Lawmakers back Nicaragua bid for Panama Canal rival

Nicaraguan lawmakers approved a law Tuesday aimed at creating an alternative to the Panama Canal, a $30 billion project President Daniel Ortega says will lift the country out of poverty.

"We can make this dream a reality," said Edwin Castro, legislative leader of the majority Sandinista party.

"I don't know if they will find the funding for this canal, but it is hopeful," said opposition legislator Wilfredo Navarro.

The initiative, approved by 85 of 91 lawmakers, establishes a legal system for the proposed 200-kilometer (125-mile) canal to connect the Atlantic and Pacific oceans.

The legislation also creates a Grand Canal Authority that will have the power to direct the project's state and private funding as well as to supervise the work.

Plans to build a canal across Nicaragua date back centuries, but were overtaken by the construction of the 82-kilometer (51-mile) Panama Canal.

In recent years, however, Nicaraguan governments have revived the concept as a way to promote development in the second poorest country in the Americas after Haiti.

Feasibility studies are expected to cost $350 million, while actual construction could hit $30 billion.

The government is proposing to raise the funds through a joint public/private partnership, with the state maintaining a 51 percent stake.

Project leader Eden Pastora said Nicaragua's canal, to be built along one of six proposed routes, would be larger and deeper than the Panama Canal.

That vital waterway is currently undergoing a major $5.25 billion project to expand its choked capacity. The upgrade, set to be completed in 2014, will allow some of the world's largest ships to pass through.

The Panama Canal handles five percent of world trade annually, and has hosted more than one million vessels since it was inaugurated in 1914.

It also generated a record $1 billion for Panama in fiscal year 2010-2011, for a total of $6.6 billion since the United States handed over control more than a decade ago.

Pastora said project leaders have had talks with six countries, including Japan, China, Russia, and Brazil, interested in investing in the project. China, among others, is seen as keen to build a backup inter-oceanic shortcut route, if the numbers make sense.