Thursday, November 02, 2006

Central American News

Nicaragua Plans To Build New Interocean Canal
Will the Panama Canal go out of business?

On the weekend of Oct.22, the citizens of Panama approved the expansion plans for the interoceanic canal that has been in operation for the past 92 years. One of the main reasons for this result was the news that one of its neighboring countries, Nicaragua, is also very near to beginning construction of an alternative passage through its territory, that will allow ships of higher tonnage to cross from the Atlantic to the Pacific Ocean and vice versa. In the mid nineteenth century , Nicaragua had been the first option to build a canal, but it was discarded due to the technological limitations of that time, instead Panama was chosen and the Canal was inaugurated in 1914.
Other countries that may be affected are Argentina and Chile, since at present some of the more modern vessels and supertankers cannot pass through the Panama Canal, and must circumnavigate around the Cape Horn, a 36 day trip that increases costs by approximately US$2 million. The main advantage of building a canal through Nicaragua is that the route between New York and California will be shortened by 800 kilometers and will also reduce costs for ships that travel between Asia and Europe. Even with the recently approved expansion plans that will give the Panama Canal a new length of 80 kilometers and the capacity to allow ships of up to 130,000 tons, the Nicaragua Canal will have a capacity for ships of up to 250,000 tons.
At the beginning of this month, the President of Nicaragua , Enrique BolaƱos presented the project during an international defense conference . "This is a matter of continental security. What was a dream before, can now become a reality," said Bolanos. Also the Nicaraguan government has set up a "Commission for a Great Interoceannic Canal Through Nicaragua", that has identified the most convenient route. (see map). The canal will have a length of 286 meters, including an 80 km stretch with special dikes that will cross through Lake Nicaragua, the biggest in Central America. Ships will take 26 hours to cross the new canal, compared to the current 8 hours through Panama. The Nicaragua Canal would begin operations in 2019, and its construction will cost US$18 billion, that will be invested by local and foreign companies. During the construction, 40,000 direct jobs will be created and for its operation, the Canal will employ between 5,000 to 10,000 people. The project estimates that by 2025, the "Great Canal" will allow the transit of 573 million tons of cargo , or 4,5 % of global trade. The canal will increase Nicaragua's per capita income will increase from today's US$ 857 to US$2258 in 2025. An estimated US$300 million will be invested to preserve the tropical jungles and the habitat of native communities, as 40,000 square kilometers will be reforested.

No comments: