Following a unanimous vote in the National Assembly’s Infrastructure Committee, Nicaraguan officials have begun preparations for the so-called Interoceanic Grand Canal, which will connect to Lake Nicaragua by means of a 177.7 mile (286 km) waterway. President Daniel Ortega signed an agreement for the ambitious construction project with Hong Kong Nicaragua Canal Development Investment Company (HKND Group) on June 13, 2013. Demonstrating its growing influence in Latin America, Russia will be responsible for guarding the construction site. Nicaragua has signed a unique security agreement with Moscow that could potentially allow “Russian warships and aircraft to be present in its territorial waters for the first six months of this year and also to carry out patrols of the country’s coastline…until June 30, 2015.”
Seeking to expand Russia’s partnerships in the region, President Vladimir Putin visited Cuba just days before, where he concluded a number of agreements with Raúl Castro’s regime. Russia has undertaken similar diplomatic initiatives with other countries such as Argentina, Brazil, Ecuador, and Venezuela; however, Russia’s most ambitious regional venture is helping build the Nicaragua Canal—the project is estimated to cost nearly $40 billion.
The Interoceanic Grand Canal will be 127.1 miles (204.5 km) longer than the Panama Canal, with a width of 83 meters and depth of 27.5 meters. According to HKND Group, the canal project will involve more than just building the waterway and associated facilities; it will include the construction of other sub-projects, such as “2 Ports, a Free Trade Zone, Holiday Resorts, an International Airport and several roads.” It is believed the project will generate some 50,000 direct jobs and 200,000 indirect jobs.
Despite the projects’ promising economic benefits, many Nicaraguans are skeptical, believing the Interoceanic Grand Canal will only benefit a select few—they are also concerned about potential violation of their property rights. The lack of communication from HKND Group regarding the logistics of the canal project has produced uncertainties among property owners in the path of the proposed canal route. According to a Heritage Foundation Issue Brief, “With no public debate, a deficit of hard facts, and a proposal rushed through the Nicaraguan National Assembly, the canal would be a massive undertaking with many unforeseen consequences and still uncertain economic gains.” Many farmers believe the Nicaraguan government will forcibly relocate already impoverished communities for the construction of the canal. Democracy and the rule of law are undermined by the reckless actions of the Nicaraguan government.
Russia, China, and other countries have similarly considered the strategic implications of the canal, which affords an alternative to the Panama Canal. However, there remain many unanswered questions about HKND Group and Russia’s influence. As further explained by Zuckerman, “The U.S. and foreign investors should be wary of a deal that will have dubious impacts on Nicaraguans and be run solely by an inexperienced telecoms businessman, and instead look to further promote transparency and free-market principles in the region.”