Nicaragua's fast track to prosperity?

• Author: Ambrus, Steven
• Position: Railroad link between oceans proposed

The rutted road to the town of Tola, Nicaragua, winds through a broken past. It curves around abandoned rice paddies and bean fields, passes by concrete and aluminum shacks and unemployed peasants, and penetrates the heart of the town, where Mayor Zody Trinidad Segura, thirty-six, sits at his metal desk trying to speak above the whirring of a fan and the crashing of keys on his secretary's battered typewriter.

The mayor talks of grim things. He recounts the dozens of families displaced from their homes by a tidal wave and woefully wet winters that have washed away crops. He describes the endless exodus of impoverished job seekers to Costa Rica, the battle against the Somoza regime, and the past hardships of the military draft, abolished seven years ago. Only as talk wanders to distant rumors does he turn sanguine. "We've heard they want to build a `dry canal' near here, and everybody is praying for it like the spring rains that soak the earth and raise up our crops," he says. "Countless people are hoping the canal will come soon, bringing jobs and relief from grinding poverty."

Tola, a town ripped apart by years of civil war and unemployment of around 50 percent, is the fifth poorest municipality in this nation of 2.6 million people, still recovering from decades of strife and social upheaval. But since the word spread in 1995, that a group of potential investors from China, Hong Kong, South Korea, and Japan were interested in constructing a $1.5 billion "dry canal" linking the Pacific and Atlantic oceans, Tola's and Nicaragua's residents have begun to dream of an end to hard times.

The result has been a nationwide embrace of the Consortium for the Inter-Oceanic Canal of Nicaragua S.A. (CINN), which has proposed a 234-mile railway link between Nicaragua's Atlantic and Pacific coasts that would serve as a key bridge for east-west container traffic. The idea of the dry canal, which would be financed largely by Asian as well as European and U.S. capital, has brought visions of boom times to come.

Residents of Tola, who grow rice and beans on rented plots, talk about jobs and improving the standard of living for their families. Ministers in Managua, pondering depressing macroeconomic projections, envision an economic surge after the five-year construction process begins in 1998 as hoped.

"This is an enormous project that would generate twenty thousand jobs and allow Nicaragua to leap from 5 percent to 10 percent annual GDP growth," says former transport and public works minister Pablo Vigil, who signed an agreement with the consortium to allow it to conduct a one-year $15 million feasibility study.

Nicaraguans have traditionally feared foreign meddling. They recall the thousands of uncouth prospectors from the eastern U.S. who crossed Nicaragua laden with bedrolls, picks, and shovels in the mid-nineteenth century on their way to the California gold rush. They recall the rival ambitions of the U.S. and Britain for an ocean-to-ocean Nicaraguan canal that nearly sparked war in 1848. And they especially remember the American physician and adventurer William Walker, who invaded...