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In the nineteenth century Western policymakers became enamored with the idea of establishing a canal across Central America. While extempers are aware of today’s Panama Canal, which was constructed by United States between 1904 and 1914, Nicaragua was actually the first choice for a Central American canal project that would link the Caribbean and the Pacific Ocean, thereby reducing shipping times and costs. When the United States chose to build a canal through Panama it abandoned the idea of a Nicaraguan canal entirely, but the project has been revived by the Nicaraguan government and Chinese telecommunications tycoon Wang Jing. Two years ago, the Nicaraguan National Assembly granted a canal concession to Mr. Wang’s Hong Kong Canal Development Group (HKND), who will operate the canal for one hundred years, with the Nicaraguan government achieving a majority stake in the canal after fifty years. The project will cost an estimated $50 billion and is supposed to be completed within the next five years. However, opposition is growing from indigenous communities, environmental activists, and Nicaraguan President Daniel Ortega’s political opponents. There are also questions about whether the canal project is feasible and some engineers wonder whether the Grand Canal will eventually become a “grand mistake.”
This topic brief will provide some background on the existing Grand Canal project, highlight the Nicaraguan government’s case for why the canal needs to be built, and then discuss criticisms of the project.
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