Politics, Business & Culture in the Americas

Nicaragua’s Interoceanic Canal: Is it Progress?

Reading Time: 3 minutes

It’s now been nearly a month since the HKND Group (HK Nicaragua Canal Development Investment Co.)  and the Nicaraguan government signed an agreement to build an inter-oceanic canal that would cut through the Nicaraguan heartland.

The megaproject, with a tentative price tag of $40 billion, is set to include an oil pipeline, two deep-water ports, two airports, a railroad through Nicaragua, and two free-trade zones.

According to HKND’s website, the canal would measure 286 kilometers long, by 20 meters wide and 24 meters deep—twice as long as the Panama Canal and possibly the largest infrastructure project in Latin American history.

If the project goes through, Nicaraguan Public Policy Secretary Paul Oquist said that it could double Nicaragua’s GDP and triple employment by 2018, significantly reducing poverty and improving a number of economic and health-related indicators in which Nicaragua consistently ranks toward the bottom.

But at what cost? Each of the proposed inter-oceanic canal routes impacts Lake Nicaragua (or Lago Cocibolca, as it is referred to by Nicaraguans), essentially destroying the nation’s access to clean freshwater. This factor alone could have devastating environmental impacts for generations to come.

Further, this megaproject assumes that Nicaragua’s canal can compete with Panama’s existing canal and actually return a profit. Thirty percent of the Western Hemisphere’s cargo passes through the Panama Canal, which is undergoing a $5 billion expansion project. The remaining cargo travels through U.S.-based ports. Economically and environmentally speaking, the Nicaraguan canal faces great challenges.Over the last few years, Latin America has experienced an unexpected economic boom, sustained primarily by high demand for exports like petroleum, minerals and lumber. National policies often encourage greater extraction.  Under the ‘new’ model, states are participating directly in the economy and guiding foreign exchange funds, and China is challenging the United States’ position as the top importer of goods from Latin America.

However, this new economic model has not transformed centuries-old inequality. Nicaragua is engaging in a political project where the state is repositioning itself as a critical player in global commerce, with general disregard for popular opinion.

Across Latin America, presidents are engaging in similar projects: in Bolivia, where debate over the TIPNIS road project continues; in Colombia, where a mass dry canal was proposed in 2011; and in Venezuela, where there is an active debate around over-reliance on petroleum profits.

But Nicaragua is a very unique case. The inter-oceanic canal has been a dream for foreign developers for over 100 years, with various attempts to build it under previous administrations. Under former President Enrique Bolaños, a proposed canal project failed to be ratified before the national assembly. At the time, then-Congressman Daniel Ortega pledged never to sell Nicaragua to foreign investors.

Yet six years after Ortega resumed the Nicaraguan presidency, his neo-Sandinista administration pushed legislation authorizing the canal through the national assembly within days. Many Nicaraguans were shocked to see how quickly this megaproject passed—along strict party lines—while other struggles, such as pensions for the elderly, have taken over 5 years to gain any traction.

Another concern is that the country’s most precious water resources will be handed over to foreign investors. The proposed canal would cut through national reserves—comparable to  Yellowstone or Yosemite National Park in the United States—and would severely impact Indigenous and Afro-descendant Nicaraguans, who have been completely left out of all canal-related dialogue.

The debates in Managua and protests across Nicaragua after lawmakers granted the concession for the canal mirror what is happening in other nations; when leaders cut off dialogue with their people, the result is protest.

Nicaraguans are demanding transparency about the future of this canal and want to be involved in the discussion. Real progress involves every sector of Nicaraguan society, not just Managua elite.

Tags: Daniel Ortega, Nicaragua, Nicaragua Canal
Like what you've read? Subscribe to AQ for more.
Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Sign up for our free newsletter