Nicaragua Pushes for Construction of Rival Canal

Dusting off a dream that dates back five centuries, Nicaragua wants to build an $18 billion alternative to the increasingly overloaded Panama Canal.

Officials are drafting legislation, conducting feasibility studies and lobbying internationally for the project, first considered by Spanish explorers who scanned the Central American coast in the 1500s for a navigable waterway from the Atlantic to the Pacific.

"The prospect of having something like this is probably better now than at any time in the past," said Marc J. Hershman, an international shipping expert at the University of Washington School of Marine Affairs. "There's huge growth in cargo shipping around the globe, and it's going to accelerate more and more."

The idea is gathering pace as Panamanians hold a referendum Sunday which polls predict will approve widening their 92-year-old canal. But Nicaraguan officials insist it isn't a rivalry, arguing that there's enough traffic to sustain two waterways, and theirs would be able to handle bigger ships.

CountryWatch: Nicaragua

It would be 173 miles long. From the Caribbean, it would run along the San Juan river, which forms Nicaragua's southern border with Costa Rica and lets out into Lake Nicaragua. From the western side of the lake, 12 miles of canal would be built across the Isthmus of Rivas to reach the Pacific.

Other river routes to Lake Nicaragua have also been proposed, as well as the possibility of a coast-to-coast railroad.

Many in the shipping industry have been looking "more closely at another canal with wider capabilities and a deeper channel" than Panama, Hershman said.

Mexico and Guatemala also would like to build inter-ocean cargo corridors, but Nicaragua has pursued the idea most aggressively.

Its outgoing president, Enrique Bolanos, says a canal could be built in 12 years and would open the way for giant tankers from Asia that cannot squeeze through Panama's 50-mile waterway. The Nicaraguan option could cut a day off shipments between California and New York, while Chinese tankers could save as much as 36 days and $2 million on their roundtrips to the U.S. East Coast, Bolanos said.

He made his pitch to the Western Hemisphere's defense ministers, including U.S. Defense Secretary Donald H. Rumsfeld, who met in Managua this month.

Daniel Ortega, the Sandinista leader who is the front-runner in the Nov. 5 presidential election, is on record as supporting the plan, though he says he wants to study it further.

Panamanian officials say Nicaragua's proposal is pushing them to move ahead with their $5.25 billion expansion.

"For us, Nicaragua is serious. This is not just speculation," said Adolfo Ahumada, director of the Panama Canal, which earned $1 billion last year.

About 5 percent of the world's maritime trade crosses through the Panama canal, but its growth is limited: 10 percent of the world's ships are too big for it. Others wait in long lines, losing time and money. And Bolanos estimates the shipping business will grow by at least 5 percent annually until 2025.

Nicaraguan officials claim their canal could take 275,600-ton container tankers and ships — more than double what Panama will be able to accommodate even after expanding.

They say the mammoth engineering feat will depend on public financing and international investors, including banks in China and Japan, countries that would benefit from quicker, cheaper shipping to the West.

Nicaragua's canal commission plans to present proposed legislation for the venture in coming months.

Along San Jorge's shores, where women wash clothes in the lapping waves of Lake Nicaragua, the project seems as far away as the blazing sun.

A dozen battered boats sputter in and out of the port daily, hauling bananas from Ometepe island for export to El Salvador and Honduras. Sweating men heave the loads from the boats to buses headed to markets.

Environmentalists worry about the impact a Nicaraguan canal would have on wild life, vegetation and indigenous people, while Nicaraguan authorities believe the benefits would be a doubling of gross national product and at least 150,000 new jobs.

Supporting the plan is Jose Ignacio Sequeira, 53, a leader of indigenous communities on Ometepe, an island of twin volcanoes in Lake Nicaragua.

"We are the center of Central America," he said. "This is the exact place for it."