Will nothing stop the Nicaragua Canal?

• Not the traffic analysis indicating the canal is unnecessary?
• Not the financial analysis indicating it won’t pay for itself for decades?
• Not the environmental and societal impact reports which the company purports to have done but will not make public?
• Not the outrage of the Nicaraguan people whose homes and lives will be perversely disrupted by the canal?

Why are we thinking about this?  Background work for an FTZ project in the Caribbean reminded us of the mega-engineering project that brings together Nicaragua’s Daniel Ortega and Wang Jing, CEO of HKND.  The former needs no explanation but Wang is no household name in the Americas despite the fact that he is Chairman of more than 20 enterprises including Beijing Xinwei Telecom.  According to HKND’s website, Mr. Wang founded the company on the spirit of Optimism, Diligence, Pragmatism and Innovation.  Well… optimism rings true.

The irrational exuberance of the Nicaragua Canal project mirrors a long tradition of Chinese make-work vanity projects planned and approved with no cost-benefit analysis and executed without rigorous quality control.  Our research in Africa has given us some transparency into shoddy concrete work by Chinese construction teams involved in transportation and housing construction projects.  Shoddy work is an inconvenience if a highway between two centers of commerce is crumbling; it’s a catastrophe if associated with a 172-mile canal in Nicaragua.

Has a good case been made for the need for another canal in Central America?  We don’t think so.

But lack of economic feasibility has not been sufficient to derail this type of project in China.  Funding sources may not derail it either.  Wang’s ability to cough up $40-50 billion (four times Nicaragua’s GDP) is assured if the Chinese government funnels money to Wang’s company to support the venture.

If Wang is a proxy for Chinese government expansionism, Central America can expect to be living with this burr for years to come.

 Nancy Musselwhite is a Senior Consultant at Geo Strategy Partners, a  B2B/Industrial focused market research and strategy consulting firm.

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