It’s the second poorest country in the hemisphere, second only to Haiti.
But Nicaragua — which in the last half century has suffered the political and economic flings and arrows of two major conflicts (the Sandinista Revolution from 1974 to 1979 and the Contra War from 1979 to 1990), an economic blockade in the 1980s, the devastating consequences of Hurricane Mitch in the late 1990s, and a drought, global recession and hotly contested elections in the first decade of the 21st century — is still betting on a scheme to resolve its financial woes with the construction of a massive water canal that would challenge that of Panama and help pay off the cash-strapped country’s crippling $3.5 billion debt.
The $50 billion investment for the proposed trans-isthmian canal megaproject was supposed to come from a Chinese backer, but now there is serious concerns that the project, which was due to begin construction two years ago and be operational by 2019, may never materialize.
The Chinese multi-billionaire who had agreed to finance the canal’s construction has threatened to pull out, citing economic losses from other projects, and the country’s socialist president, Daniel Ortega, is hard pressed to find replacement capital for his dream venture.
If completed, the proposed canal would give Panama a run for its money in the interoceanic shipping business.
The new canal would be three times as wide as the Panama Canal and twice as deep, slicing through southern Nicaragua and joining the Pacific Ocean with the Caribbean Sea.
Its construction, along with a series of seaports, an airport, free-trade zones and a state-of-the art freight railroad system, would mean major bucks for both investors and the tiny Central American nation.
But the canal has more than its fair share of detractors who, alternately claim that it would constitute a forfeiting of national sovereignty, violate indigenous territorial rights and could spell environmental disaster for Lake Nicaragua, the region’s largest source of fresh water and arguably the country’s most valuable natural asset.
Still, the Ortega government is determined to make the canal a reality.
And his government’s enthusiasm has drawn the interest of a line of Mexican investors who are jumping on Nicaragua’s investment bandwagon.
Today, Mexico is Nicaragua’s third-largest investor, right after the United States and Venezuela, according to Nicaraguan Embassy sources.
In fact, according to the Mexican-Nicaraguan Chamber of Industry and Commerce (Camexnic), Mexican investment in Nicaragua represented a full 23 percent of the Central American nation’s total foreign capital in the last eight years.
At last count, accumulated Mexican investment in Nicaragua ascended to nearly $850 million, including a $50-million Grupo Lala milk processing plant just outside Managua opened in May 2015.
Other Mexican firms that have also invested in Nicaragua include auto-parts giant Arnecom and a number of textile and clothing companies.
Cement colossus Cementos Mexicanos (Cemex), soft-drink bottling company Femsa and (no big surprise here) billionaire Carlos Slim’s massive telecommunications and hydroelectric corporation have also sowed investment capital in Nicaragua in the last decade.
“Nicaragua and Mexico have always had great relations and we have a free-trade accord signed in 1997 that can facilitate commercial relations,” Nicaraguan Ambassador to Mexico Tamara Hawkins de Brenes told The News in a recent interview at her embassy.
“With the new canal, it will be even easier for companies in Nicaragua to ship their goods practically anywhere in the world.”
Combined two-way trade already amounts to about $1.5 billion annually, according to Mexican government sources, and Hawkins de Brenes said that with her government’s commitment to open its doors to greater cooperation with friendly nations in all fields, Nicaragua is headed on a path to expanded global commerce and Mexican companies can get in on the ground floor.
“We are openly courting foreign investment, and Mexico is a very close friend of Nicaragua,” she said.
“We are eager to attract Mexican capital for joint-venture projects that will benefit everyone.”
Thérèse Margolis can be reached at therese.margolis@gmail.com.