Lake Nicaragua — a massive pool of pristine water — sits in the middle of a primordial jungle. Covering more than 3,100 square miles in the center of Nicaragua, the lake is the primary source of fresh water for much of Central America.
The enormous jungle lake is also the center of a battle of ideologies that pits a Chinese billionaire, a communist dictator, the Russian government, and the international cargo industry against each other. And it’s a battle that is still playing out.
Two Central American Canals?
At the center of the conflict is a plan for a new Central American canal to challenge the monopoly the Panama Canal currently enjoys among ships traveling between the Atlantic and Pacific Oceans.
Built in 1918 by the US, the Panama Canal currently is the only way for cargo ships to cut across the Americas without having the make the arduous, costly, and time-consuming journey around Tierra del Fuego at the southern tip of Argentina.
The government of Nicaragua — led by longtime leftist strongman Daniel Ortega — strongly supports the construction of a new 178-mile canal that would bisect the country and create a steady stream of giant cargo ships across Lake Nicaragua.
Strained US-Nicaraguan Relations
Ortega is the former Sandinista leader who ascended to the Nicaraguan presidency in the 1980s despite the US government’s covert efforts to fund, train and arm the opposition group known as the Contras.
Ortega is on record as saying the Nicaraguan Canal was the second phase of the Nicaraguan Revolution and offers his country its best hope of lifting its citizens out of poverty with the creation of more than 250,000 jobs, thus establishing Nicaragua as a leading industrialized nation on the world’s stage.
Funding Suddenly Vanishes
Ortega planned on getting the $40 billion to $50 billion needed to fund the project from Chinese billionaire Wang Jing, who Ortega granted a 50-year lease to finance and manage the canal, with the option of extending the concession another 50 years once the project is completed.
But now the project’s funding is in jeopardy thanks to the crash of the Chinese stock market, which wiped out an estimated 85% of Wang’s personal fortune, leaving him with only about $1 billion.
The company Wang formed to oversee the project — the Hong Kong Nicaragua Canal Development Investment Company (HKND Group) — claims that the project is still on track to be completed within five years, with construction to begin next year after the required environmental impact studies are completed. Yet many have their doubts.
Russian Intrigue
Meanwhile, the Russian government reportedly is interested in participating in the construction of the Nicaraguan Canal as part of its efforts to pursue strategic interests in Central America — something that almost certainly has gained the attention of the US, particularly the Central Intelligence Agency given its history in the region.
Concerns about financing, politics and environmental impact aren’t the only issues putting the canal’s future in jeopardy. There’s also Nicaragua’s volatile climate and seismic activity, which could further threaten the project’s feasibility.
A Second Panama Canal
There also are plans in the works to build a second canal through Panama, rather than Nicaragua. This rival canal would be shorter and — with a price tag of only $10 billion — would be less costly than the Nicaraguan option.
Furthermore, Panama is generally seen to be in better financial shape to take on such a substantial debt — especially since it already has an active canal to provide a steady income stream.
Will the Nicaraguan Canal ever become a reality? Only time will tell. Meanwhile, not a single shovel of dirt has been turned over to begin the project and there currently is no funding deposited for construction.