The idea of a shipping canal through Nicaragua that connects the Atlantic Ocean and Pacific Ocean has been discussed for more than 100 years. Earlier this summer, the plan was formalized. Now it seems work on the Nicaragua Canal will begin next month.
Hong Kong Nicaragua Development (HKND) Group won the contract to build the waterway and now aims to complete the canal within five years, although that may prove to be an ambitious goal. Paul Oquist, a close adviser to Nicaragua’s President Daniel Ortega, said construction of roads and a wharf for the Chinese-run $50 billion project would begin December 21, an article on the Guardian reports.
“The Nicaraguan people will get a big Christmas present,” Oquist said in an interview with the Guardian. “It has always been pending and now it can happen.”
Panama earns about $1 billion annually from its canal, so it’s easy to understand the appeal. Oquist predicted the canal would double the GDP of Latin America’s second poorest country and allow the Sandinista government to achieve a long-held goal of eradicating extreme poverty.
“There is nothing else in Nicaragua that could achieve that within our lifetimes—and it is within grasp,” Oquist says in the article. “It has never been closer than it is now.”
The planned 173-mile route across the isthmus between the Atlantic and Pacific is significantly longer than the existing 48-mile Panama Canal, which itself is being renovated. It’s also more ambitious. The Nicaragua Canal project is expected to include two ports, an airport, a resort and an economic zone for electricity and steel companies, with a 2,000-foot bridge that spans the canal. In the first stage of the project, engineers will start construction in of a wharf that can land giant trucks and excavators, which is necessary to begin building the needed infrastructure.
Considering how quickly the project is moving forward, it’s no wonder there are concerns the project lacks transparency and is being rushed without completing due diligence regarding its impact on society and the environment. The proposed canal will go through an indigenous reserve and several environmentally sensitive areas including Lake Nicaragua, the largest source of fresh water in Central America.
In 2012, Nicaragua passed a canal concession law, which makes HKND responsible for environmental assessment. The group in turn, contracted London-based Environmental Resource Management to conduct studies of the canal’s likely impact on the lake, wetlands and other ecosystems.
Oquist said extensive investigations had been carried out by ERM, U.S. consulting firm McKinsey and others, and cited a figure of $900m for the feasibility studies, the Guardian reports. He further explained the start of preparatory building work was just a form of hedging so the project could move forward rapidly once the green light is given.
“I think there is a lot of confidence. One reason is that the very same firms did a lot of pre-feasibility work,” Oquist says in the article. “No one makes a $900m bet without information, so you think they must have pretty good information from the pre-feasibility studies that this is going to work out.”
There of course has been considerable opposition from farmers and other landowners who believe the Nicaragua Canal will take valuable land from them. Some of the farmers have demonstrated against the canal.
However, Oquist predicts this too will be a non-issue—once compensation begins.
“This entire issue has a short shelf life. It will expire when compensation kicks in,” Oquist says in the Guardian article. “The criteria is that at the end of the day, everyone’s going to be better off than they were before … The ones who complain will be the ones who miss out.”
Environmental concerns aside, what are your thoughts on the Nicaragua Canal? Is there enough shipping business to warrant a canal in addition to the Panama Canal?