The megaproject, which was expected to be completed by this year, would also include an airport, a pipeline, two ports and a free-trade zone.

‘We don’t want the Chinese here’: Nicaraguan farmers protest US$50b canal

But the plans were quickly met with scepticism by local farmers, indigenous groups, human rights advocates and environmentalists in Nicaragua, who feared the impact of such a major project, as observers and experts raised doubts about its feasibility.

Six years on and dozens of protests later, activists are renewing calls for the project to be cancelled for good, and for the law that allows its construction to be repealed.

“We want this to be the end of the project – once and for all,” says Amaru Ruiz, human rights advocate and president of Fundación del Río, an environmental NGO.

The agreement signed six years ago between the Nicaraguan leader and HKND includes a clause stating the concession to any “sub-project”, meaning infrastructure, related to the canal could be cancelled if investment had not been obtained within 72 months – or as of June 14, 2019.

According to the agreement, the Ortega administration or the company have 90 days – until September 12 this year – to inform each other of a cancellation, but it is unclear if either party is planning to do so.

The same document also states that the agreement “shall terminate automatically, without the need for a party to take any action, on the first date that each concession has expired or has been terminated”.

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Ruiz, who is now in exile in Costa Rica, said he hoped this would lead to all plans related to the controversial canal to be ditched.

“We are urging the government to issue a formal note informing the company that the concession is invalid, and that there aren’t conditions to pursue the project. And then, we request for the Law 840 to be formally revoked,” Ruiz said.

Law 840 has been perceived as a tool used by the government to stifle those who challenge the project and to expropriate land. According to Ruiz, it also puts the nation’s sovereignty and its natural resources at risk.

Earlier this month, the Cocibolca Group – which consists of several civil groups, including Fundación del Río – issued a statement calling for the project’s cancellation.

The concession’s agreement, they claimed, has been “plagued by illegalities, irregularities, signs of government corruption and illicit enrichment of some people linked to the government, who has used the Company of the Grand Canal of Nicaragua as a means to acquire properties along the planned route of the canal and other activities that are at odds with transparency and good management of public affairs”.

Advocates and experts say the project has already caused environmental damages, and that about 119,000 people living along the canal route have faced not only uncertainty, but also harassment from authorities.

Ruiz said while he thought it was the “right moment” to revoke the concession and dissolve the law, the government would probably not do so, because the move would be perceived as a “political defeat”.

He also feared the government and HKND would sign a new deal to pursue the canal.

CASH WOES

Questions have swirled in recent years over the bankroller’s ability to see through the project.

Doubts about the project’s financial viability first emerged in 2015, when Wang Jing, chairman of HKND Group, reportedly lost over 80 per cent of his fortune in the Chinese stock market crash. His net worth was believed to have plunged from US$10.2 billion to US$1.1 billion.

But the following year, the firm’s executive vice-president, Pang Kwok Wai, who had been in charge of works for the canal, told the South China Morning Post the project was in shape to go on.

Last year, HKND abandoned its office at the International Finance Centre in Hong Kong, Bloomberg reported.

Nicaragua’s US$50b canal project ‘going ahead slowly’ as funding evaporates and Chinese investor keeps low profile

According to records seen by the Post, HKND’s official address is now of a secretarial company in Kowloon, while Wang’s residential address appears to be in Beijing.

Other documents show the shares of HKND are held by the Nicaragua Development Investment Limited, whose address is in the Cayman Islands.

The company last updated its official website and Facebook page in 2017.

Neither the Nicaraguan government nor HKND responded to requests for comments.

Carlos Murillo, professor of international relations at the University of Costa Rica, believes Nicaraguan president Daniel Ortega will let the project die down quietly, as a national crisis grips his attention.

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“It is necessary to recognise that the Nicaragua Canal is a non-viable project for technical, environmental and economic reasons,” Murillo said. “The government is probably thinking: ‘we do nothing, so people will forget about the canal’. They have more important problems to deal with at the moment.”

After the 2021 presidential elections, “the government will say the Chinese company defaulted or breached the agreement and the megaproject is gone”, the professor predicted.

Economist Po Chun Lee, a professor with the Institute of Higher National Studies of Ecuador, said the project’s looming failure was no surprise.

“The facts showed this project was going to fail, and the six-year fundraising period is a good legal clause to execute to put the last nail in the coffin,” he said.

“The main financial backer, Wang Jing, can’t fund it himself, and suspicions about Chinese government funding will be confirmed if an angel/saviour funder shows up at the last minute to save the deal,” Lee said. “Since China and Nicaragua don’t have direct diplomatic relations, China had to go through a private investor.”

Nicaragua has diplomatic ties with Taipei, which is viewed by Beijing as a renegade province.

China in Latin America: partner or predator?

Both Lee and Murillo said it will not.

“People don’t connect this project with the Chinese government,” Murillo said. “Most Nicaraguan people knew this was a failed project from the beginning.

According to economist Lee, there’s a possibility that Beijing could “deny their involvement if it fails. They can spin the story that in the end, it was the dream project of an erratic billionaire”.

Lee also noted that “China has a myriad of successful projects in Latin America to showcase, like Ecuador’s Coca Codo Sinclair dam [and ] the many bridges that they built here”.

“China knows that even if it loses economically, it can’t lose face before the world,” Lee said. “The official record is still intact.”