The Nicaraguan Canal

One year ago this month, to considerable fanfare, a Chinese consortium who are planning on building a canal across Nicaragua started their initial work. But today, there seems to be no further signs of progress, beyond a few dirt paths that the construction company has carved out near the mouth of the Brito River, near the city of Rivas and just north of the surfing mecca of San Juan del Sur, on southern Nicaragua’s Pacific coast.

If the world’s biggest mega-project – worth US$50 billion – were to fail, it would be in good company. In the past 500 years, more than 70 proposals for a canal across Central America have been mooted and abandoned, by visionaries ranging from the first Spanish conquistadors to US president Theodore Roosevelt. Historically, the challenge of excavating a canal between the Pacific and Atlantic oceans has been fraught with problems. In the 19th century, French efforts to build the Panama Canal descended into chaos, after its architect, Ferdinand de Lesseps, completely underestimated the size of the task (or the number of malarial mosquitoes in the jungle, which killed over 10,000 of his workers). Once a national hero (for designing the Suez Canal), he nearly bankrupted France and later died in disgrace. The Americans purchased the French’s interests in 1904 and the canal was finally completed a decade later.

But Nicaragua has always been another potential canal hotspot. Despite being three times as long as the Panama Canal (Nicaragua is the largest country in Central America, after all), the Nicaraguan one is planned to go along existing rivers, and utilise Lake Nicaragua in the middle of the country. It also helps that the highest elevation in the entire route is just 30 metres above sea level, making it the lowest route across the Americas.

These geographical advantages have caused Nicaragua to be the focus of many canal ambitions in the past. In the 19th century, before there was any road or railway across the USA, it was actually quicker, easier, and safer to cross the States by sailing from New York to the Caribbean coast of Nicaragua, crossing the country by boat (along the Rio San Juan, Lago de Nicaragua, and the Rio Brito), and then taking another ship up the Pacific to San Francisco. The American shipping magnate Cornelius Vanderbilt made millions of dollars by having the monopoly on Nicaraguan trans-oceanic shipping with his Accessory Transit Company, which ferried gold-seeking prospectors to from the USA’s east coast to California, until a combination or civil war in Nicaragua (never good for business), filibuster William Walker (who invaded Nicaragua to get his hands on the lucrative route and turn the country into his own private fiefdom), and the completion of the USA’s first transcontinental railway, all took away his customers. But despite the popularity and feasibility of the route, an actual canal was never built (and eventually, when one was, it was in Panama).

Finally, in June 2013, Nicaragua’s National Assembly approved a bill to grant a 50-year concession to finance and manage a canal project to the private Hong Kong Nicaragua Canal Development Investment Company (HKND). Bizarrely, for a project of this size, the lion’s share of financing appears to have come from just one man – Chinese telecom mogul and President of HKND, Wang Jing. Apparently, Wang has invested US$500 million dollars of his personal fortune in the project, but many people are now speculating about his financial standing. Earlier this year, Wang was reported to have lost 80% of his US$10 billion worth due to China’s stock market crash. So (for the moment, anyway), the canal seems to have stopped (although the official response is that HKND are discussing the Environmental Impact Assessment, but seeing as neither HKND nor the Nicaraguan government have released the full report to the public, nobody else knows what it actually says).

It’s also been noted that the Chinese have a poor track record in these kinds of constructions, of which there have been several across the Americas over the last few years. China’s been flexing its geopolitical muscles in the area for a decade now, and, like in Africa, it doesn’t seem too bothered about working with corrupt governments and dictatorships, just so long as they’re willing to let them do whatever they want. And as the current Nicaraguan government seems to be a dictatorship of President Daniel Ortega (since the Sandinista revolution, he and his cronies have confiscated the country’s finest properties and biggest businesses), Señor El President is probably going to get a piece of the action, canal or no canal.

The Nicaraguan government claims that many Nicaraguans are excited about the project, but everyone I speak to seems to be unhappy or at least concerned about it, and there have already been several protests and marches (which the government responded to with typically Latin American subtlety). While the government predicts that the canal will lift half a million Nicaraguans out of poverty by the end of the decade, the locals are more worried about the environmental effects on Lake Nicaragua (which is the largest freshwater lake in Central America and water source for thousands of people, and which will have to be dredged if the canal goes ahead, as it’s not deep enough); plus the threat of being forcibly evicted and resettled (thousands of Creole, Garifuna, Miskito, and Rama people live in indigenous communities in the proposed path of the canal – communities that are, on paper at least, supposed to have a degree of autonomy and a say in what happens on their ancestral lands).

The parts of the Environmental Impact Assessment of the canal (the EIA study is what’s ‘officially’ holding up construction, not the lack of money) that have been made public state that the canal will have ‘significant environmental consequences’, for the country, especially for Lake Nicaragua, and for the natural reserves in the country’s east that the canal will go through. It also notes that parts of the canal are to be built on earthquake-prone land, of which there’s plenty in seismically- and volcanically-active Nicaragua (and which was one of the reasons that Panama was chosen all those years ago).

Today, advances in engineering work in the canal’s favour, and there seem to be plenty of people who see the canal as an opportunity for prosperity – a long time coming to Nicaragua, after decades of war, instability, and poverty (I imagine there’s a fair bit of palm-greasing going on as well, if Latin America’s reputation for corruption is anything to go by). But for those who stand to lose from the canal, they may well welcome the setback in construction as a possible sign of the long-term impossibility of the project. And, as a selfish tourist, I’m definitely glad to be able to enjoy the placid waters of Lake Nicaragua without the pollution and the supertankers.

So, for the time being, it seems that there’s no Nicaraguan Canal. And now that the Panama Canal is undergoing a US$5 billion refurbishment to widen it (to allow for the bigger ships that the Nicaraguan Canal was going to accommodate), maybe there never will be. Perhaps it’s just yet another failed attempt to cross the continent.