The Panama Canal was opened in 1914, but this did not mark the end of plans for a canal through Nicaragua. It is not surprising, given that a Nicaraguan canal would shorten the maritime route between New York and San Francisco by approximately 800 kilometers compared to the Panama Canal. The geographical location of Nicaragua allows for a more direct route between the Atlantic and Pacific Oceans. The Nicaraguan route would reduce sailing time and fuel costs for ships traveling between the east and west coasts of the United States. By the late 1920s, the U.S. seriously considered constructing the canal, but the Great Depression ended that attempt.
Between 1939 and 1940, while World War II was ongoing in Europe, a new study was conducted for the construction of a barge canal. Three variations were considered, with minimum canal depths of 1.8 meters, 3.0 meters, and 3.7 meters. The idea of a large-scale canal, with some excavation to be carried out using atomic bombs, was revived in the 1960s as part of the Plowshare project. However, this attempt was also abandoned.
The HKND (Hong Kong Nicaragua Canal Development) project was an ambitious initiative proposed in 2013 under the leadership of Chinese entrepreneur Wang Jing. The plan called for the construction of a 278-kilometer canal connecting the Caribbean Sea to the Pacific Ocean via Lake Cocibolca. The project was also set to include additional infrastructure such as ports, airports, and free trade zones, with an estimated cost exceeding $50 billion. The Nicaraguan government granted HKND a 50-year concession, with the possibility of extending it for another 50 years, sparking controversy. The project faced strong opposition from environmental organizations, which warned of potential ecological devastation. Skeptics questioned the project’s feasibility, arguing that Wang Jing lacked both financial resources and political support from Beijing. After years of stagnation, the HKND concession was revoked in May 2024. Although initial work on the route had begun, the canal was never built.
The Latest Proposals
In mid-November 2024, President Daniel Ortega presented the idea of constructing a transoceanic Nicaraguan Canal at the 17th China-Latin America and Caribbean Business Summit in Managua. The proposed 445-kilometer canal would serve as an alternative to the overburdened and politically strained Panama Canal. Approximately 6% of global maritime trade passes through the Panama Canal, which has been struggling with low water levels and ship congestion. These issues have resulted in significant delays and increased costs. The Panama Canal recorded a 29% drop in traffic in the last fiscal year due to drought. Specifically, from October 2023 to September 2024, only 9,944 vessels passed through the canal, compared to 14,080 in the previous year.
At the major summit attended by representatives from 29 countries, Ortega presented the latest version of the canal project. The starting point would be a planned deep-water port in Bluefields on the Caribbean coast. The canal would then pass through northern Nicaragua via Lake Managua/Xolotlán before reaching the port of Puerto Corinto on the Pacific coast. This ambitious project represents a significant departure from the previous initiative, as the HKND company had planned a route through Lake Cocibolca.
As part of the new proposal, the Chinese company CAMC signed an agreement with Nicaragua’s Ministry of Transport and Infrastructure to build a port in Bluefields. The canal project would consist of four segments, and Ortega suggested that it could attract investments from both Chinese and American companies. This initiative comes as Nicaragua seeks to position itself as a key link in global maritime trade. Details regarding financing and environmental impact assessments have not yet been disclosed.
Obstacles to Construction
Skeptics have long questioned the feasibility of the canal due to its uncertain environmental and financial sustainability. Lake Cocibolca, the country’s main source of drinking water, would be at risk. The habitats of many plant and animal species would be destroyed. Geological activities, such as earthquakes and volcanic activity, could jeopardize the long-term stability of the infrastructure. Forced displacement of local populations, including indigenous communities, could trigger social unrest and lead to a loss of cultural identity.
There is also the risk of financial unsustainability, as the project’s cost is enormous (with estimates ranging from $50 billion to even $80 billion), and the return on investment is uncertain due to competition from the Panama Canal. The cost is high due to the construction of ports, roads, bridges, and potential compensation for displaced residents. Therefore, it is clear that only a major financial backer—such as a state like China—could undertake the project.
Advantages and Risks of Construction
The construction of the Nicaraguan Canal could bring numerous benefits. Nicaragua’s economy could significantly profit from transit fee revenues, job creation, and the development of related industries such as tourism and transportation. The Panama Canal would gain a desirable alternative, especially in times of congestion or droughts. The canal would enhance Nicaragua’s geopolitical and maritime significance, positioning it as a key hub for international trade.
If China were to build the Nicaraguan Canal, it could significantly increase its geopolitical influence in Central America—a region that the U.S. considers its backyard. Washington would perceive this as a threat to its regional dominance, potentially worsening relations between the two superpowers. This could lead to new forms of trade, maritime, and/or cyber warfare. The Chinese would further strengthen their Belt and Road Initiative, establishing a critical trade route. In response, the U.S. might seek to expand the Panama Canal.
Nicaragua would become even more politically and economically aligned with China and BRICS, setting an example for other regional countries with leftist and anti-American governments. It is worth noting that Beijing and Managua only established official diplomatic relations in December 2021. Until then, Nicaragua recognized Taiwan. A completed Nicaraguan Canal could prompt other nations to reassess their regional alliances and determine which partnerships offer the most benefits. Ultimately, in the 21st century, tangible interests prevail over ideology. Ideology largely serves to justify these interests.
Author: Matija Šerić
Featured image: Wikimedia Commons
