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Will there be a Nicaragua canal?

Aug 8, 2014 04:37 PM

Will there be a Nicaragua canal?

Published in 1977, David McCullough’s “Path Between the Seas” (Simon and Schuster) is a masterful detailing of the Panama Canal’s creation and so immediately, an apology to him for purloining words from the title of his truly epic work. One attempting to understand the historical background to the unfolding Nicaragua/China story could do no better than to start with his book since Nicaragua is where the original “Path” idea really started.

It would seem that the response to the prospect of a Nicaraguan trans-isthmus canal has been somewhat underwhelming. While this time it involves not the United States, Columbia or France, nor a De Lesseps. Bunau-Varilla or Roosevelt. Rather, into this go-around (so to speak) has steamed the eastern hemisphere’s evolving protagonist – China. Seemingly not frostbitten by its ongoing ventures along the Arctic’s NSR nor chastened by its forays into the South China Sea, is China now the shadow-financier of a canal through another Central American isthmus, remaining in the shadow of Wang Jing?

A Memorandum of Understanding signed in June 2013 disclosed that the canal crossing Panama’s isthmus might have a late-blooming twin at its geographic mirror image - Nicaragua’s own isthmus some 700 miles to the northwest. This was executed between President Ortega’s Sandinista government and Chinese businessman Wang Jing, the CEO of “Hong Kong Nicaragua Canal Development Investment Company, Ltd” (HKNG Group) - a private entity. Inevitably, the questions of what, who, where, why, and especially HOW followed in the wake of the announcement - quickly trailed by assurances that complete “transparency” would mark the process.

One year later, and perhaps with more translucency than transparency, the MOA “Concessions” were formalized and signed this past June with the “go ahead” now in place. Those concessions include 50 year exclusive rights to develop, finance, build and operate a canal with options to extend for an additional 50 years. HKND’s proposal went through Nicaragua’s National Assembly in 3 days, virtually unopposed. Whether such “promptness” resulted because no other bidders were invited or that none chose to be involved, has yet to be made “transparent”.

WHAT: A 175-mile linkage of dredged rivers, massive (approximately 120 miles) excavations, two lock sets (at last estimate), a deepened channel of about 55 miles through freshwater Lake Nicaragua and the creation of an artificial lake (to provide lock-water) In addition to the canal itself are rights to develop two deep-water ports, an airport, a duty-free zone at either end, a pipeline and railway. Construction to start December 2014 with completion in six years; estimated cost $40 billion. (Panama figures below are for the post-construction dimensions due complete in 2015.)      

  length (miles/km) width (feet/m) depth (feet/m) length (feet/m) width (feet/m) depth (feet/m)
Panama 50/80 45.3/13.7 45.3/13.7 1401/425 180/55 60/18.3
Nicaragua 175/280 759-1716/
91/27.6 1529/463 210/62 210/64
Air draft (Panama) at Bridge of the Americas: 190 ft (57.9 m)

Capacity (dwt): Panama, 125,000; Nicaragua, 250,000

Lake Nicaragua: 108 ft (32.7 m) above sea level

Planned channel depth: 86 ft (26 m)

WHO:  Ostensibly, not China, as in ”The Peoples Republic of … “, but rather a businessman with a Beijing mailing address who recently became the subject of multiple news stories regarding the re-awakening of the concept of a Nicaraguan canal - 41 year-old Wang Jing. HKNG Group’s company profile discloses that it is  “a privately-held infrastructure-development firm headquartered in Hong Kong and with offices in Managua … the Group has extensive experience in construction management and infrastructure development.”

Aside from his Self description as a “very ordinary Chinese citizen" he stands #1,210 on Forbes listing of the world’s richest people.  He is the president of Xinwei Telecom Enterprise Group, a telecommunications group that also has interests in Nicaragua. Aside from telecommunications, he and HKNG would appear to have what might be called an uncertain experience in heavy and robust engineering such as would be critical in an enterprise of this magnitude. 

WHERE:  After considering six possible routes, the one chosen would extend from (Pacific end) at the mouth of the Brito River passing near the city of Rivas - thence (via a lock set) to Lake Nicaragua via a dredged channel, and passing easterly to an artificial 150-square-kilometer lake near village of Rio Grand (a function of the artificial lake would be to supply the locks) thence transiting that lake to the Punta Goudas river – and finally via locks to the latter’s mouth on Nicaragua’s Caribbean coast near Bluefields Bay.

WHY: The predictable suspects would include (a) anticipated volume of sea-shipping in the coming decades and (b) sizes of vessels coming off the ways are exceeding the capability of the locks at Panama - examples would be the newer supertankers as well as Maersk Triple E class container ships whose Asia – Europe  (and eastern U.S.?) service will otherwise be via the Indian Ocean - Suez – the Med. Taken together, they support the need for greater capacity to handle trans-oceanic shipping routes. Economic benefits touted are those to those living in an impoverished country and to the country itself, given the geopolitical clout such a sea-transport enterprise would bring to Nicaragua.

And not often mentioned: It’s always good to have a backup for “the other” canal!!

WHY NOT: This question would seem to center on (a) economics and (b) environmental.  (1) Will traffic volume growth be sufficient to accommodate a second Central American route? (2) Will smaller / lower tonnages opt for Panama (shorter / faster)? (3) Will a Nicaraguan canal evolve into transiting mainly larger dwt vessels and if it does, can it survive without diverting others from Panama – and if not, can the two survive by “sharing” the rest? (4) Can environmental “intrusions” (to put it mildly) be minimized? (5) Will there be “in-place” capability to deal with spills, groundings, etc., especially in and around critical Lake Nicaragua as well as the rest of the route? (6) Can a sufficient number of personnel be trained to operate and maintain an exceedingly complex and geographically vast complex operation?

HOW: This would seem to beg the questions of (1) design, (2) route and (3) financing.  As for the first, almost nothing has been divulged – or at least published. The final narrowing down the route is as covered above. As for (3) there is almost nothing to go on. A repeated query has asked the question of governmental (Chinese) support. Replies have ben at most vague dismissals - none seem to have been outright, firm and unequivocal denials. Misty references to unknown bankers, etc. have adding little or nothing as to “the bottom line.” So, in summary, only the route (and that in a very general sense) has been revealed, Absence of anything more is probably the explanation for a rather silent reaction to the idea (which is to start in December 2014)!

NOW - A FROSTY SIDEBAR:  It’s well known that China has also been active in the north. Its application to the Arctic Council for Permanent Observer Status was approved. In 2012 the icebreaker Xue Long (Snow Dragon) sailed the Northern Sea Route (NSR) from the Bering to Barents Sea., rounded the corner at Iceland then back via the NWP. In September 1913 with its arrival in Amsterdam, the China Ocean Shipping Co.’s Young Shang completed its transit of the NSR, the first container ship to have dome so. In December of the same year, the China-Nordic Arctic Research Center opened in Shanghai. To complete (anchor) the northern arc, China signed a free trade agreement with Iceland in 2013

In 2013 the New York Times reported that a property developer representing a Beijing based company (the “Zhongkum Group”) has expressed desire to build at Grimsstadir, Iceland  “a luxury hotel and an ‘eco-golf course’ for wealthy Chinese seeking clean air and solitude.” The cost to complete this “solitude” haven was about $200 million. It might also be noted that (source - WIKIPEDIA) … “Grimsstadir is a settlement in northeast Iceland whose main claim to fame is that its weather station holds the low-temperature record for Iceland.” Thinking of Iceland as the eastern Arctic’s sea-buoy into the Atlantic and its “relative proximity to deep fjords on Iceland’s northeast coast,” could this discount Grimsstadir’s brush with the Arctic Circle?

So what does this NSR northern sidebar have to do with a Nicaraguan venture? Could China be covering its NSR bets with a southern flank?

David McCullough provided a historical footnote to the 19th-century Panama-versus-Nicaragua controversy in Congress. Mark Hanna, in one of his last speeches before the Senate, posed the prescient question: "If the United States were to build a Nicaraguan canal, what then was to prevent some other power from finishing the canal.” (Ironically, of course, that’s exactly what the U.S. did vis-à-vis France – but in Panama).

However, moving the context of Hanna’s 1800s warning to the present, substitute a “private Chinese conglomerate” for the U.S. and for “other power,” the Chinese government. Quoted by the Beijing Telegraph, a comment by the Panamanian Foreign Minister Fernando Fabriga opined “I don’t think it’ll be funny for the Americans to have the Chinese with a canal through Central America.” Hanna would be smiling.

The question then (remember the “HOW” above) - just how politically independent from the Peoples Republic of China a “Chinese conglomerate” really is. China already is sending shipping through the Arctic via the NSR and has established close ties with Iceland. It would seem that a 50- to100-year control of a Central American transit route would close that encompassing arc (noose) around trans-oceanic maritime commerce. In short, is China the (not so) silent partner to this mother of all concessions?

When queried as to whether the canal project is motivated by geopolitical or military interests, Alvaro Baltodano, economic adviser to President Ortega replied “That is not a concern that people should worry about.” A glance back at U.S. actions in regards to Columbia and its then-province of Panama may tend to temper the inevitable ascription of` Chinese interests in a Nicaraguan canal as purely geopolitical; very likely they are in part – but a “look-in-the-mirror” might serve as a dose of deja vu.

Adding to this trans-hemispheric intrigue, President Putin, fresh (or flush) from his multi-billion-dollar natural gas deal with China, visited Nicaragua this July. Although the first Russian president to do so, Nicaraguan officials played down the visit’s significance. 

Having cleared all this up, do ceremonial shovels await?

OOPS – don’t get up. Just when it seemed that canal-frolics were quieting down, reports of Egypt’s plans for Suez  “broke” - essentially a 45-mile dig to provide two-way sections for the parts of the passage. What little has been put out (true “transparency” re: Suez compared to the info-vacuum from Nicaragua), it would seem to be directed more to shipping volume anticipation rater than tonnage/size capacity.

 De Lesseps and Bunau-Varilla may be giving each other a “high five”.

Jim Austin
Burlington, Vt.‚Äč 

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