Security & Supply Chain: Russia & China interests in the Western Hemisphere
by Sterling J. Scott, Marketing Communications Coordinator, MHI | @mhi_sterling
As cost overruns and local labor disputes delay the expansion of the Panama Canal, Russia and China are increasing efforts to partner with Nicaragua to build the Nicaragua Canal. The Panama Canal’s expansion, which costs over $5 billion USD, comes during a period of rapid growth in the country’s emerging economy. The canal would be three times as long as the Panama Canal and would take about a decade to complete.
Nicaragua plans on tapping into the growth potential that sea trade presents by building a wider canal that can fit larger ships that are too wide for the Panama Canal. The $40 billion project is expected to begin in late 2014. The primary investor is HKND Group, a Chinese company that has rights to the planning, construction and management of the canal. Russia is a partner in the canal’s development and is seeking a role. The development of the Nicaragua Canal has the potential to strongly affect trade through and from the region, ultimately affecting global supply chains.
Russian Sustainment Centers
In March, it was reported that Russia was in negotiations with Cuba, Nicaragua, and Venezuela to establish permanent military bases in the countries. However, Deputy Defense Minister Anatoly Antonov recently elaborated that Moscow had no intentions of setting up any military bases in Latin America and is only considering sustainment centers for Russian military ships in various ports across the globe.
Chinese Foreign Investment
While the United States, with $41.5 billion in 2012, is still the biggest foreign investor in Latin America, its level of investment is declining while China’s is rising.
Latin America accounts for 13 percent of China’s $87.8 billion overall foreign investment – about $11.4 billion in 2012, a significant increase from the $120 million of 2004. All told, between 2005 and 2013, China invested $102.2 billion in the region, according to Boston University. Over that period, China invested over $50 billion in Venezuela, over $10 billion in Argentina and Brazil each, as well as roughly $10 billion in Ecuador.
Businesses should develop an understanding of how their supply chains are or may be affected by the Nicaragua Canal as well as Russia and China’s activities in Latin America. It’s important for companies to have a real-time view of their supply chain to increase agility and mitigate any potential risks.
More information on supply chain analytics and other innovations that drive supply chains are available in the 2014 Annual MHI Industry Report which can be downloaded at www.mhi.org.
MHI is a great resource for connecting suppliers of supply chain products and solutions with the companies that need them. For more information on how MHI can help your business, visit www.mhi.org.