World Economy

Nicaragua Launches World’s Largest Infrastructure Project

Nicaragua Launches World’s Largest Infrastructure ProjectNicaragua Launches World’s Largest Infrastructure Project

The Nicaraguan government and a Chinese development company have started work on what they claim is the world’s largest infrastructure project: a new canal to connect the Pacific Ocean and Caribbean Sea.

Three times as large as the Panama Canal, the $50 billion project will speed shipping time for supertankers taking shale oil and liquefied natural gas from the eastern United States to energy-hungry Asia, Aljazeera reported.

Supporters say the canal and related projects will create over 250,000 jobs.

Future Problems

Opponents emphasize the lack of government transparency and potential environmental problems the canal would create. They argue the project would wreak havoc on Lake Nicaragua, Central America’s largest body of freshwater, and disrupt bird and wildlife habitats.

Many ordinary Nicaraguans were more concerned about jobs than flora and fauna. They look forward to what the government promises will be massive foreign investment, which it claims will not only create 50,000 temporary construction jobs but also 200,000 permanent jobs at anticipated ancillary projects such as ports, an airport, factories and tourist resorts.

An overwhelming 71 percent of Nicaraguans living far from the canal route support it, according to a December poll by M&R Consultants. But support drops to 42 percent among those living along the canal’s path.

Hong Kong Nicaragua Development (HKND), the company building the canal, admits that the project will displace about 35,000 people, mostly campesinos (peasant farmers) and indigenous tribes living near the Atlantic coast. Campesinos have become the backbone of the anti-canal movement.

The opposition includes leftist critics of the newly moderate Sandinistas, along with the conservative daily La Prensa, conservative political parties and some Contras, the US-backed counterrevolutionaries who fought a civil war against the Sandinista government in the 1980s.

Benjamin Lanzas, head of a construction industry trade association, estimates the canal and related projects will provide 25,000 construction jobs for Nicaraguans and 25,000 for Chinese and other foreigners with specialized skills. So far the project has employed some 200 Nicaraguan construction workers. Employment should increase later this year as HKND builds worker housing and port facilities on the Pacific and Caribbean coasts.

China's Role

Opponents argue that the Chinese government is manipulating the canal project behind the scenes — part of political plan to colonize Latin America. One opponent said China is prepared to lose tens of billions of dollars on the project to establish a political beachhead in Nicaragua. Others go further and claim China is planning to create a military base on Ometepe Island.

A Chinese diplomat, who demanded anonymity, said that the Chinese government favors the canal but is not involved in the day-to-day decision-making. The Chinese government hopes to benefit economically and politically from the project but has no agenda beyond getting faster and cheaper delivery of oil and other key natural resources.


HKND President Wang Jin has reportedly put up $200 million of his own money so far. HKND says it has additional investors lined up from China, Britain, Australia and the US. At least so far, the investors are also major subcontractors, which stand to profit from building the ports, dredging the waterways and doing related work. HKND has not made public the names of other investors, if any.

HKND has announced plans to offer securities on a stock exchange to raise additional funds. International stock investors will want a great deal more financial transparency than HKND has offered. Without additional financing, HKND will have a hard time completing the canal — let alone the subsidiary projects.