Nicaragua's Canal


For the past couple years, Chinese billionaire and CEO of Beijing Xinwei Telecom Wang Jing has been planning a lucrative infrastructure project in Nicaragua. Although the progress on cementing the deal has been lethargic, the effects of a $50 billion private investment project would send shockwaves through a country with a mere $11.26 billion of Gross Domestic Product.

The project consists of digging a canal through Nicaragua to provide cargo ships with a route north of the Panama canal. According to a report from The New York Times, this project has been well received by the Sandinista government. Over the course of three years, the government projects that the revenues from the project could lift 400,000 people out of poverty and provide 25,000 jobs.

On the other hand, there are also less bright economic forecasts for the project. In a report from The Economist, Jorge Quijano, administrator of the Panama Canal, said that in order for this to be financially feasible the toll that customers would have to pay would need to be double what is charged at the Panama canal. In my opinion, the slowing growth for consumer shipping demand should be a major concern to the project financiers.

Another downside to the ambitious project is the ecological ramifications — Amnesty International has already condemned the government’s handling of the project. In formulating their criticisms of the Sandinista government, the organization points to the tens of thousands of indigenous families who will be displaced from the construction of the canal. According to the same report from The Economist, building the 162 mile canal would require displacing 177 billion cubic feet of dirt, leading to piles of dirt stacked one mile high on each side of the canal.

I traveled to Nicaragua for one month during the summer after my junior year, and, personally, I would have mixed feelings about this project. Along with hundreds of indigenous communities, I would hate to see the beautiful island of Ometepe, on Lake Nicaragua, destroyed. However, there is terrible poverty in many areas of Nicaragua — particularly in the rural regions, where people lack access to basic needs like proper medical care and clean drinking water.

According to the World Bank, Nicaragua is the second poorest country in the region after Haiti. Will this project will solve any of the people of Nicaragua’s problems? I am not sure. But, I would imagine that this project would attract investment to the Latin American country. While investment doesn’t in itself stimulate economic growth, it is an important ingredient. Therefore, I would urge the Nicaraguan government not to let environmentalists, or money hungry investors, decide the fate of their people.