Nicaragua – Canal Project Put on Hold

An audacious and highly controversial canal project promoted by President Daniel Ortega as an economic game-changer for Nicaragua has hit a snag, and the unexplained announcement of a delay in the startup of substantive construction until late 2016 suggests that the future of the $50 billion project is in doubt. The delay should help to ease domestic political tensions, which had become more intense as it became apparent that Ortega was serious about proceeding with the plan.
Plans appeared to still be on track on November 5, when Ortega officially approved the environmental study carried out by a private firm, Environmental Resources Management, on behalf of the Chinese engineering firm, HKND, which won the no-bid contract to build the 175-mile canal, along with a 50-year concession to operate it. However, on November 25, HKND announced that further progress on the project would be delayed for a year, stating that the design was being “fine-tuned.”  The firm gave no indication of a target for completion of the canal, which previously had been set at 2019.
According to various media reports, the cause for the delay is a reversal of economic fortune for Wang Jing, the billionaire head of HKND, who apparently suffered huge personal losses as a result of the steep fall in the Chinese stock market in the summer of 2015, a reversal of fortune that presumably prompted him to reassess his interest in the costly venture. However, it is possible that the delay has more to do with the electoral calendar than financial considerations.
Although Ortega has invested a good deal of his personal prestige in the canal project, widespread opposition to the plan has provided the fragmented opposition with a unifying issue. The opposition’s chances of unseating Ortega or his party will remain low as long as the president avoids handing his opponents an issue around which to rally support.
Ortega loyalists control all of the key government institutions, including the courts and the nominally independent electoral commission, and notwithstanding the tumult over the canal project, the FSLN remains by far the most popular political organization in the country. Nevertheless, given the recent reversals of the so-called “pink tide” in Argentina and Venezuela, Ortega cannot afford to become complacent.