The construction of the megaproject is delayed and there us no certainty about its viability

Leer en Español: ¿Qué pasó con el canal de Nicaragua?

The largest channel in Latin America

The channel aims to be the most ambitious project in the history of Nicaragua and the largest to be developed in Latin America, after the construction of the Panama Canal. The Chinese telecommunications entrepreneur Wang Jing announced an investment of 40,000 million dollars, almost four times the GDP of Nicaragua. The plan is to build in ten years a channel that crosses the country from the Atlantic to the Pacific. Thus, a double-span canal to Panama that provides an alternative transoceanic passage in the región.

The Nicaragua’s National Assembly approved the project by majority on June 13 of 2014. The promoter company, HK Nicaragua Canal Development Investment Co. Limited (HKND Group), has its HQs in Hong Kong and it is headed by W. Jing. The agreement signed between Ortega and W. Jing attributes to the Chinese company the control of the channel for fifty years, extendable for another fifty years. However, it was intended that the work began in late 2014 but currently it has not advanced with the megastructure.

How is the Nicaragua channel going?

In December 2014, W. Jing and the government of Nicaragua inaugurated the first works of the interoceanic canal. Nevertheless, the project currently does not advance as planned and this arises questions about the viability of the channel. The HKND group in charge of the mega project offered subprojects that included oil pipelines, roads, tourist centers, airport, railroad, among others; also, the subprojects included the intention to purchase provisions to feed about 25 thousand workers. Nonetheless, none of these projects has started.

Despite the great promotion of the project, the promise of the channel is uncertain, especially, because the businessman W. Jing has not visited Nicaragua in over two years. Therefore, the HKND group has gradually decreased its presence in the Central American country. On the other hand, W. Jing has maintained a low international profile until the point where there is not news about him. However, recently he reappeared in an article by Bloomberg Businessweek, which mentions the mishaps that confront their different projects in the world

W. Jing’s current situation in the business area is problematic. On one hand, he has had difficulties positioning his company Xinwei as a strong telecommunications corporation. On the other hand, W. Jing has had to face the recent business scandal related to Ukraine. 

China has agreements with both Nicaragua and Panama

The recent nineteen agreements, in different sectors, signed by Panama and China strengthen the commercial relationship between these two nations, which undoubtedly will benefit the pursuit of economic strengthening. Panama, with the deepening of these commercial and investment links with China, will be positioned as an important logistics hub in the region. Panama will increase the flow and interaction of the market in Latin America through its channel.

Additionally, the possibility of materializing Nicaragua’s interoceanic channel is greatly diminished by the fact of Panama being a geostrategic partner in China’s trade policy. This possibility could take place if China finds a more favorable scenario with Panama than with Nicaragua. Likewise, with the recent agreements signed, China gains a logistics hub and will be able to strength its presence in the growing and important Latin American market.

Given the latest movements regarding its trade policy, China has opted to deepen its free trade with the infrastructure offered by Panama. The infrastructure is modern, and it is currently making extensions; also, it is important to highlight that it has years of experience and improvement in the field of maritime trade. Above mentioned, one can affirm that the Panama Canal accomplish the requirements that the Chinese trade policy needs. For that reason, the following question arises: does China need another interoceanic canal? Does China support Wang Jin in the construction of the Nicaragua canal?

Nicaragua’s Channel Future

Nowadays, the Nicaraguan canal remains as a project to be done because of there are no reliable indicators that show a serious interest from international investors to develop it. The Project involves enormous technical, technological and logistical challenges that have not been developed; therefore, this enterprise is delayed and has no evidence of concrete progress. On the other hand, leaders of the private sector in Nicaragua have doubts about the promises made by the government and W. Jing because the businessman has not shown a serious interest in the development of the project. In the same way, the problems W. Jing is facing with his other companies are evidence that it is not a good moment to start an entrepreneur like the cannel.  

Besides previous information, it is important to keep in mind that the Chinese government’s trade policy with Panama is against it. So far there is not reliable plans in the construction of Nicaragua’s channel because of three reasons; first, the signing of nineteen agreements with Panama on trade matters; second, cooperation with the China Development Bank; finally, the study to negotiate a free trade agreement (FTA). 

LatinAmerican Post | Camilo Salazar.

Copy edited by Marcela Peñaloza