Building a Canal to Power

By building a canal in Nicaragua, China asserts itself as a global power.

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Wang Jing, CEO of Xinwei Telecom Enterprise Group, speaks during an interview in front of a painting featuring the late Communist leader Mao Zedong and his Red Army commanders in a meeting room of the company's headquarters in Beijing, China, Sunday, Sept. 1, 2013. When Nicaraguan President Daniel Ortega granted the Chinese telecommunications executive exclusive rights to develop a $40 billion canal through Nicaragua and operate it for 100 years, his administration touted the CEO's record of success heading a wireless communications firm with projects in 20 countries. Xinwei boasted that it had orchestrated an array of deals worth more than $5 billion over the last three years, in places as far-flung as Zimbabwe and Ukraine. But an examination of those claims by The Associated Press around the world paints a different picture. While at least some of Xinwei's domestic enterprises appear to be successful, outside of China, promises to build revolutionary new telecom networks have yet to materialize.

While America's national security leaders have been absorbed by the Middle East and the putative "pivot" to Asia, little attention has been paid to China's newest and arguably boldest challenge to America's preeminence: a Chinese canal in the Western Hemisphere.

Policymakers in Washington appear to have shown little concern over the revelation that a Chinese billionaire, Wang Jing, plans to build a $40 billion canal in Nicaragua to rival the Panama Canal. Yet it should be readily apparent to our leaders that Wang is more than likely a proxy for Chinese government interests. Press accounts indicate that his office displays a mural of Chairman Mao, as well as models of various Chinese military weapons. In addition, Wang's canal consortium is backed by China Railway Construction Corporation, a huge Chinese government-owned enterprise. Wang, however, asserts that he has no Chinese government connections. 

Wang's Nicaraguan canal is still in the planning stages and there is much that could go wrong with the project, even before it starts. So there is a real possibility that this venture, like the first attempt by the French to build a Panama Canal, could be abandoned. For now, however, the plan is to begin construction in late 2014 and complete the canal in five years. This is such a massive undertaking, with an expected price tag of more than $40 billion, that the stated costs and timeline are certainly just approximations at best. But while this canal is far from a done deal, the U.S. must not take this bold venture lightly.

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The lack of concern in Washington over this potentially huge geopolitical shift is partly due to the fact that we do not have a clearly defined Latin American policy. While the 1823 Monroe Doctrine, along with its Roosevelt Corollary, was the policy of the U.S. for much of the 19th and 20th centuries, it no longer is – and nothing coherent has taken its place. This lack of a comprehensive policy regarding Latin America, and our focus on other geographic regions (such as the Middle East and Asia), has created an opportunity for a soft power play that could allow China to gain a strategic foothold in the Western Hemisphere.

Some would argue that having an additional canal in Central America is good for international commerce. But the economics do not point to any reasonable justification to build a canal through Nicaragua; even if the new canal could equal the Panama Canal in revenue from day one, it would take at least 40 years for it to even break even. So why would the Chinese want to build a canal that does not make economic sense?

Beijing's true motivation may lie more in geopolitical purposes than in trade. The Chinese are not just building this canal. The Sandinista government of Daniel Ortega in Managua has given Wang a 50 to 100-year lease to control and operate the canal.  With this long term lease, China intends to steadily increase trade and investment in Central America in order to obtain access to markets and to garner new political allies along the way. But there's more to it than that. 

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To understand why China covets this canal, it is important to remember why the U.S. wanted its own in Central America in the first place. U.S. policymakers in the early 20th century knew how a canal through Central America could both enrich and empower the country. The Roosevelt administration understood full well that the Panama Canal was not just for business and trading purposes; it would give the U.S. influence in the region, enshrining American control over a key commercial route and maritime asset. "Strategic primacy," as described in 1905 by Roosevelt's secretary of state, Elihu Root, would require the U.S. to engage in military policing activities in the region surrounding the Panama Canal.

This same need for "strategic primacy" through policing activities will inevitably result from any new Chinese canal in Nicaragua. Beijing's increased presence, in turn, would drastically hamper the ability of the U.S. to hunt for contraband or to keep enemy naval assets from entering the Latin American region. It also could create the ability for the Chinese Navy to move warships into the Caribbean and the Atlantic, at will. It is also not beyond the realm of possibility that a Chinese-controlled canal, located in an openly-hostile nation like Nicaragua, could be used to facilitate staging for hostile naval or military forces.  

The completion of the Panama Canal was universally regarded as one of the supreme human achievements of all time, and it helped propel the U.S. to the status of a major global power. The completion of the Panama Canal also marked the beginning of what we now know the American Century. As the U.S. military pivots to Asia, we must also ensure that our own hemisphere is free from potential hostile threats. A Chinese-controlled canal in Nicaragua is nothing less than China's own bold pivot, but to the West. It also represents a challenge to American primacy — one that could bring about the Chinese century far sooner than any of us may think.

Eric Hannis is Senior Fellow in Defense Studies at the American Foreign Policy Council in Washington, D.C.

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