Save the Cruces Trail and Panama Canal Watershed, salvar el Camino de Cruces y cuenca del Canal de Panama. Protect Gatún Lake from saltwater intrusion, pollution and environmental catastrophe through use of safer, more efficient lock configuration, which does not create unnecessary risks to the Panama Canal system unlike the selected one for the current expansion plan, does not require building on top of active fault lines, and expose marine creatures in both oceans to extinction.
How a Chinese Billionaire Got Invested in Nicaragua's Canal Plan
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Wang established HKND in August 2012, one month after the Nicaraguan government established its Grand Interoceanic Canal Authority, which paved the way for realistic investment into a canal project. A month after it was established, HKND had a memorandum of understanding with the Nicaraguan government to conduct the feasibility study for the canal project. In June 2013, the Nicaraguan legislature formally voted to approve the construction of the canal, and within days the contract was awarded to HKND.
Wang’s involvement in the canal appears to stem from a meeting with the son of Nicaraguan President Daniel Ortega, whom he met with either in Nicaragua or Beijing. Wang was looking to expand his telecom business into Nicaragua as part of broader global expansion, and his company, Xinwei, acquired contracts in 2013, though there has been little work reported toward fulfillment of those contracts. Rather, amid discussions with Ortega’s son, Wang became enamored with the opportunity for a Nicaraguan canal that, he hoped, would carry massive bulk cargo ships from Brazil to China — ships that were too big for the Panama Canal and, incidentally, were in some cases blocked from Chinese ports because of their size and Chinese concerns for maritime shipping competitiveness.
A Nicaraguan canal may make more sense for international traders than it does for its potential investors. Though most studies argue that investors are guaranteed to lose in the canal construction, if the canal is built and managed efficiently, it does offer complementary routes for trade between Asia and the East Coast of North America, something that could interest shipping companies given the perception of unreliability of United States’ West Coast ports. It also could provide speedier passage of bulk cargoes from Latin America, particularly Brazil, to Asia (read China), and as a redundant route, may ease congestion in the Panama Canal.
But the canal itself is not the only prize. Wang’s vision includes the expansion of Nicaraguan ports, the establishment of new tourism venues to rival nearby Costa Rica, and the creation of new free trade zones in Nicaragua to take advantage of its location for manufacturing and distribution. With China slowly losing its place as the primary source of international low-end manufacturing, a Chinese-backed free trade zone in Nicaragua could take advantage of regional low labor costs and the nearness to larger Mexican, South American and U.S. markets. Stratfor counts Nicaragua among our so-called Post-China 16 countries, those positioned to take advantage of the changes in global manufacturing supply chains. The canal fits with the desires of Nicaragua’s president, but the add-ons are potentially the more significant prize for Wang and his fellow investors.
Wang has not had an easy time drawing in the financial backing that a project of this magnitude needs. Already he has spent by some estimates more than $5 billion of his own money as well as that of his family and friends, whom he solicited early to capitalize the project. Some major state-owned enterprises have steered clear of the project, including major Chinese shipping companies (COSCO for example already has a stake in the Panama Canal). But others, particularly construction companies looking for large projects overseas, have expressed interest or engaged in a partnership with HKND, and HKND is urging those companies to become partners, bringing with them their own financing. In this way, HKND can spread the cost and potentially still profit from a canal project that others before had determined would not turn a profit.
Interestingly, despite the obvious questions about Wang and Chinese involvement, the Chinese government does not seem to be involved directly. Wang has worked somewhat outside the normal channels of Chinese political networks, and Beijing has been cautious about the project from the start. Beijing has no formal diplomatic relations with Nicaragua; rather, Nicaragua is one of the few nations left that maintains formal recognition of Taiwan. In 2012, as news of the canal construction heated up, the Chinese Ministry of Commerce cautioned Chinese companies, noting the lack of diplomatic ties in addition to border issues between Nicaragua and Costa Rica. Beijing is not interested at this time in drawing Nicaragua to alter diplomatic relations to the mainland, since that would undermine Beijing’s management of the Taiwan issue.