Update: Nicaragua Announces Start of China-led Canal
Nicaragua announced the start of work on Monday on a $50 billion shipping canal, an infrastructure project backed by China that aims to rival Panama's waterway and revitalize the economy of the second-poorest country in the Americas.
The groundbreaking was largely symbolic, as work began on a road designed to accommodate machinery needed to build a port for the canal on the Central American country's Pacific coast.
Nicaragua's government says the proposed 172-mile (278-km) canal, due to be operational by around 2020, would raise annual economic growth to more than 10 percent.
The canal could also give China a major foothold in Central America, a region long dominated by the United States, which completed the Panama Canal a century ago.
Construction of the new waterway will be run by Hong Kong-based HK Nicaragua Canal Development Investment Co Ltd (HKND Group), which is controlled by Wang Jing, a little-known Chinese telecom mogul well connected to China's political elite.
More than a year since it was first announced, the project faces widespread skepticism, with questions still open about who will provide financing, how seriously it will affect Lake Nicaragua and how much land will be expropriated for it.
"Given how much this will cost, it's hard to take a stance on whether it will happen or not until there is a signal whether that money is available or not," said Greg Miller at consultancy IHS Maritime.
In the Americas, only Haiti is poorer than Nicaragua and Monday's presentation did little to dispel doubts about the plan.
Event organizers told media representatives to assemble at a place from which they would be taken to a news conference given by Wang Jing and Nicaragua's President Daniel Ortega.
But after watching buses fill up with invited Chinese guests, and waiting for another hour, the media were then told they were no longer welcome at the ceremony.
Earlier, Nicaraguan presidential spokesman Paul Oquist said feasibility studies, including a McKinsey report that experts say will define interest in financing the canal, had been delayed by changes to the route and would be ready by April.
Oquist said the "core financing" would come from public and private Chinese money, without giving a percentage.
But he added that Nicaragua is seeking international funding and rejected the idea that China will bankroll the project worth roughly four times Nicaraguan gross domestic product.
(C) Reuters 2014.