Fabrizio Verde, Antidiplomatico, December 10th 2021
https://www.lantidiplomatico.it/dettnews-nicaraguacina_la_nuova_via_del…
"Today is a historic day. The re-establishment of diplomatic relations with the People's Republic of China fully corresponds to the will and fundamental interests of the Nicaraguan people.
Nicaragua recognizes the one-China principle and acknowledges that the government of the People's Republic of China is the only legitimate government that represents all of China and Taiwan is an inalienable part of Chinese territory.
Nicaragua has already broken off supposed diplomatic relations with Taiwan and will no longer have any official relationship or contact with Taiwan.
Nicaragua admires China's extraordinary success in development, highly appreciates China's important position in the international arena, and supports China's proposed global development initiative.
Nicaragua is willing to actively participate in the construction of the New Silk Road.
Nicaragua is looking forward to carrying out operations with China in the political, economic, social and cultural fields, among others, in order to promote national development, relations between China and Latin America and the Caribbean, as well as South-South cooperation."
These are the words pronounced by Nicaragua's Laureano Ortega, presidential advisor and deputy foreign minister of Managua, in the joint press conference with his Chinese counterpart Ma Zhaoxu following the announcement of the re-establishment of diplomatic relations between China and Nicaragua.
Very significant statements that give an idea of the historical significance of the moment and how this step can mean a great deal for Nicaragua, Central America and the whole of Latin America. The entire central and southern hemisphere of the American continent will in fact benefit from win-win cooperation with the People's Republic of China.
It is precisely Central America that shows us that U.S. domination has not brought any benefit to the countries and peoples of the region. Guatemala, Honduras and Panama have been financial partners of the United States for a hundred years. Wall Street banks and corporations have almost a free hand in these countries. The result is there for all to see: rampant poverty and increased violence and power for drug traffickers. For many in Central America and Mexico, the unregulated reign of U.S. corporations has made life almost unliveable and they have been forced to flee to the United States. Every day, bodies are discovered along the U.S. border. The bodies belong to those who have died trying to enter the country after fleeing their own countries. The bodies belong almost exclusively to those living under neoliberal and liberal free market regimes.
Like the dead in the car accident in Chiapas (Mexico), where a truck overloaded with men and women in a container lost control, causing the death of more than 50 migrants mostly from Central America.
This is the scenario in most Central American countries. But one country has taken a different direction, with encouraging results. In Nicaragua, the standard of living is rising and the country is stabilizing. A recent Wall Street Journal article describes how poverty has been dramatically reduced over the past decade.Unlike its neighbors, Nicaragua is not led by a pro-Western, market-oriented regime. The Sandinistas are in power.
President Daniel Ortega calls himself a Marxist revolutionary. While other countries in the "Bolivarian bloc" of left-wing Latin American states have gone into distress due to U.S. economic sabotage and falling oil prices, Nicaragua's economy continues to grow. In part because U.S. sabotage and sanctions have little effect on a country that is not dependent on imports and produces almost all the food it needs at home.
According to what the Wall Street Journal writes, poverty in Nicaragua fell by 30 percent between 2005 and 2014. Meanwhile, GDP increased by 36% between 2007 and 2016. The trend of Nicaragua's economy is in stark contrast to the rest of the region.
China and Nicaragua
In Nicaragua's growth, one of the key factors is its close relationship with the People's Republic of China. In fact, China is involved in Nicaragua's largest project: the construction - worth 40 billion dollars - of a navegable canal between the Caribbean Sea and the Pacific Ocean that crosses the entire country, an alternative to the Panama Canal.
The project is part of Xi Jinping's "One Belt, One Road" policy. In the Western Hemisphere, Nicaragua can perhaps be described as the most important point on China's New Silk Road.
Prior to 1949, China was commonly referred to as "the sick man of Asia." In the 1970s, Nicaragua could be described as "the sick man" of Central America. The country was led by a brutal dictator, Anastasio Somoza, who was supported by the United States. When the country was hit by a terrible earthquake in 1972, the world watched as the corrupt regime in the service of the United States confiscated humanitarian aid and prevented the injured and displaced from receiving assistance.
That tune changed decisively in 1979 when the Sandinista National Liberation Front took power. Like Mao Zedong's Chinese Communist Party, the Sandinista National Liberation Front had developed their own ideology and tactics based on the unique conditions of their country. In addition to Marxism-Leninism, the Sandinistas also embraced Christianity and had many Catholic priests in their ranks. The Sandinistas were environmentalists and sought to preserve the country's rainforests and natural resources, which Western companies were destroying.
Just as Mao Zedong's revolution in China deepened enormous efforts to improve the lives of peasants, Daniel Ortega and his comrades focused on providing care for their rural population. Cuban doctors ran free health clinics built with Soviet money. The Sandinista government launched a literacy campaign and thus succeeded in teaching millions of poor Nicaraguans, who had previously languished in poverty and ignorance, to read and write.
The U.S. used the same tactics in both China and Nicaragua: Washington supported dictator Chiang Kai-shek against the revolution in China, while in Nicaragua the U.S. financed and trained violent and extremist terrorists known as "contra" to overthrow the Sandinista government.
When in 1990 an electoral cartel led by Violeta Chamorro wrested power from the Sandinistas, Managua, having aligned itself with Washington, in addition to returning to neoliberal economic measures, established diplomatic relations with Taiwan. However the Sandinistas managed to return to power in 2006 with a program of economic nationalism, rights for indigenous peoples and independence for the country. It is therefore a natural consequence on a diplomatic and foreign policy level to return to the recognition of a single China represented by the People's Republic of China.
The New Silk Road in Latin and Central America
Nicaragua's decision to recognize China, establish diplomatic relations with Beijing and cease its relations with Taiwan gives the Dragon another foothold in Latin and Central America. With Nicaragua set to sign a memorandum of understanding on the New Silk Road with China, the diplomatic move adds another piece to China's presence in the region.
Nicaragua is a member of the Central American Common Market (CACM), which also includes Costa Rica, El Salvador, Guatemala and Honduras, with the first two countries already having active agreements with China. None of these countries have double taxation treaties with the People's Republic of China and, with the exception of Costa Rica, none have free trade agreements with China either. But that could change in the short term. China is now the second largest global trading partner, after the United States in the CACM, so options are on the table.
Nicaragua's move can thus be read as a contrast to the U.S. "Build Back Better World" infrastructure initiative. That plan on paper claims to want to make heavy investments, but there are doubts about the real capacity of the U.S. plan designed for the purpose of countering China's rise and further tying the member countries to the United States.
CACM countries certainly need investment, however Washington imposes constraints and heavy interference, so countries will watch with much interest how China finances infrastructure development and invests in projects in Nicaragua, as well as how trade is developed.
Despite the lack of a free trade agreement, Chinese trade has become regionally important and is growing.
Nicaragua's bilateral trade volume with Taiwan in 2020 was approximately $168 million, in contrast to China's trade with Nicaragua of just under $50 million. However, Taiwan's trade has probably almost reached a ceiling with Nicaragua: it is limited by volume and market capacity. Managua therefore aims in 2022 to surpass with China the volume of business achieved with Taiwan in a matter of months.
While the United States will continue to be the dominant market for the CACM, Nicaragua's position poses a challenge to Washington.
Nicaragua's decision to recognize China was a smart move, as well as a natural diplomatic evolution of the increasingly close relationship between Beijing and Managua.
If "Build Back Better World" includes Central America, how many resources will the US invest?
It's hard for the U.S. to outdo China both in investment and in terms offered. Nations prefer mutually beneficial win-win agreements, such as the ones China is advancing, to agreements that are heavily conditional, subordinating them to Washington.
In any case, the Chinese locomotive runs unstoppably throughout the subcontinent. The great oriental dragon is now fundamental to the economy of Latin America. It is a voracious consumer of food, minerals, metals and fuels produced in the region. Trade, financial aid and investment are key to enabling the area, regardless of the political sign of its governments, to meet its growth challenges.
According to Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), cooperation between China and Latin America and the Caribbean offers an opportunity to reduce global asymmetries and support an inclusive transformative economic recovery that promotes sustainable development.
The pandemic has not stopped China's long march: in the context of the pandemic, research and development agreements have been intensified, especially in pharmaceuticals. Its bet (without abandoning other sectors) is to advance in logistics, services, telecommunications and transport. Nothing seems to indicate that this trend will disappear.
The Asian nation is Latin America's second largest trading partner, above the European Union. Today it represents 15% of the area's trade. At the same time, it is the third largest source of investment in the area's economies. Between 2015 and 2020, private and parastatal companies invested about $7,850 million in the hemisphere. Countries like Chile have had a free trade agreement with China since 2006. And Peru has become the preferred destination for investment by Chinese companies in the continent.
According to the China-Mexico Studies Center (Cechimex), the eastern giant has 138 infrastructure projects in Latin America, with an investment of about $94 billion, which have generated 600 thousand direct jobs.
China's growing presence in an area traditionally of U.S. influence is meeting with increasing unease from Washington. The empire has sought to contain and manage the impact of Asian power and limit it to the economic sphere. Beijing, in turn, has acted cautiously and made it clear that its intention is to expand its economic boundaries.These are deals, investments and loans not conditional on the acceptance of development dogmas, ideological considerations or strictly political criteria. They are agreements based on cooperation and mutual support.
In an interview with the Mexican newspaper La Jornada, former Bolivian President Evo Morales explained this relationship as follows: "China supports development without blackmailing us, without conditioning us. The United States supports, but in exchange for the privatization of natural resources and basic services, as well as conditioning the fight against drug trafficking. China gives you credit, it doesn't put any conditions on you. This is the profound difference. The same happens with Russia and other countries. In my experience, we are fighting with an empire, but not with other powers."
In a short recorded video message released at the summit of the Community of Latin American and Caribbean States (CELAC) last September, Chinese President Xi Jinping offered help to Latin American and Caribbean countries to contribute to a full recovery after the pandemic and to promote socioeconomic development. The relations - he stressed - have entered a new era characterized by equality, mutual benefit, innovation, openness and well-being for the peoples.
China, Xi pointed out, wants to work with the countries of the region to overcome difficulties together and create opportunities to build a community of shared future between China and Latin America.
The dragon, despite U.S. maneuvering, has no intention of leaving Latin America. A crucial region for the western development of the New Silk Road.