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Trouble Brewing in Nicaragua

If an American corporation engaged in unlawful property confiscations in rural areas of Nicaragua, with the full cooperation of the Nicaraguan military, it would be front page news at the New York Times and other progressive news organizations. The international NGO network would see to it and then some. However, since it involves a left-wing Sandinista government and Chinese private and government entities, the issue barely registers as political tumbleweed in the United States. At least for the moment.

Last week in Managua the Executive Director of the Violeta Chamorro Foundation, Cristina Chamorro, warned that a proposed interoceanic canal’s Achilles Heel was official state “secrecy” about the project. Chamorro is concerned about property rights as well as the rise of unlawful confiscations of private property by the Sandinistas, the environmental impact of the proposed canal, as well as long-term Nicaraguan sovereignty (according to a legislative decree, control of the canal would, in essence, be in the hands of a Chinese company for many years after completion).

Nicaragua’s La Prensa newspaper, Tim Rogers of The Nicaraguan Dispatch blog, and Fusion have done a good job documenting some of the key events related to the proposed canal. These are issues that Congress and the Obama Administration should begin to scrutinize.

For example, in addition to rural families recently threatening to pull children from schools in protest to the canal, dozens of Nicaraguans have reportedly gone missing, been jailed, or injured related to clashes with the Sandinista government because of the project. The following statement from a Nicaraguan civil society group not prone to shrill statements succinctly makes the point that political trouble is in the offing:

“This is no longer a dictatorship lite, this is a now a full-blown repressive dictatorship that is baring its claws and releasing its dogs,” Vilma Nuñez, head of the Nicaraguan Center for Human Rights, told Fusion.

In addition to political instability, which should concern the United States, there’s the Chinese investor component that includes both private Chinese companies as well state-owned Chinese entities. Sure, they have a website and every now and then appear at public relations events. Yet it is this somewhat crepuscular nature of its operations in Central American that calls for further U.S. government scrutiny. They say all the right things. Just enough to make it legitimate sounding.

The Chinese company engaged by the Nicaraguan Congress in 2012 — the HKND Group — states in marketing collateral that the proposed interoceanic canal is needed to support global trade. The HKND also states it will “plan, design, construct and thereafter to operate and manage the Nicaragua Grand Canal and other related infrastructure projects.” Innocent enough. Who would not be for more “trade” and “free markets.” But you’ll need to dig a little deeper to start to have a better picture of the business connections to the People’s Republic of China.

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According to Inside Costa Rica, “the latest known proposed route for the Nicaragua Interoceanic Canal, the proposed Pacific entrance to the canal is the mouth of the Brito River. Also note the three sets of locks in yellow.”

For example, HKND has teamed up with a Chinese government-owned corporation — The China Railway Construction Corporation (CRCC) — the second-largest state-owned construction company in China. Another Chinese company, XCMG, is also involved. XCMG‘s holdings are mostly outside the United States, including a Venezuelan entity that manufactures heavy machinery that will probably be used in the canal project, but it also has a U.S. presence in Cold Spring, New York. And, if you keep digging and we plan to, you will find many other corporate entities tied to the government of China.

When I first wrote about this project in 2013 on a tip from a friend in the region with close ties to Nicaragua’s opposition, I had a tough time believing any of it was true. But folks advised me then, and they do so today, that the power grab by Daniel Ortega required a sideshow and the canal, along with other projects, fit the bill to a tee. Since then I’ve talked with others in civil society as well as the Nicaraguan Congress. It seems the Sandinistas are on a power trip and, in the process, eroded the rule of law, freedom of expression, and other fundamental liberties.

Why is U.S. government radio silent?

In addition to the human rights abuses by the Sandinistas as well as the unlawful confiscations of private property, why are U.S. policymakers not reviewing the U.S. national interests at play in this matter such as regional security and economic interests? What is the role, if any, of Americans and American-held corporations in this venture? And, on a possibly related front, why do the Sandinistas want or need to buy Russian Mig fighter jets? Someone needs to step up in the Obama Administration and the Congress, fast, and ask these and many other related questions.

If you’re an American taxpayer, review the State Department’s summary of U.S. foreign policy toward Nicaragua. It includes, among other things, a certification by Uncle Sam that Nicaragua is working to resolve hundreds of still pending confiscated property claims held by Americans that date to the 1980s at the hands of the Sandinistas.

To this day, I’ve advised clients and potential clients who seek to invest in Nicaragua to conduct as much due diligence as possible before buying any real property in that country. There is many a good deal, however, you must undertake heightened legal and business precautions before doing so.

Nicaraguans suffered a great deal under Communist rule during the Cold War and, to a certain extent, the country has still not completely recovered. While not all Sandinistas are bad actors, the Sandinistas in control leave much to be desired when it comes to meeting basic standards of democratic governance. It is these same bad actors that appear to want to facilitate meddling in the Americas by a foreign power, a global competitor of the United States.

It is time to put U.S. leadership in action to avert another political crisis in Central America.

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