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talkpolitics2014-01-20 10:04 pm
abomvubuso.livejournal.com) wrote in talkpolitics2014-01-20 10:04 pm
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A tale of two routes
Holding control of the sea routes is far from just being part of the romantic tales of the sailors of old, and one-eyed brigands with expletive-infested parrots perched on their shoulders. Today, more than ever, the so-called Great Powers are ambitiously scrambling to tighten their grip on vast chunks of the world oceans. Especially if those chunks are adjacent to islands teaming with oil platforms, or narrow passages sitting in the middle of hugely strategic trade paths. And naturally, a very special place in this lot is usually occupied by hand-dug canals, particularly those connecting oceans and seas. Especially the two most emblematic ones, the Suez canal and the Panama canal. History remembers all sorts of drama playing out around these water arteries, exactly due to their key geostrategic positioning. Today, these are focusing the attention of the big players once more.
The old veteran, the Suez canal, which this year completes 150 years of age, is as important with the 8% of the world's shipping traffic that's passing through, as it is crucial for the US habit of circulating its military vessels between the Mediterranean and the turbulent Middle East. The short path to the Horn of Africa, which is such a strategic launching pad for projecting influence in the Indian Ocean region, is also a big bonus. Including for the French military, which seems to be getting increasingly involved on this continent. Add emerging India, and the new "tiger" Indonesia, who both seem promisingly close to investment-starved, chronically struggling Europe - and the picture gets somewhat complete.
But the more dynamic storylines have inevitably developed around the younger of the two "global canals" as of late - the Panama canal. A major expansion of the facility is underway there, but chances are that it might be halted. In fact we're talking of a whole new canal, parallel to the old one, running deeper and wider. The construction of the world's biggest ongoing infrastructure project was commenced back in 2007. Panama figured at the time that the waning cargo flow through its cherished facility (4% of the world's trade at the time) was due to its outdated parameters. In simple words, the canal just turned out to be too narrow and shallow for the humongous oil tankers and cruise liners of the 21st century. So in 2009 a competition was organised for choosing a contractor that would expand the project, and it was won by an European consortium which involved Spanish, Italian and Belgian companies, with a minor participation of the Panamanian state. They offered to build the more important section of the expansion for roughly $ 3 bn (the whole project would cost $ 5 bn overall), and open the locks at the end of 2014 or mid 2015. The Europeans won the auction because of their cheap proposal, pushing aside their main rival, an influential US company whose offer exceeded theirs by $ 1 bn.
The echos of the first quarrels were heard as early as the first days of 2014. Turned out the Spanish/Italian consortium was making claims for extra costs by a billion - which is exactly the amount that had torpedoed the US offer in the first place. Their excuse: the initial geological explorations that the Panamanian side had presented, had been inaccurate, and the local basalt that's used for preparing the concrete for the works does not meet the technical requirements - so they'd have to deliver concrete from afar. Panama voiced their indignation with this arm-twisting via their business representative, the chairman of the state firm ACP, Jorge Quijano, whose statements in recent weeks have been much to the effect of, Not only were those Europeans given a chance to take a breath of air amidst the crisis, but now they are trying to skin us alive! What are they thinking - that we are still some kind of wild natives!? We can complete this canal on our own!
The tone of discourse between the two sides was raised to such a peak that the Spanish minister of infrastructure, Ana Pastor was compelled to make an urgent trip to Panama and visit president Ricardo Martinelli, and try to bring the matters back into the realm of dialogue and compromise. Things are still kinda hanging in the air as of now: the European consortium has not withdrawn their threat to freeze all construction works by the end of the month unless they get the subsidies that they demand from Panama. And the third side, the shunned Americans, are sniffing around, trying to figure out where the wind is blowing, and whether they wouldn't be presented with a second chance.
Meanwhile, nearby Nicaragua ain't sleeping. It has already advanced another, much more ambitious project, worth the staggering amount of $ 44 bn, which is 4 times the country's GDP. With a decision of the Nicaraguan parliament from last June, a second canal is to be dug between the Atlantic and the Pacific ocean. In fact the idea for such a water route is quite old, it dates back to the 19th century, when the choice between Panama and Nicaragua was literally hanging on a thread till the very last minute, when the former option eventually prevailed. Nicaragua's advantage is in its two big lakes, Nicaragua and Managua, and also the river San Juan, which all provide natural and convenient water basins, leaving the hardest digging for one last very short section near the Pacific coast.
Despite the choice of Panama, Nicaragua never really gave up on their dream to have a canal of their own. But the key obstacle, naturally, was the lack of an investor generous and ambitious enough to kick the project into motion. Enter 41 y.o. Chinese businessman and Hong Kong based multi-billionaire Wang Jing. Although his company HKND Group is nominally private, lots of observers believe he's being supported by the Chinese state itself, which is using him as a cutting edge tool in their newly found neo-colonial aspirations in Central America. Indeed, China is strategically interested to enhance the delivery of its oil tankers directly from friendly Venezuela to the Chinese ports. And what could be a shorter way than a "private" trans-oceanic canal? The Chinese expansion into the entire Latin American region has been accelerating in recent years, their appetites growing exponentially - and a water route like that would facilitate the process quite a bit.
Most commenters are certain that Beijing's biggest benefit from completing such a project would not be as economic as it would be of strategic nature. And in this context, there've been a number of speculations whether the new canal is really a promise for upcoming stand-off between China and the US in their struggle for regional domination - or conversely, the facility would actually be used by both powers, whose mutual future, now more than ever, looks likely to bind them together into a common fate. I'm talking of pragmatism trumping ideological and even geopolitical deliberations, and compelling both sides to work with each other to their mutual benefit. In fact, one might argue that the Sino-American relations have been much more intimate than any of the two sides would probably want to admit. In other words, more things connect them than the things that separate them. Let me just say that the two giants presently make up 1/3 of the world's economy.
Besides, it's not like the US doesn't have reliable mechanisms of their own to put a halt on this project in case it really disturbs them that much. Since they're obviously not doing it at this point but are keeping silent about it instead, then this might be a sign that they're rather happy with the prospect of a new, modern connection opening up right under their nose (and much closer to both US coasts, might I add). And that could be something the two sides could step on as a foundation to work together on, rather than quarrel about it.
The Nicaraguan canal will be an investment that's bound to bring continuous benefits for half a century ahead - at least that's the contract term of Wang Jing's company. According to the offer, HKND will be paying Nicaragua $ 10 million for the first 10 years, then they'll be granting them a certain share of the profits. The Central American country, where 42% of the population lives under the poverty line, is hoping that the project would swell its national revenue by roughly 10%.
Wang Jing has said that he'll only deliver the money to launch the project. The following installments would have to be provided by international investors which he'll be recruiting to the cause. Construction is supposed to take between 6 and 11 years, a number of additional facilities being built around the canal in the process, like ports, railways, an airport, an oil pipeline, a free-trade zone, etc.
Of course, the rivals from Panama (which, among other things, is one of the most popular offshore zones among the world's super-wealthy) are gnashing their teeth and constantly reminding that the Nicaraguan project is doomed because of the frequent earthquakes and hurricanes there. And a number of environmentalist organisations and scientists are warning that the new canal could seriously damage the unique ecological and ethnic system around Lake Nicaragua. Its waters host fresh-water sharks, and its small islands are dotted with a myriad of indigenous communities. It's unclear what effects the huge influx of imported work-force, new technologies and industrial expansion would have on the region - not to mention how devastating the consequences of opening up the fresh-water system of the two lakes to salty ocean water would have on the entire regional ecosystem.
But whatever happens to any or both of these two projects, the Panama canal and the Nicaragua canal, it's clear that they're already causing a lot of bustle throughout the entire region. The US are already considering expanding their Pacific ports, with the hopes that they'll soon be able to host the gigantic ships that'll start circulating through at least one of the two canals. Similar plans are related to Cuba, whose economy is only now slowly beginning to open up to the world. The Cubans are already building an expansion of their Mariel port on the Gulf of Mexico, in collaboration with Brazil. The first free-trade zone on Cuban territory will pop up there in the years to follow.
In other words, it's time the bored, stagnating, fear-shaken, crisis-laden Europe faced the facts: the more dynamic world, the one that's hungry for expansion and growth and new endeavours, has long moved on to other places, constantly looking for new horizons in lands never thought of before. And Central America is fast becoming one of those. The major players have two options: either get on the bandwagon, or stay out of the game, and take one more step further towards oblivion.
The old veteran, the Suez canal, which this year completes 150 years of age, is as important with the 8% of the world's shipping traffic that's passing through, as it is crucial for the US habit of circulating its military vessels between the Mediterranean and the turbulent Middle East. The short path to the Horn of Africa, which is such a strategic launching pad for projecting influence in the Indian Ocean region, is also a big bonus. Including for the French military, which seems to be getting increasingly involved on this continent. Add emerging India, and the new "tiger" Indonesia, who both seem promisingly close to investment-starved, chronically struggling Europe - and the picture gets somewhat complete.
But the more dynamic storylines have inevitably developed around the younger of the two "global canals" as of late - the Panama canal. A major expansion of the facility is underway there, but chances are that it might be halted. In fact we're talking of a whole new canal, parallel to the old one, running deeper and wider. The construction of the world's biggest ongoing infrastructure project was commenced back in 2007. Panama figured at the time that the waning cargo flow through its cherished facility (4% of the world's trade at the time) was due to its outdated parameters. In simple words, the canal just turned out to be too narrow and shallow for the humongous oil tankers and cruise liners of the 21st century. So in 2009 a competition was organised for choosing a contractor that would expand the project, and it was won by an European consortium which involved Spanish, Italian and Belgian companies, with a minor participation of the Panamanian state. They offered to build the more important section of the expansion for roughly $ 3 bn (the whole project would cost $ 5 bn overall), and open the locks at the end of 2014 or mid 2015. The Europeans won the auction because of their cheap proposal, pushing aside their main rival, an influential US company whose offer exceeded theirs by $ 1 bn.
The echos of the first quarrels were heard as early as the first days of 2014. Turned out the Spanish/Italian consortium was making claims for extra costs by a billion - which is exactly the amount that had torpedoed the US offer in the first place. Their excuse: the initial geological explorations that the Panamanian side had presented, had been inaccurate, and the local basalt that's used for preparing the concrete for the works does not meet the technical requirements - so they'd have to deliver concrete from afar. Panama voiced their indignation with this arm-twisting via their business representative, the chairman of the state firm ACP, Jorge Quijano, whose statements in recent weeks have been much to the effect of, Not only were those Europeans given a chance to take a breath of air amidst the crisis, but now they are trying to skin us alive! What are they thinking - that we are still some kind of wild natives!? We can complete this canal on our own!
The tone of discourse between the two sides was raised to such a peak that the Spanish minister of infrastructure, Ana Pastor was compelled to make an urgent trip to Panama and visit president Ricardo Martinelli, and try to bring the matters back into the realm of dialogue and compromise. Things are still kinda hanging in the air as of now: the European consortium has not withdrawn their threat to freeze all construction works by the end of the month unless they get the subsidies that they demand from Panama. And the third side, the shunned Americans, are sniffing around, trying to figure out where the wind is blowing, and whether they wouldn't be presented with a second chance.
Meanwhile, nearby Nicaragua ain't sleeping. It has already advanced another, much more ambitious project, worth the staggering amount of $ 44 bn, which is 4 times the country's GDP. With a decision of the Nicaraguan parliament from last June, a second canal is to be dug between the Atlantic and the Pacific ocean. In fact the idea for such a water route is quite old, it dates back to the 19th century, when the choice between Panama and Nicaragua was literally hanging on a thread till the very last minute, when the former option eventually prevailed. Nicaragua's advantage is in its two big lakes, Nicaragua and Managua, and also the river San Juan, which all provide natural and convenient water basins, leaving the hardest digging for one last very short section near the Pacific coast.
Despite the choice of Panama, Nicaragua never really gave up on their dream to have a canal of their own. But the key obstacle, naturally, was the lack of an investor generous and ambitious enough to kick the project into motion. Enter 41 y.o. Chinese businessman and Hong Kong based multi-billionaire Wang Jing. Although his company HKND Group is nominally private, lots of observers believe he's being supported by the Chinese state itself, which is using him as a cutting edge tool in their newly found neo-colonial aspirations in Central America. Indeed, China is strategically interested to enhance the delivery of its oil tankers directly from friendly Venezuela to the Chinese ports. And what could be a shorter way than a "private" trans-oceanic canal? The Chinese expansion into the entire Latin American region has been accelerating in recent years, their appetites growing exponentially - and a water route like that would facilitate the process quite a bit.
Most commenters are certain that Beijing's biggest benefit from completing such a project would not be as economic as it would be of strategic nature. And in this context, there've been a number of speculations whether the new canal is really a promise for upcoming stand-off between China and the US in their struggle for regional domination - or conversely, the facility would actually be used by both powers, whose mutual future, now more than ever, looks likely to bind them together into a common fate. I'm talking of pragmatism trumping ideological and even geopolitical deliberations, and compelling both sides to work with each other to their mutual benefit. In fact, one might argue that the Sino-American relations have been much more intimate than any of the two sides would probably want to admit. In other words, more things connect them than the things that separate them. Let me just say that the two giants presently make up 1/3 of the world's economy.
Besides, it's not like the US doesn't have reliable mechanisms of their own to put a halt on this project in case it really disturbs them that much. Since they're obviously not doing it at this point but are keeping silent about it instead, then this might be a sign that they're rather happy with the prospect of a new, modern connection opening up right under their nose (and much closer to both US coasts, might I add). And that could be something the two sides could step on as a foundation to work together on, rather than quarrel about it.
The Nicaraguan canal will be an investment that's bound to bring continuous benefits for half a century ahead - at least that's the contract term of Wang Jing's company. According to the offer, HKND will be paying Nicaragua $ 10 million for the first 10 years, then they'll be granting them a certain share of the profits. The Central American country, where 42% of the population lives under the poverty line, is hoping that the project would swell its national revenue by roughly 10%.
Wang Jing has said that he'll only deliver the money to launch the project. The following installments would have to be provided by international investors which he'll be recruiting to the cause. Construction is supposed to take between 6 and 11 years, a number of additional facilities being built around the canal in the process, like ports, railways, an airport, an oil pipeline, a free-trade zone, etc.
Of course, the rivals from Panama (which, among other things, is one of the most popular offshore zones among the world's super-wealthy) are gnashing their teeth and constantly reminding that the Nicaraguan project is doomed because of the frequent earthquakes and hurricanes there. And a number of environmentalist organisations and scientists are warning that the new canal could seriously damage the unique ecological and ethnic system around Lake Nicaragua. Its waters host fresh-water sharks, and its small islands are dotted with a myriad of indigenous communities. It's unclear what effects the huge influx of imported work-force, new technologies and industrial expansion would have on the region - not to mention how devastating the consequences of opening up the fresh-water system of the two lakes to salty ocean water would have on the entire regional ecosystem.
But whatever happens to any or both of these two projects, the Panama canal and the Nicaragua canal, it's clear that they're already causing a lot of bustle throughout the entire region. The US are already considering expanding their Pacific ports, with the hopes that they'll soon be able to host the gigantic ships that'll start circulating through at least one of the two canals. Similar plans are related to Cuba, whose economy is only now slowly beginning to open up to the world. The Cubans are already building an expansion of their Mariel port on the Gulf of Mexico, in collaboration with Brazil. The first free-trade zone on Cuban territory will pop up there in the years to follow.
In other words, it's time the bored, stagnating, fear-shaken, crisis-laden Europe faced the facts: the more dynamic world, the one that's hungry for expansion and growth and new endeavours, has long moved on to other places, constantly looking for new horizons in lands never thought of before. And Central America is fast becoming one of those. The major players have two options: either get on the bandwagon, or stay out of the game, and take one more step further towards oblivion.