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A Man A Plan A Canal
Chinese-Backed Canal Gets Underway in Nicaragua

Chinese investors broke ground on the Nicaragua Canal this week. The hasty opening fulfills chief investor Wang Jing’s promise that construction would start by the close of this year, even though the project’s core problems have not yet been resolved. But observers are already talking up the benefits that Chinese investment will bring to the region, even if the canal never succeeds. From the Wall Street Journal:

“You sell the country a big dream, you get an open door and you score big with real-estate development,” he [Rodriguez] said. “The great majority of the project that has been shown by Chinese developers are real-estate projects. They seem to be using the canal as an excuse to sell real-estate projects, golf courses, and hotels.”

While Mr. Rodrigue doesn’t believe the canal will be built, he is more optimistic that new ports, especially on Nicaragua’s Pacific coast, as well as an airport may be constructed as a result of the canal project.

China has a long-term goal to increase its soft power in Latin America and the Caribbean, but that’s not all bad from the American point of view. As we’ve said before, Chinese foreign investment will help a region where governments are sometimes shaky and poverty and crime rates still high; a healthier Latin America, both economically and politically, is very much in our interest. Nicaragua is the second-poorest nation in the Western Hemisphere: the more investment here, the better.

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  • FriendlyGoat

    Maybe the physical hurdles are indeed formidable, but I doubt China would start this without believing it can finish.

  • David Graeme

    … and if I remember my geography correctly, a canal across Nicaragua (unlike the Panama Canal) would not require locks because the sea is the same height on both sides of the Isthmus – just a giant ditch, really. I can remember excited talk in the 1970s of a cross-Nicaragua canal, with equally excited predictions that some kind of Pacific starfish would migrate into the Caribbean and eat everything in sight. Could still happen, I guess.

    • Government Drone

      A sea-level canal could’ve been dug at Panama as well, but it wasn’t because of the added costs; namely you have to move a LOT more dirt around, & they already had tremendous problems with getting the side slopes shallow enough to keep landslides to a manageable level. I suspect the same factors will be at work for a Nicaragua canal, though sufficient technology, ambition & money can still let you have one.
      One question I have is whether the Nicaragua canal would use Lake Nicaragua as part of its route; this would be a good source of water for locks (lake level is about 32m above sea level, & its maximum depth is 26m, according to Wikipedia), though I wonder if local rainfall is enough to keep the lake from being drained, & the fresh water would help discourage the less desirable Pacific Ocean & Caribbean Sea critters from spreading out of their native habitats.

  • GaiusTrebonius

    What was started was the building of access roads miles away from the actual construction site. There is no feasibility study, environmental impact statement and no financing plan. Indeed, there are no engineering drawings despite the fact that locks would have to be built higher than those used in the Panama Canal since Nicaragua’s canal would need to be 20 feet higher than the one in Panama if they use the shortest route. And, since they haven’t mapped out the route, who knows? I see a fiasco in the making.

  • JDanaH

    “Nicaragua is the second-poorest nation in the Western Hemisphere: the more investment here, the better.”

    Why? Just because a nation is poor, that makes it a good idea to invest in it? Usually the *reason* a nation is poor is due to either anarchy or a corrupt, authoritarian, and/or left-wing government. If property rights and the rule of law are not respected, “investing” in a country amounts to throwing money away — or, worse, to helping sustain the very system and rulers that keep the country poor.

    • PoohBear57

      Given the corruption quotient of many Chinese businessmen, perhaps Nicaragua and Wang Jing deserve each other.

      And I can’t see how that pairing would benefit the U.S. interests in the rule of law.

  • Terenc Blakely

    Pretty sure this won’t end well.

  • douginsd

    Jorge Luis Quijano, Administrator of the Panama Canal Authority says in an interview granted to La Estrella de Panamá that ACP experts estimate this as being a $65-70 billion project, and that five years is way too optimistic. There are also many questions about Environmental mitigation.

    My personal focus is not on that, but on OpEx for this canal. First, the much longer time in canal waters at slow speed mitigates some of the distance advantage for certain port pairs, and has the largest effect on time-sensitive cargoes, which may be willing to pay the highest tolls per ton.

    More importantly, the route will require triple the maintenance dredging, as well as triple the piloting and tugboat hours. Those will all affect what the canal can charge for a transit, and therefore the gross margin per transit.

    Furthermore, of all the ships that could only use this canal, and not the one in Panama, most transport low value, time-insensitive cargo. (bulk carriers and VLCC’s). The Maersk EEE and larger container ships can call on only a few dozen ports worldwide, not just because many ports can’t physically handle their size or draft, but because most ports can’t produce enough demand to justify a weekly or even biweekly port call.

    This canal is obviously a threat to the tolls that Panama could charge. However, in a race to the bottom, the low cost provider usually wins, and Panama will have lower costs because the Panama Canal is so much shorter.

  • ToursLepantoVienna

    Tom Friedman’s writing for TAI now?

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