China’s Belt and Road Initiative Ortega Wants to Join

…now that the two countries have formed an alliance

Laureano Ortega, (l) at the signing ceremony to reestablish diplomatic relations with China.

Since formally aligning with China, the term “Belt and Road” has begun to gain ground in the discourse of Daniel Ortega’s regime. 

By La Prensa

HAVANA TIMES – Recently, the phrase “Belt and Road” has begun to gain traction in the rhetoric of Nicaragua’s dictatorship. In a letter sent to Daniel Ortega on December 10, Wang Jing assured his canal project partner Ortega that “Nicaragua is destined to become the most important axis of the Belt and Road that runs through the Pacific and the Atlantic.”  This letter was sent in the wake of Nicaragua’s announcement that it was severing diplomatic relations with Taiwan, which Ortega now considers to be part of China’s territory and not a free and independent nation.

On December 31, this phrase was repeated by Yu Bo– representative of the government of Beijing—during the reopening of the Chinese embassy in Managua.  According to Yu Bo, “Nicaragua is welcome to take an active part in this initiative and to join as soon as possible the great family that is jointly constructing the Belt and Road.”

Even earlier, in an appearance before the dictatorship’s propaganda media on December 16, Laureano Ortega Murillo said that Nicaragua was seeking to join this global project, in which 19 countries in Latin America and the Caribbean already participate.  It is a project whose expansion the United States views with suspicion.

According to Ortega Murillo, “We are working with them to sign a memorandum in which the Nicaraguan government will be part of this great global project, a project that includes a very strong investment fund organized by China and that has already made some large investments in Latin America.”  Laureano’s speech has already begun to be repeated by the regime’s supporters, despite the fact that few know exactly what this agreement would consist of.

Finance Minister Iván Acosta sees the initiative as an opportunity for Nicaragua to obtain investment in a variety of areas. This occurs at a time when Nicaragua’s deteriorated institutions and worsening investment climate have made it almost impossible to attract investment from democratic nations such as the United States.

As Acosta noted, “These are great opportunities, because China is looking to Latin America in terms of trade, economic exchange and strategic investments. When we talk about the Belt and Road initiative, the goal is to connect all ports and airports, as well as to develop logistical connections between the participating countries. This will make it possible to increase trade, and as the last twenty years has demonstrated, when trade grows, the economy grows. ”

Ambitious Chinese project

But what is China’s  Belt and Road? What is this project about? Can Nicaragua really benefit from it? What other nations in the region are participating? Is this an alternative to the failed Interoceanic Canal?

The Belt and Road Initiative (BRI) is a project promoted by China that aims to establish a set of maritime and rail links to strengthen the Asian giant’s connections both on the continent and abroad.

Through what is also known as the New Silk Road, China seeks to build an infrastructure network spread over the five continents. Costing up to a trillion dollars, it consists of a network of roads, railways and ports that will improve commercial connections between participating countries.

The project appeared in 2013 and was proposed by Chinese President Xi Jinping, who took his inspiration from the idea of ​​rebuilding the ancient Silk Road. It seeks to establish greater economic, cultural, and political cooperation between the countries and regions that comprise it.

Chinese president Xi Jinping. File Photo La Prensa

The project consists of a land route that will link China with Pakistan, Afghanistan, Turkey, Moscow, Kazakhstan, Turkmenistan, Kyrgyzstan, Uzbekistan, Tajikistan and Europe through the Balkans and reaching Paris. In addition, the initiative aims to reach Latin America, Africa, and the Middle East through a sea route.

Specifically, the Belt and Road includes the construction of an interconnected freight transport route, the improvement of customs facilities, the creation of a multimodal transport system designed to link with all roads in the region, the improvement of port infrastructure and civil air transport facilities, as well establishing connectivity between cross-border energy networks and the densification of fiber optic networks.

This initiative is also intended to create the conditions for participating nations to develop their own infrastructure and to generate new commercial opportunities. In fact, in recent years China has signed a series of agreements with various member countries of the Belt and Road initiative, and has also provided them with financial support for, among other things, the building of infrastructure projects and the development of resources.  

In June 2017, Panama became the first country in Latin America to join this initiative. Later, Costa Rica (2018), El Salvador, Uruguay, Ecuador, Venezuela, Chile, Uruguay, Bolivia, Cuba and Peru joined.

Among the other Latin American and Caribbean countries that currently have Belt and Road agreements, the following stand out: Antigua and Barbuda, Barbados, the Dominican Republic, Guyana, Jamaica, and Trinidad and Tobago.

Criticism of the initiative

For international specialists, the New Silk Road not only represents an attempt by China to increase its geopolitical and strategic influence, but also leads to the indebtedness of the recipient countries.

According to the independent journalism platform, Diálogo Chino, there are several criticisms of the initiative. One concern, for example, is the debt burden that small economies take on when borrowing for Belt and Road-related projects.

Another criticism is that the key objective of China is to control supply chains.  Other critics are concerned that the investments associated with the Belt and Road are mainly focused on projects and sectors that carry great environmental risks and that can threaten the rights of indigenous communities.

Still another concern about the initiative is the fact that the projects initiated by China use Chinese rather than local workers. This means that the employment opportunities for locals are reduced, even though the recipient country has become indebted to China. 

According to Germany’s principal radio broadcaster Deutsche Well, “It is feared that China will consolidate its supremacy in the world and divide Europe.”

In fact, several international analysts have warned that the project is based mainly on “debt diplomacy,” which has led to the injection into Latin America of billions of dollars in Chinese loans. Now, especially because of the pandemic, recipient countries are having difficulty honoring these loans.   

According to a report by BBC World, the Washington-based consultancy RWR Advisor notes that since the initiative began in 2013, China has loaned US $461 billion to participating nations. The majority of these nations are in Africa, and nearly all are considered high-risk debtors,

Such has been the pressure of such indebtedness on participants in the Belt and Road initiative, especially in the context of the health and economic impacts of the pandemic, that many have asked Beijing to restructure, delay or forgive payments on loans coming due soon.  This situation has put the Xi Jinping administration in a bind.

“It is a debt trap,” is the conclusion of international critics.

Can Nicaragua be a participant in the Belt and Road initiative?

Despite these drawbacks, an economist and external consultant, who preferred anonymity for fear of reprisals, shared that at present many Latin American countries, especially in the south, are inclined to strengthen commercial ties with China.  This move toward China is guided by the belief that in the long term, the US economy “would not grow at historical rates and would not be able to absorb the region’s economic exports.” 

Therefore, he sees the New Silk Road as a strategic option for these nations, adding that “the political issue is another theme that is being incorporated into this scenario.”

In his view, China is looking to Latin America to exploit its mineral resources. “According to studies, China’s interests in the region are to identify and try to exploit mineral resources as much as possible. In addition, investment in the region can also serve as a commercial springboard from which China can more easily and less expensively invade the United States with merchandise and technology.”

He explained that in the case of the Nicaragua, the current government’s desire to join the Belt and Road initiative follows the logic of the Interoceanic Canal project.”

However, he clarified, China’s interest in Nicaragua is more political than economic, in that incorporating Nicaragua into the Belt and Road initiative would help China expand its presence in Central America.  Nicaragua’s low production of the kinds of resources needed by the Chinese, as well as the high costs of transport, mean that it holds little economic relevance for China, except perhaps in the exploitation of minerals.” 

For the Ortega regime, in contrast, the goal is to show the United States that it can align itself with another world power. “However”, this same individual notes, “Nicaragua’s infrastructure and economic platform have historically been linked to the trade with the US.  If we join the New Silk Road, it will take years, because it will be very complicated to modify Nicaragua’s infrastructure and economy” to align with the new initiative. 

Nicaragua, a geopolitical strategy

According to economist Marco Aurelio Peña, Nicaragua’s decision to end diplomatic relations with Taiwan and to reestablish relations with China should be seen against the backdrop of geopolitical and geo-economic concerns.

“Mainland China,” he noted, “has been interested in positioning itself on the Central American isthmus because it already has a strong presence in South America. In the case of Central America, it has already established diplomatic relations with Costa Rica, El Salvador and Panama.  This is of interest to China because it is in a race with the United States to become the world’s economic leader, and for this reason it already enjoys a strong presence in the region and has developed a strong commercial partnerships in countries that have traditionally maintained exclusive economic ties with the United States. “

Peña noted as well that the Nicaraguan government’s bet on China is a matter of survival and “of the preservation of power for power’s sake. Several countries have imposed sanctions on officials, associates, and relatives of the current government, which has forced it to look for new allies. Russia and China have emerged as two great nations that can militarily and economically counterbalance the United States.”

Peña indicated that Nicaragua will have to compete with its Central American counterparts to be able to export to China. “It remains to be seen other ways Nicaragua can gain benefits from the establishment of bilateral cooperation with China.” 

And at the same time, he recalled that the United States is the destination for all Latin Americans forcibly displaced by their country’s internal conflicts, poverty, unemployment, political persecution, etc. “In terms of its overall population, Latinos form the US’s largest minority group, and it is a country with which we have a lot in common.  With China, in contrast, we cannot say the same.  Aside from the great distance that separates us, culturally we are very different.”

“What can Nicaragua offer China that these other Central and South American countries haven’t?” Peña asked.  “The answer,” he continued, is geopolitical.  “With the addition of Nicaragua, China has established economic alliances with practically the entire Central American isthmus.”

He added as well that “While China has a portfolio of benefits to offer Nicaragua, including cooperation, investment, trade and business.  The question, however, is what else can China be interested in?  The country’s natural resources?  Restarting the Interoceanic Canal project?”

At the same time, others have taken an even more pessimistic view.  According to another economist, who also requested anonymity, it is unlikely that Nicaragua will be included in the New Silk Road initiative.

“This is pure propaganda,” he argued.  “Attracting investment requires years and is not easy. Just because we are now friends with China doesn’t mean that 20 companies will come and set up operations in Nicaragua. No, this is a whole process that will take years to get underway.” 

It is, in his view, reasonable to maintain relations with China, “because that’s really where the future lies.”  At the same time, he continued, this talk of Nicaragua is being included in the New Silk Road initiative is an illusion. Yes, there would be benefits, but the great limiting factor is that our economy is extraordinarily small, and, at the moment, we don’t have much to offer.”

Read more from Nicaragua here on Havana Times.