A Nicaraguan committee approved a proposed route on Monday for a $40 billion shipping channel across the Central American country that would compete with the Panama Canal.
The committee of government officials, businessmen, and academics approved a 172-mile route from the mouth of the Brito river on the Pacific side to the Punto Gorda river on the Caribbean that was proposed by executives from the HK Nicaragua Canal Development Investment Co Ltd (HKND Group).
The Hong Kong-based HKND group, which is funding the project, is headed by Chinese lawyer Wang Jing, who also heads Chinese company Xinwei Telecom Enterprise Group.
The idea is ridiculously ambitious. The waterway would be more than three times as long as the 48-mile Panama Canal, and one of the largest infrastructure projects ever.
The canal will be between 755 feet to 1,706 feet wide and 90 feet deep, according to HKND engineer Dong Yunsong.
There are also social concerns: The canal would pass through Lake Nicaragua, Central America's largest lakes and an important fresh-water source for the country. And the the water used by the canal's locks could seriously deplete the lake.
It would probably affect poor communities who live along the massive tract of land.
"We're at a crossroads because either you use Lake [Nicaragua] for floating boats or you use it for drinking water, but you can't use it for both things at once," Victor Campos, assistant director of the Humboldt Center environmental organization, told the Associated Press last year.
Further, the project appears to by on shaky legal ground.
Wang Jing, Chairman and CEO of Xinwei Telecom Enterprise Groups and Chairman and CEO of HK Nicaragua Canal Development Investment Co. Ltd. (HKND), pauses during an interview with Reuters in Xinwei Telecom's headquarters in Beijing, April 28, 2014. Picture taken April 28, 2014. REUTERS/Barry Huang
Chinese telecom tycoon Wang speaks during an interview with Reuters in Xinwei Telecom's headquarters in Beijing.
"Gabriel Álvarez, a law professor at Nicaragua’s National Autonomous University, says there have been 32 charges of unconstitutionality — a number he reckons unprecedented in Nicaragua," The Economist wrote in October.
"He points out that the law gives the company unfettered and tax-free rights over vast tracts of land, which would violate the country’s sovereignty. It also requires the supposedly autonomous Central Bank to waive its right to sovereign immunity, which has alarmed economists."
Nevertheless, work is expected to begin by December, according to committee member Telemaco Talavera, and the plan is to finish the canal in 2019 and begin operations in 2020.
The 48-mile Panama Canal was completed by the U.S. in 1914 at the cost of about $375 million and thousands of lives.
Here's a rough comparison of the two routes (note Lake Nicaragua):
On its website, the HKND Group argues that the rapid emergence of China as a manufacturing center and global economic growth will bolster international container traffic for decades to come.
But global engineering and shipping experts told the AP that lowered demand for massive container shipping and increasing competition from potential alternate routes — like the Arctic — could make the project economically unfeasible.
"It's addressing a need that definitely is not here now and I'm not sure if it's 'a build it and they will come' sort of thing," Rosalyn Wilson, a senior business analyst at the Delcan Corporation, a Toronto-based transportation consultancy and author of the U.S. logistics industry's annual report. "I wouldn't invest my money in it."
China has been actively investing in Latin America. In March, Ecuador agreed to auction off 3 million of the country's 8.1 million hectares of pristine Amazonian rainforest to Chinese oil companies.