Nicaragua plans its own Panama Canal

Nicaragua's government is just months away from breaking ground on a new waterway meant to rival the Panama Canal, despite cries of alarm from environmentalists and growing questions about the company involved in heading up the project.

A lot about the new waterway, which would be three times as long as the Panama Canal and would take about a decade to complete, is still not public. But last month, Nicaraguan President Daniel Ortega and Wang Jing, president and CEO of the Hong Kong Nicaragua Canal Development Investment Company (HKND), said in a joint statement that construction on what is being called the "Nicaragua grand canal" is scheduled to start in December.

Last June, HKND won a $40 billion concession to design, construct and maintain the Nicaragua Canal, which like its Panamanian counterpart would allow a shorter international shipping route between the Pacific and Atlantic Oceans. Wang says HKND is a "strictly commercial project," with no geopolitics involved. "There was no order from the Chinese government," he said in an interview last October, "nor were any instructions given or demands made."

But the project, and Wang Jing, have recently drawn scrutiny. Wang is also president and chairman of the Xinwei Telecom Enterprise Group. In a statement on the company's web site, Wang says Xinwei is "committed to providing world-leading wireless communication technologies, products and services," and to contributing "to the progress of world civilizations."

But an Associated Press report published several months ago in the South China Morning Post notes that in more than half of the 20 countries where Xinwei reportedly has business ventures, there's no evidence that Xinwei or its associated firms have any "successful, large-scale project up and running."

And soon after the project was announced, Business Monitor's web site said the feasibility of a Nicaraguan canal is, at best, questionable. The research firm noted that HKND has no experience with infrastructure development. It also questioned company claims that the new canal would boost Nicaragua's GDP and help create more global competition, saying the proposed Nicaraguan canal's long-term maintenance costs alone would undermine its cost-efficiency.

Meanwhile, a recent article by two researchers, published in the science journal Nature, cautions the canal could create a regional enivironmental disaster in Central America by threatening fresh water supplies, cutting off wildlife migration routes and further endangering rare species.

"The excavation of hundreds of kilometers from coast to coast, traversing Lake Nicaragua, the largest drinking-water reservoir in the region, will destroy around 400,000 hectares (nearly one million acres) of rainforests and wetlands," said the article's authors, a professor of zoology and evolutionary biology at the University of Konstanz in Germany and the president of the Nicaraguan Academy of Sciences.

Arguments have been made for another canal. Globalization has boosted demand for international shipping. And a fact sheet on U.S-Panama relations issued in November by the White House says that, while an estimated 5 percent of global trade currently passes through the Panama Canal annually, the volume of cargo traversing that route is expected to double by 2025.

Meanwhile, plans to expand the Panama Canal to accommodate the latest generation of large, transoceanic cargo ships have been delayed for months due to cost overruns and local labor disputes, and aren't expected to be completed until next year.

But industry analysts have their doubts about the Chinese-Nicaraguan venture. "[T]here is no justification whatsoever for a new canal through Nicaragua," Ralph Leszczynski, head of research at the maritime agency Banchero Costa, told the Bangkok Post. "We already have a canal through Panama that works pretty well."

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