Monday, March 21, 2016

China's Fitzcarraldo Complex

Robert Nelson in The Diplomat:
The canal will not happen because it does not make sense. The primary reason is that there is no demand for a second Central American canal, making the project financially unfeasible. In an interview with CNBC, Bruce Carlton, president and CEO of the National Industrial Transportation League, a shipping industry advocacy group, speaking for the vast majority of industry experts said, “I sincerely believe we don’t need another canal. I don’t think there’s enough ship traffic to warrant the construction of another canal.” In addition, at a cost of $40 billion, even if the Nicaraguan canal received all of the Panama Canal’s current traffic (an impossible assumption) it would take 40 years for the project to break even. Add on that the Panama Canal offers faster transit times, that no current American ports can handle ships the size that the Nicaraguans are talking about, and that global warming could possibly open a faster and free route north of Canada, and the whole project seems like a fool’s errand.

The project’s failure to make financial sense means that its titular head, Wang Jing, will likely not be able to find investors. And given that he has lost 85 percent of his net worth in the recent collapse of the Chinese stock market, his ability to self-fund is doubtful. The claim that the Chinese government will fund the project for strategic reasons is also dubious; because as Phyllis Powers, the former U.S. ambassador to Nicaragua, pointed out to me in an interview, “The Chinese already control the ports at both ends of the Panama Canal.”

Just because the project will not happen, however, doesn’t mean the U.S. should be excused from paying attention to what is happening in Nicaragua. Because President Daniel Ortega has staked so much political capital on the canal project, he is still proceeding as if the project will happen – and the result is that the Nicaraguan people are suffering.

PLUS: Our earlier story on yet another Chinese canal fantasy, this time in Thailand:
For centuries, imperialists of one stripe or another have envisioned building a canal across Thailand's Kra isthmus. These visions never materialized, due mainly to the resources necessary for such a huge project. Moreover, the canal has been historically seen as a threat to the sovereignty and national integrity of Thailand, and to the Southeast Asian region as a whole.
Nevertheless, in Thailand's more recent history, every time there has been a change of regime, the canal idea gets dug up again. Last summer, General Prayuth, speaking for the ruling military junta, again rejected the idea. By the end of that summer, however, things changed. It would appear that opposition to normalizing the military government by the United States and other G8 nations is a major factor in this change. Meanwhile, China welcomes an authoritarian Thailand as part of its peripheral sphere of influence, and so now the rulers of Thailand welcome the canal.
Since then, it would appear that the Kra project has been put back into the drawer.

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