Nicaragua's Interoceanic Canal

Does this project have real and practical bases, which means we should pay attention to it?

Monday, June 11, 2012

EDITORIAL

CentralAmericaData.COM's vision is to select and validate business news that matter to the region. The modern Central American entrepreneur simply does not have time to do so, and this is the service we provide, therefore, given the publicity the press in general has given to the intereoceanic canal project promoted by President Ortega, we have an obligation to analyze and comment from a business standpoint.

Central America has been, for centuries, a place where the geography seems to lend itself best to achieving an interconnection between the Atlantic and Pacific oceans facilitating global trade. The Panama Canal is now more than a century old and is the largest hub in the world for shipping routes. Dependence on this route for shipping of goods is so great that should it ever close it would be a global catastrophe for logistics.

The question to ask when considering the Nicaraguan canal project is, would it be economically feasible to have another route for the transit of goods between the two oceans, beyond its feasibility in terms of engineering?

For now there is no objective answer to that vital question, because beyond generalities about the growth of world trade and the current size and future of shipping vessels, there has not been, at least not reported in the press, any formal and detailed market research to indicate the need for such a second waterway.

Therefore we can not respond negatively about the need for the proposed canal in Nicaragua, but neither can we be affirmative.

What we can do is to consider some aspects that may shed light on the basis of the project’s feasibility, and one of those aspects is the political overtones that the project acquires, when it links its financial viability to support from countries which are "old friends" of Nicaragua, in clear reference to governments with historic political and philosophical affinities with the current ruling party. These days it will be very difficult to get $30 billion investors from "friendships" rather than on the basis of a planned economic return which, as yet, is not foreseeable.



More on this topic

Lack of seriousness in Inter-Oceanic Corridor Proposals

April 2014

During the IX World Economic Forum on Latin America the new President of Honduras promoted a project without being able to refer to studies carried out for it or the investment amount.

The Central American "Canalitis" disease seems to be widespread among the ruling classes of the region who have no respect for logic or the minimal criteria required for healthy business and investments.

Nicaragua: Brilliant and Enormous Bid by China

June 2013

The delivery of a 100 year concession award for an Inter-oceanic Canal to a company without the capital or experience to carry out a project of this magnitude could be the result of a brilliant long-term operation by the Chinese government.

Editorial

By Jorge Cobas

As a commercial project, the Inter-Oceanic Canal in Nicaragua is economically unfeasible, in particular because the uncertainty over the return on investment to be made is so large. But for a country destined to be a world leader, as is China, for whom $40 billion is a small thing, possession of a dominion over a waterway in the backyard of its greatest commercial competitor makes this investment a bargain.

Is an Interoceanic Canal in Nicaragua Feasible?

March 2012

This 150 year old concept is now being revisited by President Ortega, but its viability depends not only on engineering and financial factors, but also on the market.

The presidential announcement on the creation of a commission to study the feasibility of a canal which would be a continuation of the San Juan River, has again raised the discussion of an idea that was initially dreamt up by the first European sailors who came to America.

Interoceanic Canal Idea Returns

February 2012

President Ortega has said studies will be started for the construction of a canal linking the Caribbean and the Pacific using the San Juan River and Lake Nicaragua.

The idea of building an interoceanic canal has returned to be floated in Nicaragua, where President Daniel Ortega announced that he will begin studies on this huge and costly project.

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