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  Number 433 | Agosto 2017
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Nicaragua

The “buds” are pinning their hopes on the OAS electoral observation

US congressional approval of the Nica Act seems unstoppable, putting the Ortega-Murillo government in its gravest fix in a decade. But it doesn’t seem to be contemplating a responsible way out. Both the government and its big business buddies in Ortega’s corporative government model have pinned their hopes on OAS observation of the municipal elections this November 5 and a final report they hope will legitimize them.

Envío team

On the afternoon of July 19, at the celebration of the 38th anniversary of Nicaragua’s revolution, an already overcast and increasingly angry-looking sky let loose a torrential downpour that sent the government sympathizers who had filled the plaza running for cover and put an abrupt end to a speech President Daniel Ortega had barely started. Some say there are no such things as coincidences. Did this augur the difficult moments waiting for him in the coming months?

In September last year, as the Obama administration was winding up its eight years, a group of Democratic and Republican congresspeople presented the House of Representatives with the Nicaragua Investment Conditionality Act, soon abbreviated to Nica Act, which was approved both expeditiously and without dissent. While the Senate recessed without passing its own version, the House is now in the process of approving an even tougher one, putting a new ball in the Senate court. The possibility that this legislation will be pushed through and applied has been a threat felt every day of the past 10 months on our country’s political stage.

Too bad it took a foreign power


The Nica Act orders US government representatives in all international financing institutions—the World Bank and Inter-American Development Bank (IDB) being the two most important to Nicaragua—to vote against any loan request by the Nicaraguan government as long as it takes no verifiable steps to promote credible and transparent elections, freedom of organization by political parties, an effective fight against corruption and the protection of journalists, union members and representatives of social and human rights NGOs.

The bill rightly argues that none of this exists in Nicaragua today and everything the Nica Act demands has already been repeatedly demanded by broad sectors of the country’s own population. Unfortunately it took a foreign power to use its considerable strength to turn the screw for these just claims.

How powerful is the US vote?


The Nicaraguan government could lose an estimated US$200-300 million annually in loans if Washington can quash its loan requests with the support of allied countries. In an effort to get the drop on the Nica Act’s approval, Ortega has already gotten enough loans approved from other countries and the lending institutions in question to carry it up to 2020, one year before the next presidential elections.

There is also a question mark over how effective the US vote is today in vetoing loans. In the 1980s, when the Reagan administration decided not only to foot the bill for the contra war against the Sandinista government but also to impose an economic embargo that included voting against any loans for Nicaragua in those same lending institutions, the US had greater veto power than it apparently does today. Arturo Cruz, a former Nicaraguan Ambassador to the US, says recent voting reforms at the IDB have eliminated the US ability to veto loans. He says it took a 75% vote to approve loans prior to January 2017, while a simple majority is sufficient now, effectively removing the US veto power.

World Bank reforms in 2010 increased the weight of small and developing countries in loan approval, although the large, rich ones still control over half the voting percentage based on financial contribution. Rather curiously, in a review of dozens of reports on World Bank voting procedures and reforms, not one mentioned the majority required to approve a loan by the different segments of the World Bank Group to which Nicaragua submits requests (the International Bank for Reconstruction and Development and the International Development Association).

But more important than any loans that could fail to get approval in the foreseeable future is the uncertainty reportedly being generated already among foreign investors by the mere possibility of the Nica Act’s passage. This uncertainty could prove to be very significant given that their investments have been the motor force of Nicaragua’s economy, particularly following the collapse of the bounteous Venezuelan oil deal that started with Ortega’s return to office, which in its peak year brought him a cool US$500 million bypassing the budget books.

Best to shoot with a rifle


The Nica Act has another impact some consider even more serious. It orders the US Treasury Department to prepare a list of all government officials involved in acts of corruption. Those on it can expect to be targeted with personal sanctions such as the denial of US entry visas and the freezing of all assets held in the United States.

In January, Francisco Aguirre Sacasa, another ex-ambassador to the United States and a former Nicaraguan foreign minister, considered to have a pretty good handle on how things work in Congress, warned that including this list in the bill reflects an idea that has taken hold in Washington: “to use the law as a rifle, not a shotgun.” He explained that the concept involves going after very specific targets with a well-aimed and powerful bullet, avoiding the collateral damage caused by a broader policy, in this metaphor a shotgun, in which the pellets spread upon leaving the barrel. Focusing on specific government actors would not only seriously turn a painful screw, but would also assuage the main criticism of the bill: that vetoing the kinds of loans these banks offer—for road building, irrigating the drought-afflicted “dry corridor,” education programs and the like—hurts this country’s poor more than its government.

A big mistake… huge


The start of the new legislature in Congress in January 2017 and the arrival of the unpredictable Donald Trump to the White House seemed to put the Ortega-Murillo government at ease. The calculation was that the complex problems Trump would be facing, Nicaragua’s insignificance in current geopolitics and the agreement Ortega signed with Organization of American States Secretary General Luis Almagro that same month, allowing the OAS to observe this November’s municipal elections, would get the Nica Act shelved at least for the foreseeable future. Just to be sure, however, the government dispatched several lobbyists to Washington.

That calculation was wrong. It took no longer than May 24 for a slightly tougher Nica Act to reappear and be unanimously approved in the House Foreign Affairs Subcommittee on the Western Hemisphere. Among the changes in the new version were that the Treasury Department was ordered to present the list of corrupt officials in 60 days, not the 90 stipulated in the first version.

Another step for the Nica Act


That’s where things still stood on July 27, just before Congress was about to recess for the August vacation. But that day the Nica Act suddenly took another step forward that not even the most meticulous analysts and certainly not Ortega were expecting: the 47 members of the House Foreign Relations Committee, parent of the Subcommittee on the Western Hemisphere, also unanimously approved it, with only one change, the addition of another “finding.”

The law’s promoters pulled a quote by former US Ambassador to Nicaragua Robert Callahan from a special hearing in that same committee in December 2011, titled “Democracy Held Hostage in Nicaragua: Part 1.” Callahan described Ortega’s reelection the previous month as “illegal, illegitimate and unconstitutional” and warned that “Daniel Ortega and his Sandinista party have systematically undermined the country’s fragile governmental institutions.”

The next anticipated step will be full House approval after the recess. It is expected to pass with the same expedited procedure used last September, when the 435 representatives approved the previous version in the plenary with what is known as “unanimous consent.” The procedure consists of a member requesting that something be done or permitted, and if no other member objects, it passes without an individual vote and often without debate. It’s normally used for minor issues, but can also be employed for bills and resolutions if they are considered non-controversial.

Once the House bill passes, presumably with no more changes, the Senate is expected to send it through its own committees, a process everyone assumes will go more slowly. A companion bill has been sitting in the Senate since late April, introduced again this time by Ted Cruz (R-Texas). He and his colleague Marco Rubio (R-Florida), both of Cuban descent, will give the bill their fullest support, just as Cuban-American Congresswoman Ileana Ros-Lehtinen did in the House. Rubio is in a strong position to do so as he chairs the Senate Foreign Relations Subcommittee on the Western Hemisphere.

Since the bill only requires a simple majority, the Republicans in he Senate alone would have enough votes to push it through alone as they hold 52 of the 100 seats. There’s little reason to expect either any Republican defectors or a united Democratic opposition such as we saw recently in the thus-far failed attempts to repeal Obama’s Affordable Care Act. Once approved, it is expected that President Trump will sign tthe Nica Act into law.

Little has been said about this


While the government’s political and business emissaries continued their lobbying in Washington, those in Managua who know how the wheels of US politics turn urged Ortega to assume the threat responsibly, arguing that he could halt its approval by agreeing to an authentic democratization process. But Ortega didn’t react, the official media ignored the threat and if journalists from independent media questioned any of Ortega’s government officials or business allies about the possibility of the bill’s approval, they either prudently said nothing or assured that the economy was prepared and the situation would be “handleable.” None of them ever referred to the corruption list.

One of the few unmuzzled declarations about that list was uttered by Augusto Navarro, agricultural minister during the government of Enrique Bolaños: “There is one part of the Nica Act about which little has been said, which is the issuing of a list of Nicara¬ua’s most corrupt people. This is very important because there’s no way to find out about this here, as neither the Comptroller General’s office nor the Attorney General’s office says anything. No institution here is uncovering the unhideable atrocities. Somoza used to tell them to hide the feathers when they stole a chicken. But they’re really hard to hide when you’re stealing the entire henhouse. If the gringos come out with that list, they’re surely going to do it with full knowledge of the facts. It’s the only way to learn who the main criminals are in the government branches.”

On July 19, Guatemala’s Prosecutor General’s office and the International Commission against Impunity in Guatemala (CICIG), a powerful skeleton-rattling UN entity in that country, announced publicly that acts of corruption it is investigating involving Communications, Infrastructure and Housing Minister Alejandro Sinibaldi extend to Nicaragua, where he allegedly laundered over $10 million through a network of fictitious companies created by his collaborators. In Guatemala, 17 individuals have been arrested in the case so far, although Sinibaldi himself is a fugitive.

For the previous three months, Guatemala had been requesting judicial assistance from Nicaragua’s institutions to clarify the case, but no response was forthcoming. No state institution, not even the Superintendence of Banks or the Financial Analysis Unit, much less the offices of Prosecutor General and Attorney General, have said a single word about the case. Questioning the official silence, Nicara¬gua’s former attorney general Alberto Novoa pointed out that “these transactions from one country to another don’t just happen without good reason; there’s a protective hand guaranteeing them.”

After the Nicaraguan media published CICIG’s announcement, most of Nicaragua’s banks, however, quickly assured that they had received no money from those companies. Banco ProCredit was the only to admit having opened accounts for some of those implicated, but said suspicions had led it to stop transfers totaling some US$900,000 to those accounts and to close them.

Strategy to soften the bill


A few months ago Nicaraguan banker Roberto Argüello, who has resided in Miami for decades, contracted Arthur Estopiñán, who worked for Congresswoman Ros-Lehtinen for 27 years, to lobby in favor of softening the Nica Act. Argüello is now sure the legislation will pass the House with no problems for various reasons. One is that there’s “no opposition,” while another is that congresspeople tend to see Nicaragua as “an extension of the Venezuelan regime.” A third is that Ros-Lehtinen and the bill’s other sponsors introduced it as part of a package of three other foreign affairs bills Argüello says are “very popular” among legislators: one on the crisis in Venezuela, another on human rights in North Korea and the third urging the European Union to classify the Lebanese Islamic group Hezbollah as a terrorist organization.

Argüello warns that approval of the Nica Act won’t just affect loans for infrastructure and other public expenses requested by the government in the international lending agencies. “The international commercial banks,” he said, “could also reduce their short-, medium- and long-term loans to the Nicaraguan private sector to the tune of more than US$400 million a year.” That previously unmentioned prediction made the Nicaraguan business elite, Ortega’s main economic ally, even more nervous.

Argüello is putting his hope in the Senate. Estopiñán said they’re going to look for an influential senator to present an amendment to soften the legislation or establish a grace period in which it is either not applied or staged deadlines are established for its application based on the Nicaraguan government moving forward in democratizing its electoral institutionality together with the OAS. They also hope the Senate debate will underscore the argument that the Nica Act will destabilize the country, triggering migration and weakening the struggle against drug trafficking.

A confrontational strategy: Resurrect the World Court case


The Ortega-Murillo government immediately reacted to the Nica Act’s approval in the House Foreign Relations Committee by digging up an old weapon from the 1980s war. It was a very different response than the long rhetorical one in April, when it was learned that the House had reopened discussion of the Nica Act. While there was no lack of rhetoric this time, the response was much briefer and had the earmarks of a challenge.

“The Nicaraguan State,” says the new text, “has initiated a legal process that will allow us to require the United States of North America to pay the Indemnification ordered in 1986 by the International Court of Justice at The Hague as compensation for the fatal damages caused to the People and Government of Nicaragua as a result of the destructive intromission of that Power in its National Affairs.”

Not surprisingly, the legislative branch closed ranks behind Ortega. His absolute majority of National Assembly representatives, who faithfully follow executive branch orders, gave their 71 votes to a law “in defense of the national patrimony” that instructs all state institutions to reactivate the demand for indemnification. Those votes were further bolstered by the 3 from their “colleagues” in the now pro-FSLN Independent Liberal Party, Alliance for the Republic and Nicaraguan Liberal Alliance. Of the 14 votes against, 13 were from the Constitutionalist Liberal Party bench and the other was from the Conservative Party representative, Alfredo César, who presided over the National Assembly in 1991 when President Chamorro repealed Law 92 on the same issue. The FSLN government had passed it just after losing the 1990 elections in an attempt to preempt US pressure on her to drop the indemnification suit. The law required her government to consult with the population before entering into any bilateral indemnification negotiations with the United States.

The Hague: 1986 –1991


In June 1986 the International Court of Justice ruled on the side of Nicaragua in its suit against the United States for militarily and financially supporting the counterrevolutionary forces in the war of the 1980s. Although the US was a member country of the Court, it chose not to recognize the Court’s jurisdiction, ignoring its resolution that the US should rightfully compensate Nicaragua for the damage caused.

That same year Nicaragua presented the Court with its first carefully detailed quantification of the cost: just over US$12.22 billion. A claim filed after two more years of war rounded the figure off at US$17 million.

The Court never specifically signed off on that or any other figure, leaving it to the two countries to reach an agree¬ment. And in June 1991, with both the war and the revolution at an end, Nicaragua’s representative to the Court, Carlos Argüello, delivered a document from President Violeta Chamorro stating that Nicaragua “has decided to renounce all right and posterior action based on the case and therefore does not wish to continue with the proceedings.” The document requested that the Court “issue an order officially registering the withdrawal of these proceedings and ordering that the case be removed from the list of affairs being dealt with by the tribunal.”

Under pressure from the United States on many flanks, not the least of which was its demand that President Chamorro remove General Humberto Ortega as head of the Army, which she was unable to do, Chamorro withdrew Nicaragua’s case in order to be able to engage in “friendly negotiations” for loans that the country, economically and humanly devastated by the ten-year war, desperately needed. While the US did indeed provide economic assistance in the early nineties loosely equivalent to what the Venezuelan government has more recently provided the Ortega government, it was nothing like the postwar “mini-Marshall Plan” the US had been rumored to be considering. And it was nowhere near the damage inflicted thanks to the hundreds of millions of dollars in both legal and illegal support the Reagan administration had provided the contra forces originally put together and then run by the CIA throughout the eighties.

During his speech as pro-tem president of the Central American Integration System at the Fifth Summit of the Americas held in Trinidad & Tobago in April 2009, Ortega said the indemnification amount had grown to US$50 billion, considering the annual interest and arrears charges for nonpayment. It was the recently installed US President Barack Obama’s first introduction to Ortega’s deep-rooted anti-imperialism.

Ortega’s challenge is seemingly an empty threat, although Sorbonne-educated legal expert Francisco Rosales, an FSLN justice on Nicaragua’s Supreme Court, minimizes Chamorro’s document, insisting that Nicaragua never withdrew and the case remains alive. Most people, however, believe it’s only aimed at stirring up nationalist sentiments in the party’s own base and some other sectors of the population. It sends the signal that Ortega, like his colleague Nicolás Maduro, is not prepared to back off, has no adequate way out of the crisis affecting his government today and is even willing to aggravate it.

Business leaders ask Ortega to ratchet back


The Ortega government’s reaction to the renewed congressional activity on the Nica Act is deeply worrying its allies among the big business elite, who perceive it as unwisely confrontational. With virtually one voice, they began to issue public statements calling for calm and reasonableness, requesting that Ortega lower his tone and opt for dialogue.

The United States is Nicaragua’s main trade partner, with some 56% of Nicaragua’s exports going there. It is also the source of the bulk of remittances sent home to their families by our country’s emigrants. Around US$680 million in remittances are received from the United States each year, more than half of the US$1.264 billion sent home last year by Nicaragua’s emigrants in all countries combined.

Some are afraid Ortega’s defiant strategy could actually speed up approval of the Nica Act. Others fear it could draw the attention of the irascible Trump to Nicaragua for the first time, causing him to lash out directly. Still others, on the other hand, believe that, despite Ortega’s insistence on putting Nicaragua on his adversaries’ radar, his rhetoric is so well known that most people tune it out.

Ambassador Dogu weighs in


US Ambassador Laura Dogu reacted to the National Assembly’s passage of the law reactivating the suit against the United States by calling the indemnification issue “a closed case, ended decades ago.” She said her government is focused “on the future” but added rather gratuitously that Nicaragua is a sovereign country and “can do what it wants.”

Days earlier, in a TV interview with journalist Jaime Arellano, Dogu commented that congressional approval of the Nica Act is motivated not only by the lack of democracy and free elections in Nicaragua. She said the congressional representatives are also concerned about the Ortega government’s growing relationship with Russia —some even speculate the new Russian installations in Nicaragua may be espionage centers—and its “excessively strong” support for the Venezuelan government in the OAS sessions. Obviously Nicaragua can’t really do what it wants, even if it’s perfectly legal.

Is the investment climate in jeopardy?


On July 7 the US State Department released another of its detailed annual reports evaluating the world’s countries. Titled “Investment Climate Statements for 2017,” this one was prepared by its Bureau of Economic and Business Affairs, presumably during the Obama administration.

All such reports, be they on human rights, fiscal transparency, judicial corruption or even human trafficking, include serious criticisms of Nicaragua’s institutions and the President’s control of them. This report was no exception.

Given that the “excellent” climate Nicaragua offers foreign investors is one of the arguments the business elite allied to Ortega most often repeats to defend his government, the report was of special interest to them. It reportedly increased their anxieties, although a reading of the 2012 report, halfway into Ortega’s decade in power so far, shows that some things have improved, while others have not.

For example the 2012 report lists “difficulty in resolving commercial disputes, particularly the enforcement of contracts,” as one of the “most serious drawbacks to investment in Nicaragua,” while this year’s begins the same section on Dispute Settlement with a list of the instruments Nicaragua subscribes to for such settlements. One mechanism mentioned is part of the Central American Free Trade Agreement with the United States (CAFTA-DR), which went into effect 11 years ago. Significantly, the report says there have been no claims by US investors under this agreement to date.

This and previous reports since Ortega’s return to power recognize the government’s efforts to attract foreign investment and list the following as investment attractions: the free trade zone regime; the trade relations through CAFTA; the country’s security levels, exemptions from import duties, property tax incentives and income tax relief for many industries; and the country’s “relatively low-cost and young labor force,” which the report calls a “key draw” for investors.

At the same time, just like the 2012 report, it lists the following among the problems: the weakness of institutions, deficient application of the law, legal insecurity, lack of transparency in the governmental bureaucracy, excessive control by the presidential office, corruption in the legal system and unresolved property problems, although it says that all confiscated US property claims from the 1980s have been fully settled or dismissed (a total of 419 Embassy-registered claims remained as of the 2012 report). It makes no mention of a recent World Bank report stating that legal insecurity affects ownership of 35-40% of the country’s lands, much of which presumably covers the vast indigenous territories under siege by waves of settlers from the Pacific. The State Department report does say that “foreign investors in Nicaragua experience difficulties defending their property rights” and wisely counsels those interested in purchasing property in Nicaragua to “seek experienced legal counsel very early in the process” to avoid getting entangled in scams by “unscrupulous individuals.”

Those who believe Ortega’s diatribes have become old-hat and are now routinely ignored can find support in the fact that the 2017 report contains no echo of the following statement from 2012: “President Ortega’s harsh rhetoric against the United States, capitalism, and free trade has had a negative effect on foreign investor perceptions of risk.” Given how fast new office buildings in Managua fill up with branches of US companies, one could argue it hasn’t had any serious deterring echo among investors either.

Mixing politics and economics


What is new in this report is the following political assessment: “Presidential elections held in 2016 further concentrated power, with an authoritarian executive branch exercising significant control over the legislative, judicial, and electoral functions.” It further states that “The United States is deeply concerned by the flawed presidential and legislative electoral process in Nicaragua, which precluded the possibility of a free and fair election on November 6, 2016.”

Given that investors are notoriously far more interested in profits than electoral processes, one might guess they’d be more concerned with weighing the pros of low wages, free currency convertibility, unrestricted direct investment, multiple tax benefits, CAFTA-DR incentives and free repatriation of profits against the cons of public sector corruption, competition, favoritism, arbitrariness, negligence and slowness. And even these cons are greater obstacles to inexperienced small investors than to global players who are familiar with them as standard operating procedure in the business climate of most third-world countries.

Moreover, in these deregulated times of global capital expansion, Ortega’s rant against “savage capitalism” can no longer be seen as ideological opposition. He and his close circle seem to have studied the system closely and learned how to play at the big guys’ table.

Nicaragua’s corporativist “buddy system”


To wit, the State Department report notes the disadvantage national (and presumably international) investors and businesses face with respect to “the important presence of state-owned enterprises and firms owned or controlled by government officials and members of the ruling party,” which “reduces transparency.”

William Muntean, economic adviser to the US Embassy in Managua, was referring to this in the following comment: “a telephone call has more power than the written law in Nicaragua.” Muntean also expressed concern about the lack of transparency in the handling of the funds and businesses of Albanisa, the mixed public-private Venezuelan-Nicaragua company set up in 2007 to handle the oil coming to Nicaragua from Venezuela and invest the proceeds from its distribution, which, not too surprisingly, creates disadvantages for foreign investors.

Both the report and Muntean are referring to what former Education Minister Humberto Belli calls “buddy capitalism.” As Belli explains it, “success in buddy capitalism depends not so much on one’s own merits as on links to governmental officials. In competitive capitalism, companies compete equally and the victory goes to the most effective. In buddy capitalism those who are well connected win the bids, and receive permits, protections and tariff or other special exonerations. The bureaucracy exempts them from the paperwork and red tape that burden everyone else; the courts favor them in litigations; and, when necessary, the tentacles of power avoid possible competitors from overshadowing them.

“This type of capitalism is essentially corrupt and arises in societies where a shortage of ethics combines with powerful governments that control all the levers of power. Nicaragua has all the ingredients for this kind of capitalism to flourish: a family consortium with unlimited political power, major businesses and few ethics.

“These circumstances have created two business sectors: one relatively new, a child of the advantages of power, and another made up of long-time capitalist families, plus a constellation of still competitive medium-sized businesses. The problem is that, due to its obvious advantages, the first sector tends to grow and corrupt the other. Many businesspeople are tempted to associate with those with connections or to cultivate economic friendships and ties with the people who run the governmental dependencies. That way they assure their prosperity, although they sacrifice their independence and to some degree their integrity.”

This text by City of God Conservative Humberto Belli, lauding the virtues of competitive capitalism, suggests a nostalgia for the days of Adam Smith. He’s certainly not in tune with the modern world of Washington Consensus capital deregulation, the mammoth rollback of corporate taxes, the defanging of anti-trust laws, the boom of financial capital or the concentration of power in ever fewer global corporations whose annual earnings exceed the budget of many of the world’s countries, allowing them to buy the vote of politicians even on such planetary threats as climate change.

What seems to bother Washington, in contrast, is not so much that competitive capital is going the way of the Dodo bird, much less that there’s something supremely wrong with contemporary global capital if the combined wealth of the world’s richest 1,000 people is already twice as much as the poorest 2.5 billion. It’s not even that Nicaragua isn’t on a democratic path, evidenced by the undemocratic countries the US supports if it suits its own interests.

The problem seems to have a psycho-political component: Ortega isn’t “one of them.” Just as Washington is more comfortable with a Juan Orlando Hernández than a Mel Zelaya in Honduras, it was more at ease with a Somoza in Nicaragua than with the man President Reagan once called “a tin-horn dictator in green fatigues and designer glasses.” If there’s one glaring distinction between the dictatorship Somoza built and the one Ortega’s accused of building, it’s that Somoza was an unfailing US ally in all international entities while Ortega has the audacity to challenge US authority in them.

Is the way to Ortega really through COSEP?


Faced with Ortega’s intransigence against opening up the political system, more actors seem to have decided the way to protect Nicaragua from the Nica Act is to get the Superior Council of Private Enterprise (COSEP), the institutional expression of Nicaraguan big businesses’ economic alliance with Ortega, to pressure him. Belli, for example, believes that “one of the greatest challenges facing COSEP is what position it’s going to take on this.” Gerardo Baltodano, president of the Nicaraguan Foundation for Economic and Social Development, echoed that in his presentation to the third Business Gathering held in July when he said “there is no such thing as public corruption unconnected from the private business sector” and advocated an “open market system without entry barriers, with equal opportunities and without participants that play with an advantage or with loaded dice.”

Then in a July 24 meeting to present the contents of this year’s foreign investment report to the heads of the more than 20 business chambers under the COSEP umbrella, Ambassador Dogu delivered the same message she’s been repeating recently in Nicaragua’s independent media and in meetings with social organizations: the economic bonanza COSEP’s members have been enjoying thanks to their alliance with the government is unsustainable if Ortega remains bent on his authoritarian and exclusionary model. Although wrapped in her unfailing diplomatic language, the message was a recognizable warning to COSEP to lean harder on Ortega to change his political ways.

This issue of “unsustainability” is being highlighted on all sides and with more or less similar words, although focused on various different topics. In its June 18 report titled “Nicaragua Paving the Way to Faster Growth and Inclusion: Systematic Country Diagnostic,” the World Bank touched more sore points than on other occasions, including inefficient government bureaucracy, concentrated decision making, the need for greater empowerment of public officials, technical decisions based on political loyalties that lead to inaction or flawed implementation. The World Bank favors fostering a “broad debate and evidence-based policy formulation.”

Their hopes rest on the OAS


Given that the behavior of US foreign direct investment has been relatively unphased by Ortega’s authoritarianism and exclusions over the past ten years, it could be argued that any unsus¬tainability resulting from a serious deterioration of the investment climate in the near future would be more a result of the Damocles sword of the Nica Act than any major changes in the government’s behavior toward investors.

The Nica Act has indeed shaken both the corporative model and its main players: the government and its big business allies. Watching the bill move forward and seeing its likely approval, business leaders are pinning all their hopes on the OAS coming to observe the November 5 municipal elections. But of course this would have to go beyond just observing to include the subsequent publication of a positive report about the process. And not only that: it must also reiterate its promise to work with the government to improve the democratic institutionality over the agreed three-year period so we reach 2021, the next general election year, with a substantial change and the crisis behind us. As COSEP President José Adán Aguerri put it: “The important thing is to have an electoral process we glide through and for the OAS to then see how to improve the entire electoral structure with an eye on the 2021 process.”

According to the OAS agreements with Ortega and the announcements that followed, a first group of five officials will set up shop in Nicaragua as of August 10 then will tour the country the first week of September to see how the electoral process is shaping up. Just days before the elections, 120 observers will come to follow the process in groups of 40 in three key cities: Managua, León and Matagalpa. How it all develops and how fluidly we “glide” through it is still anybody’s guess. Violeta Granera, coordinator of the Broad Front for Democracy, talks more about the main unknowns enveloping the upcoming elections in the Speaking Out section of this issue.

No electoral enthusiasm


In most of the over 80% of the municipalities now under governing party control, there’s no sense of the competition and enthusiasm that usually prevails in Nicaragua during an election season. “We already know what’s going to happen,” say many local residents when queried.

In the first week of July, the consortium calledl Panorama Electora, which together with other civic movements is chaired by the national observation organization Ethics and Transparency, presented the results of its first survey of 1,400 citizens in 150 of the country’s 153 municipalities. It shows “little or no interest” in these elections among those polled in 82% of the municipalities, while in 73% of them even those who sympathize with the governing party have “little or no interest” in the surveys the FSLN has organized to select candidates for mayor, deputy mayor and Municipal Council members.

In this gray area of today’s critical horizon, the final OAS report on the municipal elections will be crucial. Another crucial factor would be if we see a repeat of the extremely high abstention levels that characterized last year’s presidential elections. All eyes will also be on how many mayoral seats Ortega decides to give Citizens for Liberty, the only real opposition party running, as the business elite is counting on its results to legitimize these elections. What happens on November 5 will be a life or death issue for the government and its business allies, and for their “buddy capitalism” corporative model.

“Circumstances are pushing”


Meanwhile Venezuela’s unprecedented crisis has the Ortega government on tenterhooks. How the knots of that crisis are untied will also affect our country.

Venezuela doesn’t need new external pressures; what it needs is a dialogue at home that leads to a solution based on the democratic principles in the Constitution Chávez bequeathed the country. It requires a unified and pluralist leadership made up of both honest people from the anti-Chávez opposition and people with pro-Chávez roots and moral authority, whether they come out of the United Socialist Party of Venezuela or not, who have distanced themselves from the “dictatorial vocation” expressed in the Constituent Assembly.

Although in a very different situation, Nicaragua will need something similar if it is to move past the crisis generated by the model Daniel Ortega imposed on the country. Even his own brother, retired General Humberto Ortega, had been urging a “national concertation” for the previous year. At moments like this, General Ortega always appears in the media. He has already been interviewed more than three times this year. In declarations following approval of the Nica Act in the House Foreign Affairs Committee, he was asked if he sees any willingness on his brother’s part to call for a national concertatio. He replied that “it’s not about whether he’s in favor of a national dialogue or not. The circumstances are pushing toward a national agreement.”

Collapse or only a respite?


The circumstances do seem to be pushing our country toward change. Will it come out of a dialogue? If it does result in a transition, a transition to what: a more flexible and inclusive government still run by Ortega or a new government of national unity? And what role will the Army play in the unfolding of this change?

Is the opposition prepared to take good advantage of the spaces being opened by this crisis, the most acute one Ortega has gone through since returning to government? Will the municipal elections be the definitive proof that the Ortega model has collapsed? Or will it just provide the breathing space the “buddies” are hoping for? And what will happen after either a collapse or a respite?

The “circumstances” have somewhat defined the horizon we’re moving toward, only to reveal it as increasingly critical. What’s happening in the US Congress augurs sanctions, while the black hole into which Venezuela seems to be sinking confirms that Nicaragua’s Venezuelan godfather has disappeared and the hoped-for Russian one can’t take its place, so the crisis will only get worse. But with too many gray areas still to be defined, the horizon is still rather murky for better or probably for worse.

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