Nicaragua still thinks it can build a better canal than Panama after 200 years of trying

Even after Panama’s canal expansion is complete, Nicaragua’s would be bigger.
Even after Panama’s canal expansion is complete, Nicaragua’s would be bigger.
Image: AP Photo/Arnulfo Franco
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Today, Nicaragua’s parliament is expected to approve proposals by a Chinese consortium to build a canal across the country to rival that of Panama. (Update: The plan has been approved.) The $40 billion project could double Nicaragua’s GDP and create 40,000 construction jobs over an 11-year construction period.

The idea of building a canal in Nicaragua is nothing new. For most of the 19th century, experts considered a Nicaraguan canal more feasible than one through Panama or another proposed route through Mexico. US tycoon Cornelius Vanderbilt led a project to carry goods across Nicaragua by stagecoach and steamship as a prelude to building a canal, for which he even won a concession. Thirty years later, US president Ulysses S. Grant endorsed the Nicaraguan route as the cheapest and easiest, pegging the cost (p.110-111) at $52,577,718.00—though he admitted that, with probable delays, it could stretch to $100 million. A Nicaraguan canal would be more cost-effective than a Panama one, he argued, where builders would encounter tougher terrain.

Other countries, looking for a foothold in South America or in international trade, also made numerous attempts to beat the US (which ultimately took charge of the Panama project) to the punch. German scientist and nobleman Alexander von Humboldt proposed six inter-oceanic canal routes, but favored one through Nicaragua. He argued that it offered a route at sea level, which wouldn’t need locks, as the Panama Canal has. Partly because of inaccurate maps, he also judged Panama too mountainous. But those plans—and German interest in the project—ultimately came to naught.

alexander von humboldt canal plans nicaragua panama mexico brazil
German Alexander von Humboldt had developed six plans for an inter-oceanic canal. These are his sketches in 1811.
Image: Alexander von Humboldt/European Journal of Geography

Great Britain and France came much closer. Even though he was a political prisoner in France at the time, Prince Louis Napoleon Bonaparte (Napoleon III) secured a concession from the Nicaraguan government in 1845-6 to build a canal through Nicaragua along the San Juan River. Upon his escape from France to London, he tried to sell the project to the British—who, he judged, must still be smarting from the loss of the American colonies (emphasis ours):

The state of Nicaragua can become, better than Constantinople, the necessary route of the great commerce of the world, and is destined to attain an extraordinary degree of prosperity and grandeur…France, England, and Holland have a great commercial interest in the establishment of a communication between the two oceans, but England has, more than the other powers, a political interest in the execution of this project. England will see with pleasure, Central America becoming a powerful and flourishing state, which will establish a balance of power by creating in South America a new centre of active enterprise, powerful enough to give rise to a feeling of nationality, and to prevent, by backing Mexico, any further encroachments from the North.

Those plans were put on hold when Napoleon III became king of France, but there’s evidence to suggest that funding had already been secured. The project was advanced enough, however, to force a treaty between Britain and the US in 1850, in which both sides promised to split interest in any canal equally. (The treaty was later repealed.)

In 1858, Napoleon III revisited the project for his own country, even sending an engineering company to Nicaragua and conducting negotiations with the Nicaraguans and Costa Ricans. He ran out of money. He tried to revive the project 10 years later, but had to set it aside with the advent of the Franco-German war.

Nicaraguan canal hopes stayed alive as the French bungled construction projects in Panama in the 1880s and 1890s. But the US finally bought the unfinished projects off the French, ending any interest in Nicaragua. The Nicaraguan government—feeling like the wronged party after years of trying to attract a canal—tried to convince the Japanese to build one, reportedly with some success (pdf). Fearing foreign competition, the US government gave Nicaragua $3 million in 1915 to prevent anyone else from building a canal there.

However, Nicaragua still felt the loss of economic prosperity a canal would have brought. It dissolved its 1915 contract with the US in 1970. In 1989, Nicaraguan authorities brought in Japanese engineers to discuss the feasibility of a canal—just as Japan had graduated on to the world stage as an economic powerhouse. Meanwhile, the US, which still has close relations with Panama, handed the canal back to it in 1999.

nicaragua canal routes 2006
Nicaragua looked at six possible routes when it tried to drum up investor interest in a new project in 2006.
Image: Gobierno de Nicaragua

In 2006, the Nicaraguan government began making concerted efforts to raise funds for a new canal, deciding between six possible routes (pdf, Spanish), eventually recommending #3 in the map above. Finally, in 2012, Nicaraguan president Daniel Ortega said that investors from Japan, China, Russia, Venezuela, Brazil, and South Korea were all interested (Spanish) in a plan to build another canal, and had all participated in talks with the Nicaraguan government.

There’s good reason to believe that a Nicaraguan rival would seriously rival a Panama one, even though little is known about the Chinese group’s plans so far. The Nicaraguan canal—probably without the locks—will, the government says, be able to handle ships up to 250,000 deadweight tons, or around double the size of ships the Panama canal’s locks will handle even after the upgrades due to be completed in 2015.

Then again, this isn’t the first time someone’s tried to build a Nicaraguan canal. And the US will hardly allow a Chinese company to interfere with its policing of Caribbean and Pacific waters, and will surely have a say in the environmental disruption (Spanish) a canal may cause. Besides, it took decades for dreams of a canal to come to fruition in Panama. So we’ll believe it when we see it.