Nicaragua Far Behind as Panama Canal Celebrates 100 Years

Since completion in 1914, the Panama canal has been vital for maritime trade between the Atlantic and Pacific oceans by cutting through the Isthmus of Panama to eliminate the lengthy and dangerous Cap Horn route looping around the southern tip of South America.

In the meantime, Nicaragua has embarked on the construction of their own transoceanic canal, which is being billed as a $40 billion megaproject slated to be completed in 2020.

Since the $40 billion price tag is approximately forty times Nicaragua’s $996 million annual budget, the project has been largely sponsored by China, which has become increasingly influential through the region.

As Nicaragua begins breaking ground on the construction of a 278km Pacific-Atlantic canal funded by China, Panama’s canal is nearing completion on a $5 billion dollar expansion project, which will more than double capacity (from 5,000 to 13,000 TEUs) to accommodate so called, “Post-Panamax vessels.”

According to a 2010 report by the Van Horne Institute, more than 957,000 vessels and 8 billion tons of cargo transited the canal as of 2007, with roughly 13,000 ships transiting the canal every year, meaning that an estimated 1 million ships have passed through the Panama canal in its 100 year history.

As far back as 1825, the newly established Federal Republic of Central America had considered building such a canal, and even began surveying possible routes, but the project was delayed, and the Panama Canal became the de facto transit route.

Nicaragua’s project also faces opposition from conservationists, who fear the impact of transatlantic cargo traffic into Lago Nicaragua, which is home to a variety of native species along with the Nicaragua shark, which is a variety of the bull shark, found in freshwater along coasts and rivers globally. In addition to disruption and pollution from traffic, the shallow lake will have to be dredged to create a channel for such large ships.

While the Panama Canal has explicit partnerships with research institutes for archaeological sites, and environmental organizations (such as the National Environmental Authority (ANAM) and the Aquatic Resources Authority), information regarding the impact of Nicaragua’s canal are not as readily available.

Nonetheless, HKND Group, the Chinese-backed infrastructure development firm responsible for developing the Nicaragua Canal, argues that there is room for two transoceanic canals in Central America, and predicts “a rapid increase in East-West trade volume and increasing ship sizes, there is a sufficient justification for a second Interoceanic Canal spanning Central America.” The group further estimates that, “in 2030, 16 years from now, the combined value of goods passing through the Nicaragua Canal and Panama Canal will surpass 1.4 trillion dollars.”

The group is leading the project in exchange for a 50-year concession on the canal.

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