As Chinese push into Latin America, Nicaraguans try to hold the line

MANAGUA, Nicaragua — Doña Albalina Espinoza’s cellphone rattled with the incoming warning call at 2:30 p.m: “The Chinese are coming!” the voice hissed.

Espinoza quickly hung up, then dialed the next number on the list: “The Chinese are coming!” she repeated.

Within minutes, all 150 families in the lakeside village of Obrajuelo had been alerted to the interlopers’ presence. The Chinese surveyors had returned to take more measurements of the land they’ve flagged for expropriation to make way for their $50 billion Nicaragua canal project, which is scheduled to break ground on Dec. 23.

“Fuera Chinos!” Espinoza shouted, as she joined her neighbors outside. Then someone threw a rock. Then another. Within minutes, the police-chauffeured Hilux was kicking up a dust cloud as it whisked the Chinese surveyors out of town, chased by a tropical hail of rocks and sticks.

“We are prepared to do anything and everything to defend our land and protect our lake,” Espinoza told Fusion. “They want to run us off our properties — to scatter us like birds without a nest. My family has lived here for more than 100 years, and we would rather die here fighting than get forced off our land.”

Espinoza’s family, one of 7,000 poor Nicaraguan households scheduled for removal to clear a path for Central America’s second interoceanic canal, says her neighbors know it’s only a matter of time before the Chinese return with more muscle. The Nicaraguan Army is already providing security for Chinese canal firm HKND, and the Russians have reportedly promised to lend additional brawn during the construction phase.

The people of Obrajuelo, however, say they are prepared to give all to defend their ancestral acres from the project they call “the damn trench.”

Today, Dec. 10, the residents of Obrajuelo will join thousands of other mostly impoverished Nicaraguans in a nationwide march on Managua to protest the mysterious canal project, which will be built, owned and operated by an enigmatic Chinese billionaire who has only visited Nicaragua three times and still can’t pronounce its name. With groundbreaking only two weeks away, nobody outside a secretive Sandinista-Chinese cabal knows who is paying for the project, how much it will cost, or what the environmental impact will be.

On separate occasions, canal spokesman Ronald MacLean-Abaroa has told me that Chinese state businesses will “finance a great part of this project,” and alternately that there will be “no government involvement whatsoever, not from China or any other country.”

The mega-development — if it really happens, which many still doubt (there still aren’t any serious earth-moving machines in the country two weeks before ground-breaking, and Nicaragua has a perfect 0 for 7 record when it comes to converting mega-projects) — would be the biggest engineering feat in the history of Latin America, and the biggest single Chinese investment in the hemisphere.

“This will be like the new Great Wall of China for the Western Hemisphere,” said Nicaraguan political analyst and former ambassador Arturo Cruz.

Others think that “wall” —a 278-KM long, 25-KM wide vertical cut from Atlantic to Pacific — will literally divide the nation into two parts. Six municipalities will be cut in half, with no clear way for neighbors and families to communicate with one another on opposite sides of the Chinese gulch (amazingly, the “plans” apparently call for only one bridge at the Inter-American Highway)

“With this canal, the country will be divided in two: The Nicaragua of the North and that of the South, like the two Germanies and the two Koreas,” wrote famous Nicaraguan poet and revolutionary priest Ernesto Cardenal in a recent op-ed.

And it’s the poor who’ll suffer the most.

“A canal is for rich people to make more money, but it does nothing for the poor,” says Doña Albalina back in Obrajuelo.

China increases its footprint in Latin America

Nicaraguans are not the only ones pushing back against Chinese investment in the region. Other Latin American nations have organized similar protests against Chinese mining and oil operations across South America.

“There have been considerable protests related to Chinese deals,” says Margaret Myers, the Inter-American Dialogue’s program director for China and Latin America. “You see that in Nicaragua, you’ve also see that in Ecuador quite a bit. A little bit in Peru, in local communities.”

“I think there is certain fear associated with China,” she says.

Not all the trepidation is warranted, Myers says; in most cases the Chinese are no more abusive than other multinationals investing in Latin America.

“There is very little to support the notion that China is the worst abuser in mining projects or whatever else,” Myers told Fusion.

Overall, she said, China has become an increasingly important trade partner and lender in Latin America. China is already the main trade partner for Brazil, Chile and Peru, and “will soon become a top trade partner for some others,” she said.

Here’s a quick breakdown of Chinese involvement — and local pushback to that involvement — in several key countries in South America:

ECUADOR

Environmentalists and indigenous groups have led protests against Chinese oil and mining operations in virgin sections of the Amazon— and sometimes with mysteriously fatal results. Last weekend, the dead body of indigenous leader José Isidro Tendetza Antún was found bound tossed in an unmarked grave, making him the third member of the Shuar Nation apparently killed under mysterious circumstances after protesting the Chinese-owned Mirador gold and copper mine.

The protests are not anti-Chinese by nature, but environmentalists often find themselves at loggerheads with Chinese companies that have become the “major players” in Ecuador’s oil and mining industries, says Adam Zuckerman, of conservation group Amazon Watch.

China began to play a major role in Ecuador’s economy in 2009, after the South American nation defaulted on a $3.2 billion foreign debt.

Ecuador’s cash-strapped government couldn’t find funds in international credit markets and turned to the Chinese government for help. Since then, China has lent Ecuador more than $9 billion. In exchange, Ecuador sells up to 90 percent of its oil to state-owned Chinese firms, which in turn re-sell the oil in international markets.

The deal has given Chinese firms a strong incentive to invest in Ecuadoran oil projects. Last year for example, companies owned by Chinese conglomerates helped to buy three out of four oil blocks auctioned off by the Ecuadoran government.

The controversial auction, which included thousands of acres located within Yasuni National Park, sparked protests in Quito — including one where an indigenous man famously threatened an oil executive with a spear. Amazon Watch says that the Ecuador’s government used that incident as an excuse to shut down the Pachamama Foundation, one of the country’s leading environmental groups.

Opponents accuse the Correa government, which in 2008 became the first in the world to codify the Rights of Nature in the nation’s constitution, now accuse the president of siding with Chinese companies every time there’s an environmental disputes.

Before disappearing two weeks ago, the indigenous activist Tendetza, who was on his way to denounce the Correa government before the international court of public opinion at this week’s UN climate change conference in Peru, signed a petition urging six Chinese banks to stop financing the Mirador Copper mine, which is expected to destroy up to 450,00 acres of pristine forest.

“I think it’s too early to say whether engaging with these companies will be successful or not,” Amazon Watch’s Zuckerman said. “But at this point, we’ve been disappointed that Chinese companies are not following their country’s own regulations.”

PERU

Few countries in Latin America have captured as much Chinese investment as Peru, a top global minerals exporter.

Chinese companies have poured billions of dollars into Peru’s mining sector in recent years, and China has become a leading market for Peruvian copper, iron, gold and other mineral exports.

In a country where social protests over mining are frequent, several large-scale Chinese projects have touched off demonstrations, often by poor, indigenous Peruvians living in the country’s interior, where many mining projects are based.

Chinalco, a mining company owned by the Chinese government, faced fierce resistance over its plans to build a $3 billion Toromocho copper mine, which started production last year. To build the giant open-pit mine, Chinalco made an unusual offer to relocate 5,000 people living in the nearby village of Morococha, a decision that angered townspeople and ignited protests.

The Chinese eventually won over many residents with offers to build a new town called Nueva Morococha that included new homes equipped with running water, schools, a hospital and a town plaza.

Peru’s mining industry has attracted investors from more than 30 countries, and other foreign companies have also been targeted by protests.

Cynthia Sanborn, a professor of political science at Peru’s Pacific University, said Chinese companies in Peru have shown growing interest in being perceived as more socially and environmentally responsible.

“To the extent that mining companies don’t exercise high levels of social responsibility, it’s been because the Peruvian government has let companies get away with it,” she said.

While Chinalco’s handling of the Morococha residents was dramatic and involved tough negotiations, Sanborn said the company invested considerable money and time to building a relationship with the Morococha community, leading some to wonder if it might signal a new approach by some Chinese firms operating in Latin America.

VENEZUELA

Venezuela is China’s largest borrower in Latin America, with loans totaling $50 billion. The loans cover 25 percent of the Venezuela’s spending, and helps the Chavista government pay for its social projects and remain afloat during economic hardship marked by 60 percent inflation and shortages.

Venezuela pays down the loans by selling China half a million barrels of oil each day. Trade between both countries is around $19 billion a year, making China the country’s second-largest trading partner.

Protests against Chinese involvement in Venezuela have been small, limited mostly to opinion columns, memes and social media hashtags.

Carlos Romero, a political scientist at Venezuela’s Central University, says the government of Nicolas Maduro depicts the Asian nation as a benevolent “big brother.” The opposition, meanwhile, is focused on other issues, Romero said.

Still, he says there is growing concern about how Venezuela is handling the Chinese funds. In 2013 for example, five officers were arrested over the embezzlement of $84 million from a Chinese development fund.

“There have been several corruption cases tied to the Chinese funds,” Romero said. “Everything is handled very opaquely, even the Chinese get tired of doing business in Venezuela.”