Iran is establishing a Central American foothold in Nicaragua, to the alarm of some U.S. state department officials, it is being reported.

The San Antonio News-Express said Monday that Nicaragua, with the backing of its Venezuelan ally, has been forging a new partnership with Iran.

Part of that relationship comes in the form of a $350 million deep-water port at Monkey Point on Nicaragua's Atlantic coast that is to extend across the continent to the Pacific Ocean. Iran has also recently opened an embassy in Nicaraguan capital of Managua.

Click here to read the full San Antonio News-Express article.

Some state department officials are concerned that Iran's presence in Nicaragua would allow Tehran to stage strikes on American interests by deploying the terrorist group Hezbollah and Revolutionary Guard operatives already in Latin America, the Express reported.

Cargo-News Asia reported that the port, which is expected to provide connectivity to the ports in the East Coast of the United States and to Europe, could be a possible windfall for the poverty stricken country. The project is seen as an about-face for a country that has been reluctant to embrace foreign investment, it wrote.

Despite U.S. warnings, Latin America countries, such as Nicaragua and Venezuela have recently been cultivating ties with Iran. Nicaraguan President Daniel Ortega has met with Tehran officials several times this year to seek help with several major infrastructure projects. And on Monday Venezuelan President Hugo Chavez wrapped up a visit to the Islamic republic aimed at building a "strategic unity".

This comes as relations with the U.S. and its allies cool over attempts to try to force Iran to end its contentious uranium enrichment program.

The Associated Press contributed to this report.