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Central American University - UCA  
  Number 396 | Julio 2014



The interoceanic canal: An ever-present but never realized dream

Why has a Nicaraguan canal never been built, despite so many projects? Since the author never got a satisfactory answer to that question, he decided to search for the answer himself two years ago by systematizing the information available in the UCA’s Institute of History of Nicaragua and Central America. This is only some of what he discovered.

Jangeert Van Der Post

In May 2012 President Daniel Ortega announced the intention to construct an interoceanic canal through Nicaragua. He first mentioned it at the Central American Presidents’ meeting with President Barack Obama in San José, Costa Rica. Days later he announced it in Nicaragua, at the commemoration of the 118th anniversary of the birth of national hero Augusto Sandino. With that he broke a silence on the subject that had gone on for a number of years.

72 different tries
to build that canal

Over the centuries many attempts have been made to build that canal through Nicaraguan territory but none of the long line of proposals ever succeeded. The project has even cropped up in the output of Nicaraguan writers. Sergio Ramírez and Francisco Mayorga based their respective novels Mil y una muertes (Thousand and One Deaths) and La Puerta de los Mares (The Door to the Seas) on this dream, with the inevitable historical inexactitudes of any literary text. This most recent attempt by the FSLN government can be considered an extension of a process started by the previous two consecutive Liberal governments, those of Arnoldo Alemán and Enrique Bolaños.

Alemán got as far as creating a Grand Canal Working Commission in 1999. It worked for years with different teams, until presenting its third and most elaborated project profile in August 2006. Its proposal is for a “super canal” capable of accommodating the largest ships in today’s world, those of up to 250,000 tons that can carry between 15,000 and 18,000 standard containers. The canal designed in this project aimed to provide conditions complementary to those of the Panama Canal rather than in competition with it.

Before such a concrete step was reached, interoceanic canal proposals had for a long time been nothing more than papers in the form of accounts, books, or simply extensive letters by different rulers of the Central American isthmus. That variety makes it hard to come up with an exact figure for the number of plans and proposals drafted over the years. In my research I discovered at least 20 ideas or intentions during the Spanish Colony, none of which included any concrete design for the work. Another 13 appeared during the brief period of the Central American Federal Republic, all of which were only partially designed plans. Since independence and the creation of the Republic of Nicaragua I found at least 39 plans or projects, the last of which is the one President Ortega gave in concession to Chinese business owner Wang Jing. In total, the historical literature I consulted mentions at least 72 different tries, but of all the proposals drawn up since 1840 only 13 or 14 have any real design.

Some projects were serious;
others not so much

So many mentions of different projects obviously represent a real gamut of ideas, ranging from the most optimistic ones with no real basis to technically complete designs. Although their very nature meant that the unrealistic projects never reached any level of execution, several were very influential in the foreign policy of their time. For example, while no concrete project proposal came out of the descriptions of German scientist Alexander von Humboldt, they awakened a lot of interest in both Europe and the United States. Luis Napoleón Bonaparte’s fantasies also enthused many when he called on others to participate in constructing the canal, hyping it as the “project of the century.”

Organizing this volume of projects into some kind of order required distinguishing between projects or proposals with lasting impact—those that maintained their importance and relevance over the course of history—and less serious ones, which nonetheless had influenced ideas about interoceanic communication. In the end I left aside the multiple writings that contained no concrete or realistic content.

How to get from the
“North Sea” to the “South Sea”

Spain’s search for an alternative route to the Southeast Asian Spice Islands, blocked by the newly “discovered” continent, produced a lot of writings about the need for an opening between what the Spanish called the North and South Seas. This idea gained momentum after Vasco Núñez de Balboa “discovered” the Pacific Ocean in 1513, thus proving that another ocean existed between what would be called the Americas and the coveted Asian islands.

By the second half of the 16th century it had been ascertained that there was no natural pass between those two oceans and that the only route was the Strait of Magellan, in the extreme south of the Americas. That left constructing an artificial canal as the only alternative, but few considered such a huge work to be feasible, even just to cross the few kilometers of Nicaraguan land that separated the “Fresh Sea” (Lake Cocibolca, also known as Lake Nicaragua) from the Pacific Ocean. Moreover, Spain’s centralization of its commerce with its American colonies in Madrid and/or Seville by royal order during the 18th century impeded the development of more concrete plans. The Spanish Crown feared that a canal would stimulate internal commerce among the colonies to the detriment of trade with the home country.

Galisteo’s project

It wasn’t until the 1780s that work was actually done on a first engineering proposal, when on orders of the Spanish Crown engineer Manuel Galisteo was sent to Nicaragua to study a possible canal route. The mouth of the Río San Juan in the Caribbean Sea was considered the natural entrance to such a canal.

The most important result of that feeler was Galisteo’s verification of the difference in water level between Lake Cocibolca and the Pacific Ocean. It was thus concluded that opening a canal along that route would make passage to the Pacific virtually impossible as it would quickly drain the lake. It’s notable that no one at that time seems to have thought about building locks to control the water levels [although one source, Y las mulas no durmieron…, by Carlos Molina Montes de Oca, suggests that Galisteo did visualize such a solution].

The importance of his work was the relative exactitude of his measurements of the Río San Juan’s water levels along the planned route, bearing in mind the limited quality of instruments available at that time. For a long time the route he had studied continued to be considered the most apt for a canal through Nicaraguan territory: up the San Juan river from San Juan del Norte to San Carlos, then across the lake and finally opening an water route through the Rivas isthmus; or alternatively crossing “Lake León”—the name given to Lake Xolitlán, or Lake Managua, until the second half of the 19th century—to El Realejo, Nicaragua’s most important Pacific Ocean port.

The Central American call for tenders

After Central America’s Independence, the rulers of the new republics urgently needed income for the state coffers. The colonial authorities had left them empty and international trade was in crisis due to excessive contraband and fiscal disorganization. The tolls and port fees paid by ships crossing that interoceanic canal were therefore seen as a good and steady source of earnings for the young Nicaraguan nation. As early as 1825 the Central American Congress proposed putting the project out for bid, inviting international capitalists to invest in it.

Companies or consortiums from Great Britain and the United States presented bids but none had an authentic technical plan and many still referred to Galisteo’s incomplete work 40 years after it had been produced. The tender was won by Aaron Palmer, a New York Stock Exchange broker, who offered to build the canal for US$5 million. It isn’t clear whether he was going to seek financing for the construction or intended to resell the concession Nicaragua had granted him in London. In any event, nothing came of it because he was thrown into jail upon his return to his country due to suits from previous creditors he had swindled.

The Dutch project that never was

This first example of an independent project coincided with the Panama Congress Simón Bolívar called in 1826 to unite the Latin American nations that had recently gained independence from Spain. During the Congress, Central America’s delegates communicated with an observer sent by the Netherlands because King William of Orange wanted trade relations with the nascent South American republics. Guatemala’s delegates proposed their own plans when Bolívar raised the idea of an interoceanic canal through Panama.

The Dutch envoy to the Congress, Jan Verveer, grew increasingly enthusiastic about the idea after talking to Aaron Palmer in prison in New York. In 1828, this now passionate promoter of the canal project tried to negotiate a concession for a Dutch consortium under King William’s tutelage. Central America’s internal wars and the instability of the region’s governments, however, meant it was never possible to send a delegation of the by-then renowned Dutch hydraulic engineers to the region to study the possibilities of a canal. It finally became possible to negotiate a pre-concession in 1830, once peace had been reestablished in the isthmus, but that same year Belgium’s war of secession from the Netherlands extinguished any embers of interest that still glowed in The Hague.

The importance of those negotiations was the complexity of the agreement, which included lessons learned from the failed concession attempt with Palmer. This time around a financial-economic base was proposed to cushion the debts the required investments for constructing the canal would generate and it was also suggested that exploitation of the canal be combined with colonizing the areas surrounding the canal route. Verveer, however, opted for the creation of a “free city” with its own juridical system. In later negotiations the plan to colonize vast areas along the canal route would appear again and again.

The first research of real magnitude

The first research of major significance was conducted by John Baily, an English military officer living in Central America who had already been involved in the tender issued between 1825 and 1826. In 1837 El Salvador’s Francisco Morazán, interested in promoting Central American unity, contracted Baily to investigate the canal idea, but the dissolution of the Central American Federal Republic the next year deprived Baily of the remunerations promised by Morazán.

The lasting importance of Baily’s work was that it was the first attempt to compile complete information on the entire length of the possible route. He was the first to warn that the lower Río San Juan, the part close to the Caribbean Sea, wasn’t apt for navigation and would require an artificial canal on its northern banks in addition to the one crossing the Rivas isthmus.
Some years later, John L. Stephens, an American explorer, writer and diplomat who played a key role in planning Panama’s railroad, estimated the canal’s total cost at some US$25 million, a nearly prohibitive sum at the time.

In the era of Vanderbilt and Walker

The first complete design, well-executed from the engineering point of view, was that of US military engineer Orville W. Childs. Contracted by his countryman, steamship magnate Cornelius Vanderbilt, in 1852 Childs presented a finished design based on exact measurements in which the canal route would connect with the Pacific Ocean through Brito, north of San Juan del Sur, which is the lowest point of that zone.

Those were the years of the California gold rush, and the ambitious Vanderbilt established his American Atlantic and Pacific Ship Canal Company to respond to the important demand for transport by gold seekers from the eastern seaboard of the United States who preferred not to make the long and arduous journey by land. His transit route through Nicaragua followed the one traced by Baily. His steamships brought the adventurers down the Atlantic coast and through the Caribbean Sea to the mouth of the Rio San Juan, then up the river to Lake Cocibolca and across to La Virgen. From that lakeside port, the passengers were shuttled 20 kilometers overland by horse-drawn carriage to the beach town of San Juan del Sur, where another steamship took them up the Pacific Ocean to California.

The Nicaraguan government had granted Vanderbilt permission to exploit the transit route on the condition that he also build the canal, but not even Vanderbilt had the capital for that. By that time the British were no longer interested in financing the canal because Childs’ design was only big enough for US merchant ships and the British steamships already exceeded their size. Furthermore, the political rivalry between the United States and Great Britain had been expressed in the signing of the Clayton-Bulwer Treaty, stipulating that neither country could build a canal through Nicaragua unilaterally, thus effectively halting US plans to promote the canal alone.

The lead role played by US filibusterer William Walker in Nicaragua’s national war distanced Nicaragua from the United States with respect to possible construction of the canal. That opened possibilities for other interested parties, such as the French savant Félix Belly and his countryman Michel Chevalier, a political economist. The Civil War in the United States also helped extinguish US interest.

Only a mile of the canal
and a bankrupt company

Not until 1870 did US engineers reappear on the scene. President Ulysses Grant took an interest in the construction of a canal in Central America, recognizing not only its strategic mercantile value, but also its military usefulness given how close it would be to US territory.

At Grant’s request a series of civil engineer and military teams studied the possibility of a trans-isthmus canal in Panama, Mexico or Nicaragua. The study prepared by engineers Edward Lull and Aniceto García Menocal in 1873 was a step forward from Childs’ design 20 years earlier. Comparing Lull and Menocal’s designs for Nicaragua and Panama, the preference was for the Nicaraguan route, an idea that prevailed for nearly 30 more years.

In 1873 several teams began work to perfect the design of the canal through Nicaragua. Improved proposals were made in 1880, 1885 and 1889, in all of which Cuban-born Aniceto García Menocal had a hand.

Twice US private investors tried to establish the Maritime Canal Company, and in 1889 they finally put together the first US$6 million to begin the work, whose total estimated cost by that time was eleven times that. In four years the investment company had spent the $6 million, constructing only a mile of the canal, and not even at its required depth. An economic crisis in the United States prevented the investors from leveraging more funds, which left the construction company bankrupt.

The French failure

While that debacle was unfolding, French engineer and diplomat Ferdinand de Lesseps, spurred on by his success in building the Suez Canal, had already begun building a canal in Panama with capital he had put together in France. As in Suez, he again decided to build the canal at sea level, thus avoiding having to use locks along the route.

Despite heroic efforts and an inconceivable number of human lives, the French never overcame the problem of Panama’s mountain range. They abandoned the enterprise in 1889, just as the US was beginning what turned out to be its one-mile Nicaraguan canal effort. Thus by 1893 two projects had already started and failed in two different countries.

Through Panama or through Nicaragua?

By that time the US government had become quite determined to build an interoceanic canal. The Clayton-Bulwer Treaty was still in affect so Washington’s politicians needed to cut loose of it. By the end of 1901 they had gotten it annulled, which opened the way for the State to invest in that project.

Between 1893 and the final decision of 1902, US Army engineers prepared two studies for a canals, one through Nicaragua and the other through Panama. Technically they preferred Panama, with the use of locks, but financially they preferred Nicaragua, given the huge sum the French were demanding for their canal rights and to compensate the investments they had already made in Panama.

Theodore Roosevelt assumed the US presidency just when the official commission decided in favor of Nicaragua. He made every possible effort to get it to choose Panama, as he feared interference from two new maritime powers, Japan and Germany. Building the canal in Nicaragua would leave the field free in Panama, going against the revitalized Monroe Doctrine, which proclaimed “America for the Americans.”

French shareholders finally influenced the Senate and House of Representatives to choose Panama by intentionally issuing a postage stamp with the image of a Nicaraguan volcano erupting. That warning of the volcanic or seismic dangers Nicaragua would represent worked: the US abandoned the Nicaraguan plans.

The same year the United States inaugurated the Panama Canal (1914), it signed the Chamorro-Bryan Treaty with Nicaragua, which just happened to be occupied by US Marines at the time, giving the US exclusive rights to construct a canal through that country. That treaty remained in effect until July 1970, when Anastasio Somoza Debayle revoked it.

The Japanese plan and
the Alemán-Bolaños project

No new proposals for a canal through Nicaragua saw light until well after that offensive treaty was abrogated. In 1989, the last year of the Nicaraguan revolution, the Japanese proposed a canal through Nicaragua that would complement Panama’s, meaning it could be used by ships too big to pass through the Panama Canal’s locks.

As the 20th century was coming to an end, President Arnoldo Alemán formed the Grand Canal Working Commission charged with producing a profile of a canal project with the capacity for ships weighing over 200,000 tons. Alemán’s successor, Enrique Bolaños, presented the definitive profile in August 2006. The Liberal government’s idea was to seek capital in the international financial market through a contract that would deposit all responsibilities for the design, financing, construction and administration and/or operation in the contractor’s hands. But just a few months later, Daniel Ortega’s victory in the November 2006 presidential elections and subsequent return to office stopped the project in its tracks.

The interesting aspect of the 2006 proposal was the presentation of new alternative routes in the eastern section and the inclusion, for the first time, of environmental concerns and reforestation projects as indispensable to approval of the construction. Although silence officially reigned in the first years of Ortega’s presidency, the proposals he launched, first in 2012 and more concretely in 2013, look for all the world like inheritances from the Grand Canal Working Commission. The biggest differences were in the project’s contracting and financing methods.

The French emperor’s fantasy

This is as far as the impressive projects go. Among those that didn’t prosper for lack of seriousness, some could be called sheer fantasy. In 1846, before being elected President and later crowned Emperor of France, Luis Napoleón Bonaparte tried to head up a company to build the Nicaragua Canal. He even wrote a pamphlet on the project later, from exile. He had never visited Nicaragua and painted an excessively optimistic image of the country and the project’s possibilities, including some monumental errors. Nonetheless, he awakened a lot of European interest, which the Nicaraguan government was desperately seeking after the disappointment suffered with the King of the Netherlands.

Napoleon Bonaparte III emphasized the need to colonize the areas all along the canal’s projected route. For that reason he went for a longer route, which would pass through all the country’s most populated areas, so the greatest possible population would benefit economically from the canal. The route he designed went up the Rio San Juan to Lake Cocibolca, then through the Río Tipitapa to Lake Xolotlán, and from there across an artificial canal to the port of El Realejo.

Bonaparte set aside his project to dedicate himself to governing France, but he never forgot it. Some 20 years later he sent engineer Michel Chevalier off to Nicaragua to get a concession to build it. The 1870 war against Prussia, his consequent surrender and the end of his empire brought down the curtain on that attempt.

Another failed fantasy

Another canal fantasy, that of Félix Belly, started in 1858. As the smoke from the National War in Central America was clearing and Ferdinand de Lesseps was beginning his adventure to develop the Suez Canal in Egypt, Belly presented himself in Central America as an envoy of the French emperor. He managed to convince both the Costa Rican government and Nicaragua’s President of that false claim.

Taking advantage of their credulity, Belly obtained broad concessions that he never had the aptitude to concretely exploit as he was always caught up in financial and legal problems and was unable to meet agreed-upon dates. He contracted some French adventurers who dedicated more time to fighting amongst themselves than to working. Furthermore, to satisfy the Costa Ricans he decided on a route that came out at Salinas Bay on the Pacific coast, saddling the Nicaraguan-Costa Rican border, a route Orville Childs had already discarded for technical reasons in 1851.

Let’s do it better:
A railroad, a dry canal

The French weren’t the only ones to show up in the isthmus promoting a trans-isthmian route. Bedford C.T. Pim, a British Navy officer, materialized in the canal dream right before the National War in Central America.
Unlike the others, Pim didn’t propose a water canal, but a dry one, a railroad connection. He obstinately believed in the great advantages of the train as a truly modern means of transport and apparently was thinking of it only for transporting passengers, as his project included no plan for cargo.

Pim predicted that the port of San Juan del Norte would in time fill in with sediment so proposed a bay further north, the Caribbean port of Monkey Point, which he claimed to have discovered. An interesting note is that Monkey Point figures in the dry canal proposals considered by others much later, during the Alemán and Bolaños governments.

An impossible canal
and an insane idea

US dreamers also proposed an impossible canal, or at least a poorly planned one. In 1929, just before that year’s economic and financial crash, a US Army team arrived in Nicaragua to study and design yet another canal, even though the one in Panama had been functioning for over a decade. Supposedly due to the saturation of Panama’s canal, they decided to dust off the plans published in 1901. Yet another US team would study the expansion of the Panama Canal and its transformation into a sea-level canal.

In 1932 the team’s chief, Daniel Sultan, presented this very detailed plan but it was shelved immediately as the Great Depression made any US investment abroad impossible. Compensating for this aborted attempt, a new study for a smaller canal for barges only was done in 1939 and 1940, but the project went nowhere given its limited economic usefulness.

The last US investigations into a canal through Nicaragua resulted in the insane idea of opening a sea-level canal using nuclear explosions, the dangerousness of which, even if minimized, limited the project to a few relatively unpopulated areas. And if that wasn’t sufficient dissuasion, two additional problems were the danger that Lake Cocibolca would drain out completely and the forced passage of the route through populated areas of Nicaragua’s Pacific region.

When Nicaragua disappeared off the canal map, the United States agreed to abrogate the Chamorro-Bryan Treaty, which was still offensive to Latin Americans, especially Nicaraguans. It’s annulment in 1970 opened new possibilities for the Nicaraguan government, but they weren’t taken up until the end of the 20th Century, with the creation of the Grand Canal Work Commissions by the Alemán and Bolaños governments.

Always generous concessions
for economic reasons

It’s interesting to note that throughout Central America’s postcolonial history, first the government of the Federal Republic and later the Nicaraguan authorities were willing to concede considerable privileges to foreigners who proposed to build the canal. This generosity included granting them vast areas of territory, almost always freely selected by them and exempting them from taxes and other obligations.

In exchange, the government would receive limited compensations during the canal construction; only when the canal was operating would it receive a part of the profits. The exception was the Chamorro-Bryan Treaty, for which Nicaragua received a one-off payment of US$3 million in exchange for giving the United States exclusive rights in perpetuity.

History shows us that the canal was always sought for economic advantage. Central America’s first independent governments needed fixed incomes to build their new States but as no project ever reached the execution phase—the 1889-93 project had little physical and even less economic impact—no experience was accumulated regarding the effects a canal could have on the national economy. Building Panama’s canal required such a huge manual labor force that it had to be sought abroad, although the economic boom after the country took over the canal’s administration has shown that a canal can have positive effects on the national economy during its operational phase.

Change of perspective as
environmental issues are considered

Interoceanic canals have an enormous physical and socioeconomic impact, but until very recently the ecological and environmental impacts weren’t considered in the discussion of these mammoth projects. The improved infrastructure involved was simply considered an advance for civilization.

The negative effects of these constructions and their implications for future generations only began to be considered at the end of the 20th century. This change of perspective has become a new element in debates about the advantages and disadvantages of interoceanic canals, and also in public opinion. Environmental concerns could have such an impact as to actually halt or prohibit the realization of any new plan.

Why was the canal never built? So, why was no canal ever actually built in Nicaragua? There’s no single reason for all the failures, but five issues stand out among them.

Lack of Central American funds. In the post-colonial period this forced the region’s rulers to seek support and capital abroad, but that was always difficult due to restrictions in the internal markets or to world economic crises.

The project promoters’ lack of preparation. In the early 19th century those entrepreneurs interested in a canal overestimated the development of world trade and didn’t worry about ensuring an up-to-date design. Cornelius Vanderbilt’s design in the middle of that century didn’t meet the requisites for all types of ships. And at the end of the same century, the Maritime Canal Company started its project without having guaranteed all capital and was unable to make up the difference.

Political instability. It was pivotal in the case of the Netherlands, where interest disintegrated when the nation did. Later, the national wars in Central America, particularly in Nicaragua, followed by the Civil War in the United States paralyzed decisions at critical moments.

Technical reasons. In 1902, faced with the choice between Panama and Nicaragua, the former offered relative technical advantages: a shorter, less winding canal that would be cheaper to operate and a smaller difference in the water level to deal with.

Jealousies between governments. The Clayton-Bulwer Treaty in the second half of the 19th century was largely the result of competitive jealousies between the United States and its old mother country, Great Britain. But it virtually tied US hands despite growing awareness of the commercial usefulness of a canal in the region.

In the region itself, the eternal conflicts between Nicaragua and Costa Rica put the brakes on the development of some alternatives that could have been promising. And on two recent occasions—1990 and 2006—changes of government following Nicaraguan presidential elections hindered transparent decision-making to see through potentially interesting projects.

Engineer JanGeert van der Post is the author of El Camino Largo y Sinuoso, Razones por las que no se realizó el canal de Nicaragua (The Long and Winding Road, Reasons why the Nicaraguan canal was never built), published by the Central American University’s Institute of History of Nicaragua and Central America (IHNCA) in July 2014. This text is an edited summary of that book.

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