Michael Busch

Remember Nicaragua’s plans for a grand canal

A little over a year ago, contractors broke ground on the ambitious scheme to construct a transoceanic waterway that would dwarf the Panama Canal. In total, the proposed canal would run nearly 172 miles long, cutting through Lago Nicaragua and connecting the Caribbean Sea with the Pacific Ocean. The designs demanded a massive undertaking. “Three times as long and almost twice as deep as its rival in Panama,” the Guardian reported last year, “Nicaragua’s channel will require the removal of more than 4.5bn cubic meters of earth—enough to bury the entire island of Manhattan up to the 21st floor of the Empire State Building.” 

It was immediately apparent that, for all the hype, Nicaragua's canal was a disaster waiting to happen. Serious concerns about the environmental and socioeconomic impacts of the project, not to mention questions about the murky financing involved, cast the entire scheme in doubt. There were also worries that the canal would be susceptible to catastrophic damage from earthquakes common to the country. The fact, too, that the canal met with popular protests by locally effected communities, which in turn provoked violent state suppression, suggested from the beginning that the challenges would be impossibly tough, and resistance unrelenting. 

Evidence that the canal was already in trouble began surfacing over the summer. To that point, it wasn’t clear that any work had seriously been undertaken on the canal since the groundbreaking ceremony the previous December. But then the Chinese economy took a plunge in July, and worries about the projects finances could no longer be ignored. Rumors began circulating that the Wang Jin, one of the richest men in the world and CEO of HKND—the Honk Kong-based development firm responsible for the canal’s construction—had suffered severe losses in his personal fortune. How the project would move forward became anyone’s guess.

By autumn, threats to the project's viability intensified. An environmental impact study, which had been delivered to the government earlier in the year, was made public in September (though in a highly abridged format). It warned of major risks and adverse consequences if construction were to move forward, and prompted the government to call time-out. Among other findings, the report concluded that not enough was known about possible effects of the dredging to Lago Nicaragua during construction, or the resultant flow of waters into nearby rivers, to safely allow for work to continue. The government has refused to release the full report for public inspection.

Since then, the canal has been “placed on hold,” and things aren’t looking good.  HKND’s Wang lost roughly $10 billion (or 85 percent) of his personal money during China’s market dip earlier in the year, and has shown few signs of recovery. Not only have his fortunes bottomed out, but the canal has unsurprisingly failed to attract much interest from investors following the environmental impact report. As one analyst told the AFP, “Apparently not enough capital…has been raised, and they have not been able to come up with a study able to dispel all the doubts.”  That may be, but the government appears committed to forging ahead anyway.

The government has said that work will begin again in March; HKND has indicated the reboot won’t happen, at earliest, until much later in the year. Both of these projections betray wishful thinking. And while the canal itself has been slow to materialize, efforts to resist it remain fierce. Protests were regularly staged all last year, and don’t show signs of dying down. “We’ve been jailed, beaten up, you name it,” one activist told NPR. “But we’ll keep fighting.” Another was even more direct. “If they destroy this lake,” she said, “it will be like killing us. I won’t let that happen. They’ll have to do it over my dead body.”

Michael Busch is Senior Editor at Warscapes. Follow him on Twitter at @michaelkbusch.