Nicaragua has approved plans for a mysterious Hong Kong-based company to build an estimated $40 billion canal across the middle of the country, Luis Manuel Galeano and Michael Weissenstein of The Associated Press report.
The waterway, which would have to be roughly three times as long as the 50-mile Panama Canal, would be one of the largest infrastructure projects ever.
The plan has some serious detractors: Environmentalists say it would devastate Lake Nicaragua, the country’s primary source of fresh water, while shipping experts say that it may be a economically unfeasible power play by China.
The company, HK Nicaragua Canal Development Investment Co. (HKND Group), has provided virtually no details about the canal and declined to comment to the AP on the record about its funding and backers.
The path would certainly cross Lake Nicaragua, meaning the water used by the canal’s locks could seriously deplete the lake.
“We’re at a crossroads because either you use Lake [Nicaragua] for floating boats or you use it for drinking water, but you can’t use it for both things at once,” Victor Campos, assistant director of the Humboldt centre environmental organisation, told the AP.
Furthermore, global engineering and shipping experts told the AP that lowered demand for massive container shipping and increasing competition from potential routes could make the project economic unfeasible.
“It’s addressing a need that definitely is not here now and I’m not sure if it’s ‘a build it and they will come’ sort of thing,” Rosalyn Wilson, a senior business analyst at the Delcan Corporation, a Toronto-based transportation consultancy and author of the U.S. logistics industry’s annual report. “I wouldn’t invest my money in it.”
(Check out ABC’s glance at the history of Nicaragua canal plans.)
Nicaragua’s National Assembly, dominated by President Daniel Ortega’s Sandinista Front, disagree with those assessments. They say the canal will transform one of the region’s poorest countries by bringing tens of thousands of jobs to the country and fueling an economic boom.”Global trade demands that this canal is built because it’s necessary,” Sandinista congressman Jacinto Suarez said during Thursday’s legislative debate. “The data shows that maritime transport is constantly growing and that makes this feasible. Opposing it is unpatriotic.”
Wilson noted that the global economic slowdown led to a lower demand for massive container shipping, and that climate change means that the Arctic could become a viable alternative to crossing Central America by canal.
Roberto Troncoso, president of the Panamanian Association of Business Executives, told the AP that he believes that the plan represents China’s desire to trump the Panama canal, which was completed by the U.S. in 1914 at the cost of about $375 million and gave passage to 6.6 million shipping containers in 2011.
“The money is totally irrelevant,” he said. “We’re talking about national hegemony. China is looking to turn itself into the predominant economic power. Whoever dominates trade, dominates the world.”
China has been actively investing in Latin America. In March Ecuador agreed to auction off three million of the country’s 8.1 million hectares of pristine Amazonian rainforest to Chinese oil companies.
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