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The Nicaragua Canal (also referred to as the Nicaragua Grand Canal, or the Nicaragua Interoceanic Grand Canal) is a proposed shipping route through Nicaragua to connect the Caribbean Sea (and therefore the Atlantic Ocean) with the Pacific Ocean. Construction of such a shipping route—using the San Juan River as an access route to Lake Nicaragua—was first proposed in the early colonial era.
Napoleon III wrote an article about its feasibility in the early 19th century. The United States abandoned plans to construct a waterway in Nicaragua in the early 20th century after it purchased the French interests in the Panama Canal.
Because the steady increase in world shipping may make it an economically viable project, speculation on a new shipping route has continued. In June 2013, Nicaragua's National Assembly approved a bill to grant a 50-year concession to the Hong Kong Nicaragua Canal Development Investment Company (HKND Group) to build the waterway.
The concession can be extended for another 50 years once the waterway is operational. Construction of the canal, estimated to cost $40 to $50 billion, is scheduled to begin in December 2014, with completion due within five years.
Several possible routes have been proposed for the Nicaragua Canal, all making use of Lake Nicaragua. The following six routes have been discussed to carry traffic from the Caribbean Sea to Lake Nicaragua, which is at an elevation of 32 m (105 ft) above sea level:
All of the above proposed routes lead from port at or near Bluefields in the Caribbean Sea to Morrito, a small town located on the eastern shore of Lake Nicaragua. From Morrito, ships would continue westward across Lake Nicaragua to a port near the town of La Virgen in the Department of Rivas. At that point, ships would enter a manmade canal and navigate 18–24 kilometers across the isthmus of Rivas to reach Brito, a port on the Pacific Ocean in the Department of Rivas.
The last route proposed (Route 6) would require deepening the shallow San Juan River and adding a series of locks. However, despite the lower cost compared to the other routes, HKND Group has stated it will not use this route.
HKND Group has hired Environmental Resources Management, one of the world’s leading sustainability consultancies, to independently assess the environmental and social impact of various routes under consideration.
The idea of constructing a manmade waterway through Central America is old. The colonial administration of New Spain conducted preliminary surveys. The routes suggested usually ran across Nicaragua, Panama, or the Isthmus of Tehuantepec in Mexico.
In 1825 the newly established Federal Republic of Central America (FRCA) considered the waterway. That year, FRCA government authorities hired surveyors to chart the route and contacted the government of the United States to seek financing and the engineering technology needed for building the shipping route, to the advantage of both nations. A survey from the 1830s stated that the waterway would be 278 km (172.7 mi) in length and would generally follow the San Juan River from the Caribbean Sea to Lake Nicaragua, then go through a series of locks and tunnels from the lake to the Pacific Ocean.
While officials in Washington, D.C., thought the project had merit and Secretary of State Henry Clay formally presented it to the Congress of the United States in 1826, the plan was not approved. The United States was worried about the poverty and political instability of Nicaragua, as well as the rival strategic and economic interests of the British government, which controlled both British Honduras (later Belize) and the Mosquito Coast.
On August 26, 1849, the Nicaraguan government signed a contract with the United States businessman Cornelius Vanderbilt. It granted his Accessory Transit Company the exclusive right to construct a waterway within 12 years and gave the same company sole administration of a temporary trade route in which the overland crossing through the isthmus of Rivas was done by train and stagecoach. The temporary route operated successfully, quickly becoming one of the main avenues of trade between New York City and San Francisco. Civil war in Nicaragua and an invasion by filibuster William Walker intervened to prevent the canal from being completed.
Continued interest in the route was an important factor in the negotiation of the Clayton–Bulwer Treaty of 1850. The canal idea was discussed seriously by businessmen and governments throughout the 19th century. In 1888 a bill was proposed it the US house of Representatives to incorporate a Nicaragua Canal company.
In 1897, the United States Nicaraguan Canal Commission proposed this idea, as did the subsequent Isthmian Canal Commission in 1899. The commission also recommended that the French work on the Panama Canal be taken over if it could be purchased for no more than US$40 million. Since the French effort was in disarray, in 1904 the United States purchased the French concession, equipment, and excavations for US$40 million.
The Nicaraguan Canal Commission carried out the most thorough hydrological survey yet of the San Juan River and its watershed, and in 1899 concluded that an interoceanic project was feasible at a total cost of US$138 million. At the same time, the Geological Society of America published the “Physiography and Geology of Region Adjacent to the Nicaragua Canal Route” in its Bulletin in May 1899, which remains one of the most detailed geological surveys of the San Juan River region.
In the late 19th century, the United States government negotiated with President José Santos Zelaya to lease the land to build a canal through Nicaragua. Luis Felipe Corea, the Nicaraguan minister in Washington, wrote to United States Secretary of State John Hay expressing the Zelaya government's support for such a canal. The United States signed the Sánchez–Merry Treaty with Nicaragua in case the negotiations for a canal through Panama fell through, although the treaty was later rejected by John Hay.
Before Corea completed a draft of the Nicaragua proposal, Congress was considering the Spooner Act to authorize the Panama Canal. In addition to the promise of earlier completion of the Panama Canal, opponents of the Nicaraguan canal cited the risk of volcanic activity at the Momotombo volcano. They favored construction of a canal through the Isthmus of Panama.
In 1898, the chief of the French Canal Syndicate (a group that owned large swathes of land across Panama), Philippe Bunau Varilla, hired William Nelson Cromwell to lobby the United States Congress for the Panama Canal. In 1902, taking advantage of a year with increased volcanic activity in the Caribbean Sea, Cromwell planted a story in the The New York Sun reporting that the Momotombo volcano had erupted and caused a series of seismic shocks. This caused concern about its possible effects on a Nicaraguan canal.
Cromwell arranged for leaflets with stamps featuring Momotombo to be sent to every Senator as "proof" of the volcanic activity in Nicaragua. An eruption in May 1902 on the island of Martinique resulted in 30,000 human fatalities. This catastrophe persuaded most of the United States Congress to vote in favor of constructing the canal in Panama, leaving only eight votes in favor of Nicaragua. The decision to build the Panama Canal passed by four votes. Cromwell was paid US$800,000 for his lobbying efforts.
Nicaraguan president Zelaya later tried to arrange for Germany and Japan to finance the building of a canal that would traverse Zelaya Department. Having settled on the Panama route, the United States opposed this proposal.
Since the Panama Canal opened in 1914, the Nicaragua route has been reconsidered. Its construction would shorten the water distance between New York and San Francisco by nearly 800 kilometers (500 mi). Under the Bryan–Chamorro Treaty of 1916, the United States paid Nicaragua US$3 million for an option in perpetuity and free of taxation, including 99-year leases of the Corn Islands and a site for a naval base on the Gulf of Fonseca.
In 1929, the United States Interocean Canal Board approved out a two-year detailed study for a ship canal route, known as the Sultan Report after its author, the United States Army engineer Colonel Daniel Sultan. From 1930 to 1931 a United States Army Corps of Engineers survey team of 300 men surveyed the route of a future canal, called the Forty-Niners route because it followed closely the route that miners took in the 1840s California Gold Rush.
Costa Rica protested that Costa Rican rights to the San Juan River had been infringed, and El Salvador maintained that the proposed naval base would affect both it and Honduras. Both protests were upheld by the Central American Court of Justice in rulings that were not recognized by either Nicaragua or the United States. Both nations repealed the Bryan–Chamorro Treaty on July 14, 1970.
Between 1939 and 1940, with war in Europe underway, a new study was made for the construction of a barge canal. Three variants were considered, with minimum channel depths of six, ten, and twelve feet.
In 1999, Nicaragua's National Assembly unanimously approved an exploration concession, Law 319, for the construction of a shallow-draft waterway along the San Juan River, known as the Ecocanal. This would connect Lake Nicaragua to the Caribbean Sea, but would lack the inter-oceanic link to the Pacific Ocean. This project is loosely based on the 1939–40 study.
In 2000, the Nicaraguan government granted a concession to Canal Interoceánico de Nicaragua SA (CINN), a company formed and led by New York attorney Don Mario Bosco, to build a railway "dry canal" connecting Nicaragua's coasts. However, CINN was unable to obtain financing to begin construction.
It is possible that these schemes could exist in parallel to the proposed inter-ocean canal.
In 2004, the Nicaraguan government again proposed a canal through the country—large enough to handle post-Panamax ships of up to 250,000 tons, as compared to the approximately 65,000 tons that the Panama Canal can accommodate. The estimated cost of this scheme may be as much as US$25 billion, 25 times Nicaragua's annual budget. Former president Enrique Bolaños sought foreign investors to support the project. The scheme met with strong opposition from environmentalists, who protested the damage that would be done to the rivers and jungle. The project was similar to the original plans, except that the United States government would buy the land for investors to begin construction on the project.
In addition to the governmental waterway proposal, private proposals have been based on a land bridge across Nicaragua. The Intermodal System for Global Transport (SIT Global), involving Nicaraguan and Canadian and American investors, proposed a combined railway, oil pipeline, and fiberoptic cable; a competing group, the Inter-Ocean Canal of Nicaragua, proposes building a railway linking ports on either coast.
On October 2, 2006, President Enrique Bolaños, at a summit for defense ministers of the Western Hemisphere, officially announced that Nicaragua intended to proceed with the project. Bolaños said that there was sufficient demand for two canals within the Central American isthmus. He proclaimed that the project would cost an estimated US$18 billion and would take approximately 12 years to construct. It would take one of six possible routes at approximately 280 km, reduce the transit time from New York to California by one day and 800 km, considerably reduce transit costs from Europe to China and Japan, and have capacity for ships of up to 250,000 tons.
The construction of the canal alone would more than double Nicaragua's GDP (excluding other investments as a result of the canal's construction). Some sources suggest that construction of the canal would enable Nicaragua to become one of the wealthiest countries in Central America, and one of the wealthiest countries in Latin America in per capita terms. The government has been studying proposals for such a development. Supporters believe that all of Central America would benefit from the construction of the canal. If a Nicaraguan canal were built, "it would bring an economic effervescence never seen before in Central America", Bolaños said.
In 2009, Russian President Dimitry Medvedev suggested that Russia would be interested in pursuing the construction of the interoceanic waterway. However, no progress has been made to date and the construction of the Third Set of Locks for the Panama Canal has apparently dampened Russian enthusiasm for the project. Khalifa bin Zayed bin Sultan Al Nahyan of the United Arab Emirates has also expressed interest in sponsoring an interoceanic canal project.
In 2010, Nicaragua signed a contract with two Korean developers, Dongmyeong Engineering & Architecture Consultants (DMEC) and Ox Investment, to construct a deepwater port and facilities at Monkey Point on the Caribbean coast to improve capacity there.
On July 27, 2012, engineering services provider Royal HaskoningDHV announced that the Nicaraguan government commissioned a feasibility study to be completed in early 2013 at a cost of US$720,000. The contract has been awarded to a consortium made up of Royal HaskoningDHV and Ecorys.
On September 26, 2012, the Nicaraguan government and a newly formed Hong Kong–based company signed a memorandum of understanding that committed HKND Group to financing and building the Nicaraguan Canal and Development Project. HKND Group is a private enterprise. HKND Group has now entered the study phase of development to assess the technological and economic feasibility of constructing a canal in Nicaragua, as well as the potential environmental, social, and regional implications of various routes. The canal and other associated projects would be financed by investors throughout the world and would generate jobs for Nicaragua and other Central American countries.
Initial findings of the commercial analysis conducted by HKND Group indicate that the combined impact of growth in east–west trade and in ship sizes could provide a compelling argument for the construction of a second canal, substantially larger than the expanded Panama Canal, across Central America. Within 10–15 years, growth in global maritime trade is expected to cause congestion and delays in transit through the Panama Canal without a complementary route through the isthmus. Additionally, by 2030, the volume of trade that a Nicaragua Canal could serve will have grown by 240% from today.
On June 10, 2013, The Associated Press reported that the National Assembly's Infrastructure Committee unanimously voted in favor of the project, with four members abstaining. On June 13, 2013, Nicaragua's legislature passed the legislation granting the concession. On June 15, Nicaraguan President Daniel Ortega and the chairman of HKND Group, Wang Jing, signed the concession agreement giving HKND Group the rights to construct and manage the canal and associated projects for 50 years. An HKND Group press release read, "HKND Group Successfully Obtains Exclusive Right to Develop and Manage Nicaragua Grand Canal for 100 Years". Under the exclusive contract, Wang can skip building the canal (and making any payments to Nicaragua) and instead simply operate lucrative tax-free side projects.
Wang Jing, a Chinese billionaire who leads and wholly owns HKND Group, announced at a press briefing in June 2013 that he had successfully attracted global investors to the $40 billion project. In January 2014 Wang Jing and President Ortega issued a statement that construction of the project would begin in December 2014, and that it will be completed in 2019.
On July 7, 2014, a 278 km (172.7 mi) route for the Nicaragua Canal was approved. The route starts from the mouth of the Brito river on the Pacific side, passes through Lake Nicaragua, and ends in the Punta Gorda river on the Caribbean. The proposed canal would be between 230 meters and 520 meters (754.6 feet and 1,706 feet) wide and 27.6 meters (90.6 feet) deep. The Toronto Star noted that Chinese engineer Dong Yung Song said the canal's design called for the creation of a 400 square kilometres (150 sq mi) artificial lake. The water to fill the canal's giant locks would come from the artificial lake, not from Lake Nicaragua.
The Moscow Times has reported that Russia will take part in the building of the Nicaragua Canal, viewing the project in part as an opportunity to pursue strategic interests in the region.
The Nicaragua canal project has seen business rivalry greatly intensify in late 2014. China Harbor Engineering Company, an experienced construction company, has offered to design, construct, and finance a fourth set of locks, in Panama, where it opened a regional headquarters, which if built to the width of the proposed Nicaragua Canal, would cut across far fewer kilometers, and still cost only $10 billion according to the firm. Panama is in a much better financial situation than Nicaragua to afford take on such debt, and already has a stream of income from its existing canals. Furthermore, the Suez Canal has put pressure on Panama, by initiating an expansion in August 2014 to reduce Suez transit times from 11 hours to 3 hours (with financing already complete), and doubling transit capacity, due to be finished by 2015, or before the 3rd set of locks in Panama are completed.