Brazil, Peru and China and the Inter-oceanic Dream

Railway likely to have high environmental and social costs for both Latin American countries

Brazil and Peru share an old dream of joining their Atlantic and Pacific coasts and China can turn the dream into a reality.

Impetus was given to developing Latin America’s infrastructure at the first China-CELAC forum in Beijing last month, where it was identified as a strategic area of cooperation in documents produced by the meetings.

Prior to the forum, the presidents of Brazil, Peru and China had already inked a memorandum of understanding to build the transcontinental railway.

The trilateral agreement between Peru’s Ministry of Transport and Communications, Brazil’s Ministry of Transport, and the Chinese National Commission of Development and Reform is expected to deliver the project within six years at an estimated cost of US$ 10bn.

But critics claim that in their eagerness to construct the railway, governments are overlooking the considerable social and environmental impacts along the proposed route such as large-scale deforestation and disruption to indigenous communities living in voluntary isolation.

Pedro Tipula of the Lima-based Institute of the Common Good (IBC in Spanish) argues that while negotiations have moved forward quickly, details have been characteristically lacking: “All the projects that the Peruvian government has undertaken in the name of development have had very incomplete information,” he said, “only the benefits of this project are discussed.”


Economic benefits

A route to the Pacific would bring Brazil closer to the fastest-developing region on the planet: Asia. For Peru, the railway would facilitate the transportation of products that arrive in the continent’s Atlantic ports, as well as goods that are traded with the Southern Cone countries.

At the same time, China would see a reduction in transport costs for agricultural and mineral products imported from Latin American countries. Initial calculations indicate that the railway would reduce the price of exported grain by US$ 30 per ton.

Among the commodities exported along the route before being shipped to China would be soybeans from Pará in Brazil’s central-western interior as well as phosphate rock, a raw material used by the carbon-intensive fertilizer industry.

The Bayóvar mine in the Sechura Desert in Peru has one of the largest deposits of phosphate rock in South America with a capacity of 3.9 million tons per year. The mine supplies markets in Brazil, North America and Asia.

The president of the Association of Chinese Enterprises in Peru (AECP), Gong Bencai, has already announced that China International Water & Electric Corporation (CWE) is one of the parties with a stake in the project. CWE is a subsidiary of the China Three Gorges Corporation (ETC) and one of the largest companies in China, with experience in hydroelectric projects, highways, and railways in more than 30 countries.


High socio-environmental costs

According to According to the IBC, which is a member of the Amazonian Network of Georeferenced Socio-environmental Information (RAISG in Portuguese), indigenous communities living along the proposed route have not been properly consulted.

They claim there are more than 600 indigenous communities of different language groups that stand to be affected by the project including around 15 living in voluntary isolation. Many inhabit the Isconahua reserve near the Peru-Brazil border, an area already threatened by illegal logging.

When contacted, environmental authorities in Peru expressed little opinion on the interoceanic railway and even seemed unfamiliar with the project.

Fabiola Muñoz Dodero, executive director of the Peruvian National Forestry and Wildlife Service, an agency created within the Ministry of Agriculture in August 2014, advocates a more integrated look at the concept of the landscape which involves not only social and environmental sustainability but also the economic sustainability of natural areas.

However, she admitted she did not have the details of the proposals. “For every project involving infrastructure of this type, there must be environmental management tools to assess whether the impacts can be mitigated. I do not know what level this project is at, but we are all making an effort to improve the connectivity in the region, which is critical. Everything is still under discussion,” she told Diálogo Chino.

The director of the Peruvian Ministry of the Environment’s National Program for Forest Conservation, Gustavo Suarez de Freitas, admitted that there are many regions in the Peruvian Amazon lacking the presence of forestry officials to curb illegal activities.

“The budget is always cut for forest-related activity, which is huge. More than half of Peru is covered with forests. The country suffers from problems related to deforestation. There are many regions where there is a large amount of illegal activity,” she said.


Connecting the Atlantic and Pacific

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The tripartite agreement would see the 5,300km transcontinental railway built through the Brazilian state of Rondonia, connecting the cities of Porto Velho and Vilhena by rail. The route would also cross the vast states of Goiás and Mato Grosso, reaching the border with Peru at Acre.

According to VALEC Engenharia, Construções e Ferrovias S.A., a public company controlled by the federal government through the Brazilian Ministry of Transport, the transcontinental railroad (known by the abbreviation EF-354) was planned to span approximately 4,400km of Brazilian territory from Port Açu on the coast of Rio de Janeiro state to the town of Boqueirão de Esperança in the state of Acre.

Although the route on the Peruvian side has not yet been decided, one proposal is to build from the border with Brazil in Rondônia to the south of Peru (Fetras) via Madre de Dios, Cusco, Puno and Arequipa.

A second idea (Fetab) would link the regions of Piura, Cajamarca, Amazonas, San Martin, Pasco, Huanuco and Ucayali.

This project would complement the US$ 2 billion Initiative to Integrate Regional Infrastructure in South America (IIRSA).

The inter-oceanic railroad could signal the end of the line for the logistics nightmare that Brazil has experienced in getting crops like soy to market in China. But for indigenous groups in its way, the railroad is hardly a dream come true.