Is a Nicaraguan Canal Viable?

By John A. C. Cartner

There has been a lot of talk about a canal across Nicaragua. Is this talk or is the project viable.
Any project of the sort envisioned by Chinese backers must hThere has been a lot of talk about a canal across Nicaragua. Is this talk or is the project viable.
Any project of the sort envisioned by Chinese backers must have the four P’s: politics, public funds, and persistence and it must also have some sort of economic need to make it pay in addition to any public need it fulfills. Any one of these four is not easy. When combined with the quanta of funds and person-hours with a shaky need, the outlook is not very good.


The politics is straightforward. It has been China’s policy to invest in infrastructure and basic commodities worldwide for some time. Africa has become in effect a Chinese commodity colony with some good to African states and a great deal of good to the Chinese state. Latin America is another target. A canal across Nicaragua would do two main things. It would make money by speeding commerce and it would allow the Chinese navy to appear on the Monroe Doctrine’s doorstep.  Laudable goals from the Chinese perspective. That perspective is not shared by many. However, US maritime policy is virtually non-existent as to canal politics since the Panama Canals’ turnover to the Panamanians in the Carter administration saving reversion to the U.S. in cases of national security need. It is premature to say how the U.S. politics will play out, however. We do know that the Department of Defense has China near the top of the threat list.
How much does it take to build a canal as is envisioned in Nicaragua? A lot. More than private backers can raise without public finding or guarantees by most estimates. So it comes down to economics to pay for private money or a state buying strategic position by paying public money. How will this play out. Probably both ways. Two things are currently at play, however. First, it is not all that clear that the canal will pay for itself. Some projections make it a dead loser. Others say it is marginal at best. The optimists think everyone will get rich including the backers. The reality, given canal histories, is likely mixed. Recall that the US government had to bail out the private backers of the Panama Canal and the canal itself was finished by the US Army Corps of Engineers. The Suez Canal had to be bailed out by French and British public and private monies.  Canals always cost more and have more problems than those who project them think.
When the first canal was proposed to cross Central America, Nicaragua was a hands down winner. However, a postage stamp showing a volcano killed the deal and Panama was selected. Bad decision, but the geology of Nicaragua if not as fractious as Panama is still not benign – what we know of it. Ecologically, a Nicaraguan canal would be very problematic. Moreover, such a canal is not at sea level. It requires two locks – although not as elaborate as the Panamanian system. People tend to like their environments – even in the faces of dictatorships as in Nicaragua.
Recall too that the Chinese economy has grown too fast to be sustainable. Its decline is inevitable to some stabilizing position. A canal may well be lowered on the list now that most Chinese people have their consumer goods and automobiles. The recent devaluation of the yuan is a symptom and the tightening of Chinese debt policies and the banks is another. Chinese economics are internal debt economics which in the end – as in Greece – must fail.
So persistence is the key. The need is not well defined or agreed except as Chinese projection of power. Money is iffy. Press releases are not political action. I do not expect to see it in my lifetime.

 

The opinions expressed by Dr. John A.C. Cartner in the ‘Conversations with Cartner’ Video Series and accompanying blogs are the opinions of Dr. Cartner and do not necessarily reflect the views of the staff and management of Maritime TV, or its parent network, TV Worldwide, Inc.

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John A. C. Cartner

John A. C. CartnerJohn A. C. Cartner

Dr. John A. C. Cartner practices maritime law domestically and internationally. He is designated Proctor in Admiralty by the Maritime Law Association of the United States and is member of other state maritime law associations.

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Maritime TV 'Conversations with Cartner'
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The opinions expressed by Dr. John A.C. Cartner in the ‘Conversations with Cartner’ Video Series and accompanying blogs are the opinions of Dr. Cartner and do not necessarily reflect the views of the staff and management of Maritime TV, or its parent network, TV Worldwide, Inc.

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