By Donald Jeffries
Nicaraguan President Daniel Ortega recently announced plans for a canal spanning over 276 miles through his country, linking the Caribbean with the Pacific Ocean. The timing is interesting, given President Donald Trump’s pronouncements about taking back the Panama Canal, which Jimmy Carter sold back to Panama for $1 in 1978.
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Recently, Ortega declared:
Every day it is more complicated to pass through Panama. … Nicaragua is ready to contribute with this passage that will give greater fluidity to maritime transport, to commerce, and we invite you all. I am sure that even North American businessmen would be interested in the canal
We are seeing the difficulties that the Panama Canal has, they have problems with the water, in terms of fluidity, the capacity for ships to pass. So traffic is slow. There are no alternatives.
Ortega claimed that the United States had already intended to build a Nicaragua canal back in 1854.
We are going to send them more information, because many studies have been made, since [the] one made by the U.S. Navy Corps of Engineers in 1866. Nicaragua can offer for the benefit of the people, for the benefit of commercial activities, for the benefit of the growth of the economy in all our countries and that we have better conditions for peace, for stability, for security, and, with this, we can put an end to misery, we can put an end to poverty, we can live with dignity.
In 2013, Ortega signed a 50-year concession to design, build, and operate a new canal, with an estimated initial cost of $40-$50 billion. The project was to include not only the canal, but ports, a new airport, free trade zones, and infrastructure for tourism.
The Chinese businessman the deal was originally made with, Wang Jing, reportedly lost much of his fortune in 2015 due to stock market losses. That being said, many experts were skeptical that Jing could raise sufficient funds for the project. Environmentalists were concerned that the canal would cut through Lake Nicaragua, the largest freshwater body in Central America, and negatively impact its ecosystem.
In addition, thousands of Nicaraguans, especially indigenous groups and farmers, protested against the project, fearing land seizures and displacement. In 2019, an incredibly stern Nicaraguan judge sentenced three of the leaders of the farmer protests to anywhere from 159 to 216 years in prison for promoting a “failed coup.”
Some Nicaraguans were suspicious of China’s motives, and saw it as an attempt for them to gain influence in Central America. Despite a symbolic “groundbreaking” in 2014, no actual construction has ever been done on the project, and it was seemingly canceled in May 2024 by the Nicaraguan congress.
However, in December 2024, Ortega submitted a new proposal to China, with a revamped route designed to make international maritime transport more efficient.
Ortega has long desired to compete with the Panama Canal, with the goal of being the alternative for world trade in the face of cyclical drought conditions that limited ship transits through Panama in 2023.
The second proposal consists of a longer route than the one promoted in 2013. Ortega made the announcement at the XVII China-LAC Business Summit, which met under the motto “Joining forces, creating opportunities: New horizons for China and Latin America and the Caribbean.” Ortega focused on promoting trade relations and coordination to deepen economic ties with the People’s Republic of China in the face of the presence of some 200 representatives and companies from China and more than 70 business leaders from Latin America and the Caribbean. Among the benefits of which Ortega boasted was competition with the Panama Canal, greater efficiency in international maritime transportation, and reducing travel times and transportation costs, boosting international trade and the economy of Nicaragua.
The Nicaraguan president also promised the creation of jobs and infrastructure development. In an interview with official Nicaraguan media, Óscar Mojica, minister of transportation and infrastructure, acknowledged that the previous route “did not respect protected areas.” Mojica estimated that the new route would cost $64.5 billion. He said:
It is a formidable investment, but we also have income estimates and results projections, and we are sure that this route is perfectly viable and profitable. Nicaragua has the capacity to provide tax exemptions to foreign investment that participates in this great project, in imports, services, exemptions for talents who come to work there, materials … machinery, property rights are guaranteed. Of course, all these incentives have a direct impact on investment.
The Trump administration has remained oddly silent on the proposed new canal. However, Trump’s rather abrupt vow to reclaim the Panama Canal came at approximately the same time as Ortega’s new offer to China for a competing canal in Nicaragua. Since Trump had not mentioned the Panama Canal before, it is impossible not to believe there is a connection.
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