Central American Geopolitics: New Wider, Deeper Panama Canal Opens, Could Face Competition from Nicaragua

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New Wider, Deeper Panama Canal Opens, Could Face Competition from Nicaragua

The Panama Canal has reopened following almost ten years of reconstruction work, but the $5 billion project may not pay off in the face of decreased shipping and a possible rival.
The Panama Canal reopened on Sunday after almost ten years of reconstruction work which has doubled its capacity, from 300 to 600 million tons of cargo per year. The canal has been widened from 34 to 55 meters, and its depth from 12 to 18 meters.
However, the US-backed $5 billion reconstruction project is not facing a rosy future, because of a downturn in global shipping and the possibility of a rival canal being built in Nicaragua.

The downturn in international trade due to a slowdown in manufacturing in China, and lower oil prices which allow some shippers to take a longer route, have led to a 10.2 percent drop in traffic down the canal in 2015.

Mikhail Belyat, an expert in Latin American affairs from the Russian State University for the Humanities told RT Russian that shareholders in the 77-kilometer long canal will take a long time to recoup their costs.

“There is a lot of money from US shareholders invested in that canal,” Belyat explained, and added that the US will do its best to oppose a Chinese project to build an alternative canal.

A Chinese telecoms mogul named Wang Jing has set up the Hong Kong Nicaragua Development, which has agreed on its construction with Nicaraguan president Daniel Ortega. The company says the new canal will cost $50 bln to build, and it will be deeper and longer than the Panama Canal.

“According to the current (Nicaraguan) project, there will be two powerful ports at the entrance and exit to the canal; they will compete with the Panamanian ones,” Belyat said.

“In addition, the price of using the channel and the ports along the coast will decrease. That doesn’t suit the US,” he said.

“The US has staged a few interventions in Nicaragua with the aim of building a canal there. However, in the 20th century they intervened to stop a canal from being built, because it would become an alternative to the one in Panama.”….More Here

 

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