I didn’t pick up on it, since it goes to the viability of the canal as a business (an issue I excluded) but I suspect your hurricane point is pertinent. Certainly Nicaragua’s vulnerability to hurricanes means that at minimum there will be some down time for a Nicaraguan canal, and Panama will forever be competitive from this standpoint. However, this is a seasonal thing and forecasting hurricanes is pretty good, so I don’t see hurricanes as a deal stopper.

Also, just me, I was inwardly chuckling over the hurricane concern because it was a concern about volcano eruptions in Nicaragua that resulted in the canal going to Panama a century ago. The concern about the volcanos was essentially nonsense manufactured by investors in the Panama site, but it seemed to have worked. The Panama investors made money while the Nicaragua investors lost money because of a last minute “Willie Horton” campaign against Nicargua’s volcano.

But this is a peripheral point, a historical chuckle. Hurricanes (and volcanos) are real, but the hurricanes especially are avoidable most of the time. Plus, the investors are already in Nicaragua. Capital doesn’t seem to be a problem this time around, although of course capital could also get cold feet. Here the real question is the extent to which the Chinese government is backing the canal. The official story is that it is not, but there are hints to the contrary and you wonder.

See, I agree with everything you say!

I’m not sure I agree with everything you stated above but you did some deep thinking about it. Your take on the situation is pretty reasonable and based on some experience. I brought in the weather part of the equation because Nicaragua does get brushed by a hurricane from time to time and ships usually have to anchor out to wait their turn to enter a canal. Just imagine even a minimal hurricane or strong tropical storm lashing anchored out ships in the Caribbean awaiting their turn to proceed through the Nica canal to the Pacific. Container Ships have lost many containers in the North Atlantic and Pacific in just gale conditions. Hurricanes are worse. The Panama Canal, on the other hand, is too far south to really ever be affected by hurricanes so this doesn’t even factor into the equation.
Just may .02 centavos to throw out there.
This will be interesting to watch and see how it develops, that is for sure.

To my mind the real risks are political, and the main political risk is that Ortega dies. I doubt he’ll be defeated in an election (hell, he controls the guys who count the votes) or be deposed in a coup (he’s too smart for this) but he’s neither a young nor by some accounts well man. The problem his dying poses is that I seriously doubt either his wife or his sons can hold the regime together as well as Ortega can. He’s actually incredibly savvy politically, and knows exactly when to press as well as when to retreat. The odds that whoever fills his shoes are half as good are slim. Meanwhile, he doesn’t have much of a Secret Police (or an old National Guard) to pick up the dictatorial slack. His “Secret Police” is basically Lenin Cerda, an old communist cellmate from the 1970s, not a spring chicken and a fellow who’s loyalty to Ortega has always been primarily personal. By one informed account, Lenin would slit Ortega’s wife’s throat if she took over the presidency, maybe literarally. (Lenin is a tough customer.) Humberto, Ortega’s brother and a fellow who knows the ropes, is comfortably retired in CR. There are others, but basically if Ortega goes, all political hell breaks loose. And let’s not even consider the opposition. It’s so disorganized that it can’t win an election to dog catcher without US support, and then when it wins it unravels into corruption on one side and self-righteous whining on the other.

But the canal deal was rammed through the legislature by Ortega with the support of legislators personally loyal to him. These guys and gals aren’t stupid–they know that the canal is an authoritarian project, and with them are tens of thousands of Nicas who know it is too. If the lynchpin (Oretga) falls, the whole project collapses.

Meanwhile, we have the Chinese and US governments to contend with. It’s recently been revealed (What a surprise!) that actually state-owned Chinese companies are involved in the project, despite earlier denials that they would not be. Well, what’s China going to do if it gets halfway into a canal project only to see the bottom fall out? More importantly, what’s the US going to do? China, I think, is more rational and informed than the US. It will cautiously look after its long term interests while trying not to ruffle too many feathers. However, many in the US are still stuck in a Cold War mindset, which views China (and Russia) as rivals while assuming that military might is the main solution. Some predict that the US will stop the canal anyway, simply because it always has stopped canal plans that it doesn’t control. I don’t believe this. I think that the US has grown up a good bit since those days and really doesn’t give a flip about another canal in Nicaragua. However, let the bottom fall out of the deal and China be standing alone, and I bet we’d see more action from the US. Add that, hell, who knows, a Republican hawk could well follow Obama, and it’s not impossible that the US views the canal as a conflict with China. If that happens, hold onto your hats.

Although, odds are that China would then just pick up its marbles and go home, leaving a ditch halfway through Nicaragua and Nicaragua a worse basket case than it was.

My thinking is therefore that the critical issue is keeping Ortega on life support and sentient enough to push this project through to completion. Lose him, and it all falls apart.

The irony here is not lost on me. I’m actually saying that we need the dictator to make this happen. What a fuckling pickle a fellow finds himself in when it comes to real world politics.

Though I think the project will employ a lot of Nicas too. The Chinese guys on the ground now are more the management types, and it’s hard to pass on cheap local labor.

I keep thinking that it may not matter whether or not the canal is ever completed, or profitable if it is. Of course, these outcomes would be the best, but I think just pumping the kind of money they’re talking about into Nicaragua for a few years will be beneficial. Also, there are a whole much of side projects, like an oil pipeline and resorts. Even massive failure would probably produce a few successes.

Regarding the destruction, that’s a real possibility (and what CR and the environmentalists are focusing on), but from the standpoint of the Nicas, it may not matter much. The roads in the interior of Nicaragua are still so lousy that most people fly between the coasts, and the main people who reside in the interior seem to be the various rebel groups camped out and plotting the next revolution. You could probably drop a nuclear bomb in the middle of Nicaragua and not affect many of the people. Meanwhile, the chances of them screwing up coastal developments in an economically destructive way are pretty slim.

However, I can’t escape the conviction that tactics like these may be required to complete a project this massive. A more transparent and democratic process would surely create so many delays and additional costs that I seriously doubt the canal would ever be built.

Neither can I escape the conviction that the canal will turn Nicaragua from one of the poorest countries in the world into, well, a more middle-income country.

The issue here is if/when the ends justify the means. So far the means don’t seem that bad, so the end is justifiable, but we don’t know how bad the means may get.

As for Costa Rica, well, its squawking is minor. Nobody’s paying any attention. The sad thing is that Costa Rica blew the opportunity to be part of the project, and as such both to have a strong voice in how it is undertaken and to get in on the profits. What else do you think the Rio San Juan controversy was about? The only real question now is how much Costa Rica’s failed diplomacy will cost the country. My guess is that it will cost Costa Rica a lot.