Panama Canal Could Soon Have A Rival

by Leroy Baker, Tax-News.com, New York

10 November 2006

Plans in Nicaragua for a new canal linking the Atlantic and Pacific Oceans to rival the congested Panama Canal could slowly be coming to fruition.

Plans for a Nicaragua Canal have been around since the time of the early Spanish settlers in the 16th Century, and the country was seriously considered for the site of an ocean-linking waterway in the 19th Century. But since the construction of the Panama Canal in 1914, the idea has been largely forgotten about.

However, with rapid growth in maritime trade - and the construction of ever-larger container ships to convey it - exposing the limitations of the Panama Canal's capacity, the Nicaraguan idea has become a feasible, if expensive, proposition.

The idea is certainly taken seriously in Nicaragua. Legislation for the "Grand Canal" project has already been drafted, feasibility studies undertaken, and government officials have been lobbying internationally for support for the plans. They are also at pains to explain that the new canal is not meant as a rival to Panama as there is plenty of maritime trade to go around.

Costing an estimated $18 billion, the Grand Canal would be a serious undertaking. At 173 miles long, it would be well over three times as long as the Panama Canal and take about 20 years to complete. From the Caribbean, it would run along the San Juan River, which forms Nicaragua's southern border with Costa Rica and lets out into Lake Nicaragua. A further 12-mile stretch would then run across the Isthmus of Rivas to reach the Pacific.

Unlike the Panama Canal however, the Nicaraguan waterway would be able to handle some of the largest modern container ships. Nicaraguan officials claim their canal could take 275,600-ton vessels. This is more than double what the Panama Canal will be able to handle even following its $5.25 billion upgrade.

While Nicaragua has to convince financiers of the merits of the plan, there would clearly be benefits for world trade: a Nicaragua Canal would knock about 500 miles off of maritime shipments between America's east and west coasts.

What's more, shipments en route from Asia to the US eastern seaboard would also save substantially in terms of time and money by not having to wait for clearance at the increasingly congested Panama Canal or rounding the tip of South America.

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