TRANSPORT-SOUTH AMERICA: Soybeans Block Inter-Ocean Railroad Project

By IPS Correspondents Reprint | | Print |

Federico Nier-Fischer

VIENNA, Oct 1 2001 (IPS) - Powerful international grain trade interests have blocked one of South America’s most ambitious plans for an interregional railway crossing, according to experts.

At stake is the so-called ‘Interconnection’ corridor from Brazil to Chile via Bolivia, experts attending the World Railway Congress in Vienna said.

The unique project with huge development potential for Bolivia, one of the poorest countries of Latin America as well as for the entire region, was close to a take-off. Cost estimates and traffic studies were on the table. The engineering design had been completed.

But the U.S. Trade and Development Agency (TDA) threw a spanner. At the last minute, TDA withdrew its commitment to fund a feasibility study on implications for interregional trade.

The study, assigned to a U.S. consultancy firm, was scheduled to begin September 2000 and end May 2001.

According to international consultancy firms, the TDA revoked its commitment after coming under heavy pressure from the U.S. Department of Commerce and the U.S. Department of Agriculture – both apparently responded to powerful lobbying of the U.S. soybean industry.

The U.S. industry was opposed to the project because it would helped Bolivian soybean producers overcome natural barriers separating them from Pacific ports.

This in turn would have enhanced their competitiveness in the traditional Far East markets – much to the detriment of U.S. soybean producers.

Sources also pointed out that the former Secretary of Commerce, William Daley and the current Speaker of the U.S. House of Representatives, Dennis Hastert both hail from Illinois, the principal US soybean producing state.

The case of the Interconnection project was also presented in Vienna at the World Railway Congress held from September 25 to 28. It attracted considerable attention of some 500 participants.

They included railway executives and specialists from around the world, particularly from Eastern and Western Europe.

In its final conclusions the congress, dominated by representatives from Europe, commended the ongoing efforts in South America to reactivate existing and launching new trans-boundary railroads aimed at promoting economic integration and boosting trade.

The enormous potential of the project to transform landlocked Bolivia into a transcontinental railway corridor between the Atlantic port of Santos in Brazil and the Pacific ports of Arica and Antofogasta in Chile – with international connections also with Argentina and Peru – was highlighted in a presentation to the plenary of the congress by Benjamin L. Anderson, a senior consultant of the US Anderson Consulting Group.

Bolivia, a least developed country, is severely handicapped by the splitting of its national railway system, which is divided east and west by the eastern range of the Andes. Both subsystems can actually only be connected going a long way into northern Argentina.

The geographic split has been separating the two most important economic regions of the country: the traditional mining industry in the west and a dynamic agro-industry around the city Santa Cruz in the east.

The Interconnection project aims exactly at bridging the missing 388-kilometer link between the Bolivian city Aiquile in the west and Santa Cruz in the east, thus creating a complete single-mode-corridor crossing the continent.

One of the national driving economic forces behind this continental project is the emerging Bolivian agro-industry aiming at getting direct access to Pacific ports to better respond to the Asian soybean- markets.

International consultancies expect the project to lend synergies for the integration of the region. They refer to the project’s unique design that seeks to bridge existing railway networks of two countries belonging to the Andean Integration Pact (Bolivia and Peru) and three major players in the Mercosur (Argentina, Brasil and Chile).

Despite the blow from the U.S., the Bolivian government recently declared its readiness to go ahead with the project.

International consultants have estimated the total cost of the Interconnection at 820 million U.S. dollars, of which 120 million dollars would go in for necessary improvements in connecting railway lines.

Apart from the Interconnection project, three more Andean railway crossings are presently under discussion.

One of these is the Socompa Pass Railway, from Salta in northern Argentina to the Port of Antofogasta in Chile, which is currently in operation but needs significant upgrading.

Second is the Central Transandine Railway from Mendoza, Argentina to Santiago, Chile, that operated successfully for 79 years, but was closed in 1979 for passenger traffic and in 1984 for freight.

The Southern Transandine Railway from Zapala, Argentina to Loquimay, Chile, has also been a subject of fresh feasibility studies.

The Southern Transandine project has recently attracted the interest of powerful U.S. engineering enterprises such as Bechtl.

The disadvantage of this project however is the present lack of commercial plausibility to run a corridor through Patagonia, one of the poorest regions of Argentina.

The advantage of the southern route is that construction costs will be lower because of the Andean pass in the south being only 1.800 m high, while the northern projects face heights of 3,000 to 5,000 metres.

The implementation of each of the projected railway corridors, according to the Anderson Consultant Group, would require the services of international enterprises.

Great designs, modern technology and new forms of organisation and regulation would be necessary for the projects to succeed.

New and imaginative financing techniques were required to launch such large projects, which might not immediately become commercial.

Anderson therefore hopes now to mobilise also European railway companies and governmental authorities to take greater interest in South American infrastructure projects for integration.

Latin America is still one of the most underdeveloped regions in the world in terms of railway infrastructure, according to international statistics. These show Europe, Asia and the U.S. vby far possessing the most extensive roads.

The model for the present integration efforts in Europe and the Latin American needs for integration of transport systems still is the U.S. Transcontinental Railway that was completed in 1896,

Experts said the Transcontinental Railway had played a crucial role in the integration of the U.S. The project was however also a reminder that only heavy official subsidies had made it possible.