Nicaragua’s Canal Project Might Be Unconstitutional; Is President Daniel Ortega’s Dream Nonviable?

Nicaragua’s long dream of their own canal, similar to world-famous Panama’s, is slipping through their fingers. After signing a $40 billion contract with a Chinese company to finally build a waterway that would connect the Atlantic and the Pacific, Nicaragua has encountered more obstacles than the jungle and lake the project would have to make its way through.

Earlier this month conflict arouse when Wang Jing, president of HK Nicaragua Canal Development Investment, announced that the Chinese company had picked a route and that construction was all set to begin in December 2014. Almost immediately, the Nicaraguan government denied that was decided and said viability studies were still being carried out.

They might be bumping heads over nothing, though, as concern was raised on Tuesday when 16 appeals were made to the law that allowed President Daniel Ortega’s government to sign the agreement with HKND. Opposition parties, civil organizations and citizens alike consider that the agreement, which includes a concession of management of the canal for 50 years, violates the Nicaraguan Constitution and sovereignty, turning the country into a “fief of Wang.”

“The first amendment of the constitution is crystal clear: the independence, the sovereignty, the self-determination [of Nicaragua] is irrevocable, it belongs to the Nicaraguan people,” said former Education Minister Carlos Tünnermann Bernheim. “That amendment alone should be enough to appeal that law.”

Tünnermann Bernheim, one of the most respected voices in Nicaragua, was one of those who issued an appeal. Political analysts back him, saying the way the concession for the project was approved in Congress – in record time and without questioning any of the arguments presented -- it violates up to 41 articles of the Nicaraguan Constitution.

The Nicaragua canal idea has been kicking around since the mid-19th century, and it has never seemed as close to realization as when HKND signed the contract with Ortega. But as more obstacles appear, many international experts have questioned the viability of the project.

Jean-Paul Rodrigue, a transportation expert from Hofstra University in New York, argued that while it is not technically impossible to build, a Nicaragua canal would be economically irresponsible.

“The budget is estimated in $40 billion, and experience teaches us that the real cost would be at least 20 percent higher,” said Rodrigue. “Who has $20 billion to spare? It is just going to be a colossal waste of resources.”

Other analysts questioned the realism of a project from a never-heard-of company and an integrity-challenged government. “Are international shipping companies going to trust a one-guy shop with minor telecommunications experience to be the system integrator on a $40 billion project in a country whose transparency is already subject to question?” asked Evan Ellis, professor of national security studies at the U.S. Government’s National Defense University, according to Reuters.

But the major problem with the project, in Rodrigue’s opinion, is that there is no demand for it. “Global trade, as it is right now, does not need another canal – it just won’t use it,” said the analyst.

“Look at the state of the world’s economy. The U.S. is bankrupt, Europe is bankrupt, Japan is bankrupt, China is going bankrupt – who is going to use it?” he added, saying that Nicaragua would benefit from waiting another 25 or 30 years before trying to put the plan into action.

And even if there were such a demand for another trans-oceanic waterway, Rodrigue says Panama could handle it on its own. “Higher costs of production through a much larger piece of land will mean much higher charge for using the canal. Companies would go to the improved, and more cost-friendly, Panama Canal – just as they have always done,” he predicted.

Greg Miller, a shipping consultant at global maritime intelligence HIS Fairplay, summed up the real beneficiaries of the project: “The only people who will financially profit from this proposal are the consultants paid to do the feasibility studies,” he told Reuters.