The Grand Canal: Dreams and smokescreens

The political uncertainty left by the close election in Venezuela, the serious socioeconomic crisis that country is going through and the unconcealable difficulties of Chavismo without Chávez are forcing the Ortega government to prepare for hard times. Nothing is more useful for real problems than selling hopes and blowing smokescreens with the promise of an Interoceanic Canal, a dream encrusted in the national psyche for centuries.

Envío team

In his speech commemorating the birth of General César Augusto Sandino on May 18, President Daniel Ortega reported that during the Central American Presidents’ dinner with their US counterpart in Costa Rica days earlier, he had advised Obama: “President, we’re going with the canal through Nicaragua. We’re working with a Chinese company and of course would be interested in US investors participating in this project.” Obama “listened,” Ortega said, another way of saying the US President preferred not to comment.

At midnight on June 1, Venezuelan President Nicolás Maduro flew into Managua on a publicly unannounced visit with five of his ministers to hold an intense series of meetings with Nicaragua’s presidential couple.

Are those two events related? It would appear so. It’s a perfect time for dreaming, channeling hopes and blowing smokescreens, because things could get difficult… or already are.

“What dreams those were!”

Last year, on February 21, another date related to Sandino, in this case the 78th anniversary of his assassination, Ortega had announced that he was “putting all his efforts” into getting the interoceanic canal built. On that occasion he announced studies for the canal to follow the San Juan River, said the canal would cost US$30 billion and added that he would invite Venezuela and the ALBA countries to invest. Many things have happened in Venezuela since then, making it hard to imagine the Maduro government committing itself to this megaproject, which may still be only a dream in any event.

Dreams abounded in the relations between Chávez and Ortega. On Maduro’s arrival in Managua this time, he recalled the day—January 11, 2007—that Nicaragua joined ALBA and began to dream large. “What joy,” reminisced Maduro, who was Chávez’s foreign minister at the time. “What dreams those were! Some of all those dreams have now become reality and others are on the road to becoming reality.” On the road to becoming reality? After six years of promises, however, the most important dream, the “Bolívar’s Supreme Dream” oil refinery, ALBA’s star megaproject in Nicaragua, has nothing more in place than a cornerstone and there are serious doubts it will ever be built.

A dream of centuries

It must be said that this country’s greatest dream—of a canal that crosses Nicaragua between the two oceans—dates back a lot further than six years. It first took flight in the minds of the Spanish conquerors, once they had mapped out the seductive geography in the south of this new land. They envisioned that what they called El Mar Dulce, (Lake Cocibolca), El Desaugua¬dero, (the Río San Juan) and the narrow strip of land later called La Virgen (the Rivas isthmus) would be an ideal route to take them from the salt sea they had come from (the Atlantic Ocean) to the one they were just beginning to learn about (the Pacific Ocean).

The project to open a route through the middle of America, thus avoiding the long and hazardous route around the southern tip of the continent, passed from nation to nation, generation to generation and dreamer to dreamer. Even General Sandino got caught up in it.

At the end of the 19th century, the United States decided to undertake the job. US engineers analyzed all possible routes in the region’s geography, from the Tehuantepec isthmus in Mexico to the Urabá Gulf in Colombia, and concluded that the canal should go through either Nicaragua or Panama. For technical reasons and even more importantly political ones, Panama was chosen, and its separation from Colombia was promoted in 1903, thus turning it into an independent republic. Ever since then, Panama’s history has been firmly tied to the history of its canal.

Water, water everywhere…

The construction of the Panama Canal involved massive human displacements with the flooding of a number of settlements. The excavations also totally transformed the country’s ecosystem. Over 200 million square meters of earth were removed; what was for years the world’s largest artificial lake, the 423-square-kilometer Gatún, was built; and thousands of hectares of forests were clear cut. Workers from a hundred countries came seeking jobs building the canal, their descendants forming the basis of Panama’s current melting pot.

The canal consumes gigantic quantities of water. Each ship that goes through it requires the movement of 52 million gallons of fresh water through the locks. With an average of 35 ships crossing every day, that means the daily dumping of some 1.8 million gallons of fresh water into the sea. The high contamination level of the rivers and streams that empty into the Alajuela and Gatún lakes largely affects the quality of the water from these lakes that Panama processes for its population’s consumption. In 1998, the El Niño phenomenon led the navigation levels of Gatún Lake to drop to historic lows, making it necessary to limit the draft of the ships crossing the canal.

Ships, ships everywhere…

The Panama Canal was considered the most ambitious engineering work in modern history, greater than the Suez Canal, built a half century earlier. The United States inaugurated it in 1914 and since then it has decisively contributed to the exponential increase in world trade. A ship passing through the canal saves more than 7,800 miles between the east and west coasts of the United States (from New York to San Francisco) by avoiding the trip around Cape Horn at the southern end of Chile’s Tierra del Fuego archipelago.

The annual average of some 14,000 ships crossing the Panama Canal carries a quarter of the traffic between Asia and the east coast of the United States. The rapid growth of China’s economy and economic globalization in general have fostered the construction of ever larger ships in both Asia and Europe. The canal had to be expanded to accommodate their greater width and deeper draft. The construction of a third set of locks both wider and deeper than the first two began in 2007, after a plebiscite. It is costing US$5 billion and is scheduled to finish in 2014, just in time to celebrate the centennial of the canal’s inauguration.

China is cozying up…

Latin America is importing increasing quantities of products “made in China” of all kinds, size and quality, while China’s voracity for South and Central American raw materials seems insatiable. Just to give an idea of the scope, some 600,000 tons of iron are shipped to China every month from Honduras alone, largely extracted from the Agalteca mine in the northern department of Yoro.

The United States and China are the Panama Canal’s main users and the competition between the planet’s two largest economies has revived the dream of “another” canal… one that doesn’t have a US stamp. Should it happen, the route would have to pass through some point of Central America’s geography. That competition also explains China’s cozying up to our region. The attraction of Chinese investments in turn explains the various plans for “dry” canals (highways and railroads connecting ports between the two coasts that are being talked about today in Costa Rica, Honduras, Guatemala, Nicaragua and even Colombia.

“A ridiculous investment”

China’s President Xi Jinping said this month in Mexico that Latin America is experiencing its “golden age,” “so now we investors have to take the next steps” as “major importers” of Latin American raw materials. As one such investor, is China interested in all these dry canal ideas being discussed in Central America? Won’t it be satisfied with the expansion of the Panama Canal, which will be able to handle the increased international trade for decades to come? And let’s not forget that Panama already has two of these dry canals: an interoceanic transport and passenger train since the 19th century and the Colón-Panama Freeway since the 20th, making it possible to travel from one ocean to the other in less than an hour. Will there really be a need to compete against a properly expanded wet canal and two perfectly adequate dry ones at the continent’s narrowest point?

Guatemala’s Pablo Rodas, who was the Central American Bank of Economic Integration’s chief economist for five years, warned last year that any proposal for a dry canal in Central America would be a “ridiculous investment,” a “sand castle, in which the money only ends up washing away.” Rodas particularly considers it a “delusional engineering notion” to construct one in Nicaragua, because “a port and a good highway to the Caribbean would have to be built first, something not achieved in nearly two centuries of independence.”

We are territories in dispute

Perhaps in part for that reason, President Obama seems increasingly interested in Latin America in his second term. The new Pacific Alliance, promoted by Latin American right-wingers as a counterweight to the Brazil-Mercosur-ALBA alliance, is part of that geopolitical competition. Mexico, Peru, Chile and Colombia are already participating in the Pacific Alliance and Costa Rica, Panama and Guatemala are interested in joining.

US Vice President Joe Biden, who has already thrown his hat into the ring for the 2016 presidential elections, visited Mexico and all Central American countries except Nicaragua last year to discuss economic, security and drug-related issues. He has declared that economic and commercial relations with Latin America will be priorities in Obama’s agenda and that our region is experiencing the most active high-level push in a very long time.

On the other side, this month Chinese President Xi Jinping visited Mexico, Trinidad & Tobago and Costa Rica, the only Central American country that has diplomatic relations with the People’s Republic of China. Nicaragua was the first to establish diplomatic relations with it in 1985, but President Chamorro switched to Taiwan in the nineties and that remains the status quo.

While Maduro was travelling to Nicaragua to evoke “dreams on the road,” a Chinese state company reached an agreement with Costa Rica’s state oil company to build a $1-billion refinery in the Limón area. It will also modernize Limón’s port, through which Nicaragua currently exports because it has no deep water port on its own Caribbean coast. Paradoxically Xi Jinping didn’t stop off in Nicaragua, even though a Chinese company will reportedly construct a multibillion dollar interoceanic canal here.

“If the country is small…”

All of Nicaragua’s governments have at one time or another, whether at moments of nationalist enthusiasm or of crises and shake-ups, resurrected the canal dream, encrusted in Nicaragua’s collective psyche for over 150 years. That dream contributed to the poetic power and symbolic weight in people’s mind since their school days of Rubén Darío’s famous line: “If the country is small, one dreams it big.” And what bigger dream is there than that canal? It’s no accident that Ortega’s project isn’t simply referred to as an interoceanic canal, but the “Grand” Canal…

Peddling hopes with that dream is very useful to the Ortega government right now given the uncertain economic scenario with the probable reduction of Venezuelan cooperation; the fall in international prices for our main export products; the structural problem of sizable and persistent unemployment and underemployment, which the government has failed to resolve; and the growing though still dispersed social demands to which the government is not yet managing to provide responses…

Putting himself at the head of the dream of the canal also pays political dividends for Ortega, which are becoming indispensable right now. At the same time he’s creating his monument in history: he will be the one who actually pulled it off.

“Progress for generations”

In June 2012, as the horizon was beginning to darken, President Ortega sent a bill to the National Assembly creating the Grand Canal Authority and Legal Regime. After quick consultations lasting less than a month, Law 800 was approved on July 3. The MRS bench abstained from voting on the grounds that the bill had not been sufficiently studied.

With that law approved, Ortega named his deputy foreign affairs minister, Manuel Coronel Kautz, to head up the authority. During the revolutionary eighties, Coronel Kautz worked in the Ministry of Agricultural Development and Agrarian Reform, participating in the design and initiation of other large projects—touted by the government as grandiose and by envío at the time as “white elephants” unaffordable by a tiny country at war. All of them failed at huge cost to the national economy for reasons that neither he nor his superiors ever explained publicly. When Ortega appointed Coronel Kautz to direct this unquestionably grandiose project, some quipped that having him at the helm is the best possible assurance it will never come to pass.

Once sworn into his new post, Coronel Kautz attended an International Colloquium in Brussels to present the project. He proclaimed that “the philosophy of the State of Nicaragua behind this monumental engineering work is to bring development and sustainable progress to its population, progress rapid enough to be perceptible and stable enough to continue for generations. It is to eradicate the poverty of all its people and achieve political and economic sovereignty, all in accord with the spirit and principles of its national Constitution and its commitment to the Central American Integration System and to ALBA [the Bolivarian Alliance for the Peoples of our America].”

Studies, studies everywhere…

There was no further talk of the project until May of this year, when President Ortega returned to it with suspect urgency. His surprise news was that the canal route through the Río San Juan had been discarded and it will be “more to the north, although always passing through the Great Lake” (Lake Nicaragua, or Cocibolca, as it’s also called). He announced that the canal would be accompanied by two ports, two free trade zones, airstrips, railroads and an oil pipeline, all at a cost of US$40 billion, that a Hong-Kong based company is interested and that pre-feasibility studies were already underway.

Those new studies will be costly, even though similar ones were already done and paid for during the Alemán and Bolaños governments, when they put the cost of the canal project at US$18 billion. In 2012 Nicaragua invested another US$720,000 in a feasibility study for the canal with a Dutch company, which concluded something that was already known: the canal can’t go through the Río San Juan. It has also been learned that ALBA de Nicaragua, S.A. (Albanisa), the joint Venezuelan-Nicaraguan company created in July 2007 by Chávez and Ortega to take charge of sending off the immediate payment for the sale of Venezuelan oil in Nicaragua and investing the profits, among other things, paid yet another US$400,000 for a feasibility study for a Chinese company to build a dry canal of some sort between Monkey Point, south of Bluefields on the Caribbean Coast, and the port of Corinto in the northwestern department of Chinandega.

It’s clear that even if the Grand Canal is never built, abundant public resources will have been spent on studies, consultancies, advice and trips.

A higher destiny

The explanatory preamble to last year’s Law 800 was laden with expressions of providential religiosity. Nicaragua is defined as being in the place “destined” by Providence for this engineering work and Daniel Ortega as the ruler “destined” for the mission of finally realizing Nicaraguans’ dream.

That same religious language is being repeated again now. Echoing the presidential announcement of May 18, First Lady Rosario Murillo commented days later in her ritual midday message: “The canal through Nicaragua will be underway very soon, thanks to God, thanks to the Virgin! It fills us with encouragement, with optimism, with hope as a blessing of the Lord and the Virgin Mary in the month of the Virgin, the month of mothers. It is a strategic project that allows us to guarantee the routes of prosperity and leave behind the Calvary and suffering of poverty, misery and ignorance and to propose development with social justice for ourselves. What better gift for Nicaraguan mothers!”

Will Venezuela provide?

For eight years President Ortega always found hopeful and encouraging responses to any shortfall or economic slip-up, assuring the country that “Venezuela will provide.” Venezuela’s economic crisis now opens the question of whether the “providential oil” will continue to be provided in the same amounts and with the same favorable repayment deadlines and interests Chávez granted Ortega over those years.

Among the 17 countries with which Venezuela exchanges political influence for oil through the Petro-caribe alliance, its relationship with Cuba is the most vital and the one Maduro will prioritize in any financial cutback. According to Cuban economist Carmelo Mesa-Lago, 42% of Cuba’s export goods goes to Venezuela while Venezuela sends 62% of the oil Cuba needs and pays 4 billion euros a year for the professional services of Cuban doctors, nurses, teachers and others it provides. Mesa-Lago concludes that the economic relations with Venezuela amount to 21% of Cuba’s gross domestic product, “a similar percentage to that of the relations with the USSR in its best moment,” and constitute 44% of Cuba’s trade deficit.

Venezuela’s relationship with Nicaragua is smaller, but has been fundamental for our economy, which in recent years has received approximately 10 million barrels of oil a year at extraordinarily advantageous interest rates and repayment deadlines.

Will there be changes
in the oil agreement?

With Venezuela’s oil production dropping due to lack of investments, in turn resulting from the fiscal deficit choking the country’s economy, it’s logical that President Maduro must weigh up the Petrocaribe project’s viability. Nicaragua and Petrocaribe’s other member countries already owe Caracas billions of dollars in long-term debt for the supply of crude.

On May 5 Maduro hosted a summit of the Petrocaribe countries in Caracas and on June 29 they will meet again in Managua to continue this necessary evaluation. Will changes in the conditions of the oil contracts be announced then? Both the President of the Dominican Republic (a Petrocaribe member) and the Vice President of Guatemala (recently added to the alliance) are now publicly discussing the evaluation with concern as it could easily result in higher interest and shorter repayment periods.

Will Venezuela start alleviating the oil debt by requesting more in cash payments and less in loans? Will Venezuela return to the project’s initial scheme in 1980 in alliance with Mexico? At that time, when it was called the San José Agreement, the countries involved immediately paid 75% of the oil purchased from those two countries and the rest stayed in the purchasing country as a long-term soft loan. The current arrangement with Nicaragua is half the oil bill payable within 90 days of receipt and the other half over 25 years at 1% interest.

It should be mentioned that Nicaragua, by 1985 already struggling to finance the contra war unleashed by the United States, was unable to meet those conditions and was cut out of the deal under US pressure, thus forcing it to turn to the Soviet Union for its oil supply. As Ortega surely remembers vividly, President Reagan immediately used that intensification of relations with the USSR as his excuse to push a request for $100 million in contra aid through Congress with very little opposition.

A risky “supreme dream”

Such a favorable supply of oil was a “dream” come true. But Nicaragua is still waiting for the megaproject that Chávez promised Ortega in July 2007. “Bolívar’s Supreme Dream” was to have consisted of an oil refinery that would produce 150,000 barrels of crude a day, supplying Nicaragua and the rest of Central America, leaving earnings of some US$600 million a year. The megaproject included a transoceanic gas pipeline and petrochemical complex.

The “Supreme Dream” was originally projected to go on line in 2010, at a cost of over US$4 billion. But less than $250 million has been executed in six years, mainly to buy and level the land.

This month it was announced that a Chinese company has reportedly subcontracted a private Nicaraguan construction company to build storage tanks for various fuels for some US$30 million. Perhaps the project has been reduced to those tanks, and that may even be the best solution. The Humboldt Center released a study last September warning of the environmental danger involved in both building and operating the refinery and its other components.

The study stated that the refinery, “the engineering work with the greatest potential negative environmental impact ever to be constructed in Nicaragua, was insufficiently consulted with interested sectors and the neighboring population.” It concluded that “it implies inevitable environmental risks to the marine-coast and land ecosystems of Nicaragua’s central Pacific due to their fragility and to the high risks in the zone associated with natural threats [earthquakes, tsunamis, flooding, etc.].”

The study further points out that “the site of that industrial complex is very close to a highly seismic area that has had at least 7 epicenters in the past 10 years.” It also warns of the risk of spills due to the huge volumes of hydrocarbons to be processed every day and notes that the megaproject would increase Nicaragua’s dependence on oil, contradicting the Ortega government’s expressed desire to change the country’s energy matrix.

The Grand Canal triggers
even grander alerts

Similar warnings have been heard about the canal ever since President Ortega announced that it’s going ahead and will cross Lake Cocibolca. Jaime Incer Barquero, a presidential adviser on environmental issues, has explained in detail over all media that this route is technically unviable and could end up an environmental disaster. And given that a Chinese company is now slated to implement the project, he has not shied away from mentioning China’s “disregard” for its own environment. Salvador Montenegro, director of the Center for Research on Aquatic Resources, and Víctor Campos, deputy director of the Humboldt Center, used similar terms of alarm in the media.

The list of reasons to pinch ourselves awake from this dream of a wet canal is significant. Most obviously, the depth of Lake Cocibolca—an average of 9 meters and nowhere more than 13—could not accommodate the passage of the new larger ships the Panama Canal is being expanded to accommodate. The lake’s sedimentation would require ongoing and very costly dredging.

Furthermore, Cocibolca is the second largest source of fresh water on the continent after the Andean Lake Titicaca (8,000 square kilometers), and by law (Law 620, approved in May 2007) is a “national potable water reserve.” Using it as part of the canal crossing would mean losing the assurance of potable water and would pose a risk to the future of the population and the national economy.

And hardly least, the canal would irreversibly affect the diversity and wealth of ecosystems surrounding the lake and would cut the valuable Meso-American Biological Corridor in two. Any oil spill, very plausible given the passage of tankers, would be the end of this irrecoverable liquid treasure…

It is incomprehensible that the presidential couple hasn’t made even the smallest comment about such serious environmental warnings, including those from their own adviser.

An inexplicable rush
and a suspicious deal

Equally incomprehensible is the Presi¬dent’s rush to order an extraordinary National Assembly session on June 7 to receive his bill “related to the Grand Canal” then fast-track it through the Assembly’s Infrastructure Commission in two days, after only hours of consultation. Because his party has a majority in the parliament, his orders were obeyed, without the commission consulting even one environmental expert, either individual or organizational. The plenary pushed the law through and signed it in a formal act just over a week after it was introduced by the executive branch.

That legislation, which amounts to a legal framework agreement, establishes the concession for the construction and 50-year administration of the project, extendable for another 50 years, to an individual, Wang Jing, who also signed a memorandum of understanding with Nicaragua as CEO of the Hong Kong-based company HKC Nicaragua Canal Development Investment Company Limited, created only ten months ago. For the purposes of the Canal project, HKC Nicaragua in turn set up a company legally registered in Nicaragua and a holding company in the Cayman Isles, famous for speculative operations and money laundering.

The framework agreement annuls various key articles that appeared in Law 800, among them one establishing the Grand Canal as Patrimony of the Nation and determining that the State would form a mixed public-private company for its construction, retaining 51% of the shares of the project.

According to constitutional expert Gabriel Álvarez, “The law is granting an alleged Chinese businessman a concession to exercise the broadest faculties of administration, exploitation and commercialization, with a series of fiscal, commercial, juridical and other privileges and benefits, including to transfer those rights and faculties granted him by law to anyone that businessman wishes, with no interference from national political or administrative authorities of the Nicaraguan State, and without Nicaragua being able to oversee, regulate or oppose it for the first 51 years.”

Is it a coincidence that Wang Jing also represents Xinwei Telecom, which showed up in Nicaragua last year with one of the President’s children and announced that it would invest US$2 billion in mobile telephony, to compete with Movistar and Claro? Xinwei, the same company that promised to sell Nicaragua a telecommunications satellite, has yet to install a single telephone line.

Is any of this serious?

What’s behind this hurry to close an operation designed for a century, one so onerous for the country and so clearly and massively detrimental to national sovereignty? If the canal is really happening, it’s a project of such magnitude and such major economic, political, social and environmental consequences for Nicaragua—like those Panama’s canal has had there for nearly a century—that it needs to be thought about seriously. And that requires more time, more consultations and an informed national debate to build national consensus. Any serious investor interested in such a huge and costly project ought to see such consensus as appropriate and even self-serving.

If it isn’t really happening, it means that all this propaganda is no more than a shiny bauble to feed dreams, sell hopes and lure people’s minds away from the probable hard times ahead. It could also be a smoke screen to hide a mega-business deal or gigantic swindle to benefit a certain group.

A deafening silence

When Ortega announced in February 2012 that the Grand Canal would indeed be built, he congratulated Nicaragua for its “liquid possibilities”: “Thanks to God, we have enough water, we have water on all sides: rivers, lakes and lagoons.”

While that’s true on the face of it, Nicaragua’s waters are increasingly contaminated and scarce. Official reports indicate that ENACAL, the state water company, only supplies 36% of the rural population and that over 40% of the water sources it uses don’t have enough water to cover each year’s dry season.

Almost every day so far this year, we have seen news reports of serious sedimentation in the once deep Río Coco and the same thing is happening in the San Juan, our country’s other big river border. Meanwhile, the rivers that feed the Cocibolca are drying up because their basins are severely deforested.

Such unresolved structural problems are aggravated by climate change and by accelerated deforestation resulting from the advance of the agricultural frontier, the persistence of extensive cattle ranching and the insatiable greed in the lucrative lumber business. Both big businesspeople and politicians are participating in these operations that are ravishing our forests, including—as proven this month—the ALBA Forestry company.

Covert or contracted deforestation is wiping out the Bosawás World Biosphere Reserve, which is the largest forest reserve in Central America, the second largest in the continent after the Amazon and the third in biological value and size on the planet. On top of that, the Grand Canal could wipe out Cocibolca, the largest potable water reserve in Central America and second largest on the American continent.

If the canal is really happening, the silence of the presidential couple, governmental officials and the governing party’s legislative bench regarding the environmental warnings is deafening.

The Maduro-Ortega agenda

President Maduro’s surprise visit to Nicaragua came in the midst of this context of predicted difficulties, real problems and smoke screens to hide them and sell dreams. He was accompanied by his ministers of the presidency, youth, food, agriculture and tourism—curiously not the economy. Nicaragua’s side was represented by 12 ministers and other top officials of the Ortega government.

They spent all of the next day, Sunday, June 2, in bi-national working tables. Their work was capped in the late afternoon by a public act in Managua’s Plaza of the Revolution, with the now ritual audience of youths in artsy white party t-shirts seated obediently in long rows of white seats before a stage adorned with costly floral arrangements. This time, Chávez, his hands together in a prayerful pose, looked down on the proceedings in a gigantic photograph. The agreements they had reached during the day were signed on this stage.

President Maduro informed the crowd and media reporters of three framework social cooperation agreements to “raise the quality of public education at all levels in Nicaragua and Venezuela,” “ strengthen the construction of the public health system and train new doctors and nurses,” and “strengthen the productive cooperatives.” He also spoke of a party-based agreement for the FSLN and PSUV youth organizations to join forces. And, with respect to the Safe Homeland Plan he has made a centerpiece of his administration, Maduro reported on twinning between the Venezuelan and Nicaragua police forces, given that “it is well known how Nicaragua, with its own police model, has managed to maintain the highest rates of protection and security on the continent, despite the criminal pandemic that has taken over Latin America.” This pandemic seems to have particularly infected Venezuela: days earlier Maduro had declared that 90% of the kidnappings in Venezuela are by the Police itself.

In their speeches and public declarations neither Maduro nor Ortega and his wife, who is in charge of communication and citizenship for the government, mentioned any change in the conditions of the current oil agreement, the heart of Venezuela’s cooperation with Nicaragua. Nor was there any mention of the oil refinery or the much heralded Grand Canal, in which Ortega had earlier invited Venezuela and the other ALBA countries to invest…

Why did Maduro come?

Maduro’s unannounced visit and the government’s now familiar habit of not providing any transparent information necessarily triggered assumptions, conjectures and suspicions about the purpose of his trip.

It was said that Managua was simply one stop more on Maduro’s Latin American junket to legitimize himself as Chávez’s successor, having already visited Alba member countries Cuba, Ecuador and Bolivia. But it’s hard to envision how Ortega could add much international legitimacy to Nicolás Maduro.

It was also said that he had come in search of food given Venezuela’s serious basic product supply crisis. Nicaragua is already exporting sugar, milk, beef and black beans to Venezuela and the quotas for those products will surely be increased.

We also sell Venezuela cattle on the hoof. As of 2012, Nicaragua had sent Venezuela more than 50,000 head of heifers and young bulls, which has concerned experts given the possible deterioration of the national herd’s genetic pool. Even with increased export levels, it’s hard to believe that Nicaragua’s limited production could substantively cover Venezuela’s enormous demand.

Another guess was that Maduro came to check out the accounts of the ALBA businesses in Nicaragua. And indeed the timing of the visit rang some bells, as on May 28, only days before his arrival, Comptroller General Guillermo Argüello Poessy announced that he was doing an audit of Albanisa.

So what did Maduro himself give as his reason for coming? He said he came to “ratify, strengthen and expand” Venezuelan cooperation and “draw up a map of bilateral cooperation that is better than what we have had so far.” He also announced that he would be back on June 29 for the Petrocaribe summit in Managua, which he said would be “historic” because it would launch the “Petrocaribe Economic Zone (the ZEP), another great step that will also bear the loving mark of someone for whom politics was the redemption of the peoples,” referring to Chávez.

“Albanisa manages
a lot of money”

Argüello Poessy explained that he was auditing Albanisa because “it is a company that manages a lot of money.” The official data shows Venezuela’s cooperation with Nicaragua having now hit the US$2.8 billion mark in just over the past five years. This month the comptroller provided a new piece of information: since 2007, when it was created, Albanisa reports sales amounting to the equivalent of US$1.82 billion.

Nearly half of Albanisa’s money belongs to the Nicaraguan State, which has 49% of the Albanisa shares through Petróleos de Nicaragua (Petronic), the state oil company. Venezuela has the other 51% through Petróleos de Venezuela (PDVSA). Albanisa’s president is Asdrúbal Chávez, the late Venezuelan President’s first cousin. The vice president is Francisco López, the FSLN’s treasurer and also director of Petronic.

Albanisa manages both the import and storage of the Venezuelan oil that comes into Nicaragua through Petrocaribe and now controls a third of the distribution of that oil and other petroleum-based fuels around the country. This provides it a profit margin per gallon that exceeds the average margin of similar businesses in the rest of Central America.

A dozen new companies have been generated by Albanisa’s profits in a growing range of areas (oil-generated and renewable energy; foods; livestock; construction; forestry…). All are in the hands of an increasingly powerful economic group that operates in the protective shade of the presidential couple. So far all of Albanisa’s transactions are being managed at the discretion of the presidential couple and are allegedly being used to finance government programs, party activities and various businesses. They don’t go through the national budget, aren’t taxed and have never been open to any institutional control much less public scrutiny.

For years the political opposition and society in general have demanded transparency regarding the Venezuelan cooperation channeled through Albanisa, particularly since the executive branch has played a shell game about the amount of the long-term debt generated and who’s responsible for it. Until now, that demand has always fallen on deaf ears, with the government arguing when convenient that Albanisa is a private company and it is only obliged to audit public ones.

Will this government
audit be trustworthy?

So did Venezuela ask for this recently-announced audit because it’s now requiring transparency of its Nicaraguan counterpart so it can weigh what to do as the creditor? Or has the Ortega government itself calculated that, given the new uncertainties in Venezuela, it’s best to start treating Albanisa as an auditable—i.e. public—company, so that any debts as a privatized agent of the Venezuelan aid will now fall to the State? Or are both things true?

The latter hypothesis has a precedent. In March 2011, Albanisa sources leaked a copy of the Albanisa accounts for 2007 and 2008 plus eight months of 2009 to the weekly magazine Confidencial and the Channel 12 program “Esta Semana,” both directed by journalist Carlos Fernando Chamorro. A Venezuelan delegation had come in 2009 to analyze that accounting, discovered anomalies and took some measures.

Two public accounting experts asked by Confidencial to analyze the information concluded that “this is a company administered with weak internal controls, not very reliable financial statements and a high rate of indebtedness.” One of them commented, “I would go so far as to say that it is not an auditable company.”

That opens up the question: Can an audit conducted by the Comptroller General’s Office, a state institution that, like all others, is totally subordinated to Ortega, possibly be reliable? Himself hardly a symbol of transparency, Argüello Poessy is one of the numerous top officials whose terms are long since up but have never been replaced or even reappointed by Ortega.

A dream, a smoke
screen or both?

This has been a month full of questions and premonitions. Are the days numbered for the advantageous conditions of the Petrocaribe agreement, the ALBA project and the Community of Latin American and Caribbean States—the 33-nation bloc created two years ago to consolidate the region’s integration independent of the US-dominated Organization of American States—given their reliance on Venezuela’s oil money? Will they only last as long as Nicolás Maduro is sitting in Venezuela’s presidential seat? That seems to be what those governing Nicaragua today think, although they aren’t saying so.

Is the Grand Canal a functional project in these times of uncertainty or nothing more than a temporary ploy to re-channel hopes of finally ending poverty and achieving full employment, progress and development, a shiny bauble to distract people from thinking too much about the uncertainty or the possibly murky business deals? We lack the information to know how great that uncertainty is or do more than conjecture about the business deals based on the scant but hardly encouraging evidence.

For many years now, Nicaragua’s politicians and business elite have seen the interoceanic canal, the “real” one, not the various ideas for dry ones, as our way to leap into modernity, shaking off the bonds of our backward agrarian economy by taking advantage of our strategic geography to assume our place in the world. Along with the elites, generations of ordinary Nicaraguans learned to dream that dream.

Nicaragua has every right to development and Nicaraguans to dream of a canal that would help make that right a reality. But it belongs to the Nicaraguan people and includes the right to decide how, where, when and with whom to shoulder that project and to do so based on full and transparent disclosure of what it involves, what it will cost and all the other pros and cons. Although not the only obstacle today, the main one from the perspective of sustainable development is environmental.

Are we joining the ranks
of the extractivist Left?

If all the hoopla about the canal is because it’s a serious project and not just a temporary diversion, it’s way too important to be entered into with such limited seriousness, passing laws without measuring their ecological consequences and talking about it with the anti-ecological superficiality that characterizes this government. It’s the same mentality that characterizes the new Latin American Left that has allied with transnational capitalism, so aptly described by Latin American scholar James Petras in his article, “The extractive capitalism of Latin America’s progressive camp” in the June 2012 issue of envío.

It’s an extremely flexible Left when it comes to favoring the large-scale influx of transnational capital, whether clean or dirty, giving out mining concessions in indigenous zones or natural reserves and promoting infrastructural megaprojects, ecological costs be damned... It’s a Left that hasn’t incorporated an environmental vision; that still relies on that old unsustainable, ecologically ravaging developmentalist approach; that still justifies itself with the questionable logic that if developed countries did it before, why shouldn’t we do it now.

Daniel Ortega’s FSLN is a card-carrying member of that Left. Ignoring the environmental obstacles that counsel abandoning this megaproject, selling dozens of gold mining concessions to transnationals and participating in or at best covering up for those responsible for the massive cutting down of our forests, Ortega is just another Latin American ruler who sees no problem with short-sighted extractivism, with selling our resources off to savage capitalism.

He belongs to a Left that has stopped being red yet hasn’t learned to be green. It is known as the “brown” Left for obvious ecological reasons.

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