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Editor’s Note: The following report is excerpted from Joseph Farah’s G2 Bulletin, the premium online newsletter published by the founder of WND. Subscriptions are $99 a year or, for monthly trials, just $9.95 per month for credit card users, and provide instant access for the complete reports.

WASHINGTON – After the recent discovery a North Korean ship carrying missile components from Cuba, alarm is growing in the U.S. over the security and geostrategic implications of a Chinese plan to build a canal through Nicaragua, according to Joseph Farah’s G2 Bulletin.

The proposed project would compete with the Panama Canal for ocean-going traffic between the Atlantic and Pacific Oceans

Under virtual Chinese control, a Nicaragua canal would make it impossible for the U.S. to hunt for contraband or keep enemy ships from entering the Latin American region, which the U.S. considers to be in its sphere of influence.

Already, the unfriendly Russians, Chinese and Iranians are increasing their presence in the region. The Nicaraguan government of President Daniel Ortega, the leftist Sandinista National Liberation Front, has close ties with all three, raising growing U.S. geostrategic problems.

Nicaragua has entered into discussions with the Chinese Hong Kong-based HK Nicaragua Canal Development Investment Company to develop and eventually operate a new $40 billion canal through the Central American country. The company would have a 50-year lease to operate it.

Sources say that the Hong Kong firm has no prior experience in construction but received what amounted to a sole-source contract without any open bidding.

Regional analysts say that the first phase has begun with analysis and design work. The fact that it is a Chinese company funded by Chinese money raises Beijing’s visibility throughout the region significantly.

China already is gatekeeper for the Panama Canal with a 50-year lease under the Chinese Hong Kong corporation Hutchison Whampoa. It affords Beijing an excellent opportunity to gather intelligence on U.S. warships which now go through the canal.

Chinese control also gives Hutchison Whampoa the right to operate tugs and work boats which, in effect, gives the Chinese Hong Kong company control of all of the canal’s movements.

There are concerns that provisions of the Chinese contract with Panama also gives “first option” to Hutchison Whampoa to take over the U.S. Rodman Naval Station, the Pacific deep-water facility capable of handling any warship.

The Chinese then would have the legal ability to exclude U.S. warships while admitting their own, according to regional sources.

The initial analysis and design phase of the Nicaraguan canal project will continue for the next two to three years.

The proposed canal offers major environmental concerns, since the canal route would go through Lago de Nicaragua, also known as Cociboica, sources say. The lake is a major source of drinking water for the country.

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