What’s the Deal With “A Canal of Their Own” in Nicaragua?

Hello All!

Welcome to another edition of “What’s the Deal?” the blog that wonders how Teddy Roosevelt would feel about a new canal.

In this week’s blog, we’ll discuss a newly planned canal to be dug in Nicaragua to connect the Caribbean Sea to the Pacific Ocean through the Central American isthmus. We’ll take a look at why this isn’t the first time a Nicaraguan canal has been planned and attempt to understand why another canal is being planned.

Mr. Wang realizes its cool to get into 19th century ventures

Mr. Wang realizes its cool to get into 19th century ventures

The Current:You’re the man, Mr. Wang

In June, Nicaragua’s National Assembly passed a new measure approving a plan for a Hong Kong based firm to build a transoceanic canal through the country. President Daniel Ortega has signed the law and is collaborating directly with a Chinese firm HKND and its billionaire tycoon boss, Mr. Wang Jing (apparently a canal hipster).

This is not the first attempt by Nicaragua to build such a canal. In fact, the initial canal across the isthmus that eventually was constructed through Panama was originally planned for Nicaragua. A canal has become a pipe dream of sorts for the Sandinista government. Now, Mr. Wang wants to make that dream a reality in a $40 billion quest.

Both routes require lines in the sand

Both routes require lines in the sand

The canal proposal faces many more obstacles than just finances, however. The canal is obviously a huge job in engineering, but the scope of the job and the lack of infrastructure in Nicaragua severely complicate the operation. Here are some of the hurdles facing the project:

  • Engineers are trying to figure out how to remove millions of truckloads of dirt in a country w/ no large excavators or no nearby highways or railways.
  • How to dredge a huge channel through Lake Nicaragua without damaging the local environment.
  • How to dig through ancestral lands without angering indigenous and historical landmarks.
  • How to make the project economically successful with world trade down and new shipping routes through the arctic possibly making the route through the canal obsolete.
  • Any delays or unforeseen obstacles may make the project financially impossible.
  • One of the proposed routes goes along Costa Rican border which would require their consent.

So, saying the project won’t be easy is an understatement. But why is it so important to President Ortega and the Nicaraguan government that they build a canal? With so many obstacles, wouldn’t it be easier to engage in a project that would have a greater effect on the economy without as many hassles?

To find the answers to these questions, we must examine the history of canal development in Central America and the formation of the current Nicaraguan government. 

Canal-Craze vs. Volcanic Activity

Since the 1870’s the United States had dreamed of constructing an inter-oceanic canal to bypass the treacherous and long winded route around South America so that shipping goods to the West coast and to Asia would be much easier and efficient. Going through Nicaragua was pitched as the most cost efficient and politically easy option since the U.S. had a fairly positive relationship with Nicaragua in the 19th Century.

Big Shovel policy

Big Shovel policy

This option came to fruition as a project of the U.S. Government in 1901 in the Theodore Roosevelt administration. Roosevelt vigorously pursued a canal during his leadership as he took a personal responsibility on seeing the project through. The bill to fund the canal project through Nicaragua was easily passed in the House, but before the Senate could vote on the bill, a roadblock of volcanic proportions changed the course for Managua and the Americas for years to come.

A French contractor, in debt and unable to complete their own canal project in the isthmus of Panama (a province of Colombia at the time), asked an American lawyer and lobbyist William Nelson Cromwell to convince the U.S. government to switch its plan to a canal route through Panama. To change a seemingly shoe-in policy for a Nicaraguan canal, Cromwell used propaganda and a scared public to do it. Using a Nicaraguan stamp (that was printed by a New York company) with the country’s famous volcanic peak Momotombo featured on it, Cromwell warned his powerful friends in Congress of the potential for a geologic disaster to ruin the canal route. A far-fetched idea to be sure, but the preceding year had seen 2 deadly volcanic eruptions in the Caribbean that killed thousands and the American public had been shocked. Influencing the public using this tactic was therefore fairly simple.

the smoking gun

the smoking gun

The idea that the Nicaraguan volcano was actually a geologic threat was preposterous given that the peak was very much dormant and was nearly 100 miles from the proposed canal route, but it made a huge difference. Several senators proposed the Panama route instead and enough congressmen followed the new proposal and the U.S. abandoned the Nicaragua plan.

So, a postage stamp indirectly changed the inter-oceanic canal from Nicaragua to Panama. But the U.S. choice to move away from Nicaragua had lasting damages.

President Jose Santos Zelaya of Nicaragua still wanted a canal even after the U.S. abandoned their initial deal with his country. But the U.S. had changed its friendly approach to Nicaragua once William Howard Taft assumed the presidency in 1909 for Zelaya was respected by Roosevelt for his zeal and confidence, but this was not shared by Taft. Zelaya had wanted Nicaragua to become less dependent on American businesses and government. Having reached out to Europe and Japan for loans to pay for his own canal and bypassing American banks was the final straw and the American government used intimidation and threat of forced removal to get Zelaya out of office in 1909.

Zelaya should have been crossing his finger behind his back

Zelaya should have been crossing his fingers behind his back

With the proactive Zelaya in office, Nicaragua was headed on its way to developing a solid self-sustaining economy with several key home grown commodities such as coffee. But his forced removal along with the abandonment of the canal project put a halt to positive trends for the country. Instead, Nicaragua was mired in an economic malaise mostly brought on by autocratic leaders who bent at the whim of American business interests instead of their own people.

To remind Nicaraguan leaders where their interest should lie, the U.S. kept a contingent force of troops between 1912 and 1933 and a treaty promised the U.S. exclusive rights to build a Nicaraguan canal to prevent any collusion with Germany or other powers from building one and competing with the Panama Canal.

It wasn’t until the 1980s that a radical change occurred in Nicaragua with an anti-American twist to it.

Sandinistas – Revolutionary Leadership

Rebellion for the long haul

Rebellion for the long haul

A huge rebel movement gathered steam in the 1960s against the long and brutal dictatorship of Anastacio Somoza Garcia and his family in Nicaragua. Somoza had suppressed any serious political opposition to his own family’s rule within the country and had made the executive the leader of the National Guards (armed forces) as well.  To try and remove the Somoza government from power would require a sophisticated and radical militia movement. The Sandinista movement grew from a small socialist student movement in the 1960s based off of a former rebel leader named Sandino who sought nationalism and had fought the Nicaraguan forces for democratic leadership.

The Sandinistas built a powerful and well trained armed militia that began testing the armed forces in small skirmishes and eventually led to a civil war in the 1970s. The Sandinistas were fighting for equal rights for Nicaraguans and an end to a military dictatorship that continued to support foreign businesses at the expense of its own people. Most importantly, the Sandinistas were fighting a system that represented the influence of the United States. The prop of so many military dictators in Nicaragua, the Sandinistas aimed to rid Nicaragua of the polluted influence of the United States – which favored big business and capital dollars over the chance for democracy in the Americas.

writing of the revolution was on the wall

writing of the revolution was on the wall

Following a victory in the civil war, the Sandinistas had to change from guerilla fighters and militiamen to politicians and government administrators with Daniel Ortega as president under the FSLN.  When Ronald Reagan became president in 1981, the United States continued its hostile approach to Nicaraguan governments that sought to become less dependent on the U.S. and their business.

Instead of recognizing the legitimacy of the FSLN and the Sandinista government like the Carter administration, the Reagan administration accused the Sandinista government of colluding with the Soviet Union on supplying rebels with weapons in El Salvador. In an attempt to isolate them, the administration suspended all aid to Nicaragua in 1981 and later the same year, approved a policy of aiding groups trying to overthrow the Sandinista government.

The United States clandestinely armed and supported the “Contra” rebel group against the Sandinista Government. They called themselves the Contras because as their Spanish name suggests, they were against the Sandinistas in a counterrevolution. Many were disaffected former National Guardsmen interested in regaining power lost as a result of the Civil War. The U.S. supplied $19 million and an operating base from Honduras. The Contras, while less numerous and had less experience proved to be a lasting menace to Nicaragua, mostly because of the campaign’s disastrous effect on the economy.

Attempting an overthrow of a government = a contra-versial subject

Attempting an overthrow of a government = a contra-versial subject

The anti-Sandinista campaigns forced the former revolutionaries to pass anti-sedition measures and came down hard on the press including the powerful major newspaper La Prensa and it’s creator, the Chamorro family which had been a thorn in the side of the dictators before the Sandinistas. Other freedoms were restricted in the name of maintaining stability, but economic decline and extensive poverty remained a key issue in Nicaragua.

The 1990 election saw Violeta Chamorro win the presidential election in the United Opposition Movement over Sandinista incumbent president Daniel Ortega despite widespread nationalistic appeal for the Sandinistas and their political tactics of blaming the UNO of being a collaborator with the United States. The new president Chamorro brought Nicaragua from under the spotlight of the Cold War promising a peaceful democratic transition that included improved relations with the United States. Aid to Nicaragua was reinstated in the 1990s and a thawing of relations included joint membership in American trade agreements. Chamorro also tried to build a canal during his presidencies in the 1990s, offering a plan to build a “dry” canal and adjacent rail lines as direct competitors to the Panama Canal, but the plans never fully came through.

Conclusion: Ortega and the Sandinistas, another try at the helm

In 2011 and 2012, Nicaraguans elected Daniel Ortega back to the presidential seat with a landslide reelection (he was reelected in 2006) and put the Sandinista government back in charge in municipal and legislative seats. The elections were denounced by the U.S. as a setback to democracy as domestic and international observers saw several irregularities and pronounced the elections flawed. The losing candidate, Fabio Gaeda refused to accept the results and many international observers are worried about Ortega changing the constitution rules on consecutive terms as president – a worry that Ortega should understand, having helped oust a dictator.

Hugo and Daniel - friends in arms

Hugo and Daniel – friends in arms

Many worry that Ortega is turning into another Hugo Chavez, the late U.S. antagonistic president of Venezuela; in fact Chavez had supported Ortega’s campaign and the Sandinista government during the election and have provided cheap oil to Nicaragua. Collusion with countries like Venezuela and aims to have their own inter-oceanic canal show the pride that Ortega and Nicaraguans have and their continuing goal to be less dependent on the United States.

So, the history of Nicaragua gives us a good idea of why their current government is insisting on going ahead with a canal project:

  • Nicaragua felt slighted that the U.S. chose Panama as the site for the eventual canal, losing out on potential economic and political gain.
  • Nicaraguans grew to loathe and resent the U.S. because of its consistent intervention and meddling in Nicaragua by its military to protect business interests and friendly dictators.
  • Beginning with President Zelaya, Nicaragua has been attempting to reduce dependency on the U.S. 
  • canal of their own would be a symbol of national pride especially for the Sandinistas.

It’s safe to say that the Sandinista was successful in becoming less dependent on the U.S. following their civil war, but the toll of the conflict on the economy and development of the country has been heavy, though things are steadily improving in some areas. The UN Development Index has Nicaragua ahead of only Guatemala and Haiti in human development rankings (129th overall), but the percentage of people living on less than $2.50/day has decreased from 59% in 1993 to 36% in 2009.

There’s no question that the importance of a canal of their own would be huge for Nicaragua politically speaking, but as we stated before, the economic case is tough to make. Unless Mr. Wang’s Chinese firm is willing to swallow the bitter pill it would take to make the project go forward, then it is unlikely that the canal will be anything less than a pipe dream.

Canal route choices

Canal route choices

Some think the U.S. should be worried that Nicaragua is using a Chinese firm to build their canal. If the canal is actually built, then it will be a big feat for the firm and for Nicaraguan-Chinese relations. But it is hardly an assault on U.S. political reach or shipping economics through the Panama Canal. Chinese firms have already made significant inroads in Central America in various pursuits and as we said earlier, shipping through the Central American isthmus may not be the only option once arctic shipping routes are readily available.

A fascinating tale of political backroom deals, scared public opinion, U.S. intervention, and canal building. It will be a great story to watch as the project goes forward!

Until the next volcano stamp causes a disruption,

Your Faithful Historian,

Eric G. Prileson

Sources and Further Reads:



Overthrow! by Stephen Kinzer







About eprileson

I am a historian and writer who wants to bring to light current events through a historical perspective. It is difficult to understand today's current events without having a grasp of what has occurred before. This is a running thread to help keep people informed about the present and remind everyone to not forget their past. Enjoy and please comment!
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2 Responses to What’s the Deal With “A Canal of Their Own” in Nicaragua?

  1. Andonis says:

    Thanks for the lesson! I was in Nicaragua in March of this year (with Shaughnessy’s Capstone) and pre-departure readings led me to believe that this trans-isthmus dream was long dead. I can only imagine the logistical difficulties of bringing it to life…

    Hope you enjoyed your research. Walker’s “Living in the Shadow of the Eagle” sheds further light on Nicaragua’s complex and fascinating history.

    Best to you!

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