The domestic and geopolitical implications of the $50 billion interoceanic Nicaragua canal project
January 23, 2015 in Nicaragua
The interest for a short route from the Pacific to the Atlantic started with explorers of Central America during the 16th century. For the last 10 years, the project of a canal through Nicaragua has been largely debated. Indeed, criticisms have been on the rise, as Panamanians cannot efficiently handle the service of the canal anymore. Aside form this, international trade is also on the rise and the waiting period for canal entry is growing. The Panama Canal has almost reached its limited capacity, sometimes backing up for several days or weeks, particularly during maintenance periods. Other problems also began to arise, as there were an increasing number of large tanker ships unable to pass through Panama’s narrow water. As a result of these problems, Nicaragua has been investigating plans for a competing canal.
The question on whether there is a necessity for an additional canal is extremely important to international trade. The outcome of such a project will have a global impact. The United States is the main user of the Panama Canal; Latin American countries also rely on it as well as Japan and other Asian countries. The cost and time of transportation has detrimental effects on prices throughout the planet. Over the years, Nicaragua has been seen as suitable for construction of an interoceanic canal. In order to make this project feasible, the government has joined forces with a Chinese national in order to construct a 278 kilometres interoceanic canal. Wang Jing, a 41-year-old Chinese businessman who owns telecommunications business Xinwei Telecom Enterprise Group, will fund the Nicaragua Canal. The total cost is estimated to be up to US $50 billion. Nicaraguan government says the project is crucial to lifting the nation out of dire poverty.
The alternative to the Panama Canal was officially set to break ground on 22 December 2014. Unlike the Panama Canal, the Nicaraguan Canal will be capable of handling the super-heavy class ships that are up to 400,000 tons compared to a maximum of 70,000 tons in Panama. It will be 278 km long and 30 meters deep. Thus, the routes between East Coast and West Coast ports are likely to be shortened by 525 miles, which would equal a day of sailing time. The project is expected to be operational and completed by 2019. The canal will also reduce the cost of transporting goods via sea transport between America, Europe and Asia by about 30%. Experts claim that it will be able to handle about 5,000 high tonnage vessels a year.
On an economic perspective, the financially strapped country of Nicaragua is hoping to fulfil their dream of a canal in order to bring prosperity. The outgoing leader of Nicaragua’s National Agrarian University, Fransico Telemaco Talavera said that: “The canal will bring prosperity to all in this poor nation creating 50,000 jobs during the five-year construction period and 200,000 more once the canal is up and running. It will turn Nicaragua – now the second-poorest nation in the hemisphere after Haiti, based on a U.S. estimate of its economic output – into the region’s powerhouse, with economic growth rates as high as 14% a year.” An international airport, a new port and a free trade zone are also part of the plans along with the canal itself.
There are also several political factors to be considered. It is currently said that the Nicaragua Canal would be a great political instrument to improve relations with the United States, and to settle other political issues in Central America. Inturn, it will engender important geopolitical consequences for China whose influence in the region will be increased.
Despite the government’s strong support for this project, its implementation is sparking major protests amongst local environmentalists and local populations. They claim that the canal will cause significant damage such as the pollution of Lake Nicaragua, which is the largest reservoir of fresh water in the region. Local residents have been protesting against this threat and also because around 30,000 farmers will be forced off their land due to the construction of the canal. Natural resources could be heavily harmed by this project as it will dredge millions tons of earth and the varieties of fauna and flora might be threatened too. Since the project was launched on 22 December 2014, dozens of Nicaraguan protesters have been arrested and injured as Nicaraguan police broke up road blocks set up by demonstrators against their possible eviction from their land. Although Wang Jin promised to pay “compensation according to market principles in a fair, open and transparent way”, the uncertainty amongst those affected is growing and many of them say they will not give up the fight. As strong demonstrations continued across the country, Indigenous communities in Nicaragua presented a request to the Inter-American Commission on Human Rights to stop the inter-oceanic canal project. The Rama y Kriol territorial government, which represents indigenous groups, asked the Commission to stop the project until a public consultation process is held.
The Nicaraguan government is selling the canal project as an economic miracle, which would permanently resolve the country’s poverty. However, in the perspective of the major protests, the government has great internal challenges to deal with. The outcome of this major project will depend on the government’s ability to run efficiently the construction and to calm down internal opposition. It is likely that protests will continue until a solution is found and concrete propositions are made to local residents.
