A Gamble Worth Taking: Nicaragua needs canal as Panama did before it

Environmentalists will be pleased by a one-year delay in the commencement of construction of the Nicaraguan Canal, which proposes a new maritime passage from the Atlantic through the Central American continent to the Pacific. With a definitive route not yet mapped out, and various feasibility studies still to be completed, the postponement comes as little surprise.

Several routes have been proposed for the $40bn construction
Several routes have been proposed for the $40bn construction

One of the major concerns surrounding the project revolves around the HKND Group, the Hong Kong company responsible for delivering the canal as part of a generous 50-year concession negotiated with Daniel Ortega’s Sandinista government. Many critics believe the engineering project to be far beyond the capabilities of HKND. With the Nicaraguans promised a minority share in all profits generated by the canal, however, Ortega will deem any hesitancy unnecessary. Nicaragua is an impoverished country, one of the poorest in the region. Wracked by crime, it needs a legitimate business source to bolster the country’s economy.

A century ago, the Panama Canal opened. Like the Nicaraguans today, the Panamanians were desperate for its construction. Having only achieved independence from Colombia in 1903 – and that with the active support of American gunboats – Panama had virtually no economy to speak of. With the Americans keen on reducing the length of maritime trade between its Atlantic and Pacific seaboards, the Panama Canal was a popular idea all round.

A monumental feat of engineering, the US desire for a cross-continental canal contributed to Panamanian independence
A monumental feat of engineering, the US desire for a cross-continental canal contributed to Panamanian independence

Having been built with American money and managed by American expertise for several decades, the Panama Canal finally came under full Panamanian control in 1999 after years of negotiations. The Canal has proved to be the lifeblood of the Panamanian economy and from its revenue and operational requirements a flourishing services industry has been established in the country.

With a per capita income rate of approximately $15,300, the average Panamanian is five times better off than the average Nicaraguan citizen. After years of dabbling with contentious Marxist economics, and having suffered periods of US-backed guerrilla warfare, Nicaragua has been reduced to financial ruin.

Daniel Ortega, current president and leader of the Nicaraguan Revolution, fought off the US-backed Contras in the 1980s to establish his socialist government. Unemployment in parts of the country stands at 80%
Daniel Ortega, current president and leader of the Nicaraguan Revolution, fought off the US-backed Contras in the 1980s to establish his socialist government. Unemployment in parts of the country stands at 80%

Despite the potential environmental impacts of constructing a new canal, and question-marks over the owner’s capabilities of bringing the project to fruition, Ortega’s government has to take the gamble.

Whether it is in 2015 or later, construction of the Nicaraguan Canal will commence. If it succeeds, it will transform the economy of Nicaragua and end the monopoly of the Panama Canal, which for a century has dictated maritime traffic between the Atlantic and the Pacific.

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Author: Stefan Lang

An interested observer of current affairs, researcher and writer

4 thoughts on “A Gamble Worth Taking: Nicaragua needs canal as Panama did before it”

    1. Nicaragua has been abused in every way possible by it’s colonial power neighbor to the North. It’s not really fair to judge the two economies when one has been harassed endlessly while the other receives endless support.

      Also, Nicaragua was one of the initial proposed routes of the cross-continental canal. Panama was selected because their government was deemed to be more compliant (they had been separated from Colombia for the purpose of building the canal).

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