The relationship that the Ortega Murillo clan is trying to consolidate with China is unequal and subordinate, and in the long term, it will have adverse consequences for Nicaragua. It includes economic opportunism, anachronistic geopolitical alignment, and political miscalculation.
Economic Opportunism
The Ortega Murillo clan’s economic opportunism, manifested in their alignment with China and Russia, has led to the surrender of Nicaragua’s sovereignty to Russia through onerous agreements. These agreements, far from benefiting the country, have only served to enrich the elite in power. The clan’s belief in the economic benefits of trade, investment, and loan relations with China, even if they fail to stimulate the country’s development, is a misguided strategy that could have serious long-term implications for Nicaragua.
Two loans totaling more than US$1 billion have already been signed. They are destined for the construction of gas containers and an airport. The dictatorship is convinced that this indebtedness will increase the business of the members of its close circle. At the same time, it will also diversify its external dependence at a time when the country’s indebtedness with the Central American Bank for Economic Integration (CABEI) has exceeded the established limit, and its options are limited.
In the short term, commercial dependence, primarily through imports and public investment in construction, will guarantee the enrichment of the “new businessmen” who are part of the circle of power.
In the long term, Nicaragua’s future is uncertain due to its increasing debt and commercial dependence on China. Without productive alternatives, judicial integrity, and strong links with the United States, the Nicaraguan economy is at risk. The projected slower remittance growth after 2024 will reduce consumption and the capacity to import Chinese goods. Furthermore, the economic and political modernization of other nations, coupled with the low influx of tourists and the absence of solid trade, will make it difficult to sustain the airport they plan to build with Chinese resources.
The debt accumulating will be inherited by those who, in the future, assume power after the democratic transition.
Geopolitics out of the 80s’
Ortega’s vision is still based on the ideology of the Cold War, which no longer exists. Russia is a country dependent on China, even more so since its invasion of Ukraine. More than 30 percent of its imports come from China, and 20 percent of its exports go to that market. Russia is not the Soviet Union but an economic relic with energy resources and nuclear weapons that it uses to blackmail a world moving in the opposite direction.
Ortega believes that by allying with China, he strengthens a virtuous circle of non-democratic regimes to combat Yankee imperialism, which he detests, although the majority of Nicaraguans admire it.
In a way, China is the last option for dictators. But it is not the first.
A global, modern China
The political calculation is wrong. Ortega is doing the same as thirty other dictatorships in the world: increasing its commercial dependence on China because it does not condition its economic relationships on whether other countries respect the rule of law.
However, the dictators do not understand that China carefully measures its political and economic costs. It does not risk its already tainted, undemocratic reputation and shady trading methods. Its global economic strategy is designed to grow trade with the countries of the democratic world and increase financial dependence on them. Fewer than fifteen countries account for 65 percent of China’s global trade, and they all are democratic. Meanwhile, the thirty dictatorships mentioned above, including Russia, Turkey, North Korea, and Iran, account only for 10 percent of China’s total trade.
China’s global strategy, which includes Artificial Intelligence (AI), Blockchain, Biotechnology, computing Services, and Cloud Computing, is a set of priorities that do not fit in the geostrategic map of dictatorships such as Nicaragua. Therefore, China prefers allies like Argentina and will not risk a disagreement over Nicaragua with Javier Milei.
In summary, the decisions of the Ortega Murillo clan show an asymmetrical relationship of economic subordination with high costs for Nicaragua and disincentives for long-term investment because business with the Chinese only benefits the corrupt. While mining companies like Calibre may leave, Chinese state-owned companies will arrive, but the gold trade will also decrease.
The Nicaraguan Democratic Concertation CDN-Monteverde believes that Chinese imports, including the installation of large department stores, displace local businesses, and financial dependence resembles the indebtedness that Ortega accumulated during his first term in office in the 1980s, which put Nicaragua on the list of highly indebted poor countries. Nicaraguans and the international community will see that the Ortega Murillo dictatorship is damaging the country and exacerbating inequalities.
The big lie of the inter-oceanic canal in Nicaragua
In Nicaragua, the construction of an inter-oceanic canal linking the Caribbean Sea and the Pacific Ocean has been a political and development myth that the country has been dragging along since the 19th century. Different governments have announced its construction, selling the illusion that this canal will lift Nicaraguans out of poverty. However, so far, none of these projects, announced with great fanfare, has materialized.
The most recent attempt was made in June 2013, when the dictatorship led by Daniel Ortega and his wife Rosario Murillo used their control over the National Assembly to approve Law 840, Special Law for the Development of Nicaraguan Infrastructure and Transportation concerning the Canal, Free Trade Zones and Associated Infrastructure, which granted the obscure Chinese businessman Wang Jing a 100-year concession to build the waterway and other related projects.
As revealed by numerous studies carried out by specialists, including the Academy of Sciences of Nicaragua, the terms of the concession and the construction of the canal, instead of representing a milestone in the development and welfare of the population, were meant to ensure the enrichment of the dictatorial family and its circle of power with a considerable dispossession of valuable properties and natural resources, to thousands of Nicaraguans.
The onerous surrender of national sovereignty unleashed citizen rejection and numerous protests through various organizations, including those of the residents along the canal route, who for years mobilized thousands of anti-canal peasants who would lose their land if the project was ever completed.
The great bet with China
Thirteen years after that act against the nation, the dictatorship once again used the legislative power for their benefit. On this occasion, not only to revoke Law 840 but also to reform Law 800, Law of the Juridical Regime of the Grand Interoceanic Canal of Nicaragua and of Creation of the Authority of the Grand Interoceanic Canal of Nicaragua, to which it made slight changes, to install new subordinates at the head of the Grand Interoceanic Canal Authority.
These changes, which could be seen as a victory for the citizens’ anti-canal demands, are motivated by the interests of the Ortega-Murillo clan and China, their most recent political ally.
In this new alliance that the dictatorial regime has rushed to consolidate at any cost, Nicaragua is being offered on a platter to be used as a platform for the interests of the Asian giant in Central America. The signals suggesting Chinese intervention in this new canal attempt did not take long. The first to send them was retired Major General Oscar Mojica Obregón, head of the Ministry of Transportation and Infrastructure (MTI), who insinuated that China could be the new investor in the megaproject. Another sign was the recent granting of legal status to the Association for the Peaceful Unification of China in Nicaragua (APUPCN).
For the Ortega-Murillo family, changing Wang Jing for China makes little difference since the background of this failed mega-project attempt is to guarantee their enrichment. But taking into account that in countries in other continents, such as sub-Saharan Africa and even in Latin America, including Bolivia, the exploitation of natural resources and the environment by the Chinese has devastating consequences. For Nicaragua, this possibility threatens its sovereignty and future development because it does not ensure employment for the Nicaraguan labor force, as has happened in numerous Chinese projects where they employ only their workers.
The Ortega Murillo dictatorship intends to sell this project again as it did in 2013 and as it has done with other mega-projects. The citizenry knows it is another deception because, as on different occasions, it is an unfulfilled promise now lined with the very striking but flimsy Chinese paper. It is handing over absolute power to China over a wide strip of Nicaraguan territory, which can be a risk that transcends to the rest of Central American countries and even to the United States due to the confrontation between powers and the threats to their security.
