Print

Email story

Comment

Email editor

Nicaragua wants a cut

The same month Panamanians vote on a canal expansion, Nicaragua is expected to announce its own grand plans for a large-scale canal system.

Seeking to cash in on booming Asian exports, Nicaraguan officials are expected to announce a $20-billion proposal to build a canal between the Pacific and the Atlantic oceans that would accommodate ships too large to use the Panama Canal.

The "Grand Inter-Oceanic Nicaragua Canal," which would connect with the 60-mile-wide Lake Nicaragua, would also be an alternative for shippers who must now make a reservation up to several months in advance to use the Panama Canal. Those without reservations wait as many as four days to cross from the Pacific side.

The official announcement is expected to come this week when Nicaragua hosts a summit of Western Hemisphere defense ministers, including U.S. Defense Secretary Donald Rumsfeld.

Speaking of plans for the canal last week, Nicaraguan President Enrique Bolanos, who is leaving office in three months, said it would bring, "an economic effervescence never seen before in Central America."

But even supporters of the canal criticized Bolanos on Monday in Nicaragua's major newspaper, saying the defense meeting was not the appropriate forum for presenting the proposal.

Meanwhile, skeptics say Nicaragua, which lost out to Panama for the original canal 100 years ago, has floated such plans unsuccessfully in the past. Nicaragua was rejected as a canal site by engineers a century ago because of the country's volcanic and earthquake activity. Critics also say such a public-private venture would have little chance of finding investors, particularly when elections in early November could put the Sandinista National Liberation Front back in office.

Nicaragua's chances are made even slimmer, critics say, by the growing likelihood that the Panama Canal will be launching a major expansion. Panamanian voters are going to the polls on Oct. 22 on a proposed $5.25-billion project that would allow vessels with double the tonnage to use the 50-mile-long waterway.

Recent polls show Panamanian voters favoring the canal expansion by a nearly 2-1 margin. If approved, the project calls for construction to begin next year with completion scheduled for 2014.

Richard Wainio, director and chief executive of the Port of Tampa, doesn't believe the Nicaraguan canal will ever materialize. His skepticism comes from 23 years of working at the Panama Canal, where his last title before coming to Tampa was director of the office of strategic planning.

"Every five to 10 years, a promoter would start talking about something in Nicaragua, but it would always be dropped because it's not cost-effective," Wainio said. "The only way they could conceivably do anything in Nicaragua is if the Panama Canal fails to move forward with its expansion. And even then it's questionable."

Rodolfo Sabonge, a top official of the Panama Canal Authority, the quasi-independent body that has run the canal since the United States turned it over to Panama in 1999, said there is not enough traffic to support the widened Panama Canal and a Nicaragua project.

"If the referendum passes and the widening goes forward, (the Nicaraguan project) is not feasible," Sabonge said. "Our analysis shows that if our project is approved, there would not be enough demand to pay for the two, and they would have to have a cost structure much higher than ours."

Opened in 1914, the Panama Canal cannot accommodate vessels that are more than 106 feet wide and 965 feet long. The planned expansion will open a third lane of locks, which would accommodate oil megatankers and larger container ships, which now either unload at West Coast ports or head toward Europe from Asia and pass through the Suez Canal.

In addition to its canal proposal, Nicaragua is the site of at least two other so-called "dry canal" projects that would include new highway and rail links connecting expanded Pacific and Atlantic ports on each side of the Central American isthmus.

Geraldine Knatz, executive director of the Port of Los Angeles, said Nicaragua is obviously trying to compete with Panama's expansion project. "But Panama has spent years studying this project, looking at the economics and doing the engineering," Knatz said. "This is not something you just decide on overnight . ... It would be a big catch-up for Nicaragua to step in and do this."

Knatz said she was a supporter of the Panamanian expansion project. "I can look out ahead to a time when the West Coast is not going to be able to handle all of the volume," Knatz said, noting that the Port of Los Angeles, the nation's busiest container port, is expected to reach capacity between 2020 and 2025.

Last week, Nicaragua's president told reporters in Managua that his government had been studying a canal proposal for "six or seven years." He said Nicaragua's canal would take a decade to build and when completed would be more modern than Panama's.

"We know that for every 100 ships that come to the Americas, only seven use the Panama Canal," Bolanos said. "There's a lot of business to share."

Mike Wasem, spokesman for the port of Tacoma, Wash., the West Coast's fourth largest, said that a large-scale canal system in Nicaragua "would certainly give shippers greater waterborne access to the Gulf Coast and the East Coast of the United States."

But he added that Nicaragua already faces significant competition from projects already under way to build international container facilities at Prince Rupert, in British Columbia, and at Lazaro Cardenas in Mexico.

Times staff writers Kris Hundley and David Adams contributed to this report.

[Last modified October 3, 2006, 06:57:55]