The rival to the Panama Canal that was never built
Chris Baraniuk/ BBC:
It is a traffic jam on a colossal scale. More than 200 ships, according to some estimates, float there, just waiting. Some are loaded with containers stuffed full of items including furniture, consumer goods or building materials. Some carry oil or gas. Others are transporting grain. They are all due to travel through one of the world’s most famous bottlenecks – a vital gateway for global shipping – the Panama Canal.
A highly unusual drought, right in the middle of Panama’s supposed wet season, has lowered water levels in two reservoirs that supply the canal. As a result, operators have had to restrict the size and number of ships that pass through its system of locks each day.
In our “just-in-time” global economy, the markets trading these goods can’t wait for long. An estimated $270bn (£210bn) worth of cargo passes along the canal each year en route to over 170 countries. Some of the ships have already chosen to take detours in a bid to avoid the delays.
“It’s unprecedented, and it’s a cause for concern,” says Michelle Wiese Bockmann, senior analyst at global maritime trade experts Lloyd’s List Intelligence. The situation, she explains, could push up freight costs, especially for fuels such as liquefied natural gas, potentially affecting consumer prices.
It’s at times like this that old ideas tend to resurface – what if there were another way to get from the Pacific to the Atlantic via ship?
In the early 1900s, the United States had two options: build a canal across Nicaragua, or, through Panama. The US Senate voted for the Panama option. It was a relatively easy choice – the route was shorter and, unlike Nicaragua, there wasn’t a string of active volcanoes in the way to contend with.
And yet the idea of a Nicaraguan Canal has never gone away. Just a decade ago, a Chinese businessman championed a huge project that intended to build such a canal by the end of the 2010s. Despite much fanfare, it never materialised. But the crippling drought now affecting the Panama Canal, and the threat of additional climate change-related water supply issues in the coming years, has prompted some to question whether a second canal in Nicaragua – or routes through other nearby Central American countries such as Mexico – might not be such a bad idea after all.
It is “technically feasible”, says Jean-Paul Rodrigue at Hofstra University, who has studied the long history of discussions around building the canal a Nicaraguan Canal. But there are many obstacles. “The problem is the distances involved are much longer, significantly longer,” he says.Any such route would likely take the form of two canals linking Lake Nicaragua to the Pacific in the west, and to the Atlantic in the east. One of these canals would be around 15 miles (25km) long and the other, connecting to the Atlantic, would be even longer – around 60 miles (100km). The Panama Canal, which itself comprises the artificial Lake Gatún in its middle, has a total length of 50 miles (80km). It lies along the Isthmus of Panama, the narrowest section of land that separates the Pacific Ocean from the Caribbean Sea in the Atlantic Ocean.
Estimates of how much it would cost to build a Nicaraguan Canal vary but if you’ve got upwards of $40bn (£31bn) in your bank account, suggests Rodrigue, you might just about be able to do it. That’s about twice the cost of London’s new Crossrail railway, which can carry around 200 million passengers every year. Investors interested in a Nicaragua Canal project would have to be assured of a steady flow of ships for years to come, Rodrigue adds, since it is the transit fees from those vessels that would allow the new canal to generate income for its owners.
Even if that were guaranteed, there would undoubtedly be environmental consequences associated with such a megaproject. In the past, opponents of the idea have cited destruction of rainforest and wetland, contamination of Lake Nicaragua’s freshwater, and disruption to important waterways in the vicinity as potential ramifications.
Despite these hurdles, some have tried to do it. In 2013, a Chinese firm called HKND signed an agreement with the Nicaraguan government, which granted the company a 50-year right to build the canal, renewable for a further 50 years. However, the handshakes and overtures have so far come to nothing. HKND closed its office in Hong Kong in 2018. Attempts by the BBC to contact the firm were also unsuccessful. HKND’s website now redirects to an online gambling page.
Sarah McCall Harris wrote a PhD thesis detailing resistance to the project from local communities in Nicaragua while she was at the University of Denver. “It tended to be led by women,” she says. “Many people were interested in doing what they could to voice their concern and protest.” She notes how some residents felt that the whole scheme lacked transparency and sufficient environmental safeguards, something HKND rejected at the time. McCall Harris, who now works for Centenary College of Louisiana, even questions whether Nicaragua was genuinely committed to the plans. Given the involvement of a Chinese company, perhaps the Nicaraguan government was more interested in posturing – and showing the US it could make other partners, she says.Although work appears to have stalled, Nicaraguan officials insist that the project is not dead. During a visit to Belarus in May, Nicaragua’s foreign minister claimed the scheme was still running and he indicated that Belarus could become involved with it somehow. No firm commitment from Belarus has materialised, to date. (In 2014, Belarus’s then-foreign minister expressed an interest in supplying machinery for the project.