The construction of an interoceanic canal in Nicaragua is a longstanding controversy that goes back to the late 19th century when the US had plans to construct the canal but in the end decided to develop the Panama Canal instead. The plans for the construction of the Nicaragua Canal have resurfaced in recent years. In September 2012, a newly formed private Chinese enterprise, the Hong Kong Nicaragua Canal Development Group (HKND), proposed a five-year construction plan at a cost of 50 billion U.S. dollars and signed a memorandum of understanding with the Nicaraguan government in which HKND committed to financing and building the project. Since the canal was green-lighted by the Nicaraguan government, scientists and specialists have sharply criticized its potential to inflict lasting environmental and societal damage. The vocal doubts raised by many experts regarding the canal’s feasibility have resulted in several recent postponements of construction. Studies of the project’s challenges and its potential impact on international shipping suggest that the canal will potentially have wide-ranging implications on vessel sizes, the global routing of maritime freight flows and port development along the Atlantic and Pacific coastlines. Many problems now hinder the project, from its economic and engineering viability to its environmental and safety hazards.
PortEconomics member Theo Notteboom, along with Jihong Chen (Shanghai Maritime University), Xiang Liu (The State University of New Jersey, Piscataway, USA), Hang Yu (Shanghai Maritime University), Nikitas Nikitakos (University of the Aegean, Chios, Greece) and Chen Yang (Shanghai Maritime University) in their latest portstudy provide a systematic analysis of the potential impact of the Nicaragua Canal on international shipping, as well as the various challenges the project faces. The authors demonstrate that the canal project is rife with shipping service uncertainties and challenges, as well as high economic and environmental costs. Additionally, Nicaragua has no diplomatic relations with China, which is a potentially large risk to Chinese investors. At the same time, Panama has cut ties with Taiwan in June 2017 and is forging stronger relations with China. Panama’s policy reversal with respect to Taiwan may be linked to China’s investments in the area around the Panama Canal. The stronger economic and diplomatic exchanges between China and Panama potentially undermine the plans for the realization of the Nicaragua Canal.
The portstudy entitled “The Nicaragua Canal: potential impact on international shipping and its attendant challenges” has recently been published via Online First in the academic journal Maritime Economics and Logistics (https://doi.org/10.1057/s41278-017-0095-3).