Case Study On Nicaragua Canal

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The controversial rival to the Panama canal is set to break ground on the beginning of a $50billion construction project, which will carve the country in two

Despite 18 months of domestic criticism and increasing protests by local people, the historic Nicaragua canal project, the world’s largest engineering project, is set to begin construction of a 278 km (173 miles) waterway connecting the Caribbean Sea to the Pacific Ocean, due to be operational by 2020. The canal is planned to cut through Lake Nicaragua, the largest source of freshwater in Central America, and cause the displacement of over 100,000 people.

There has been a shroud of secrecy over the process since June 2013, when President Daniel Ortega and the Nicaragua Congress granted a concession to the Hong Kong-based consortium Hong Kong Nicaragua Canal Development Investment Co. (HKND), a company with no history of engineering or construction and headed by relatively unknown Chinese businessman Wang Jing. There was no public consultation, no environmental studies, and virtually no parliamentary debate.

‘This massive engineering scheme will impact the country and the region on such a gargantuan scale that one wonders why there was no national referendum presented to the Nicaraguan populace in advance; either to determine the degree of support for the project or to lend an air of public inclusion to create the desired support,’ says Dr Jorge Huete-Pérez, Director of the Molecular Biology Center at the University of Central America (MBC-UCA). He told Geographical, ‘Plans for the canal are constantly changing. Sub-projects are added and subtracted, or simply disappear from the HKND Group website without explanation. Considering the enormous technical, geological, social and financial challenges facing the project – including plans to begin operations within just five years from the initial date of construction – this project appears to be rushed and lacking in responsible planning.’

Proposed route for the Nicaragua Canal


Given the speed with which the plan was approved, and with no time allowed for an environmental impact study, environmentalists have been some of the most outspoken critics of the projects. The few plans which have been released suggest it will carve straight through such nature reserves as the San Miguelito wetlands, a Ramsar Convention-protected site, and the Indio Maiz Biosphere Reserve, over 310,000 hectares of protected tropical rainforest. There are also potential threats to nearby nature reserves, such as the 286,000 hectare Cerro Silva Natural Reserve.

‘The government’s public announcements regarding the impact of the canal on the local forests and the lake state that trees will be planted in the canal area and that the lake will end up cleaner than before. They also announced that the protected areas of San Miguelito, Cerro Silva, and Indio Maiz will be respected,’ says Dr Huete-Pérez. ‘The details of these claims have not been made public. The government prefaces its statements about the environment by saying that the area where the canal is to be built is in environmental ruin, with forests gone, wildlife limited and in some cases extinct, and a lake that is currently destroyed by pollution. The broad local and international community believes otherwise. Again, studies supporting these claims are either absent or just not public.’

The canal will send cargo ships and tankers straight through Lake Nicaragua, known locally as Lake Cocibolca, the source of fresh drinking water for thousands of local people. ‘Although Lake Cocibolca is a large, shallow lake with an extension of over 8,200 sq km, the short answer as to whether the entire lake will become undrinkable as a result of the canal is that it depends on the dredging methods,’ says Dr Huete-Pérez. ‘At one point they planned to use dynamite, but because of the public commotion they eventually gave up. However, there are many factors that must concern us in terms of future water quality and quantity once construction of the lake channel begins and onward into the future operation of the canal.’

His key concerns mirror those of other environmental critics; namely that there have been no studies of the bottom of the lake to check for depth and terrain, meaning that construction ‘could either be a trifle or an herculean undertaking requiring explosives’. There is also the possibility that the canal will require long-term dredging to stop backfill. Furthermore, there are concerns about the damage that water polluted by passing ships – or even by being constantly stirred up with sediment – could have on the lake’s volcanic islands of Solentiname and Ometepe, on surrounding wetlands, and on the quality of water in streams flowing out of the lake.


The past few months have seen growing numbers of protests against the canal project by local and indigenous communities, including 5,000 people on the streets of the capital Managua last week in response to plans requiring the forced displacement of up to 100,000 people along the route of the canal. ‘There have been over 15 demonstrations to date that we know of, not all reported by government-owned media outlets,’ says Dr Huete-Pérez. ‘The majority of demonstrations to date have had a high degree of turnout, in some cases a very surprisingly high degree – 5,000 people on the small rural island of Ometepe, for example – and appear to be home-grown, and locally organised.

‘In my opinion, the general public has been slow to respond and voice either their unbridled support or their concern,’ he continues. ‘It is only within recent months that we have begun to see grass roots-level demonstrations against the canal, and in most cases, the theme of the protests has focused on a rejection of land surveying and census taking by HKND Group, accompanied by Nicaraguan police and military personnel, along the land portion of the canal route. Protesters are also vocalising their rejection of their lands being given over to HKND without a clear idea of where they will be relocated, or the amounts they will receive for their land, or even whether they are willing to leave their land at all (the latter being many of the cases).’

‘The government is not making any explanation of the canal project more that what they already did,’ says Dolene Miller, Creole Representative for CONADETI (National Commission for Demarcation and Titling). She told Geographical, ‘They only make presentations of how many jobs it is going to create, how much money it will take; this means that people only handle generalities of the project, there is no consultation and so far no environmental study is yet presented.

‘However, the central government announced that on 22 December they will start the project, and the community people are saying that they are not going to permit equipment to be installed in their community,’ Miller adds. ‘Some mention that over their dead bodies are they going to permit the government to take away their farm. Without information on the canal, people are scared and suspicious of the real motive of the canal project, especially because their land and farms will be affected. The price is not the discussion, because people are saying that their land is not for sale, and there is a lack of confidence in what the government is planning.’

Managua, Nicaragua. Photo courtesy of Shutterstock


There are several geopolitical factors which are present when considering the Nicaragua canal. First and foremost, there is the symbolic Chinese investment and involvement in central America, very similar to the US engineering project 100 years ago which created the Panama canal. This can be seen as a challenge to US hegemony in the Caribbean region. Taiwan will also be feeling threatened by further investment by China in Nicaragua, given that the central American state is one of only 22 countries who have official diplomatic relations with Taiwan, and therefore this project will likely be viewed as threatening the loss of another diplomatic ally.

There has been debate over the past 18 months as to whether this project would actually go ahead at all – whether HKND would actually make the required investment – and so despite all the logistical difficulties, it appears that construction is about to begin. However, that is unlikely to stop the criticism of the way the whole project has been handled by the government.

‘People are not stupid. They might be illiterate and naïve in many cases but they're not stupid,’ says Miller. ‘Poverty in Nicaragua is too high, and sometimes this situation can obligate people not to see farther than their needs. The people who have a job at governmental level – which is not many – are in favour of the canal. Some other fanatics of the Sandinista regime [The Sandinista National Liberation Front are the governing body in Nicaragua] are also saying that the canal is the solution to Nicaraguan poverty. However, the majority of the people don’t want progress if this means an environmental disaster. People are analysing and saying that it is better to eat poorly and in peace everyday, than to eat and dress well only for a short time. The canal is no guarantee for the welfare and stability of the people. The poor people are not going to get the benefit of the canal and only the rich will reap the best, it has always been this way in Nicaragua, and there is no trust in the political leaders.’

Nicaragua was a front-runner for the original US-led Caribbean-Pacific canal project, and it was only rumours of potential volcanic activity around the Nicaraguan Caribbean coast which persuaded the US Congress to ultimately vote in favour of Panama. This meant that despite requiring the construction of a canal three times shorter than that which would have been required in Nicaragua, ships travelling between the east and west coasts of the US have had to travel an extra 800 km (500 miles) on each journey ever since. But if Wang Jing and President Ortega have their way, then in just a few years time there will be an alternative route for ships through Central America for the first time in over a century.

World News /20 Jul 2015

Taylor Butch07.20.15

Nicaragua Canal: Major Project and Major Impact

The Nicaraguan canal, once completed, will be deeper, wider, and nearly three times as long as the Panama canal, and this waterway is expected to transform Central America and the surrounding region.

Construction of the $50 billion, 172-mile-long waterway that would transport goods between the Pacific Ocean and the Caribbean broke ground on December 22, 2014, and is being undertaken by the privately owned Hong Kong Nicaraguan Development (HKND) Group, created and led by CEO and Chairman, Chinese billionaire Wang Jing. The company projects the project will take only 5-years to complete – a remarkable feat considering workers took 10 years to build the Panama canal over 100 years ago.

Benefits of the Nicaraguan Canal

Nicaraguan officials, according to the Nicaragua Dispatch, foresee the canal completely transforming one of the poorest countries in the Western hemisphere. They claim the canal will ultimately double the economy and boost employment threefold while simultaneously pulling over 400,000 out of poverty by 2018.

The Nicaraguan canal would be able to negotiate vessels capable of moving 25,000 shipping containers – double the ship haul of the Panama canal once ongoing renovations are complete. Such capacity should benefit countries seeking to transport goods, natural resources, or other commodities from South America to Asia or vise-versa.

Nicaraguan universities too anticipate tremendous success from the proposed canal and have positioned themselves to fully capitalize on the once-in-a-lifetime opportunity. The National Council of Universities has offered new degrees related to engineering and has plans for students to learn Mandarin as a second language.

Negative Impact of the Canal

Questions regarding the project were raised even prior to groundbreaking as a lack of transparency surrounded the bidding process. HKND Group won an unopposed bid in 2013 for this project. It secured a 50-year concession to construct and operate the waterway and an option to extend to 100 years. The Nicaraguan government pushed the proposal through the National Assembly with little resistance.

Debate about how the canal will impact Nicaragua’s environmental and social realms remains an issue. Environmentalists say the canal route would destroy biodiverse-rich parts of rainforest. “In our view, this canal could create an environmental disaster in Nicaragua and beyond. The excavation of hundreds of kilometers from coast to coast…will destroy around 400,000 hectares of rainforests and wetlands,” Jorge A. Huete- Pérez, president of the Nicaraguan Academy of Sciences penned in Nature, together with Axel Meyer, professor of zoology at the University of Konstanz, Germany.

The route is planned to bisect Lake Nicaragua, the largest freshwater lake in Central America. It serves as a major source of water and is home to diverse aquatic life; both of which would likely feel the negative impact. Huete- Pérez and Meyer further declare: “The extensive dredging required [to deepen Lake Nicaragua] would dump millions of tons of sludge either into other parts of the lake or on to nearby land. Either way, the sludge will probably end up as damaging sedimentation.”

Further changes include flooding of a 150 square-mile plain to construct a reservoir which would aid canal lock water-level augmentation.

Concerns Over Legality

The route also has a substantial human impact. According to the 1987 Nicaraguan Constitution, the land which includes much of the proposed route, is home to and owned by hundreds of indigenous tribes including the Rama and Creole. Nicaraguan officials unilaterally sidestepped this roadblock in December 2013 by passing Law 840, which amends the national constitution to accommodate Wang’s company.

By granting HKND the ability to expropriate land and resources as the company deems necessary to complete its work, which include among other smaller projects like creation of railways, factories, and an airport, HKND is in essence above Nicaraguan law. While HKND is granted such authority, a major point of contention among those impacted remains land compensation. Critics say that displaced people are only permitted to be paid the tax-assessed value of their property, which is often below market value. Protests by farmers and others contesting this contentious issue have transpired and have on occasion turned violent.

A major issue still is the completion of an Environmental Impact Assessment (EIA), which typically is performed by the government prior to groundbreaking. It examines the environmental impact of a project on local area wildlife, the surrounding ecosystem, and impact on human populations. After having been delayed for months, an EIA was released on May 31, 2015, by HKND and Environmental Resource Management (ERM); however, official results of the study have not been made public. Selected scientists have reviewed only certain information in the report and have concluded that the study contains weaknesses.

Broader Geopolitical Implications

Growing Chinese economic and trade investment in South America should not be overlooked as Chinese-South American trade has increased from $12 billion in 2000 to $289 billion in 2013. Greater opportunities occurred in January 2015, when President of China Xi Jinping, announced $250 billion in investment in South America over ten years. Beijing has denied any involvement in HKND’s project.

Chinese trade with South America has become greatly diversified and will likely continue to grow. Venezuela, for example, was China’s largest South American crude oil supplier at 4 percent in 2014, according to a May 2015 U.S. Energy and Information Agency report on China, followed by Columbia and Brazil at 3 and 2 percent.

China overtook Germany to become the third-largest arms supplier in the world behind the United States and Russia, according to the recently issued March 2015 report by the Stockholm International Peace Research Institute. Although the report identifies that the majority of Chinese buyers are not located in South America, Beijing does sell arms to Venezuela, Peru, and Bolivia. Beijing will likely tap into this available arms market.

With the number of transport days from the Caribbean to China projected to be cut dramatically by the Nicaraguan canal, Beijing would be a primary beneficiary. As Beijing continues to boost its economic ties with South America, the completion of the Nicaraguan canal would only bolster its growing global influence.

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