On April 10, Nicaragua and China signed a $26.9 million loan agreement that will be used to build three gas storage tanks in the country, highlighting Beijing’s growing role in the regional energy infrastructure, Latinamerican Post reported.
Former Nicaraguan opposition lawmaker Eliseo Núñez, in exile in Costa Rica, highlighted two distinctive aspects of Chinese loans: “Their high cost and the opacity that characterizes such transactions,” he told Diálogo on April 30. He also raised questions about the lack of transparency in Chinese operations.
“It’s important to note that Beijing does not grant sovereign loans, but rather provides financing backed by natural assets or resources of the recipient country,” Núñez said. “Therefore, the crucial question arises: What resource has Nicaragua made available to China as collateral for its financial agreements?”
The agreement signed between Managua and the Chinese company CAMC Engineering Co. Ltd. will allow the Nicaraguan Gas Company to design, build, and operate three Liquefied Petroleum Gas (LPG) storage tanks, pro-regime daily El 19 Digital reported.
However, the real effectiveness of these projects to promote significant change in Nicaragua has been criticized. Núñez stressed that “the underlying structure of Nicaraguan society has not undergone substantial changes under the Ortega regime, which raises deep doubts about the impact that this Chinese loan could have on the country’s development.”
“From December 2023 to April 10, 2024, the Chinese government has injected $602 million in loans in Nicaragua,” Wálmaro Gutiérrez, a pro-regime lawmaker and president of the Economy Commission, told Nicaraguan daily La Prensa.
According to Latinamerican Post, this financial flow is evidence of an aggressive Chinese investment strategy in line with its geopolitical and economic interests in the region. Beijing is expanding its influence in Latin America through loans and infrastructure investments as part of its Belt and Road Initiative, as it is already doing in Peru, by creating a Chinese monopoly in the electricity sector.
The Beijing-financed LPG project is an example of this trend, representing a further step in China’s ambitions for global expansion through infrastructure and economic investment, Latinamerican Post reported. In addition, this project reflects China’s shifting geopolitical alliances and growing influence in Central and South America.
Chinese dominance
China’s infiltration in various sectors of Nicaraguan infrastructure is an issue that is shaping the country’s economic and political landscape. The term “crony capitalism,” Núñez said, “describes the close relationship between political power and economic elites in Nicaragua, a situation that bears similarities with the Russian reality,” he said.
China presents a model of controlled and regulated corruption, in contrast to the lack of control and rampant corruption in Nicaragua, Núñez added. “This suggests that, while corruption is present in Beijing, within certain limits set by the state, in Managua this practice is unregulated and more widespread.”
The extent of Chinese influence in Nicaraguan infrastructure can be seen in the construction of 12,000 social housing units in several municipalities, carried out by a Chinese company with Chinese workers but paid for by the Nicaraguan regime. In addition, the concession of mining territories to Chinese companies has generated controversy, especially in indigenous areas, Central American think tank Expediente Abierto indicated.
The arrival in 2023 of chain stores such as Casa China, which offer Chinese products, manufactured with low quality materials and with better tax incentives, compete unevenly against local products and retailers, Expediente Abierto said.
Other projects include the expansion of the Puerta Huete Airport and a railway. In the electricity sector, Chinese companies have won awards for hydroelectric, thermoelectric, and solar projects, highlighting their growing role in Nicaragua’s energy infrastructure, Expediente Abierto added.
“The projects, backed by Beijing and Ortega, threaten to dismantle the middle sector of local commerce,” Núñez said. “These developments intensify a restrictive model that limits freedom of expression, corruption reporting, and independent political affiliation. In addition, the establishment of competing businesses will face serious obstacles in an environment favored by the regime.”
The Collective on Chinese Finance and Investment, Human Rights, and Environment (CICDHA), highlights that Chinese projects in Latin America have recurrent negative environmental impacts, such as water and air pollution; non-compliance with free, prior, and informed consent of indigenous peoples; and repressive response to protesting communities.
Propaganda and solution
“In the current context, the Ortega regime has activated its propaganda machine to ‘communicate,’ through its pro-regime media, the success of its trade relations with China in the first quarter of 2024,” security and defense analyst Javier R. Meléndez, director of Expediente Abierto, said via X on April 22.
Nicaragua thus becomes a scenario where Russia and China seek to counteract the influence of democratic countries, Núñez said, adding that Russian ground stations in the country amplify the dissemination of Russian propaganda in Central America.
The solution, he said, lies in the return to democracy. “A democratic Nicaragua would maintain relations with various countries, within a framework that does not jeopardize its relations with other nations,” Núñez concluded.