- Jan 17, 2010
Nicaragua canal: Will China build rival to Panama Canal? - CSMonitor.com
The Chinese company, HK Nicaragua Canal Development Investment Co. Ltd., is working with the Nicaraguan government on a massive canal project experts say could take 11 years to finish, cost $40 billion and require digging about 130 miles (200 kilometers) of waterway.
That's sparked hopes of an economic gold rush in Nicaragua, and President Daniel Ortega has pushed approval of the canal through the country's congress. Ortega presented the canal proposal Tuesday and hopes to submit it to at least an initial vote on Monday, with final approval planned by next Thursday.
"This is a question of a project that is very important for the country, and that is why it is being given urgent priority," said congressional leader Rene Nunez, an Ortega supporter.
The opposition Sandinista Renovation Movement, which split in 1995 from Ortega, has tried to slow down the debate by demanding more information about the developers, while other critics have questioned the plan's viability just a few hundred miles northwest of the Panama Canal.
The Chinese company's director, Wang Jing, is also listed in the same role in 12 other existing or dissolved Hong Kong companies.
"If this information isn't forthcoming, we can assume this is a swindle, a deal with a front company to get a concession, and then sell the rights to someone else," the renovation movement party said in a statement. "It's a corrupt deal to make a lot of money with fake investors."
Just as the Panama Canal was a projection of growing U.S. power at the start of the 20th century, the Nicaraguaproject already reflects China's influence and financial clout around the world. Another Hong Kong-based company has been operating port facilities on both ends of the Panama Canal.
The Nicaraguan canal's construction would mark the end of a long push that began at least as far back as the 19th century when U.S. industrialist Cornelius Vanderbilt won the right to build the waterway but gave up amid political turmoil.
Other U.S. interests then studied building a canal in Nicaragua before settling on Panama as the crossing point.
This time around, critics have been asking whether Central America needs two canals, even in an age of growing world trade.
"Forty billion dollars is an extremely high amount and based on my experience and the studies we have done on world trade flows, the amount of traffic that would be needed to pay for a project of this size doesn't exist," said Eduardo Lugo, a Panamanian private consultant who's worked on traffic-demand calculations on the ongoing Panama Canal expansion.
Jason Bittner, director of the Center for Urban Transportation Research at the University of Southern Florida, said the demand will probably be there by the time the Nicaragua project is finished. Still, any new waterway would have to compete with the Panama Canal and the "land bridge" of railway networks that connect U.S. West Coast ports with the East Coast.
"I don't anticipate there being any reduced demand in trade between the global trading partners, so East Asia and the eastern United States will continue to have significant trade," Bittner said. "If you make this large public sector investment, it will be used, as long as it's priced properly, as long as the Panama Canal isn't significantly undercutting it."
Finding enough customers may turn out to be the least of the Chinese company's worries in a country that doesn't even have a paved road connecting its Pacific and Atlantic coasts.
For example, much of Nicaragua's water is earmarked for human use, and its lush rivers are too environmentally sensitive to be simply dredged into waterways or dammed to provide water to operate locks. Panama faced few such restrictions in the early 1900s when its canal was built.
In a previous version of the project presented in 2006, the promoters acknowledged they would probably have to build some dams, perhaps on rivers as sensitive as the San Juan, which runs along the border with Costa Rica.
In fact, the builders may have decided to eliminate a lot of digging by routing the canal through that river, according to a 2012 statement by Royal Haskoning DHV, a Dutch firm hired to do technical studies. That option had been written off in earlier proposals as too conflictive.
In 2011, Nicaragua and Costa Rica came close to an armed standoff over Nicaraguan dredging of the river to improve navigation. The World Court ordered both countries to withdraw armed forces from the area.
With 1.7 billion gallons (6.6 million cubic meters) of water per day needed to run Nicaragua's proposed locks, and tens of millions of tons of excavation needed, the project certainly looks daunting. Bittner noted that it matched the challenges of other mega-construction projects such as the Three Gorges Dam in China, which nonetheless took years and huge investments to complete.