History of the Nicaragua Canal

The idea of the Nicaragua Canal was first proposed in the early colonial era. Even the colonial administration of New Spain conducted preliminary surveys, and the routes suggested ran across Nicaragua, the Isthmus of Tehuantepec in Mexico or Panama.

In 1825 the newly independent from Spain Federal Republic of Central America considered the possibility of building a canal in Nicaragua. For this purpose, the Republic hired surveyors to chart the future shipping route. The authorities contacted the government of the United States to seek financing and the engineering technology needed for building the canal, to the advantage of both nations.

The study was indeed conducted and stated that the waterway would be 278 km (172.7 mi) in length, and would follow the San Juan River from the Caribbean Sea in the Atlantic Ocean to Lake Nicaragua, then go through a series of locks and tunnels from the lake to the Pacific Ocean. Globally, the length established, as well as the route, were the same as the 21st century project!

The American officials thought the project had merit and Secretary of State Henry Clay presented it to the Congress of the United States in 1826. But the Congress did not approve the plan, because the United States was worried about relationship with the United Kingdom, its rival in the region which controlled both British Honduras (today Belize) and the Mosquito Coast in Nicaragua.

Next initiative took place in 1849. On August 26, 1849, the Nicaraguan government signed a contract with the United States businessman Cornelius Vanderbilt who was granted the exclusive right to construct a waterway through the isthmus within twelve years. His company would have sole administration.  Mr. Vanderbilt launched a temporary route with stagecoach which operated successfully. Later he opened a railway, and this route became one of the main avenues of trade between New York City and San Francisco during the Gold Rush in California. But civil war in Nicaragua and an invasion by filibuster William Walker intervened to prevent the canal from being completed.

The interest in the interoceanic route was stressed factor in the Clayton-Bulwer Treaty of 1850 between the US and the Great Britain. Later, in 1888, a famous millionaire Morgan started the excavation, but his company went bankrupt the next year.

In 1899, the United States Nicaraguan Canal Commission (later, it became Isthmian Canal Commission) carried out another hydrological survey, but it recommended that the French work on the Panama Canal be taken over if it could be purchased for no more than US$40 million. Since the French effort was in disarray, in 1904 the United States purchased the French concession, equipment, and excavations for this sum However, the same commission concluded that an interoceanic project in Nicarague was feasible at a total cost of US$138 million. At the same time, the Geological Society of America published the “Physiography and Geology of Region Adjacent to the Nicaragua Canal Route” in its Bulletin in May 1899, which remains till now one of the most detailed geological surveys of the San Juan River region.

Finally, the US favored construction of a canal through the isthmus of Panama because of the risk of volcanic activity at the Momotombo volcano as well as because of some lobby activities (for example, the daily Sun reported that the Momotombo volcano had erupted and caused a series of seismic shocks. This piece of news caused concern about its possible effects on a Nicaraguan canal, but it was a fake).

Deceived, Nicaraguan president Zelaya tried to arrange for Germany and Japan to finance the building of a Nicaragua Canal, but having settled on the Panama route, the United States opposed this idea and blocked the efforts.

In 1929, the United States Interocean Canal Board approved out a two-year detailed study for a new ship canal route, known as the Sultan Report after its author, the United States Army engineer Colonel Daniel Sultan. From 1930 to 1931 a United States Army Corps of Engineers survey team of 300 men surveyed the route of a new canal along the Forty-Niners route in Nicaragua (its name honors a group of miners which took this route in the 1840s California Gold Rush. This time Costa Rica protested that Costa Rican rights to the San Juan River had been infringed. El Salvador also protested and maintained that the proposed canal would affect both it and Honduras. In 1939 and 1940, with war in Europe underway, a new survey was conducted for the construction of a barge canal, but the project was abandoned as too costly.

It was in 1999, that Nicaragua's National Assembly unanimously approved an exploration concession (Law 319) for the construction of a shallow-draft waterway along the San Juan River, known as the Ecocanal which would connect Lake Nicaragua to the Caribbean Sea, but would lack the inter-oceanic link to the Pacific Ocean.

In 2004, the Nicaraguan government proposed a canal large enough to handle post-Panamax ships of up to 250,000 tons, as compared to the approximately 65,000 tons that the Panama Canal can accommodate. Former Nicaraguan president Enrique Bolaños sought foreign investors to support the project. In addition to the governmental waterway proposal,  the Intermodal System for Global Transport (SIT Global), involving Nicaraguan and Canadian and American investors, proposed a combined railway, oil pipeline, a number of resorts and ecological reserves and so on.

On October 2, 2006, President Enrique Bolaños, at a summit for defense ministers of the Western Hemisphere, announced that Nicaragua intended to proceed with the project. He outlined that there was sufficient demand for two canals within the Central American isthmus.

The President promised that construction of the Nicaragua canal alone would more than double Nicaragua's GDP (excluding other investments as a result of the canal's construction). Many sources suggested then that construction of the canal would enable Nicaragua to become one of the wealthiest countries in Central America, and one of the wealthiest countries in Latin America in per capita terms.

In 2010, Nicaragua signed a contract with two Korean developers, Dongmyeong Engineering & Architecture Consultants (DMEC) and Ox Investment, to construct a deep-water port and facilities at Monkey Point on the Caribbean coast to improve capacity there. On July 27, 2012, engineering services provider Royal HaskoningDHV announced that the Nicaraguan government commissioned a feasibility study to be completed in early 2013 at a cost of US$720,000. The contract has been awarded to a consortium made up of Royal HaskoningDHV and Ecorys.

On June 10, 2013, the National Assembly's Infrastructure Committee unanimously voted in favor of the project, with four members abstaining. On June 13, 2013, Nicaragua's legislature passed the legislation granting the concession. On June 15, President Ortega and the chairman of HKND Group, Wang Jing, signed the concession agreement giving HKND Group the rights to construct and manage the canal and associated projects for 50 years. The Nicaraguan President Daniel Ortega issued a statement that construction of the project would begin in December 2014, and that it will be completed in 2019.

Let’s remind you in conclusion that a canal across Nicaragua has been a dream of kings and entrepreneurs for centuries. Like the ill-fated schemes that preceded it, the newest incarnation has its share of interesting characters, controversy and rumors.

The Nicaraguan government sees the project as a desperately needed economic boost to the country, one of the poorest in the Western Hemisphere. Exactly where the money to build the canal will come from is a mystery, as is the role, if any, the Chinese government will play (Wang Jing has denied that the government is involved in the project, as have government officials). Meanwhile Russia continues to take strategic initiatives that put the United States on the defensive, Russian beloved dictator Vladimir Putin may team up with China to help construct a trans-oceanic canal in Nicaragua that would give Moscow an even greater foothold in Washington’s area of influence.

nicaragua stamp

The 1900 postage stamp credited with scuttling plans for a Nicaragua canal in the early 1900s

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