The Panama canal expansion


The Panama canal expansion

The canal project in Nicaragua

and aircraft carriers

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Map by LMV and NBT, all rights reserved (see Contact/Our maps)
The unlikely Nicaragua Canal
On the 18th of May 2013, Nicaraguan president Daniel Ortega ratified the decision to dig an inter-oceanic canal through Nicaragua, with as main investor the HKND group (meaning Hong Kong Nicaragua canal Development). This project is supposed to allow post-Panamax ships (oversized for the Panama canal) to pass through Nicaragua starting in 2019, instead of bypassing the entire American continent.

Historically, routes for digging a canal have been searched for a long time, including routes through Nicaragua, Panama, or the Tehuantepec isthmus in Mexico, not forgetting recent projects of dry canals in Guatemala and Honduras, but Panama's canal is the only one in existence so far.  If Nicaragua was considered by Americans as a possible route after the construction of the canal in Panama, there have been concerns by Costarican authorities about the navigational rights of transit ships in the San Juan river - it's northern border with Nicaragua - and the project was abandoned.

However, different Chinese firms and conglomerates are investigating alternatives to the Panama canal, with among them, the Nicaraguan canal. This latter is probably the most expensive and technically challenging of these projects, It's cost is estimated at USD 40 billion, while the operator HKND has been granted a renewable 50 years long concession on the hypothetical canal's infrastructure.  The project's justification is mainly based on the growth perspective of international trade, and especially between both sides of the pacific ocean; according to the WTO, the global exports will grow at a rate of 9% p.a, increasing from about USD 18.3 trillion to USD 35.6 trillions in 2020 (current prices), while the global maritime trade (in volume) is to grow 3% per year during the same time. Therefore, the "Gran Canal" is supposed to meet this increasing global shipping demand, as Panama's canal capacity is already saturated. The project includes the construction of two ports, an airport, a railway and a pipeline (in 2014, feasibility and environmental studies will lead us to know whether the canal will be constructed).
Moreover, there is the objective to allow the passage of Post-Panamax and especially New-Post-Panamax (NPPX: new category including over sized ships even for the enlarged canal). As a matter of fact, the "Gran Canal" is supposed to grant access to ships up to 250,000 dwt (deadweight tons) while the enlarged Panama's canal could reach 120,000 to 130,000 dwt, with 65,000 dwt currently.

DPRK arms shipment seized in Panama. (Credit: Reuters/Carlos Jasso)
However, there is a strong opposition in Nicaragua (mainly because of displaced people and environmental concerns) and doubts are being raised about whether expropriations, financial and environmental problems will be solved or not.
Some consider the inexperience of Wang Jing (Chairman and CEO of HKND) in this domain, and the fact the port of entry on the Atlantic ocean has not been chosen yet as major uncertainties.
Finally, there is no neutrality treaty in the works (all the other interoceanical straits and canals have signed one), which is causing growing concerns among international authorities.
Thus, the Nicaragua canal might provide a safer way compared to the Panama canal for North Korean trafficking: in July 2013, Panamanian police seized a North Korean cargo with 240 metric tons of early cold-war era weapons parts, including Mig-21 fighters and spare engines.


The New Locks in Panama: a strategic asset for the USN?
The new Panama canal locks (Cedit: Rodrigo Arangua/AFP)
The new locks of the Panama canal should accommodate ships with up to 14,000 TEU, and maybe Nimitz class aircraft carriers, and its successor, the Gerald R. Ford. (The last US carriers to transit the panama canal were WWII era carriers in the 50's, with the exception of LHD and LHA)

Back before WWII, the canal was a deterrent to the Axis, since it allowed transit of US battleship and carriers from the Atlantic to the Pacific -and vice versa- within short notice. However, it didn't prevent Pearl Harbor. Soon after the end of the Second world war, carriers became much larger than they were during the war, all US carriers design since the Essex class were Post-Panamax.

With the expansion of the Canal, this role of deterrent could resurface; it could support the Re-Balancing of the US toward China and South East Asia.
The US Navy recently moved 2 of its carriers from their bases: moving one from the West Coast to Japan, and one From the East Coast to the West Coast. The purpose is clear; face the Chinese navy, but with budget cuts and fleet reduction (all the Nimitz carriers will not be replaced by Ford class) and starting from 2015, there will be only 2 carriers on station at any given time in the world, therefore, the ability to transit carriers from the two ocean on short notice can make a major difference.
In the long term, the panama canal expansion might be of strategic importance to the USN, if it is willing to preserve its role in the Atlantic, and increase its presence in the Pacific.

By LMV and NBT,
@CIGeography