The Nicaraguan Grand Canal: The Biggest Thing Since Panama

Background

One of the largest megaprojects in the world has started construction—the Nicaragua Canal. When finished, the canal will be over three times the length of the Panama Canal and will accommodate some of the world’s largest ships. The project did not arise out of thin air. The United States had interest in building a canal in Nicaragua over a century ago.

In the beginning of the 1900s, the United States was searching for a place to build a canal that would connect the Pacific and Atlantic Oceans.  Nicaragua and Panama both wanted the bid.  In 1902, the U.S. Senate voted and, by a mere eight votes, awarded the canal to Panama.  A few years after the loss of the bid, Nicaraguan President, General Emiliano Chamorro, gave the U.S. the perpetual and exclusive right to build a canal in Nicaragua in exchange for three million dollars.  This agreement is known as the Bryan-Chamorro Treaty (“Treaty”). The U.S. and Nicaragua entered into the Treaty on August 5, 1914. The Treaty was only renewable every 99 years.  Because Nicaragua gave the U.S. the exclusive rights to build a canal in Nicaragua, Nicaragua itself was legally unable to build a canal. This inability made it difficult for Nicaragua to compete with Panama economically, and, as a result, the country has suffered in the world marketplace for decades.

In 1970, the U.S. and Nicaragua bilaterally abolished the Treaty. Now, the Nicaraguan government has granted a Chinese company, Hong Kong Nicaragua Canal Development Investment (“HKND”), the right to build a canal.  December 10, 2013, the Nicaraguan Assembly passed the canal concession. The Nicaraguan government did not inform the public of the bill until the bill had already been ratified. The bill gives HKND the power to build two ports, a railroad, an oil pipeline, and roads.  The bill also gives HKND the power to expropriate land along the canal route­—effectively giving HKND the right to displace an estimated 20,000 to 30,000 Nicaraguan landowners.  No countries or businesses placed a bid to build the canal in Nicaragua. HKND won the canal project without bidding and has a 50 year renewable contract with Nicaragua to build, operate, and profit from it.

HKND, headed by investor Wang Jing, expects the project to take five years to build and cost 50 billion dollars.  The canal will span about 173 miles, while the Panama Canal is only 48 miles, to connect the Pacific and Atlantic Oceans.  The canal’s width will vary between 755 feet and 1,706 feet.  It will be around 90 feet deep.  Nicaragua and HKND state that the size of the canal will accommodate some of the world’s largest ships, something the Panama Canal cannot do.

The megaproject has drawn public interest from around the world.  The project clearly implicates many issues whose resolve will unfold within the coming months and years.  The major issues concern the rights of Nicaraguan landowners and the anticipated environmental impacts of the canal.

The Rights of Nicaraguan Landowners

A central issue and subject of debate, especially in Nicaragua, is the displacement of Nicaraguan landowners along the canal.  Nicaragua is one of the poorest nations in the Western Hemisphere.  The current Nicaraguan President, Daniel Ortega, has sold the majority of the country on the idea of the canal by emphasizing the tremendous economic impact the canal will have on the county.  Ortega states that the canal will create 50,000 jobs for Nicaraguans, bring in benefit taxes from the Chinese government, and produce revenue from its operation.

However, many people are concerned that Ortega’s promises are not what they seem. They are apprehensive because HKND will initially own the entire canal; Nicaragua will only gain one-per-cent ownership of the canal each year.

An even greater area of concern surrounds the fact that the Nicaraguan government has given up part of its sovereignty to HKND and Wang.  The agreement between the country and HKND allows the company tremendous power in the land area along the canal—allowing it to not only build the canal, but displace landowners currently living near the canal line.

HKND does not deny that it will have to displace 20,000 to 30,000 landowners, but agrees to pay them fair market value for their land.  Large landowners, will likely be okay because they will receive enough money to move somewhere else.  Small farmers and landowners, called campesinos, avidly protest the canal.  The small bits of land they own are all they have, and displacement would be detrimental.  Many campesinos are indigenous to the land and have had the small bits of land on which they live for generations. They hoped to give their land to their children one day.  The land is worth little on the market, but the families’ emotional attachments to their lands are priceless.  Giving up their land for the canal or the hotels and roads that will surround it seems like a step in the wrong direction.  They view the canal not as an opportunity to increase the Nicaraguan economy, but as a forfeiture of the country’s independence to China. Campesinos fear that displacement will not only cause the loss of their livelihood, but also will likely force their families to be homeless.

Environmental Concerns

Another issue for the canal concerns the lack of research on the canal’s environmental impacts. While scientist around the world have expressed the need for an environmental impact study, HKND has only released one. On December 16, 2014, HKND released the study, but the study was not research on the canal project itself, only on the preliminary construction. Even more worrisome, HKND paid for the study itself and hired the firm that executed it.

The study stated that there would likely be many problems resulting from the preliminary construction, some that cannot be remedied. For example, there is potential for fuel spills. Such fuel spills may harm the fresh fish, agricultural activity, and soil. Additionally, the canal is to run through Lake Nicaragua. Lake Nicaragua is Central America’s largest fresh water lake. Many people rely on it as a source of potable and irrigation water. The canal may damage this precious resource by seeping salt water into the lake.

One scientific association, Association for Tropical Biology and Conservation (“ATBC”), released a statement regarding the building on the canal. ATBC reported that the canal would affect around 1,545 square miles of “forest, coast, and wetlands.” Additionally, ATBC stated that the canal would affect “the habitat of at least 22 species that are vulnerable and in danger of extinction.”

Many other international scientific organizations have issued concerns regarding the canal’s environmental impact. Most of the organizations ask that the construction halt until adequate and independent research addressing the areas of concern is performed. However, the Nicaraguan government seems unconcerned about the consequences the canal may have on its people, land, and animals.

Conclusion

Ortega promises his people that the canal will greatly strengthen the Nicaraguan economy and give many of its citizens jobs. For this reason, most Nicaraguans support the building of the canal. Most people believe that it will transform Nicaragua from one of the poorest countries in the Western hemisphere into a resort-style country like Panama. However, whether these dreams of wealth will come to fruition is far from certain.

What is certain is that people will lose their homes and that the government is not taking adequate measures to protect the environment. International human rights and environmental organizations have cried out to the Nicaraguan government to slow down and take more precautions. As construction progresses, the international world will be watching how these issues are addressed and what consequences unfold.

 

The title image features the United States’ proposed canal through Nicaragua in 1870, which was never realized. This image is part of the public domain.

 


Sources:

Jon Lee Anderson, Breaking Ground on the Nicaragua Canal, The New Yorker, January 2, 2015, available at http://www.newyorker.com/news/news-desk/breaking-ground-nicaragua-canal.

Jon Lee Anderson, The Comandante’s Canal, The New Yorker, March 10, 2014, available at http://www.newyorker.com/magazine/2014/03/10/the-comandantes-canal.

Reese Erlich, The Nicargua Canal, NPR: Latino USA, March 13, 2015, available at http://www.npr.org/2015/03/13/392826942/the-nicaragua-canal.

Pablo Fonseca, Nicaragua Constructs Enormous Canal, Blind to its Environmental Cost, Scientific American, February 11, 2015, available at http://www.scientificamerican.com/article/nicaragua-constructs-enormous-canal-blind-to-its-environmental-cost/.

Silvana Ordoñez, Who’s behind the ‘Nicaragua Grand Canal’ – and Why?, CNBC: Transportation, February 25, 2015, available at http://www.cnbc.com/id/102451065.