China’s Ambitious Rail Projects Crash Into Harsh Realities in Latin America

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“I don’t believe in it,” Senator Blairo Maggi, a soybean farmer and former governor of Mato Grosso State told his counterparts in the Senate.

Beyond the opposition among powerful Brazilian agribusiness interests, environmental groups are also marshaling resistance to the railway, claiming that it could accelerate deforestation in the Amazon River basin.

Brazil’s labor laws, which make it considerably difficult for companies to hire foreign workers, are another potential obstacle, in contrast to railroads in African countries that the Chinese have built with their own laborers

Then there is the record of large infrastructure failures in Brazil to consider. One mega-project after another has been stalled or abandoned in recent years, often because of corruption, lack of money, bureaucratic hurdles, cost overruns, or all of the above.

“With all due respect, the African countries are a little bit more desperate,” said Kevin Gallagher, a scholar at Boston University who studies China’s forays into Latin America. “In Latin America, there’s more red tape, some of it good, some of it bad.”

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Of course, other Chinese infrastructure projects have made progress in Latin America, helping reshape the region. In Argentina, where Chinese companies are upgrading a dilapidated cargo network, imports of railroad materials and trains from China reached around $700 million in 2014, up from $50 million in 2011. In Ecuador, state-owned Chinese banks have already put nearly $11 billion into the country, building a dam, roads, highways, bridges, and hospitals.

Some in Brazil argue that Chinese companies are learning from their successes and setbacks. Here in Brazil, Sinopec, the Chinese energy producer, built a $1.3 billion gas pipeline. Now Brazilian officials are investigating claims of gross overbilling in its construction.

With Brazil’s economy ailing, some powerful officials are signaling that they may be willing to accept China’s proposal, while also suggesting that the railway could be pursued with a less ambitious, piecemeal approach.

“The Twin-Ocean Railway could be done in parts,” Nelson Barbosa, Brazil’s planning minister, said in testimony before the Senate, emphasizing in particular two stretches where farming groups have clamored for railroads.

Mr. Gallagher said the railway ranks among the largest infrastructure projects in Latin America in the last century.

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“China will have to race up the learning curve for this to succeed,” he said. “If the Chinese can’t make this happen, then no one can.”

Culled from: http://www.nytimes.com/2015/10/04/world/americas/chinas-ambitious-rail-projects-crash-into-harsh-realities-in-latin-america.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news&_r=0

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