Although chummy relations between Nicaragua and Iran have perturbed U.S. officials, property owners of Nicaraguan real estate could benefit from the outcomes of the exchange. Nicaraguan President Daniel Ortega announced on August 4 that Iran has pledged more than $350 million in aid for the construction of the first deepwater port on Nicaragua’s Atlantic coast at Monkey Point. The fulfillment of this agreement would be a major breakthrough for Nicaragua’s infrastructure, enabling the country to ship goods directly from the Atlantic side of the island, rather than through ports in Honduras and Costa Rica.
Nicaragua’s meeting with a delegation from Iran was the third in a series of talks between the two countries discussing investments to boost Nicaragua’s infrastructure. In addition to building a port on the Atlantic coast of the country, Iran will also finance upgrading of Nicaragua’s Port of Corinto on the Pacific side of the island.
Furthermore, Iran has agreed to provide four hydroelectric plants—an additional $120 million in investment—in order to help alleviate Nicaragua’s current power crisis, in which blackouts occur nearly every day. Iran will also provide aid in the form of a farm equipment factory, thousands of houses and a health clinic. Nicaragua will provide coffee, bananas and meat to Iran in return.
Ortega, who had spoken with Venezuelan President Hugo Chavez two days prior to his meeting with the Iranian delegation, announced that Venezuela would also help finance the deepwater port at Monkey Point.
“We will work to combine Iranian investment with other friendly countries,” Ortega said. “Venezuela would be ready and willing to take part in an effort like this.”
President Ortega, who formerly led a Marxist Sandinista government but has since embraced a moderate stance to remain in power, has been forging relations with “dangerous partners” like Iran and Venezuela in spite of dissent from the U.S.
According to a report posted by the Associated Press this past January, the U.S. has expressed guarded support since Ortega’s election in November 2006, and Ortega has promised to maintain ties to Washington. Severing ties with the U.S. could cost Nicaragua valuable foreign investment as well as $48 million in annual aid; at this point, Ortega is in no position to lose favor with the U.S. However, it appears that Ortega continues to walk a fine line between its relations with the U.S. and the governments of Venezuela and Iran.
There is also no guarantee that construction of the port will commence anytime soon, if at all. Previous efforts, such as the U.S. firm DELASA’s development of Puerto Cabezas on the Pacific coast, have fallen through. Investors should remain conscious of the tentative nature of a pledge for drastic investment—there are always factors that could forestall its execution.
Provided the port becomes an actuality, the improvement in infrastructure would work wonders for Nicaragua’s economy—and that will be good news for investors who own Nicaragua real estate.