The current expansion of the Panama Canal will allow close to 90% of the world's 370-vessel liquified natural gas (LNG) fleet to pass through by 2015, the Panama Canal Authority announced Oct. 30. Currently the canal can accommodate only 8.6% of the global LNG fleet. Voyages to Asia from the US will cost 24% less than longer routes, according to the authority. The US, now the world's top natural gas producer due to extraction from shale rock, is projected to  become the third-largest LNG exporter by 2020. Excavation to double the Panama Canal's capacity, which began in 2007, is said to be 64% complete. (Bloomberg, Nov. 4; Platts, Oct. 30; IBT, Sept. 20)

Accounts did not emphasize that the canal expansion was undertaken in a bid to undercut Nicaragua's efforts to supplant Panama as the primary inter-oceanic route in the coming century with a new canal, to be built with Chinese capital. As Panama announced the projected LNG capacity, a high-level Nicaraguan delegation travelled to Hong Kong, Beijing and other mainland China cities. The delegation was hosted by HKND, the Hong Kong-based firm that hopes to build the new canal, and was led by Laureno Facundo Ortega Murillo—the son of Nicaragua's President Daniel Ortega.

HKND chairman Wang Jing insisted that the canal project is strictly commercial, and said he hoped the visit would be "low-key." The Chinese Ministry of Foreign Affairs has emphasized that the canal project is not government-backed.

The Taiwan factor
However, Nicaragua's Minister of Foreign Affairs Samuel Santos López caused consternation in Taipei when he referred to Taiwan as "China-Taiwan" in a statement to the 68th UN General Assembly meeting in New York a month earlier. Nicaragua is one of just 23 nations that currently recognize the Republic of China (Taiwan) rather than the People's Republic as the legitimate government of China. The statement read: "Nicaragua continues to support the just aspirations of China-Taiwan for greater participation in the various organizations and specialized agencies of the United Nations." This raised fears in Taipei that Nicaragua is preparing to switch recognition to Beijing, which officially regards Taiwan as a renegade province. (SCMP, Oct. 29; Taipei Times, Oct. 2)

Nicaragua did switch recognition to Beijing in 1985, when Ortega's leftist Sandinista government was last in power. Nicaragua resumed ties with Taiwan in 1990 when the Sandinistas were voted out and Violeta Barrios de Chamorro, a member of the country's traditional elite, became president. Taiwan donated some $7 million to the government of former president Arnoldo Alemán (1997-2001) to build a new presidential palace. However, Ortega has pointedly refused to move there and instead took up residence at the Olof Palme Convention Center, built with Swedish funds. (AFP, Sept. 23, 2012; DPA, Jan. 8, 2007)

Nicaragua is continuing to aggressively woo Taiwan for investment—including for infrastructure related to the canal project.

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