Possible canal routesDaniel Ortega, who holds the office of President of Nicaragua in defiance of Nicaragua's Constitution, is championing a mega-project; a canal across the eastern part of Nicaragua that would provide an alternative to the Panama Canal. The estimated cost is $40 billion.

My initial reaction, when I heard about this is, Nicaragua's GDP is only $10.5 billion, and no foreign investor would be foolish enough to put up this kind of money to finance it.

I was wrong. Chinese billionaire Wang Jing is putting up the money, through the HKND Group, based in Hong Kong, and registered in the Cayman Islands. Jing and other Chinese see this project as reducing the time (and thus the cost) required to ship oil from Venezuela to China, and Chinese goods to the eastern United States. The HKND Group has contracted the China Railway Construction Corporation (CRCC) to do a feasibility study. CRCC is owned by the Chinese government, and was responsible for part of the Three Gorges Dam project.

Why do I say that this is a bad idea? Although there are several possible routes across Nicaragua, all of them go through Lake Nicaragua, which is a large body of fresh water, and environmentally sensitive. Connecting Lake Nicaragua to two different oceans will not only introduce salt water to the lake; it will introduce exotic species. The canal would also introduce large container ships, which will inevitably spill oil, sewage, and other chemicals.

Lake Nicaragua includes the island of Ometepe, a UNESCO Biosphere Preserve and an area relatively unspoiled by human habitation. So, there's an obvious determination here to spoil it.

One of the proposed routes includes the Rio San Juan, another ecologically sensitive area which also forms part of the border between Nicaragua and Costa Rica. The river would be dredged, and the jungle on either side would be bulldozed. Both Rio San Juan and Lake Nicaragua are sources of fresh water for Costa Rica, and the Costa Rican government has already filed complaints. (See Interoceanic channel in Nicaragua and possible effects on San Juan Basin and Costa Rica by Nicolas Boeglin.)

There's a much less damaging and much less costly alternative. It's called the “dry canal”, and there have been three different proposals for it. One of them, the Canal Interoceánico de Nicaragua, was given a concession by the Nicaraguan government in 2000. The idea is to run a railroad across Nicaragua that would carry containers unloaded at one end, and loaded at the other. It would take only four of five years to complete this project, and it would still create a significant number of jobs.

But even if you're convinced that a $40 billion investment outweighs the damage that this project would cost, consider this: Nicaragua's National Assembly recently passed a piece of legislation giving the HKND Group a concession for the project, and they spent only three hours deliberating over it. This concession gives the HKND Group the right to build, operate, and own the canal for the next 50 to 100 years. This means that the Nicaraguan government has handed over sovereignty for a significant chunk of its territory.

It took Nicaraguans 90 years and a significant amount of blood to end U.S. control of their country, and they have now voluntarily handed part of this control to a foreign corporate entity. Augusto César Sandino must be doing back flips in his grave.

Nicaragua Canal: bonanza or boondoggle? by Tim Rogers
Sandinistas approve Nicaragua canal concession by Tim Rogers
Nicaragua waterway to dwarf Panama canal by Jonathan Watts, The Guardian