Less than three weeks ago, Nicaragua's parliament voted in favour of constructing a canal which will bisect the largest country in Central America to link the Atlantic and Pacific Oceans.
A few days later, the country's president signed a contract with Wang Jing, the owner of Hong Kong Nicaragua Canal Development Investment Co., a Chinese company tasked to build the canal which is estimated to be around US$40 billion.
If completed, the waterway will be a direct rival of the Panama Canal. The latter has been used for international maritime trade for almost a hundred years.
The economical benefits of having such a canal are obvious for the poor country. However, don't get too excited for Nicaragua. Many non-engineering questions have emerged even before the first drill was made.
HKND, the company in charge, is newly-formed and has hardly any expertise or experience. Allowing it to take on a project of such magnitude puts this company and Nicaragua at a risk as huge as the canal can be.
Wang Jing, the chairman, is also highly suspicious. After everyone took his company's project with a pinch of salt, he decided to call for a press conference on Tuesday to quell the doubts. Question marks were still lingering after Wang's public appearance.
It is an open secret that Chinese companies do not undertake such large-scale projects without their government's backing. Wang denied that fact. Unless world trade grows at an astonishing rate in the next decade, there won't be adequate ships to keep Nicaragua and Panama busy. Hence, competition will be intense and profits are bound to drop.
At least four routes have been proposed for the canal, none of them not making use of Lake Nicaragua. This raises the issue that environmentalists are most concerned about. The route will cut the region's biggest freshwater lake and because of its presence, the lake will be much more connected to the sea. This introduces saltwater species to pollute the lake's ecology.
But with the economy in mind, the Nicaraguan government couldn't care less about the environment. That leaves us with a bigger question that involves a bigger country. Enter America.
America built the Panama Canal and was responsible of its operations for decades before the Panamanian government took over it in 1999. Two in three cargoes that travel via the Panama Canal are to or from American ports. The U.S. Navy is also a regular at the waterway.
The fact that a neighbouring country's canal will have an impact on the U.S. Navy's presence in a crucial region linking the Atlantic and Pacific Oceans may seem impossible. But do bear in mind that the Chinese Navy has already given support to Nicaragua. This brings about the question of whether Panama and Nicaragua are the Koreas of the Caribbean.
Nicaragua also reminds us of Thailand and the failed Kra Canal.
The Kra Canal was an ambitious project that was first dreamed of more than three hundred years ago. The dominance by Singapore, due to its perfect location on the world map, was threatened for more than two centuries until the British empire came to an agreement with the Thais.
The dream was revisited in the 20th century but nobody really took it seriously. A conspiracy theory that Singapore and Malaysia bribing Thai parliamentarians not to vote for the canal's construction surfaced. If completed, a Kra Canal will dent the economies of both countries which have ports along the Strait of Malacca.
Since the mid-2000s, there hasn't been any new developments on the proposed waterway. Naturally, people begin to forget about it and the Port of Singapore still remains as the mainstay of the country's economy over the years.
The Nicaragua Canal is technologically possible. However, technical concerns aside, it is pretty much for cosmetic purposes on China's CV.
We shouldn't set our expectations too high for Nicaragua and HKND at the moment.
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