prosperity has drawn tens of thousands of job-seekers, mostly from Nicaragua and nearby Colombia, Venezuela and the Dominican Republic. Almost 40,000 such workers have been granted legal status in Panama since 2010 under a government program meant to feed the roaring demand for labor to build projects that include Central America’s first subway, a $1.452 billion investment.
Panama has the highest level of human development in Central America according to the United Nations Development Program, which measures factors including life expectancy, health care access and education.
“You can make money here in Panama, buddy,” said Mauricio Hernandez, a 29-year-old Colombian who sells food in the streets of Panama City. “We’re all coming for dollars.”
Panamanian Abel Aparicio, a 49-year-old hotel chef, earns $1,000 a month, twice what he made when he started 20 years ago, and has bought two small apartments that he rents out to supplement his income.
“Nobody’s that worried about losing their job,” he said. “If you leave one job, other opportunities open up, and there are ways to make money besides hotels, which there are a lot of these days,” he said.
Panama’s economy started booming around the time that authorities began the Panama Canal expansion in 2007. By 2010, the annual growth rate rose to around 10 percent, where it’s stayed.
The canal expansion generated 30,000 direct jobs and the administration of populist right-leaning President Ricardo Martinelli estimates that the government will have put $16 billion into public works between 2009 and 2014. That amount was $4.4 billion between 2000 and 2004. A 13.5 percent unemployment rate in 2004 dropped to 4.6 percent in 2012, in a workforce of 1.6 million. The poverty rate dropped from 36 percent in 2002 to 26 percent today.
Wealthy investors, many from Colombia and Venezuela, have built real-estate and tourism projects, restaurants, clothing stores, car dealerships and computer businesses around Panama City.
Nicaragua, meanwhile, doesn’t have any obvious means, besides the possibility of the canal, of rapidly accelerating its growth.
The government says it has created 700,000 jobs since President Daniel Ortega took office in 2007 and poverty has dropped from 50 percent in 2006 to 42 percent last year. But 1 million people remain out of work in a country of 6 million. If the canal is built, the Nicaraguan government says, within five years GDP would go from $11 billion a year to $25 billion, generating hundreds of thousands of new jobs.
“Those who oppose the canal want this country to keep suffering from underdevelopment and poverty,” said Edwin Castro, congressional leader of Ortega’s Sandinista Front.
Nicaragua is betting on businessman Wang Jing, who first appeared in Nicaragua last year as the head of the Xinwei Telecom Enterprise Group, which signed a contract with the government to improve the country’s telecommunications system and promised to invest as much as $700 million dollars. So far, there’s virtually no sign of any spending yet.
“We can’t believe that they’re going to build an inter-ocean canal, when from here it looks like they haven’t even built a single telephone line, or done anything else since they made the announcement. It’s all a lie,” said opposition congressman Eliseo Nunez.
The head of Nicaragua’s state telecommunications institute told reporters last week that the first new telecommunications antennas would be installed by Xinwei in late July or early August, and the delay had been caused by Xinwei’s high manufacturing standards. Still, such problems have fueled widespread doubts inside Nicaragua, where many are skeptical about dreams of Panama-style riches.
“It’s all a grand illusion that they’re selling us, it’s untrue that we’re going to turn into another Panama,” taxi driver Francisco Siles said as he picked up fares outside a Managua hospital. “We’re going to keep being the same poor Nicaragua.”
Weissenstein reported from Mexico City. Luis Manuel Galeano contributed from Managua, Nicaragua, and Kathia Martinez contributed from Panama City.
A couple of additional comments about the points I’ve highlighted. If you are thinking about retiring abroad, about an expat life style, about escaping your home land for one reason or another, wouldn’t you choose a country with an established democratic government [albeit at times just as raucous, screwed up and maybe corrupt as the government in your homeland]? Wouldn’t you choose a country not at war with anything except poverty? Wouldn’t you choose a country that didn’t need a military? [The second US-Panama Canal Treaty promised that the US would protect the neutrality of the Canal in perpetuity - than you very much! - so who needs an army when the US spends so generously on its industrial/military complex?] Wouldn’t you choose a country that is building its infrastructure and is in the midst of an economic boom?
And a second point usually just a by-the-way in this discussion, but one which has enormous world-wide implications: no one has done any environmental impact study. It is said that had de Lesspes been successful in his original plan to create a sea level canal across Panama that the result would have been an ecological disaster. A sea level canal across Nicaragua using Lake Nicaragua might well create environmental chaos.
For more about the fascinating history of Panama and the Panama Canal read my book Cruising The Panama Canal: Centennial Edition.
I’m very pleased that one private university in Panama which specializes in teaching students American-style English is using Cruising The Panama Canal: Centennial Edition as a text in their history classes. They like my presentation of Panamanian history, a wow to me as a guest in their country, and it forces the students to read and discuss in English, and not in a formal, rigid, boring style.
Canal Expansion Unearthing Fantastic Paleontological Findings
Although the Canal is all about business and getting the job completed, the Panama Canal Authority (ACP) recognizes that this is a once in a lifetime opportunity for scientific exploration and discovery. Working closely with the Smithsonian Tropical Research Institute, which has had a presence in the Canal almost from its inception, scientists are making amazing discoveries about the bridge between the continents. This video, although in Spanish – not English or Chinese! – is fairly easy to follow even if you don’t know a lot of Spanish.