If the Panama Canal gets a rival | Hacker News Reader

If the Panama Canal gets a rival

worldif.economist.com

39 pointslando231944 comments

Disclaimer, I'm part Panamanian, that being said, I find this highly suspicious. A lot of my Nicaraguan friends are also highly doubtful this will ever take off. The big problems for Nicaragua with this are:

- Horrible ecological impact (fisheries in Caribbean are already [1]

- Many think this is an excuse for the politicians to get cushy land/resort deals along the proposed route and near the entrances to the canal [2]

- Some think it is really never going to materialize, but Chinese owned resorts will pop up on each end.

- Nicaragua doesn't have the infrastructure to undertake such a big engineering project (human talent, electrical, etc)

- The public hasn't had any say in this so far [2]

1. http://e360.yale.edu/feature/nicaragua_canal_a_giant_project...

2. http://www.csmonitor.com/World/Americas/Latin-America-Monito...

I've been living in Panama since 2006. I've followed a lot of the articles around the Nicaraguan canal to try to get some sense of how it will affect Panama.

My conclusion is a canal in Nicaragua makes no economic sense, there must be some hidden motivation at play here, such as personal glory for Wang Jing or a ploy to secure land rights and tax exemptions. The reasoning is as follows:

1) The possible ROI from a ~$70 billion investment is very low. The same revenue can be achieved by building a third set of locks in Panama for ~$15 billion. Right away it looks like bad business. Most ways you can spend $70 billion will yield a better return with less risk.

2) The Chinese government is not involved. If it were a political thing, it could explain why someone would forge ahead despite the poor ROI, but the government is not financing it and government companies won't touch it with a stick.

3) Wang Jing is a telcom billionaire and neither he nor his company have any experience with construction or engineering.

4) A Chinese construction and engineering company has offered to finance and build a fourth set of super-sized locks in Panama for ~17 billion. This would compete directly with a hypothetical Nicaraguan Canal for the largest ships, but at a much smaller investment.

Given two nearly identical products, the company with lower costs will be able to offer lower prices while still making a profit. That will clearly be Panama. There's just no logic in the Federation's move here. Jorge Quijano, who leads the Panama Canal Authority, has come to the same conclusion.

[1] http://www.bloomberg.com/news/articles/2015-04-23/panama-can...

[2] http://insidecostarica.com/2015/04/14/chinese-interested-fin...

[4] http://www.reuters.com/article/2015/03/26/us-panama-canal-id...

My wife is Panamanian and having just recently traveled there I got the same impression. I was asking everyone about it and they held the same opinions to yourself.

It's also worth noting that the reason the canal was put in Panama over Nicaragua was due to earthquake activity which Panama did not have.

Not the main reason. As always, politics really ruled with US-Columbia relations factoring in heavily (Panama was a province of Columbia early on in planning), as well as the existing US-owned Panama Railway.

It's Colombia, please.

Most effective way to piss of a Colombian is to call their country Columbia :-)

There was a good documentary on PBC about the canal recently, the US basically staged a coup for Panama to gain independence from Columbia and in return got their Canal Zone

ColOmbia?

Right thanks

Please note that this is article is part of a special section of the Economist this week called 'What If'. It is highly speculative and more about the potential of scenarios and alternatives rather than a real article. As an example another article is a retrospective on the first 100 days of Hillary Clinton as president, having won against Marco Rubio.

I love the Economist and find the section thought provoking, but hope it is not a trend to soften up the paper.

It's weird how they compare China's (hypothetical) desire for a naval military presence in the Atlantic to the USA's presence in the Pacific. Guys, the USA has coasts on the Atlantic and Pacific. No one can say we don't have a legitimate interest in defending our borders at least. I can't think of any reason for China to have carrier groups steaming around the Atlantic other than "lookin' for trouble."

Pray tell, why do you have a carrier in the Indian Ocean?

Lookin for trouble. Clearly.

The US is to a quite good approximation, the only naval power on the planet.

It depends on what we call "naval power".

China is probably the country of the planet with more "naval muscle" in fact. The chinese fishership float is huge and vital for their economy (because the very lucrative Chinese Acuaculture depends on the world marine fisheries).

So instead to having a big militar float to justify spending ridiculous amounts of tax money in ruinous wars created here and there, China have a big civil float to earn big money with fisheries and commerce... in the face of the other countries.

I'm talking about naval military power.

My understanding is that China conducts significant resource exploration and production activities in the Gulf of Mexico and other areas around the Atlantic already.

As far as I know they are not currently building any islands.

> After all, what wouldn’t China pay to see one of its naval fleets one day emerging from the Central American jungle right under America’s nose?

Not that the US Navy couldn't already shoot up entire fleets with missiles, but when a fleet passes through a tiny canal, well, it's a canal and a tiny nuke is enough to blow up the entire fleet with no way to escape...

Of all the reasons to build a new canal, I find this to be one of the most fantastic.

Totally not going to happen during peacetime, while there is zero pretense for live-fire open warfare.

This sort of posturing is likely to occur, before any actual sabre-rattling or actual shots fired in anger.

It's 2015, fleets don't move without being observed today. Every major power has surveillance satellites specifically designed for keeping track of naval fleets. A Chinese fleet rushing around the world on a provocative trajectory toward the continental US is going to gain a lot of attention and a lot of company very rapidly.

To monitor an inland canal you just need a guy and a lawn chair.

Also, the idea that any country in central America would intentionally make an enemy of the US for a little money is not entirely believable.

I'll admit to being skeptical, too, but I seem to recall reading that people thought that the US was not going to be able to finish the original canal and that the whole project was foolhardy. I think the US was just more tenacious than France before it (also people had learned about the role of mosquitoes in disease and sprayed the mosquitoes)

China has a very long history of massive building projects, so if Nicaragua is willing, and the similar sentiment as the first canal makes me hesitant to dismiss it.

The book The Path Between The Seas is an incredible history of the Panama Canal. http://www.amazon.com/The-Path-Between-Seas-1870-1914-ebook/...

Short version: the French tried to build it as an investment, but the vision they could sell (sea level canal) couldn't be built. USA took over and muscled through because it was strategically important to the govt and it was a huge jobs program and stimulus to American companies selling food, transportation, steel, construction equipment, medicine, etc to the 30k+ workers. Also gave electrical projects to a young GE!

Looking at the proposed map of the canal how does this work when Lake Nicaragua [1] is freshwater? Even with locks I'm guessing salt water from the sea will slowly contaminate (seep) into the lake causing big changes for the ecosystem and local population.

[1] https://en.wikipedia.org/wiki/Lake_Nicaragua

Harbors generally are freshwater, and boundaries between fresh and sea water are innumerable, if you stop and think about it for a few seconds. If this was a real problem it would have contaminated Lake Michigan and the Hudson Valley by the same means.

The reason it hasn't is that water generally doesn't flow uphill.

I guess 32.7 meters above sea level is reasonably uphill.

I'm too lazy to calculate the approximate volume of fresh water that represents, based on the lake's surface area. Pretty safe to say that the rest of the lake's volume, at and below sea level wouldn't be rendered brackish too easily.

Although, given China's penchant for environmental accidents, I wouldn't put it past them, if all that additional lake water above sea level were to get skimmed off the top by an accidental spill into the ocean.

For comparison, the Great Lakes are about 60 m above sea level (Kingston, at the junction of Lake Ontario and the St Lawrence, is at 200 ft). Salt water inundation has not been a problem. However, invasive species (zebra mussels, for example) have been. They are fresh water species that get sucked up into ballast water in other ports (many of which are on rivers or estuaries) and pumped out in other destinations. There are procedures to avoid this (exchanging fresh-water ballast for salt water while at sea, for example) but those procedures are inevitably implemented by humans, who are certain to eventually make a mistake sufficient to cause contamination.

Meh, China may have Three Gorges, but Western corps have plenty of environmental atrocities as well. They can pretty much operate with impunity, even on US soil. Bhopal, Prince Edward Sound, Deepwater Horizon, Niger Delta, fracking, etc etc. I think the only constant is money.

Not hugely likely, the lake is higher than the sea so the salt won't migrate up. The water level in the lake will likely be affected though.

The danger is ballast water held by ships, but like Panama they'll likely forbid all water discharge while in the canal.

I am sure accidents happen. So some contamination will occur regardless.

Gatún Lake of the Panama Canal is also freshwater, at 26m elevation.

Generally, the big risk with elevated freshwater lakes connected to the sea by locks isn't saltwater contamination, but the disastrous flood that would happen if all the lock gates were opened at the same time. A lot of work was put into the safety measures, most of which have been removed due to cost in recent decades: https://en.wikipedia.org/wiki/Panama_Canal_locks#Safety_feat...

If a flight of locks was completely opened, Gatún would promptly drain out of them, wiping out everything downstream. You could imagine the entire canal would be offline for months to years as infrastructure was rebuilt and the lake was refilled by rainwater.

I think it's more likely that China would finance a canal across the Kra Isthmus first.

Back on the envelope calculations suggest that is not profitable investment. Even with optimistic assumptions:

http://noelmaurer.typepad.com/aab/2015/01/the-nicaragua-cana...

Not a profitable investment on a 15-year timescale. Potentially profitable over 25 years (according to the linked estimates) - and this is for a project with a 50-year concession, with a 50-year extension allowed for.

Perhaps it would be silly for private investors to pile in hoping for a short-term return, but over the life of the canal it could potentially be a great investment for sufficiently long-term entities (such as nation states) to invest in.

Everyone seems to be focusing on the economic and environmental issues but missing the elephant in the room. Even the original article misses the mark:

> After all, what wouldn’t China pay to see one of its naval fleets one day emerging from the Central American jungle right under America’s nose?

It's not what China would pay to have its naval fleets traverse the canal, it's what China would pay to have a legitimate-sounding reason to have its naval fleet stationed at either end. It's a similar motivation for building those artificial islands in the South China Sea. The canal itself is a red herring.

The two-lock waterway could take vessels with a proposed freight capacity of 25,000 20-foot containers, or 20-foot equivalent units (TEUs); currently the biggest ships have a capacity of around 19,000 TEUs and make up a tiny fraction of the world fleet. Even the expanded Panama Canal, due to open in 2016, is limited to taking cargoes of 13,000 TEUs, so ships that otherwise would have rounded Cape Horn or gone via Suez would be able to move more easily between east and west.

That's about the only reason I can see for building this canal.

Does anybody here have experience as an expat living in Panama? I've heard good things about the quality of life and tax benefits (for immigrants/expats), plus a reasonable cost of living. I wonder if they're accurate, and what impact this rival canal might have on those conditions in the unlikely event it proceeds.

It is more likely that Peak Oil will kick in before the project is completed. There will be a permanent change in the order of things, it will no longer be economical to import plastic doodads from China, world shipping will decline and the Nicaragua canal will lie half-finished like stone statues on Easter Island.

Related NYTimes article from earlier this year [1]

[1] http://www.nytimes.com/2015/04/26/travel/26nicaragua-cover.h...

How well could an ocean-going ship float in freshwater lake Nicaragua?

And I doubt the lake would stay clear after ships drag in seawater.

Probably just as good as it does in Gatun Lake in the Panama Canal.

Ships would "drag" in very little salt water because the lakes are above sea level. Since locks operate using gravity the water flows back out to sea.

Like China's "One Belt, One Road"?

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