US and European exporters could profit handsomely from the so-called Grand Interoceanic Canal as it will cut shipping costs to Asia and allow passage of supertankers too large to transit Panama. Petroleum and liquefied natural gas producers in particular stand to benefit.
Canal supporter Michael Healey, head of a Nicaraguan agribusiness association, says the Chinese-led project will provide over $50 billion (44 billion euros) in foreign investment and create over 250,000 full time and construction jobs.
"For the economy it's an excellent step," he said. "Now we have 4-4.5 percent annual growth. With the canal I believe it would be 10 percent. We're going to create a lot of jobs."
But environmentalists argue that the canal will destroy Lake Nicaragua and irreparably disrupt wildlife migration. Local campesinos (peasant farmers) worry that their land will be confiscated, and they will be forced to relocate.
While a substantial majority of Nicaraguans favor the canal, according to a December opinion poll, 42 percent of those living along the canal route oppose it. Thousands of environmentalists and campesinos have protested against the project. And ground zero for those protests is Ometepe Island.
Volcanic islanders at boiling point
Waves lap languorously against the shore on this island in the middle of Lake Nicaragua. canal prime contractor Hong Kong Nicaragua Development (HKDN) plans to dig a channel 25-30 meters deep here, in the largest fresh water lake in Central America.
Maria Mercelin, a fisherman's wife, explains that the noise and pollution from a nearby tourist construction site has already chased fish away.
"Right now they're just getting started and the fish are already beginning to disappear," she said. "Imagine what will happen when they start building? Everything is going to go away completely and that's our way of life."
One recent afternoon 60 mostly older campesinos gathered at an anti-canal meeting. Osvaldo Navas is a small farmer and leader in the opposition movement. HKND has the right to confiscate land not only along the canal route, but also for secondary projects like tourist hotels. Navas says his family land is more than just property to buy and sell.
"My great grandfather gave it to my grandfather who gave it to my father," he said. "Now I want to pass it along to my son. This is my castle, my home and my paradise."
Asked if any others at the meeting would sell their land, they answer with a resounding "No." The campesinos chant "No to the canal. We don't want the Chinese," and "We don't want communism either." They even formed a band to sing an anti-canal ballad.
No jobs for locals?
Opponents mix legitimate concerns with wild and sometimes xenophobic conspiracy theories. For example, local protest leader Jairo Carillon claims no Nicaraguans will work on construction of the canal, a potential concern given that in other large infrastructure projects Chinese companies often hire their own nationals to the detriment of locals.
"Forget about jobs," said Carillon. "The Chinese are going to bring their own workers." But Carillon claimed that even after the canal is completed all the jobs on the canal, ports, airport, and free trade zone factories will also go exclusively to Chinese workers. "It's guaranteed," he said. "They just want to take over."
Canal supporters point out, however, that tens of thousands of Chinese workers won't permanently emigrate to Nicaragua to work in low-wage jobs in a country with a lower standard of living than China.
Benjamin Lanzas, head of the Nicaraguan construction company association, concedes that some 25,000 canal construction jobs will go to skilled Chinese and other foreign workers. But he estimates another 25,000 jobs will go to Nicaraguans. He says HKND officials have already met twice with Nicaraguan construction unions seeking qualified workers. "It's definitely a good sign," said Lanzas. "Nicaraguans are already working on the project."
Many of the canal opponents also believe that the Chinese will establish military bases in Nicaragua. Juana Juarez, an Ometepe anti-canal leader, says the Chinese are already planning to set up a military base on Ometepe to protect the canal. And, she claims, there's an even more sinister reason for the base.
"They are fully aware that Nicaraguans are not going peacefully," said Juarez. "So they have to militarize the entire island because we're not going down without a fight."
Canal supporters note that China has no military bases anywhere in the world outside of what it says is Chinese territory. And it has no interest in setting one up in Nicaragua. Lanzas says the canal will benefit from Chinese and other foreign investment.
"Nicaragua is the second poorest country in the Americas after Haiti," he said. "Our gross domestic product is about $11 billion. An investment of about $50 billion is definitely going to change the country."
Canal opponents don't believe the investments will materialize in the promised amounts. So in December and January they launched angry protests and clashed with police.
The Nicaraguan government has so far refused to meet with opposition leaders. Businessman Mike Healey says the government should respond to the protests.
"When people are uncomfortable, it creates a lot of tension," he said. "Tension is not good for investors. I believe if you can have dialogue, good things can come out of that."