The Inter-Oceanic Nicaragua Canal is a proposed waterway through Nicaragua to connect the Caribbean Sea and Atlantic Ocean with the Pacific Ocean. Such a canal would follow rivers up to Lake Nicaragua (the second largest lake in Latin America) and then at least 10 km through the isthmus of Rivas to reach the Pacific (via a canal dug from Brito).
Construction of such a canal along the route using the San Juan River was proposed in the early colonial era. Louis Napoleon wrote an article about its feasibility in the early 19th century. The United States abandoned plans to build such a canal in the early 20th century after it purchased the French interests in the Panama Canal at a reasonable cost.
Speculation on a new canal continues. The steady increase in world shipping may make it an economically viable project. Alternatively, a railway, or a combined railway and oil pipeline, could be built to link ports on the Atlantic and Pacific coasts.
In June 2013, Nicaragua's National Assembly approved a bill to grant a 50-year concession to a newly formed Hong Kong company, the Hong Kong Nicaragua Canal Development Investment Co., to build the canal. The concession can be extended for another 50 years once the canal is operational. The proposed Nicaragua Canal will be able to handle the world's largest ships, including the 10 percent of the world's merchant fleet that are already too large for even the new set of locks being constructed in Panama.
In July 2013, route 2 below was chosen for the canal. Several possible routes were proposed for a canal in Nicaragua, all making use of Lake Nicaragua. Three routes have been discussed to carry traffic from the Atlantic Ocean up to Lake Nicaragua, which is at an elevation of 32 m (105 ft) above sea level:
- route 1 goes from Cayman Rock to Gran Lago
- route 2 goes from the town of Bluefields on the Caribbean Sea (Isla del Venado) via Rio Escondido to Gran Lago
- route 3 goes from Punta Gorda to Gran Lago
- route 4 (Ecocanal route) goes from town of San Juan de Nicaragua via Rio San Juan (an already existing, natural river) to Gran Lago
These routes would then link the western coast via Brito to Gran Lago.
The last route proposed (route 4) is the route which would have the least environmental impact. Route 4 requires to deepen the Rio San Juan and add new locks. However, despite the much lower environmental impact, and the smaller cost in comparison to the other routes, HKND has stated it would not use this route.
HKND Group has hired Environmental Resources Management (ERM), one of the world’s leading sustainability consultancies, to independently assess the environmental and social impact of various routes that are under consideration.
The idea of building a canal through Central America is old. The colonial administration of New Spain conducted preliminary surveys. The routes suggested usually ran across Nicaragua, Panama, or the Isthmus of Tehuantepec in Mexico.
In 1825 the newly established Federal Republic of Central America considered the canal. That year the Central American federal government hired surveyors to chart the route and 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. A survey from the 1830s stated that the canal would be 278 km (172.7 mi) long and would generally follow the San Juan River from the Atlantic to Lake Nicaragua, then go through a series of locks and tunnels from the lake to the Pacific.
While officials in Washington, D.C., thought the project had merit and Secretary of State Henry Clay formally presented it to the Congress of the United States in 1826, the plan was not approved. The U.S. was worried about the poverty and political instability of Nicaragua, as well as the rival strategic and economic interests of the British government, which controlled both British Honduras (later Belize) and the Mosquito Coast.
On August 26, 1849, the Nicaraguan government signed a contract with the U.S. businessman Cornelius Vanderbilt. It granted his Accessory Transit Company the exclusive right to build a canal within 12 years and gave the same company sole administration of a temporary trade route in which the overland crossing through the Rivas isthmus was done by train and stagecoach. The temporary route operated successfully, quickly becoming one of the main avenues of trade between New York City and San Francisco. Civil war in Nicaragua and an invasion by filibuster William Walker intervened to prevent the canal from being completed.
Continued interest in the route was an important factor in the negotiation of the Clayton-Bulwer Treaty of 1850. The canal idea was discussed seriously by businessmen and governments throughout the 19th century. In 1897, the US Nicaraguan Canal Commission proposed this idea, as did the subsequent Isthmian Canal Commission in 1899. However, the commission also recommended that the French work on the Panama Canal be taken over if it could be purchased for no more than $40 million. Since the French effort was in disarray, in 1904 the U.S. was able to purchase the French concession, equipment, and excavations for US $40 million.
The Nicaraguan Canal Commission carried out the most thorough hydrological survey yet of the San Juan River and its watershed, and in 1899 concluded that an interoceanic project 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 one of the most detailed geological surveys of the San Juan River region.
In the late 19th century, the US government negotiated with President José Santos Zelaya to lease the land to build a canal through Nicaragua. Luis Felipe Corea, the Nicaraguan minister in Washington, wrote to US Secretary of State John Hay expressing the Zelaya government's support for such a canal. The US signed the Sánchez-Merry Treaty with Nicaragua in case the negotiations for a canal through Colombia fell through, although the treaty was later rejected by John Hay. Before Corea completed a draft of the Nicaragua proposal, Congress was considering the Spooner Act to authorize the Panama Canal. In addition to the promise of earlier completion of the Panama Canal, opponents of the Nicaraguan canal cited the risk of volcanic activity at the Momotombo volcano. They favored construction of a canal through the Isthmus of Panama.
According to Stephen Kinzer's 2006 book Overthrow, in 1898 the chief of the French Canal Syndicate (a group that owned large swathes of land across Panama), Philippe Bunau Varilla, hired William Nelson Cromwell to lobby the U.S. Congress for the Panama Canal. In 1902, taking advantage of a year with increased volcanic activity in the Caribbean, Cromwell planted a story in the New York Sun reporting that the Momotombo volcano had erupted and caused a series of seismic shocks. This caused concern about its possible effects on a Nicaraguan canal. Cromwell arranged for leaflets with the stamps featuring Momotombo to be sent to every Senator as "proof" of the volcanic activity in Nicaragua. An eruption in Saint-Pierre, Martinique, which killed 30,000 people, persuaded most of the U.S. Congress to vote in favour of Panama, leaving only eight votes in favour of Nicaragua. The decision to build the Panama Canal passed by four votes. William Nelson Cromwell was paid $800,000 for his lobbying efforts.
At the start of the 20th century, Nicaraguan president José Santos Zelaya tried to arrange for Germany and Japan to finance the canal. Having settled on the Panama route, the US opposed this proposal.
After the Panama Canal
Since the Panama Canal opened in 1914, the Nicaragua route has been reconsidered. Its construction would shorten the water distance between New York and San Francisco by nearly 800 kilometers (500 mi). Under the Bryan-Chamorro Treaty of 1916, the United States paid Nicaragua US$3 million for an option in perpetuity and free of taxation, including 99-year leases of the Corn Islands and a site for a naval base on the Gulf of Fonseca.
In 1929, the US Interocean Canal Board approved out a two-year detailed study for a ship canal route, known as the Sultan Report after its author, the US army engineer Col. Daniel Sultan. From 1930 to 1931 a US Army Corps of Engineers survey team of 300 men surveyed the route of a future canal, called the Forty-Niners route because it followed closely the route that miners took in the 1840s California Gold Rush. But Costa Rica protested that Costa Rican rights to the San Juan River had been infringed, and El Salvador maintained that the proposed naval base would affect both it and Honduras. Both protests were upheld by the Central American Court of Justice in rulings that were not recognized by either Nicaragua or the U.S. Both nations repealed the Bryan-Chamorro Treaty on July 14, 1970.
Between 1939 and 1940, with war in Europe underway, a new study was made for the construction of a barge canal. Three variants were considered, with minimum channel depths of six, ten, and twelve feet.
In 2010, Nicaragua signed a contract with two Korean developers, Dongmyeong Engineering & Architecture Consultants (DMEC) and Ox Investment, to construct a deepwater port and facilities at Monkey Point on the Atlantic coast to improve capacity there.
In 2004, the Nicaraguan government again proposed a canal through the country—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. The estimated cost of this scheme may be as much as US$25 billion, 25 times Nicaragua's annual budget. Former President Enrique Bolaños has sought foreign investors to support the project. The scheme has met with strong opposition from environmentalists, who protest about the damage that would be done to the rivers and jungle. The project would be like the original plans only in that the US government would buy the land for investors to start building the canal.
In addition to the governmental waterway canal proposal, private proposals have been based on a land bridge across Nicaragua. The Intermodal System for Global Transport (SIT Global), involving Nicaraguan and Canadian and American investors, proposes a combined railway, oil pipeline, and fibre optic cable; a competing group, the Inter-Ocean Canal of Nicaragua, proposes building a railway linking two ports on either coast.
In 1999, 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 Ecocanal. This would connect Lake Nicaragua to the Caribbean, but would lack the inter-ocean link to the Pacific Ocean. This project is loosely based on the 1939–40 study.
In 2000, the government of Nicaragua granted a concession to Canal Interoceánico de Nicaragua S.A. (CINN), a company formed and led by New York attorney Don Mario Bosco, to build a railway "dry canal" connecting Nicaragua's coasts. However, CINN was unable to obtain financing to begin construction.
It is possible that these schemes could exist in parallel to the proposed inter-ocean canal.
On October 2, 2006, President Enrique Bolaños, at a summit for defense ministers of the Western Hemisphere, officially announced that Nicaragua intended to proceed with the project. Bolaños said that there was sufficient demand for two canals within the Central American isthmus. He proclaimed that the project would cost an estimated US$18 billion and would take approximately 12 years to construct. It would take one of six possible routes at approximately 280 km, reduce the transit time from New York to California by one day and 800 km, considerably reduce transit costs from Europe to China and Japan, and have capacity for ships of up to 250,000 tons.
The construction of the canal alone would more than double Nicaragua's GDP (excluding other investments as a result of the canal's construction). Some sources suggest 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. The government has been studying proposals for such a development. Supporters believe that all of Central America would benefit from the construction of the canal. If a Nicaraguan canal were built, "it would bring an economic effervescence never seen before in Central America," Bolaños said.
In 2009, Russian President Dimitry Medvedev suggested that Russia would be interested in pursuing the construction of the interoceanic waterway canal. However, no progress has been made to date and the construction of the Third Set of Locks for the Panama Canal has apparently dampened Russian enthusiasm for the project. Khalifa bin Zayed bin Sultan Al Nahyan of the United Arab Emirates has also expressed interest in sponsoring an interoceanic canal project.
On July 27, 2012, engineering services provider Royal HaskoningDHV announced that the Nicaraguan government has commissioned a feasibility study to be completed in early 2013 at a cost of $720,000. The contract has been awarded to a consortium made up of Royal HaskoningDHV and Ecorys.
On September 26, 2012, the Nicaraguan government and a newly formed Hong Kong–based company signed a memorandum of understanding that committed HKND Group to finance and build the Nicaraguan Canal and Development Project. HKND Group is a private enterprise. HKND Group has now entered the study phase of development to assess the technological and economic feasibility of constructing a canal in Nicaragua, as well as the potential environmental, social, and regional implications of various routes. The canal and other associated projects will be financed by investors throughout the world and would generate jobs for Nicaragua and other Central American countries.
Initial findings by commercial analysis conducted by HKND Group indicate that the combined impact of growth in East-West trade and in ship sizes could provide a compelling argument for the construction of a second canal, substantially larger than the expanded Panama Canal, across Central America. Within 10-15 years, growth in global maritime trade is expected to cause congestion and delays in transit through the Panama Canal without a complementary route through the isthmus. Additionally, by 2030, the volume of trade addressable by the Nicaragua Canal will have grown by 240% from today.
On June 10, 2013, The Associated Press reported that 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, officially signed the concession agreement giving HKND the rights to construct and manage the canal and associated projects for 50 years. A HKND Group press release claims "HKND Group Successfully Obtains Exclusive Right to Develop and Manage Nicaragua Grand Canal for 100 Years"
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