Russia interested in Nicaragua plans to build an alternative to Panama Canal

A general view of the Panama Canal Expansion project in Panama City April 20, 2012. (Reuters/Carlos Jasso)
Russia is among six countries that’ve been in talks over funding a new $30 billion canal in Nicaragua linking the Atlantic and Pacific Oceans.

Nicaraguan President Daniel Ortega submitted a draft bill on Tuesday that describes six possible routes for the waterway, one of which would pass through the San Juan River that forms part of the border with Costa Rica, AFP reports.

"We've had talks with Russia, China, Japan, Venezuela, Brazil and South Korea and everyone is interested" in contributing to the $30 billion mega-project, project director Eden Pastora told local television.

He added that Nicaragua's waterway would be "larger and deeper" than the Panama Canal, currently the only man-made shortcut between the two oceans.

The estimated cost of feasibility studies is roughly $350 million while actual construction cost could be up to $30 billion. Pastora said the project would be carried out as a joint venture in which the government would own 51% of shares and tenders would be issued for the remainder.

The idea of building a canal across Nicaragua spans centuries, but was overshadowed by the construction of the 82-kilometer Panama Canal. The Panama Canal is currently undergoing a major $5.25-billion upgrade to expand its capacity, and is due to be completed in 2014. The expansion will allow some of the world's largest ships to pass through.

The vital waterway handles five percent of world trade annually, and has hosted more than one million vessels since it was opened in 1914. The United States handed over control of the canal to Panama on December 31, 1999.

It also generated a record $1 billion for Panama in the fiscal year 2010-2011, for a total of $6.6 billion since the US handed over control.

In recent years, however, Nicaragua has revived the idea of its canal as a way to promote development of the country, the second poorest in the Americas after Haiti. As global trade increasingly shifts towards the Asia-Pacific region, China and other Asian countries are keen to build a backup to the inter-oceanic shortcut in Panama.