The Nicaragua Canal

The Panama Canal’s opening in 1914 transformed global trade and fostered economic development in Panama. Today, Nicaraguan President Daniel Ortega and Chinese financier Wang Jing are trying to emulate its success by constructing a canal through Nicaragua.

The Next Great Canal?

President Ortega and Wang are spearheading the Nicaragua Canal proposal. If completed, the $50-80 billion project would span 172 miles across the country, nearly four times the length of the Panama Canal. Wang, a Chinese billionaire who made his fortune in the telecommunications industry, would finance the project through his HKND Group. The canal would accommodate new cargo megaships that are too large for the Panama Canal.

Pros and Cons

The Nicaragua Canal presents opportunities and risks. On one hand, the project promises economic opportunities for Nicaragua. Its government believes the multi-billion dollars of investment into building and operating the canal will create hundreds of thousands of new jobs and provide a significant boost to its GDP. This new transportation hub will likely provide lasting financial benefits to citizens and become the focal point of its economy.

On the other hand, the Nicaragua canal would expose the country to political, environmental, and human rights risks. Under the current agreement, the HKND Group would have expropriation authority, giving it power to claim any Nicaraguan land it needs for the canal’s development. Additionally, recent assessments by environmental groups reveal that the project would create severe biodiversity consequences to ecosystems along the canal route. Moreover, residents along the proposed route—including protected indigenous peoples—would be forced to relocate.

Arrested Development?

Mounting opposition from environmental groups and investment challenges seem to have delayed the project; despite promises to start construction in 2015, no visible progress had been made as of December 2016. The delay is fostering increasing speculation on the project’s viability.

Dig Deeper

Take a look at some of our favorite articles that we came across while researching this topic:

Project Background, HKND Group

Lost in Nicaragua, a Chinese Tycoon’s Canal Project, Suzanne Daley, New York Times

Why China and Nicaragua’s Canal Project Is Floundering, David Z. Morris, Fortune