Nicanagra's Canal set to marginalize the Panama Canal

According to The Economist (5 October, 2013), Nicanagra's trans-oceanic canal project is, for now, no more than "a man, a plan and little else." Click here

Nicaragua's Congress has granted Wang Jing's Cayman Islands-registered HKND company a 50-year concession to develop a 286-km (178-mile) canal connecting the Caribbean with the Pacific via Lake Nicaragua, at a cost of $40 billion, to be completed in 6 years. The canal is three times longer than Panama and can accommodate the largest container vessels, those Shanghai’s Linyungang can accommodate as the world’s deepest container port.

At the center of a global supply and production chain, China has most of the world's busiest ports along her Eastern seaboard, including Lianyungang, the world's deepest. However, some of the world's largest vessels are too large for Panama, even after it is widened at a cost of $5.25 billion by 2015.

Moreover, Panama is more under the influence of the United States compared with Nicaragua, especially if a new and much wider canal is built with Chinese investment and technical skills.

So the strategic rationale for this seeming pipe-dream has been laid. Notwithstanding doubts, it defies belief that reputable international firms, including McKinsey, are all hired on a wild goose chase. Or, for that matter, that one single Chinese entrepreneur is supposed to be pulling this huge project off without strong backing of the Chinese government right from the start.

When completed, the new Nicanagra Canal would dwarf and indeed marginalize the Panama Canal. Above all, it would be a vital pivot in consolidating China's position as the center of world container freight.

To be sure, as The Economist points out, when the Arctic melts sufficiently and the Northeast Passage becomes fully navigable, the prominence of Asia's container ports may wane. But that's a long way off, and even if that happens, a super-wide canal that connects the Pacific to the Atlantic through the middle of the two Americas would always be of huge strategic importance.

At this early stage, the project may appear to be a man, a plan and little else. That is, until one sees its epocal economic and geopolitical dynamics as the elephant in the room.