Memo to Dubya: Nicaragua needs to end its cycle of poverty, and Washington owes it big.(Trade talk)(Bush, George W.)

Late last year, an official U.S. memo disparaged Central America's largest country as a hopeless basket case. Here's a small sample of the U.S. government's opinion of a sovereign neighbor:

"Nicaragua crawls along as the second-poorest country in the hemisphere after Haiti, battered by storms of nature and of their own making, with little hope of things changing in the future" according to the memo. It went on to divide Nicaraguans into those who wear "Ralph Lauren shirts" and drive "large Ford SUVs [and] brag that they go out to T.G.I Friday's" and those who "are subsumed by the struggle to find the next plate of rice and beans."

Naturally, the administration of U.S President George W. Bush ("Dubya" in Texan slang), which is gung-ho on its Central American Free Trade Agreement, immediately distanced itself from the unsigned document, released by the U.S. Embassy in Managua. Aside from its colorful complaints, the memo might be faulted more for a glaring omission. It made no mention that Nicaragua could become Central America's richest nation--if it can pull off a US$25 billion canal project linking the Atlantic and Pacific oceans.

The waterway would be wide and deep enough to handle a new genera lion of 250,000-ton container ships too big to fit through the Panama Canal, where the limit is 50,000 tons, It would be tailor-made for Brazilian and Venezuelan iron ore-hearing ships bound for Asia and could reap hundreds of millions of dollars in tolls annually.

The canal plan is "the best way to put an end to our biggest problem-poverty," Nicaraguan Environment Minister Arturo Harding said late last year. President Enrique Bolanos is currently looking for international investors for the mega-project, which would cost 25 times Nicaragua's national budget.

If he doesn't get it, I believe the United States has an obligation to step in to help. Why? Because Washington has played a major role in stifling economic development in Nicaragua, where 45% of the nation's 5.4 million inhabitants are mired in poverty.

The United States has a long history of intervention in Nicaragua: More than two decades of occupation by U.S. marines early in the 20th century; support for the corrupt Somoza family dynasty of 1936 to 1979 (to quote U.S. President Franklin Delano Roosevelt on the elder Somoza: "He might be a son-of-a-bitch."); but he's our son-of-a-bitch."); and, during the 1980s, financing rightwing contra guerrillas who waged a civil war against the leftist Sandinistas, a war that killed more than 30,000 over the decade.

"The United States has a moral obligation to help Nicaragua's economic development," says William LeoGrande, a Latin America expert at American University in Washington. "There is no doubt that the current bad economic situation is directly traceable to the 10-year war against the Sandinistas that we funded through the contras."

The idea of a Nicaraguan canal goes way back. In an 1884 agreement, the United States promised to build a jointly owned canal. Today, Nicaragua is backing a 175-mile public-private partnership proponents say will create 40,000 jobs during construction, 20,000 permanent jobs and another 120,000 through tourism, port services and duty- free zones.

The Bolanos government, however, is also considering three smaller, private initiatives to connect the two oceans. Two of them are "dry canal" projects that would use high-speed railways to move containers from ports at either end and would cost between $1.4 billion and $2.6 billion. The other proposal, a $50 million "eco-canal" which would make low-impact use of Nicaraguan waterways, would serve national and regional trade rather than the international container market. While Nicaragua needs all the investment it can get, officials would be wise not to squander the country's environmental resources. They should choose a plan that would not adversely affect indigenous communities living on the Atlantic coast.

President Bolanos has been ferrying potential investors in army helicopters over the proposed route. U.S. government officials should be on the next helicopter flight, s, not sniping in memos from behind embassy walls.

COMMENTS? WRITE: siliconjack@latintrade-inc.com

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