by Jim sayers – Nicaragua Canal News
There is an ongoing debate about the Wisdom of Building Another Canal in Central America. There is already an existing canal in Panama that has been in operation for over 100 years. The new canal is being built-in Nicaragua, but the question of a need for that canal has polarized people both in and outside of Nicaragua. Emotions are running high, and there are few clear-cut answers, so we must examine the various issues to begin to see the picture more clearly. With that in mind, I will try to help you understand why an initiative to build a new canal so close to the existing Panama Canal is underway.
Panama is about to present the shipping world with a bigger canal and new modern efficient locks, so why build another canal in the neighborhood? For some, the answer is simple, for others it is more is complex, and then there are those that suggest that it may even have a political component to it. That may be true, but there is clearly a real world situation directly related to world shipping that is NOT handled by the expansion of the Panama Canal. However, before I get to that, I want to first look at the economic benefits to Nicaragua that a new canal would bring.
ECONOMICS 101
The proposed canal and the various companion projects will enrich the economy of Nicaragua during the construction phase, and during the operational life of the canal. There is little doubt of that, but there is a debate as to how much it will add to the Nicaraguan economy, and who in the country will benefit the most. That is an unknown, but the contracts have already been signed, and work is underway. Soon we will all see how it works.
It is not possible to spend time in Nicaragua without being exposed to an array of opposing viewpoints that range from joy to contempt for the canal. I met with the administrator of the new canal, Manual Coronel Kautz. He was very upbeat and positive about the effect of the new canal for Nicaragua. In our lengthy meeting, I asked him every question that I could think of, including some about the more contentious issues, like people losing their land and being displaced, to the overall effect that the canal would have on the environment of Nicaragua. He answered every one of them, and his answers were very direct. They gave me a much greater insight into the scope of the various projects. He also informed me that HKND, the Chinese Investment consortium from Hong Kong, and Nicaragua have a great working relationship. You can visit the HKND website at: http://hknd-group.com/portal.php?mod=list&catid=2
THE FIRST BENEFIT
The agreement between Nicaragua and HKND stipulates that Nicaragua has an initial 1% ownership of the canal, plus an additional 1% each year thereafter. In 50 years Nicaragua will have 51% ownership of the canal, which will give them control of the canal. In 99 years, they will own 100%, so to argue now whether the deal is right for Nicaragua, would be premature. However, as promising as the deal may be, some people still insist that the canal will never be built. Apparently, the men and women who are already working on the canal construction projects did not receive that memo.
According to HKND, the various projects will require a workforce of up to 50,000 people. Half of that number, 25,000, will be Nicaraguan nationals. In such a small country, that is going to have the ripple effect of creating full employment. The canal is scheduled to start operating in 2020, and once the ships start using the canal. Beyond the actual benefit of employing thousands of people in constructing the canal, there are other sources of revenue as well, and of course, Nicaragua will be the beneficiary of a portion of the transit fees.
The canal is the flagship project, but the companion projects will also enrich the economy. To support the construction of the canal, a power station, and a cement factory must be built. A coast to coast highway, railroad, and oil pipeline are also among the companion projects. Two ports, one on each coast will be built in conjunction with the canal. Taken together, those undertakings will offer jobs to the workers of Nicaragua.
THE OTHER PROJECTS
One of the other projects that will directly benefit the people of Nicaragua is a large, state-of-the-art hospital. Another project is the building of a major international airport. It is planned to be bigger, and more modern than any in Latin America, and it will compare with modern airports in the United States or Europe. When one understands the need to accommodate the high volume of foreign workers arriving to work on the various projects, and the planned expansion of the country’s tourist industry, it becomes clear why it is being built.
Whenever I encounter descent against the logic of the new canal, I never seem to hear any mention of the companion projects. The canal always takes center stage, as I suppose it should, but the overriding benefits to the country from the companion projects are also part of the equation. In future articles I will focus on them, but for now, I want to talk about the canal. To do that properly, I must start with the existing Panama Canal, and the expansion projects connected to it that are nearing completion.
The widened waterway and the new locks of the Panama Canal are incredible engineering marvels. Señor Jorge Luis Quijano, the Administrator of the Panama Canal, and his team, are to be congratulated on what they have created. The wider canal will allow for ships to pass where heretofore that was risky, or in some cases, not even possible. The new locks will allow much larger ships to use the canal that were heretofore too big for the original locks built in the early 1900’s. In addition to being bigger, the new locks also employ modern gate technology, and a water conservation system that captures and recycles about 60% of the water each time a ship uses the locks. The original lock system built a century ago was not designed to do that, so each time a ship used the locks all the water flowed from the canal into the ocean. Now, with the new system the recovered water is combined with additional water from Lake Gatun for use by the next ship into the locks. The net result is that it takes less water to up, or down lock each ship. Water conservation is important, so the recycle technology that is now part of the new locks of the Panama Canal, will also be employed in the Nicaragua Canal as well.
WOW…THAT’S A BIG SHIP!
In the time that it has taken Panama to build the new lock system, and to widen the canal, the size of container ships has grown dramatically. For obvious reasons, the bulk of the shipping industry was for years focused on building ships to the specifications of the existing Panama Canal. Those ships are referred to as Panamax. The name is as it sounds–the maximum size that can fit in an existing Panama Canal lock. The new locks will accommodate larger ships that are referred to as post Panamax ships. However, shipping companies are always looking to squeeze more profits from the movement of their ships. It turns out that the easiest way to do that is to build bigger ships, and that is exactly what they did. Now there are some ships roaming the seven seas that are even too big for the new expanded Panama Canal Locks, and in the future ships might get even bigger. One wonders if the quest for larger ships ever stop? I have no way of knowing, but given that all cargo ships must have port facilities somewhere, I think that we may have a little breathing room while ports around the world scramble to catch up with the expanding size of ships.
HKND, has designed the Nicaragua Canal to standards that will accommodate the largest ships currently afloat, thereby presenting an inter-ocean canal option to the owners of the giant ships. If the planned timetable for completion in 2020 is kept, the first of those ships will have the opportunity to enjoy the same ocean to ocean access that is currently available to their little brothers. However, it is important to keep in mind that right now there are a limited number of those giants floating around, so the expanded Panama Canal is well suited to offer passage to the majority of ships currently in service. The new locks, which in effect are new lanes, will also help to shrink the current waiting times. This combined with the other aspects of the expanded Panama Canal are major arguments against the need for a new canal elsewhere.
When it comes to the Nicaragua Canal, there are several important issues to consider and evaluate. Trying to understand all of the implications of having a canal in Nicaragua is complicated. There are questions that must be answered concerning the rational of building a canal in Nicaragua, but since it is already under way, some of the issues have already been rendered moot. I plan to dig into the various aspects of the new canal, such as, the affect of relocating people whose land is in the right-a-way, or understanding the affect on wildlife, and the affect on indigenous (Indian) lands as well. Then there’s that 500 pound gorilla in the room, or should I say, the 500 pound Polar Bear. I’m referring to the viability of a shipping route over the North Pole. Increasingly it is being looked at as a developing alternative, and if certain conditions occur, it could have an effect on the Panama Canal, the Suez Canal, and in 2020, the Nicaragua Canal. However, there are clearly other timely topics that need to be addressed, so until the situation of a route over the pole becomes a serious option, I will keep my focus on the issues surrounding the new canal.
Were I an attorney, I could go to court and comfortably represent either side of the issue on the need for a new canal. I suspect that where one actually comes down on the issue might just depend on where one is standing, or maybe it is where one is living. I currently live in Costa Rica, half way between Panama, and what will someday be a canal in Nicaragua. How convenient is that?
–Jim Sayers
March 8, 2015
Copyright © 2015 Jim Sayers
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