#376 – The Nicaragua Canal: Feasibility, Impact, and Environmental Concerns

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to The Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great and it's all right here so let's get started. Lately I've been getting a lot of questions about that proposed new canal through Nicaragua. People want to know, is it for real? Should I buy land around there? Is Nicaragua going to be the next Panama? Would that be a good or a bad thing? And how do you get in on the ground floor etc etc. Well you might know what I think, doesn't matter I'm going to tell you anyway. Now you all know I've been down here like 24 years but the first time I actually came

[01:00] down was in 1977, about 37 years ago. Now let me tell you, even back then people were all excited about putting another canal through. In fact every Central American country wanted one, I mean look what it did for Panama right? And for engineers it was really a no brainer. First choice, Nicaragua, second Guatemala, which really doesn't make sense unless you look at the map and you'll see the country's got a huge long stretch of river called Rio Dulce that originates deep in Guatemala and ends up at the Caribbean. So once connected to that a big part of the job is done. But of course there's only talk and no one's ever tried. And over the years Costa Rica has wanted to get into the canal act too. I bet you didn't know that every 25 years or so local and foreign investors tried to

[01:50] put a consortium together in Costa Rica to get something going but that never works out either. And guess what? As long as I've been down here people have been talking about putting a second Panama Canal through. Yep, as crazy as that sounds. Two in that country if you can believe that. So bottom line, this Nicaragua thing is nothing new. I've actually seen some very detailed plans for a canal through all four Latin countries that have a Pacific and Caribbean coast. And for those of you out there in Cleveland who are geographically impaired that would be Costa Rica, Panama, Guatemala and Nicaragua. Whereas Belize, Honduras and El Salvador only have one ocean coastline. And for those of you out there who say Caribbean, instead of Caribbean, try saying Pirates of

[02:36] the Caribbean. Just doesn't roll off the tongue like Pirates of the Caribbean now does it? Anyway that's what old Walt Disney used to call his theme park ride, Pirates of the Caribbean. But that was in the 60s on his program The Wonderful World of Disney. Way before the Johnny Depp movie franchise which I thought kind of sucked. But I digress as usual. Anyway just know that there have been dozens and dozens of plans to put canals through Central American countries. Including believe it or not a six lane railroad type overland canal set to go through either Guatemala or Nicaragua which never materialized either. Though there was a lot of money thrown around on that too. So a lot of both well meaning money and scam money has been thrown around with no results.

[03:25] But you know from the beginning over 150 years ago when the canal ideas first started popping up, the best and easiest project has always been through Nicaragua. And how it ended up in Panama is a long story but it wasn't exactly the perfect place to put it. The fact is the climate, the terrain, the swamp and the mosquitoes were so rough. 22,000 people died building it. And as Panamanians today like to say, it wasn't the American or European white folks but short brown indigenous folks and former black slaves from Caribbean islands who took the hit. Yup, I said Caribbean islands. So why'd the canal end up in Panama? Besides the fact that a French company started it and went bankrupt, then the US went in and

[04:13] picked up the pieces. If you're really interested you could look it up. It was a backdoor deal the US cut with Colombia. In fact back then there was no Panama at all. It used to be part of Colombia. Basically you could call it a bribe and a buyout. Or as some people say, geopolitically speaking, Colombian politicians and generals came a lot cheaper than the ones in Nicaragua. Now looking at a map you think Nicaragua would be a tough place to put the canal, but it's not true. Turns out the Nicaraguan route is three times longer than the Panama route. But still engineers much prefer Nicaragua. They always did even though it didn't turn out that way. Simply because there are much lower elevations involved, thus much less dredging. So anyway all you wannabes and gunabes up there in Cleveland and Boston who think that

[05:02] Nicaragua is going to be the next boom zone in Latin America. Let me let you in on a few of the details and why I think it's just not going to happen. Now that's not to say they won't get a start on it, maybe a big start on it. In fact there's supposed to be a huge initial push which is intended to start early next year. In that case, if you're anywhere near where the project first starts, you could make a ton of money. But the question is how long is that boomtown atmosphere going to last, and how high are prices going to rise on local goods and services? That's what always happens when there's an artificial boom of sorts, right? Remember this has been called the biggest engineering project of all time. Grabbing that 100 year old plus title from guess who? The Panama Canal of course.

[05:49] So what about it and where abouts are they going to start on the project? Of course they'll be starting from both ends, but exactly where? No one really knows. Well, of course, instantly they'll have to bring thousands of people online for work. And there'll be hundreds of millions of dollars worth of equipment brought in, almost all of it from China. Where else? In fact people in the know down here in Central America are saying there's about a 25-50% chance of that happening. That the actual construction becomes a reality. In fact, you know, Panama is full of casinos, so there's some lively betting going on down there as to whether it really gets off the ground or not. And so far, the odds are slightly against it.

[06:34] Oh and by the way, there is also a bit of interest down here in betting that Hillary Clinton will become the next president, and so far the odds are in her favor. So time to pack your bags and get the hell out folks. But before we even start discussing the logistics of a Nicaragua Canal here, it's obvious that the Chinese guy and his backers, the guys that are putting this proposal up, they believe in the unlimited growth theory of economics. At least the Chinese view of economics, which from their viewpoint totally makes sense. In other words, they actually think there's a need for this thing. And they think that if there isn't a need now by the time it's built in 2020, there'll be so much more commerce in the world that it'll be handling the same amount of flow that the Panama Canal does, 15,000 boats a year.

[07:21] So what are the Nicaraguans thinking? Well, they're thinking that according to their government projections, it'll double their GNP and pull half a million people out of severe poverty. Because you know, depending on whose statistics you look at, Nicaragua's tied with Honduras as the second poorest country in the western hemisphere, with Haiti taking the unfortunate honors. Now I really believe anyone who thinks this is going to go through the way they plan it is having a massive brain fart. Because you and I all know that a huge financial and economic tsunami is coming. It'll be the blowout to end all blowouts and the clock's ticking on that. We don't know when it's going to happen. But there's as good a chance as any that it'll happen in a year or two. I certainly wouldn't bet against it and I wouldn't be holding dollars when it

[08:09] starts to crumble. So I ask you then, if the world's financial and economic systems hits skids, who's going to ship anything even through the Panama Canal? Much less a brand new one in Nicaragua, even if it is cheaper. And get this, in about a year Panama is going to be done with its estimated $6 billion renovation of their own canal to widen it for the bigger container ships. The ones that carry a third more cargo than the largest ones that pass through now. Which means technically, when the Panama Canal renovation is finished, they should get about 20% to 30% more traffic, while other analysts are saying there'll be less traffic, because for one, the newer boats hold more. And two, since the 2008 financial crisis, container traffic is still down compared

[08:58] to 2007 numbers except for one country. China, of course. Which is one good reason perhaps why the Chinese are always thinking in perpetual growth mode. So in a year, Panama will be able to handle the bigger ships. But that's not the only thing that'll put a damper on the traffic in the proposed Nicaragua Canal. Now, in order to get that long canal through Nicaragua, you have to go through Lake Nicaragua. That's the plan. That's the only way to make the whole thing feasible. But it's also an environmental wild card. Now, I don't know how many of you guys and gals out there have been to the the Atlantic and Pacific ports where the canal begins and ends. I'll tell you this.

[09:43] There's a permanent gigantic oil slick at both of those ports leading well out into the ocean farther than the eye can see. In fact, if you ever stayed at a big hotel tower in Panama City, for example, the Hard Rock Hotel, which has 60-something stories, you can see exactly what I'm talking about. And it's pretty sad, let me tell you. If you go to the pool area on the top floor and walk out on the deck, you'll see both ends of the canal and that terrible oil slick stretching from the canal at either end to beyond the horizon. So you've got a never-ending oil pollution slick at both ends of the Panama Canal. So the fact is, every year you've got about 15,000 of the biggest ships ever built, starting their engines up as soon as they hit the canal exit.

[10:33] And believe me, if it wasn't for the fact that the canals connected at each end to an ocean, it would be a hell of a lot worse. Because those continuous tides and ocean currents dissipate and dilute some of the slick on the water, and not all of course. But still, it's not enough. The fact is, one American environmental engineer told me that a canal like that could never be built in the first world. The project would have been shut down right after the environmental impact study. And by the way, this guy mentioned you only see that long wide slick on top of the water's surface. But imagine 100 years of layered heavy oil sludge at the bottom of the ocean. It's something you don't even want to think about. So while in Panama, you're not going to want to be eating any seafood soon,

[11:20] not seafood taken from the nearby fishing boats. Okay, now regarding that new Nicaraguan canal, this is the most important point here. Lake Nicaragua, the second largest freshwater lake in Latin America, is already so severely polluted, as are all other waterways in Latin America by the way. If and when that Nicaraguan canal opens, there'll be more than 15,000 massive container ships a year dumping their motor and combustion refuse into Lake Nicaragua. Anyway, the plan is 15,000 a year, but I doubt it. So right now regarding Lake Nicaragua, you certainly don't want to eat anything out of that lake or swim in it, though you can't convince the locals of that because,

[12:06] well, it's their lifestyle. That's how the folks in the little towns and cities around the lake make their living, how they wash their clothes and get their water, and where all the factories, drains, and toilets flush into. 90% direct and untreated, of course. But if you're out on the shore looking over Lake Nicaragua, you don't smell it and you don't see too much pollution at all because it's such a big lake. Well, I take that back. When you're near a small town, it can stink to high heaven. But when you're away from the larger towns around the lake like Granada, even a couple of miles away, the water seems nice and clear. Isn't it funny that you don't see gringos swimming in it? Very rarely. But the locals, they're in it all the time. Why do most gringos stay out of it?

[12:52] Maybe they know the lake is filled with coliform and fecal bacteria. They all are. Now, I know gringos who live along oceans, lakes, and rivers in Latin America who tell me all the time they run into beautiful stretches of waterways that look absolutely pristine. But they're not. That is, unless you're way up in the mountains where the water's sources are. Then they can be pristine. But as soon as those rivers and streams work their way down mountains and ravines, past any populated area at all, forget about it. And here's one thing you'll notice, especially in Central America. Since coffee is now a huge export crop, generally twice a year what seemed like a beautiful, clear-running brook in your backyard, or what you might see along a hiking trail up in the highlands,

[13:40] twice a year they turn gray. I'm talking ugly, dishwater gray. Well, how'd that happen? Well, that's because upstream, where there's generally a coffee plantation, or two, or six, or fifty, that's how you can tell it's coffee harvest season. The coffee farmers have their workers separated the soft red berry, the outside part, the fruit that you see on the tree, from the coffee bean or seed inside. Now, the farmers can't use it as mulch, or compost, or put it back into the ground as fertilizer. And they can't feed it to the cows or livestock either. Do you know why? Because it's loaded with caffeine, which in high concentrations like that, is not only toxic to the roots of plants, but gives livestock the jitters.

[14:27] However, if on the odd chance your cows and livestock are into smoking and drinking and pulling all-nighters, maybe coffee fruit mulch feed is a good thing. But I doubt it. That said, then what do 95% of coffee plantations do? They throw that stuff into the rivers and streams, thus killing all the fish and vegetation in those streams, and disrupting all the localized ecosystems as well. And that happens twice a year all through coffee country in Latin America. You can count on it. Now, I might have mentioned this before, I can't remember. But because of that oh-so-common scenario, and the fact there are over 20,000 small coffee plantations throughout Central America alone,

[15:13] that makes for a great if not brilliant opportunity for any expat who's into biodiesel fuel or alcohol production. Because problem number one is always locating a good, consistent source of plant material that you can use in your still. And you know that sugar plantations down here in Latin America have got it down pat. They use the stalks of the sugar cane, and create on-site their own biofuel plants. Basically big old alcohol stills. The fact is, except for Brazil, there's no regulations on the production and sales of biofuel in Latin America. And if there are regs on that stuff in government archives somewhere, no one's paying attention, and certainly there's no enforcement. And now I ask you,

[16:00] doesn't it give you a warm feeling to know that nearly all the big sugar plantations throughout Latin America are completely petroleum independent? That means all their trucks and cars and machines are running on alcohol or biodiesel. So on the one hand, these sugar companies have a very tiny carbon footprint and hooray for them. On the other hand, they produce a product that's slowly killing us or at least shortening our lifespans. However, as of now anyway, at least sugar cane is not genetically modified, like the sugar beet business up in the States. But let's not get into that now. So, what about a gringo who wants to start up a very small experimental biodiesel project, let's say? Or a wannabe or expat who just wants to set up a very small still for himself

[16:47] and up to power up his cars and vehicles and such? Where can he get his plant refuse material? I mean, the sugar cane guys are totally recycling their product. You could buy refuse chopped down by all those thousands and thousands of young guys with machetes. That's a possibility. But you'll probably have to pay them for it. And it might not come regular and it might not be consistent. And it might not be the best quality stuff for your still. Well, it should be obvious, right? All you've got to do is get yourself a little alcohol plant and contact a few of the coffee farms around your area and they'll be glad to give it to you for nothing. Hell, they might even deliver their leftover mulch to your doorstep. You get the idea. And if you want to find out about those alcohol stills

[17:33] and the alcohol and biodiesel process in general, you could either study it on the internet or go to a class or hands-on seminar down here in Latin America. There's classes given all the time. Brazilians who are experts in alcohol and biodiesel have been putting on seminars to teach the people in the rest of Latin America how to do it themselves. In fact, I noticed about every six months to a year, there's an ad in all the big Latin American newspapers announcing their hands-on seminars, which last anywhere from two days on a weekend to a whole week. And the costs generally around 50 to 75 bucks. They're practically giving the info away. Now you see, most of these biodiesel and alcohol seminars are sponsored by the Brazilian government in cooperation with local Latin American countries.

[18:21] It's all about trying to get the big farmers to create their own biodiesel and alcohol to be self-sufficient like a lot of the sugar farmers are. Though as far as I can see, it doesn't look like many other farmers are jumping on the bandwagon, even though they sign up for the courses because still, still, bad pun intended, it seems only the big sugar producers are doing the alcohol and biodiesel thing. Meanwhile, the other guys, like the coffee growers, try to find places, usually rivers, to dump their mulch. The raw materials, which are the prime ingredients for the still. So now you're thinking, isn't that illegal? Yes, it is, but nobody's watching and there's no enforcement, so they do it and get away with it.

[19:07] So bottom line, gringos, expats, and wannabes, wake up and smell the coffee mulch, but don't feed it to your dog. Put it in your little still and get off the grid. Oh, and by the way, if you want to investigate alcohol and biodiesel yourself, just put the phrase, alcohol can be a gas in start page or your web browser. And by the way, it's worth repeating. Screw Google and Yahoo and the other search engines in the NSA and use start page. Talked about that in a previous show. Anyway, just look up alcohol can be a gas. And you can actually buy an audio and video course from the experts in English. And through that website, you'll be able to order stills of all kinds, even units small enough for one family off the grid.

[19:54] And again, I make no money off this stuff. And someday I just might get one of those little stills myself. I've been thinking about it, and if I do, I'll keep you posted. Oh yeah, and by the way, those courses they give down here in Latin America on biodiesel and alcohol, they're not going to be in English. They're either going to be in Portuguese or Spanish. But I digress. Where was I? Oh yeah, Lake Nicaragua, the world's biggest toilet. You think I made that toilet thing up? If I did, I would get some very nasty emails for sure. Lotta expats living down there, I can tell you. Especially in Granada, which is right on the lake. But no, I cannot tell a lie. It was an international environmental expert who made that toilet comment. Biologist and professor Jamie Inerzer-Barcaro.

[20:40] Now, for all you folks who say, wait a minute, it looks beautiful. So why not swim in it like all the locals? And since hundreds of thousands of people around that lake eat the fish for food and they're not sick. Sure, they're mighty short, but that's not because of the fish. Why should I stop eating the fish? All the restaurants serve a variety and they're all from the lake. And you know, I brought this up when I was in Granada and you know what the gringos say? Lake Nicaragua is gigantic. It's so big, it's gotta be self-cleansing. Gringos and European expats insist, especially the ones who own restaurants around there. I've heard him say, a little bit of pollution from the small towns can't really affect much the total quality of the water in that lake. Bottom line, you'd expect the locals to feel that way,

[21:28] but even the gringos are in denial. Well, if you feel that way, here's what that environmental scientist said to the inter-news press agency. He said, quote, for 82 years, we have turned Lake Nicaragua, Central America's largest lake into the world's biggest toilet. We poison it every day with tons of feces and garbage and now, at this pace, it will take 50 years or more to salvage it if we start today. Then he goes on to say, but here in the Pacific coastal region, there are five large lagoons and two lakes also. And as far as pollution goes, with the exception of one, which provides the capital with water, the rest of these water sources

[22:15] are totally unprotected and terribly exposed to pollution. So all you gringos tourists and expats, you still want to eat the fish and go swimming in Lake Nicaragua? Go ahead. Now, here's something that might make you laugh or make you cry, however you feel about it. In the year 2000, the Nicaraguan government under the vice president set up a commission called the Millennium Development Goals Project. And these were the stated goals. They said back in 2000 that by the year 2015, only six months from now, Nicaragua will provide clean water and sanitation to at least two and a half million of its six million people. There will be a 50% reduction in poverty and hunger,

[23:02] universal primary education, reduction of child mortality by two thirds, cutbacks in maternal mortality by three quarters, the promotion of gender equality, countrywide environmental sustainability, and the reversal, not the increase of the spread of HIV and AIDS. And finally, by 2015, the commission promised a global partnership for the development between the rich and poor of Nicaragua. Okay, that said, now I'll ask you, of all those lofty goals posited in that blue ribbon four-star commission way back in 2000, how many of those goals do you think they've achieved or will achieve in six months by 2015? And remember, they've had 15 years

[23:48] to implement those measures. If you answered a grand total of zero goals accomplished, congratulations, bud. You win a case of frozen fish in a year's supply of bottled water from Lake Nicaragua. Such a deal, huh? Promises from scumbag politicians? Come on. And by the way, those government panels and commissions meet in four-star first world hotels and they fly around the world to such meetings, first class, sipping champagne, on yours or someone else's donated or charity dime. So don't donate to those do-gooder agencies, okay? All right, where was I? Oh, yeah. I mentioned if that new Nicaraguan canal gets on its feet, even if there is no predicted gigantic tsunami

[24:34] of a financial blowout, still, again with the still, they're competing head-to-head with the newly expanded Panama Canal. And according to a professor, an expert on transportation economics at Hofstra University in New York, Jean-Paul Rodrique says, it's going to take a while for this capacity in Panama to be absorbed if ever. In the medium term, there will not be a need for any other canal. But you know, this new canal is going to be all Chinese money and the Chinese are of a mindset that they are in a perpetual growth cycle. And they believe that because China has seen nothing but economic growth for the last two generations, 40 years.

[25:20] And if you believe that, I've got some swampland in Nicaragua I want to sell you. Oh, and here's something interesting. The deal that the Nicaraguan government struck with this Chinese guy is pretty much the same deal the US made with Panama a hundred something years ago. It'll be a 100 year lease after which the canal reverts back to Nicaragua. And you might remember that when it happened in Panama and that canal flipped back over to the Panamanians, Jimmy Carter, the president at the time, took a lot of heat for that because he really didn't have to do it. We could have signed another 99 year lease but he gave it over to them. Okay, how about some more oddball news about this canal situation? Turns out the locks in the Panama Canal are filled with fresh water.

[26:08] Whereas because of the topography and availability of water in Nicaragua, there the locks will be filled with salt water. At least that's what engineers are projecting and there's two very big problems with using salt water. One, salt water is tremendously corrosive and all the locks and mechanisms are made out of steel and concrete. That means the Nicaraguan locks will need three times as much maintenance and thus triple the full-time maintenance manpower. And the second problem with using salt water is something that environmentalists are having fits about. Turns out because fresh water is used in the locks in Panama, the salt water marine life and fish on both ends of the canal can't mix.

[26:53] They can't get past the freshwater barrier. They won't survive. But if it's salt water, like in the Nicaragua version, sooner or later fish, plant and marine life will mix through the salt water channels and sluices. Which is sure, marine biologists say to disrupt perhaps drastically the ecosystems, especially in Lake Nicaragua which is a freshwater lake. And of course no one really knows what the effect will be and to what degree though as one gringo biologist put it, it's an experiment on a grand scale that's never been tried before. Uh oh, we're at the end of the show now so we'll finish that up next time. See you then. You've been listening to The Expat Files, living in Latin America

[27:39] coming to you twice a week from somewhere south of the border. Email me theexpatfiles at gmail.com and don't forget to check out expatwisdom.com to sign up for your free reports on Latin America. See you next time. Nos vemos.