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Nicaragua Canal: China’s Strategic Presence in Central America

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Pacific Money

Nicaragua Canal: China’s Strategic Presence in Central America

A huge project promises to give China a significant presence in the Western Hemisphere.

The $50 billion trans-oceanic shipping canal through Nicaragua, initial work for which began in December 2014, is now under construction. When completed, it is expected to bring major change to Central America and the surrounding region.

The debate about China’s controversial canal project has led many to question who is actually behind the project. Is this a grand strategy of China’s government, or is the government merely playing a partial role in a private-sector initiative? Wang Jing, Chinese billionaire and chairman and CEO of HKND Group – a privately held international infrastructure development company based in Hong Kong – is leading the project. He enjoys support from numerous Chinese companies.

Irrespective of who is actually in the driving seat, the project brings with it a significant foreign presence, which will also impact Nicaragua in social terms. While an economic boon for the country, it could also bring social fragmentation and a strengthening of social stratification.

The project has already proven controversial, with perhaps most attention so far focused on threats to environment in Nicaragua. The introduction of alien species from both the Caribbean Sea and Pacific Ocean will be a serious threat to the biodiversity, structure, and function of the ecosystem in Lake Nicaragua, which will form a large part of the canal. Native species will be displaced and community biodiversity will be reduced. It is difficult to generalize about the impact, which will vary depending on the location. The opening of sea-lanes will affect Lake Atlanta, the San Miguelito Wetlands, Lake Xolotlan, and the many rivers that feed into and out of these bodies of water.

As for the geopolitical implications, there has been much speculation about China’s intentions with the canal. China has active in Central America for years (even decades). It has been selling arms to Western Hemisphere states, while pursuing other initiatives to build military and economic relations.

So much for the Monroe Doctrine. Clearly, this is a challenge to traditional U.S. pre-eminence in the Western Hemisphere, even if it remains uncertain whether it is a deliberate response to the U.S. rebalance to Asia. Given that the U.S. has military bases near China, there is strategic value for China in establishing its own military presence in Central America, above and beyond the economic considerations.

How should the U.S. respond? It could rethink its current focus on Asia and the Middle East, reorienting back to Latin America to counter China’s growing presence there.

It could also do nothing. After all, the canal will generate considerable trade and even foster potentially positive competition with Panama. International commerce overall will benefit and the U.S. will profit from this. Yet Washington also needs to take into consideration the military element. The canal may attract Chinese military vessels looking to protect Chinese commercial interests.

China has recently published plans to grow its navy by 351 warships, surpassing the U.S. Navy in sheer numbers at least by 2020. Whether it plans to deploy its ships to waters around China or use them to expand its presence elsewhere, like Central America, is unclear. Still, combined with its infrastructure investment, traditional assumptions of U.S. primacy are facing their greatest challenge in decades – even in a region traditionally considered its backyard.

Scott Nicholas Romaniuk is a PhD student in International Studies (University of Trento). His research focuses on asymmetric warfare, counterterrorism, international security, and the use of force.