The idea of building a $40 billion canal in Nicaragua, Central America’s poorest nation, seems highly improbable. Yet Chinese businessman Wang Jing insists he is serious about constructing such a waterway, and Nicaraguan lawmakers have given his Hong Kong–based company, HKND Group, a green light to proceed. Meanwhile, the ruling Sandinista Party is depicting the canal project as a symbol of national pride (“Opposing it is unpatriotic,” said one congressman) and promising that it will greatly reduce Nicaraguan poverty (“Today is a day of hope for the poor of this country,” declared another legislator). President Daniel Ortega has offered his robust support, vowing that the project “will help us conquer our final independence.” On June 14, Ortega officially signed a 50-year concession that will allow HKND Group to build and operate the canal.
But will the project ever actually get completed? Most experts are doubtful. “It’s not going to happen, that was my first reaction,” Harvard Business School professor Noel Maurer, the co-author of a book on the Panama Canal, told the New York Times. “A pipe dream might be too strong, but I would just consider it a really bad investment.”
Leave aside the fact that Wang Jing has only visited Nicaragua two times (“for a combined 48 hours,” according to journalist Tim Rogers) and seems to have a shaky grasp of its geography: Even if Wang had spent his entire life in the country, his proposed canal would still face major logistical and environmental challenges. Green activists are already denouncing the idea, warning that it will harm Nicaragua’s ecosystems and jeopardize its water supply, since all the proposed canal routes travel through Lake Nicaragua. One environmental consortium has complained that the project will “extend, expand, dredge, or reduce bodies of water and water resources that are subject to protection and conservation safeguards.”
A bit of historical background: Interest in a trans-oceanic Nicaraguan canal dates back to the 19th century. In 1849, Cornelius Vanderbilt signed a contract with the Nicaraguan government to build such a canal, but his plan ultimately collapsed. In the late 1880s, American companies tried to spearhead a similar canal project, but their plan failed, too. In 1897, President William McKinley established the Nicaragua Canal Commission, which actually issued recommendations on a possible route. But the project was stalled by feasibility concerns and diplomatic obstacles. In 1903, it was eclipsed by the Panama Canal Treaty. More recently, in 2008, then–Russian president Dmitry Medvedev agreed to study the possibility of building a Nicaraguan canal. Last year, Nicaraguan lawmakers authorized the construction of a $30 billion canal, though they did not specify who would finance it.