A committee in Nicaragua’s General Assembly voted to approve a 50-year concession (with the possibility of an additional 50 years) for a Chinese firm to build a Panama Canal alternative in Nicaragua. The country will now begin a feasibility study, but canal-related progress will depend to a considerable extent on Nicaragua’s ability to attract investors.
In September, Nicaraguan officials signed a memorandum of understanding with Wang Jing, chairman of Xinwei Telecom and president of the newly established Hong Kong firm, HK Nicaragua Canal Development Investment Co. Ltd. Just last week, a three-party agreement was signed between “la Autoridad” (de gran canal interoceanico de Nicaragua), EDGI (Empresa Desarrolladora de Grandes Infraestructuras) and HKC (HK Nicaragua Canal Development Investment Co. Ltd). Wang Jing is evidently the head of both EDGI, which will presumably be doing canal construction, and HKC (see document signatures).
Despite Wang’s assumed connections to the Chinese government, involvement on the part of the HK Nicaragua Canal Development Investment Co. in the Nicaragua canal project is not the same as involvement on the part of the Chinese government. Most of China’s large scale, multi-billion dollar infrastructure projects in Latin America are completed with funding from China’s major policy banks — China Development Bank or China Ex-Im bank — which generally then partner with a Chinese construction company. In this case, the canal project will be funded not by Chinese policy bank commercial or concessional lending, but by investment from different governments, organizations, and individuals. The Empresa Desarrolladora de Grandes Infraestructuras is not one of the major Chinese construction firms that are typically affiliated with major China-funded infrastructure projects in the region. It was created by HK Nicaragua Canal Development Investment Co. in order to be able to operate in Nicaragua.
The extent to which this project will increase China’s influence in the region and on global trade routes is unclear. This would depend on a wide variety of factors, including HKC’s connections to the Chinese government and who else, if anyone, decides to invest in the project. The Chinese government and its representatives are mum the canal developments for the time being.
|Ley 800||07/12||Authorizes the formation of the “Autoridad” (de Gran canal interoceanico de Nicaragua)|
|Memorandum of Understanding||09/12||MOU|
|Deed of Cooperation||10/12||Covenants, responsibilities, equity and other terms|
|Acuerdo Marco de Implementación||06/13||The 120-pg official proposal/agreement||pdf1 pdf2|