Fausta's Blog

American and Latin American Politics, Society, and Culture

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The Venezuelan passports Carnival of Latin America and the Caribbean

The big news of the week: Venezuela is issuing passports, voter registrations, to Hezbollah and Syrians – actual, authentically government-issued yet fraudulent passports and voter registrations.

ARGENTINA
Housecleaning: “Mysterious” Fire Hits Argentine Ministry Of Finance, Destroys Years Of Prior Regime’s Files

NSFW: Grupos kirchneristas habrían “meado” la Catedral de Buenos Aires

BARBUDA
Robert DeNiro’s Caribbean Mega-Resort Met with Opposition from Locals

BOLIVIA
Russian Technical Commission to Plan Bolivia Nuke Project

BRAZIL
Head of Brazil’s Largest Investment Bank and a Senator Arrested in Petrobras Probe. Brazil’s federal police arrested André Esteves, the CEO of Brazil’s largest investment bank, and Sen. Delcidio do Amaral, of the ruling Workers’ Party, in a widening of the Petrobras probe.

Soiling the sea

Vale Acknowledges Toxic Waste in River. Brazilian miner Vale acknowledged for the first time the presence of toxic elements in river water following the disastrous failure of a dam at its Samarco joint venture, two days after a critical U.N. report.

CHILE
Chilean Public Employees to Strike

COLOMBIA
Police Seize over 600 Kilos of Cocaine in Southwestern Colombia, presumably from the FARC.

CUBA
Flood of Cuban “migrants” annoys Latin American neighbors

Assad and Castro Are Simply Glorified Terrorists

ECUADOR
Canada warned against getting entangled in the Chevron Shakedown

U.S. Ambassador to Ecuador: Who Is Todd Chapman?

Ecuadorians Run against Correa’s Trade Barriers. Guayaquil Chamber of Commerce Promotes Commercial Freedom with 5K Race

EL SALVADOR
Targeting The Young: Gangs of El Salvador (Part 4)

FALKLAND ISLANDS
Falkland Islanders celebrate demise of the ‘Botox Queen’ Cristina Kirchner and welcome new president Mauricio Macri. The election of Mauricio Macri to succeed Cristina Kirchner is likely to see Argentina present a friendlier face

HONDURAS
Gang Violence Drives Hondurans Away from Home. The Maras Have Displaced Nearly 174,000 Hondurans in a Decade

IMMIGRATION
Number of Migrants Illegally Crossing Rio Grande Rises Sharply

Whistleblower: Many Unaccompanied Migrant Children Placed in Care of Criminals

JAMAICA
Jamaican lottery scammer to spend 20 years in US prison

LATIN AMERICA
Focusing on Latin America Is Essential in 2016

MEXICO
Houston-area former Marine released after being detained with children in Mexico

NICARAGUA
What did I tell you? $50bn Nicaragua canal postponed as Chinese tycoon’s fortunes falter. Environments concerns and Chinese stock market woes mean world’s biggest canal project will not begin for at least another year

PANAMA
Again, Panama canal expansion could suffer new delay – spokesman

PARAGUAY
Official sacked for ‘kicking’ woman. The president of Paraguay fires the head of the country’s indigenous affairs office after he kicks an indigenous woman.

PUERTO RICO
Puerto Rico among Caribbean islands under scrutiny amid pesticide poisoning concerns. Use of banned pesticide not isolated event in US territories

VENEZUELA
Violence breaks out as election season gets going in Venezuela

FARC Find Big Business in Smuggling Cattle from Venezuela. FARC Profit from Venezuela’s Border Closure, Smuggle Livestock

Reuters: In Venezuela, a tree named “Revolution” wilts from disease



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Nicaragua: Wang Jing does poorly

In case you don’t remember the name, Wang Jing is the chairman of Xinwei Telecom Enterprise Group, who made a $300million telecommunications deal last year with Daniel Ortega. He also heads HK Nicaragua Canal Development Investment Co., the company behind the proposed Nicaraguan Canal, that project of Dubious Plans and Abundant Unknowns.

Wang is the year’s worst-performing billionaire:

This Chinese Billionaire Has Lost More Than Glasenberg in 2015 (h/t JC)

Telecommunications entrepreneur Wang Jing, 42, was one of the world’s 200 richest people with $10.2 billion at the peak of the Chinese markets in June, according to the Bloomberg Billionaires Index. His net worth has since fallen to $1.1 billion.

Oops!

HKND Group, Wang’s closely held development company, was awarded a 50-year concession for the 170-mile (274 kilometer) canal by the government of President Daniel Ortega in 2013. The billionaire said in a December 2014 televised press conference in Nicaragua that he was committing personal funds to the project, and he’s poured about $500 million of his own money into it so far, Peng Guowei, an executive vice president at HKND, told Chinese state media Xinhua on Sept. 7.

Turn of Fortune
“The turn of fortune in Mr. Wang’s financial resources will impact how and whether the canal can and will be built,” said Daniel Wagner, CEO of Country Risk Solutions and a former country risk manager at General Electric Co. “I would expect, given this year’s financial gyrations in China, that the government is also asking itself whether the canal is a viable proposition.”

The company said that despite the economic setbacks and local protests against the canal’s construction, the project is moving forward. “I have no doubt that appropriate financial arrangements will be in place before construction commences,” Bill Wild, HKND’s chief adviser for the canal, said in an e-mailed response to questions. Company representatives for Xinwei declined to comment on Wang’s personal investments and declined a request for an interview with Wang.

A September e-mail from closely held HKND said the funds raised from the pledged Xinwei shares were used for Wang’s “personal investments” and not for the canal project, without elaborating. Wang is also funding unrelated projects — in some cases with partners — including a deep water port in Ukraine.

As I have been saying from the start, the canal project (if you can find it) cannot come about without major support from the Chinese government.

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Nicaragua: Where’s the canal?

Bloomberg News went looking but couldn’t find it:

China’s Building a Huge Canal in Nicaragua, But We Couldn’t Find It

The townspeople haven’t seen any signs of canal workers in months. And the work that was done was marginal. A handful of Chinese engineers were spotted late last year making field notations on the east side of the lake; early this year, a dirt road was expanded and light posts were upgraded at a spot on the west side where a port is to be built.

Other Chinese projects in our hemisphere have not been doing all that well:

Last year I was saying The Nicaragua canal: Don’t be the next Lord Crawley

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Nicaragua: Is China actually behind the canal?

Mary O’Grady thinks so:
China Wants to Dig the Nicaragua Canal

The economics don’t add up, but the project serves both governments’ larger interests.

The Chinese government denies it is behind the concession held by HKND. But with more than $3.5 trillion in foreign reserves, it’s the logical candidate to foot the bill. Beijing has been flexing its geopolitical muscles in the Americas for more than a decade, and it hasn’t hesitated to work closely with corrupt dictatorships like those in Ecuador and Venezuela. According to HKND, the Nicaragua canal will require a labor force of 50,000. Many can be expected to be Chinese. The company says the China Railway Construction Corporation is conducting feasibility studies of the project.The HKND concession includes the rights to develop “two ports, a free-trade zone, holiday resorts and an international airport.” Canal or no canal, each is a business opportunity not only for China but also for Mr. Ortega, who is bound to ensure that he gets a piece of the action.

There’s action already: Last year Ortega made a $300 million telecommunications deal with Xinwei Telecom Enterprise Group, of which Wang Jing is chairman.

The canal, a project of Dubious Plans and Abundant Unknowns, cannot come about (as I have been saying from the start) without major support from the Chinese government. As O’Grady puts it,

China may still see the ditch as part of a military strategy,

A Nicaragua canal may fit as part of a military strategy along with the South China Sea projects.

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Nicaragua: The canal, a pretext for expropriation?

The Nicaragua Canal, that project of Dubious Plans and Abundant Unknowns, is back in the news.

It appears that HKND Group by now has feasibility studies, property surveys, an environmental impact review and exploratory drilling, according to the Wall Street Journal, but

Still unclear is whether the canal will be built.

However, the proposed canal may be a useful pretext in Daniel Ortega’s road to dictatorship:
Nicaraguan Canal Plan Riles Landholders
Sandinista push to build Chinese-led shipping route across country sparks concerns over property rights. 642 square miles, to be precise (emphasis added):

But to make room for the waterway, ports, roads and free-trade zones, the company says it needs 642 square miles. Nicaraguan government officials justify the pending expropriations, which would uproot 27,000 people, saying the canal will transform this impoverished Central American nation by creating 50,000 jobs and doubling the economy.

Though the government has yet to seize a single acre, HKND Group says it will pay market prices for confiscated acreage. However, a 2013 law authorizing the government to expropriate any land needed for the canal says payments will be based on each property’s assessed tax value, figures that are usually much lower.

Then there’s this,

“Nothing is going on with the canal because there is not yet any money deposited for it,” said Bayardo Arce, the top economic adviser to President Daniel Ortega.

Say again? A project this big,

and “there is not yet any money deposited for it“?

And, if that’s not bad enough,

More than one-third of the canal’s route skips dry ground altogether by cutting across Lake Nicaragua, the largest reservoir of drinking water in Central America.

Back in the 1980s, Ortega expropriated more than 1.5 million acres, including properties belonging to opposition leaders. The canal project, even (especially?) if no canal actually is built, may serve Ortega’s purposes after all.

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About that Nicaragua Canal . . . UPDATED

Instapundit links to a post on the proposed Nicaragua canal, and, since his website rejects my comment on the grounds that “Your comment currently includes words that are not allowed,” I’m posting it here (links added):

I’m very skeptical on the proposed project.

So far the only investor is Wang Jing’s HKND Group, which may (or may not) be a cover for the Chinese government, a company that made a $300 million telecommunications contract with Nicaragua.

For the Canal deal, “HKND would raise the $40 billion needed to build the canal and would have the right to operate and manage it for up to 100 years before turning it over to Nicaragua. In the meantime, Nicaragua would have a controlling interest in the canal and receive income from it.”

A final route for the canal has not yet been announced.
The following have not been made public:
No details on where the funds come from.
No feasability studies.
No environmental impact studies.
Indeed, no studies for the project have been made public.

Additionally, “it appears that the project would also include an oil pipeline, two deepwater ports, an airport, a railway, and two free trade zones. With a projected total price tag of $40 billion, the overall project would cost four times Nicaragua’s 2011 gross domestic product ”

The expansion of the existing Panama Canal cost $5.7 billion. The Nicaraguan canal would be 3 1/2 times longer over an existing shallow lake, & is estimated to cost only $40 billion? On the Country of Lakes and Volcanos?

While i agree that “a healthier Latin America, both economically and politically, is very much in our interest”, Nicaragua, hostile to the US, is following the Venezuelan model, not the healthiest economically and politically.

Until all these items are clarified, my advice is “don’t be the next Lord Crawley.”

UPDATE
Comment from Doug Wenzel,

Jorge Luis Quijano, Administrator of the Panama Canal Authority says in an interview granted to La Estrella de Panamá that ACP experts estimate this as being a $65-70 billion project, and that five years is way too optimistic. There are also many questions about Environmental mitigation.

http://laestrella.com.pa/panama/nacional/quijano-invertiria-solo-real-canal/23831295

My personal focus is not on that, but on OpEx for this canal. First, the much longer time in canal waters at slow speed mitigates some of the distance advantage for certain port pairs, and has the largest effect on time-sensitive cargoes, which may be willing to pay the highest tolls per ton.

More importantly, the route will require triple the maintenance dredging, as well as triple the piloting and tugboat hours. Those will all affect what the canal can charge for a transit, and therefore the gross margin per transit.

Furthermore, of all the ships that could only use this canal, and not the one in Panama, most transport low value, time-insensitive cargo. (bulk carriers and VLCC’s). The Maersk EEE and larger container ships can call on only a few dozen ports worldwide, not just because many ports can’t physically handle their size or draft, but because most ports can’t produce enough demand to justify a weekly or even biweekly port call.

This canal is obviously a threat to the tolls that Panana could charge. However, in a race to the bottom, the low cost provider usually wins, and Panama will have lower costs because the Panama Canal is so much shorter.

—————————-

Panama’s neighbor to the north, Nicaragua, is hoping a transoceanic canal and similar prosperity are in its near future; now that Venezuela’s oil money dries up, does this mean China is willing to prop up the Nicaraguan economy?

From back in 2008, China’s Control of the Panama Canal Revisited.

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The Nicaragua canal: Don’t be the next Lord Crawley

Don’t be like him
For many years now we who watch Latin American news have been hearing about a Nicaraguan canal to rival the Panama canal.

Indeed, people who know Nicaraguan history have been hearing about it for centuries.

Back in 2010 the Iranians were in the picture,

Costa Rica says that last week Nicaraguan troops entered its territory along the San Juan River – the border between the two nations. Nicaragua had been conducting channel deepening work on the river when the incident occurred.

Sources in Latin America have told Haaretz that the border incident and the military pressure on Costa Rica, a country without an army, are the first step in a plan formulated by Venezuelan President Hugo Chavez and Nicaraguan President Daniel Ortega, with funding and assistance from Iran, to create a substitute for the strategically and economically important Panama Canal.

Well, Hugo died, his heir Nicolas Maduro’s still talking to the birds, the Panama Canal expansion is going on schedule, and the Iranian fervor has cooled off in the midst of its current current annual inflation rate of 105.8 percent.

Enter HK Nicaragua Canal Development Investment Co., known as HKND Group,

Nicaragua’s legislators gave their poverty-stricken country one more chance at a dream that has eluded it for nearly 200 years, granting a Hong Kong company the right to build a $40 billion interoceanic canal.

Supporters of the 50-year concession, approved Thursday, hope that it will propel Nicaragua out of its misery by boosting employment and economic growth. But there is also ample suspicion that the project will flounder, as so many others have done since the first government contract for a canal through Nicaragua was awarded in 1825.
…
The project envisions building a canal as long as 286 kilometers (178 miles), depending on which of four possible routes is used, as well as two deep-water ports, two free-trade zones, an oil pipeline, a railroad and an international airport.
…
The law granting the concession to HK Nicaragua Canal Development Investment Co., known as HKND Group, whose sole owner is Wang Jing, a 40-year-old Beijing-based entrepreneur, was introduced last week to Nicaragua’s congress, which is controlled by Mr. Ortega’s ruling Sandinista party.

Take a look at the map,

Look at the size of the existing Panama Canal, whose expansion is estimated to cost $5.25 billion dollars and take 8 years, and compare it to the projected Nicaraguan canal. Are we supposed to believe that a new canal, multiple times larger, when

work on some of the pre-feasibility studies has barely started and isn’t scheduled to be finished until next year

plus two deep-water ports, two free-trade zones, an oil pipeline, a railroad and an international airport, are supposed to cost only $40 billion?

If the Chinese government is not involved, who’s going to cough up that kind of money for that period of time?

Wang Jing’s experience appears to be only in the telecommunications industry. And he’s not even started the feasibility studies?

There’s Mr. Wang’s little deal with Daniel Ortega,

Mr. Wang registered his canal company in Hong Kong in August. A month later, on Sept. 5, he met President Ortega in Nicaragua. That day, Mr. Wang and the Nicaraguan government signed a memorandum of understanding—which wasn’t announced at the time—authorizing Mr. Wang to promote the financing and participate in the construction of a canal.

He and Mr. Ortega also discussed a telecommunications proposal, and Xinwei was awarded a $300 million telecommunications contract in Nicaragua, according to the company.

Nicaragua’s corruption frequently makes the news.

And then there’s the collapse of the Chinese stocks, which happens sporadically, since – guess what! – China doesn’t use GAAP (Generally Accepted Accounting Principles).

Bernie Madoff is probably regretting he didn’t think of this first, but Werner Herzog may be casting a lead for a movie now that Klaus Kinski is gone.

Those of us who watched Downton Abbey may recall that Robert Crawley, Earl of Grantham found that

the investment he made in the Canadian Railway has become worthless, he had lost his own and most of Cora’s money, enough to lose Downton.

Don’t be the next Lord Crawley.


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