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Central American University - UCA  
  Number 424 | Noviembre 2016



Four keys to the volatile success of the Ortega-Murillo project

Daniel Ortega just won his third consecutive term and the fourth term overall since he was first elected in 1984, this time with historically unprecedented voter abstention. In addition to evidence of a massively corrupted electoral system, other reasons explain why he’s been successful in recent years. Will the massive abstention of November 6 be an early sign of how volatile these successes are? It’s too soon to know, but this article offers four clues to keep an eye on.

José Luis Rocha

The regime built by the late President Hugo Chávez in Venezuela is breaking up over a stormy sea of oil, Honduran President Mel Zelaya was deposed in 2009 by a coup d’état that was ineffectively repudiated and Bolivian President Evo Morales has had to deal with food crises and massive protests over some of his measures. Those Chávez dubbed the commanders of oil, cattle and coca failed to build a rule with what would appear to be the stable base of 21st-century socialism’s fourth commander: comandante guerrillero Daniel Ortega.

Why has he survived?

The Bolivarian Alliance for the Peoples of Our America (ALBA), made up of these four friends and seven other Caribbean and South American member countries is now history. The oil that united them is losing value. Yet Ortega and even more his wife Rosario Murillo—doubly acclaimed as his marital and now political consort by her enthronement as Vice President—cointinue to shout “Nicaragua: Christian, socialist and solidary” to all those still listening, who are ever fewer now, even amongst their own party members. The human pyramid stunts entertaining the crowds at the apotheosizing July 19 celebrations this year drew people’s attention away from the catechetic-sounding speeches with which their comandante wanted to instruct them, guided by slips of paper slid over to him in plain sight of everyone by Murillo, showing herself the power behind, beside, under, over and before the throne. In the future liturgies those July 19 celebrations resemble, Murillo could be delivering her own homilies.

Ortega doesn’t have Chávez’s charisma or Zelaya’s skill at making credible-seeming promises he had no intention of keeping, nor is he the symbol Evo Morales represents, an Aymara indigenous leader heading the government... What, therefore, are the keys to Ortega’s success? Why has his rule survived with fewer disturbances than that of the other three commanders?

A very risky decision

The FSLN took a bold step by placing Rosario Murillo in the dual role of First Lady and Vice President through the election facsimile on November 6. During the eighties she presided over the Sandinista Cultural Workers’ Association (ASTC), a kind of Ministry of Culture paralleling the official one headed by Ernesto Cardenal, with whom she maintained a rivalry that divided Nicaraguan artists and writers. At that time, however, her power was dwarfed by the nine National Directorate comandantes leading the revolutionary process.

The FSLN’s shift to autocracy since 2007 has given Murillo unprecedented power for a Nicaraguan First Lady. Speculations abound about why she was named as Ortega’s Vice President: To give her more formal power and visibility than she already had? To prepare a legal succession so power stays within the family? To lay the foundations for a new dynasty similar to that of the Somozas? Whatever the motivation, the measure is very risky because she arouses considerable animosity in the ranks of both the opposition and the FSLN itself.

Be that as it may, the presidential couple really seems to trust the solidity of its dominance, supported by ten years of success, to make such a risky coup de main. There are many explanations for their success, but we’ll just focus on four key ones worth watching, all of which are related to structural aspects: their relations with a divided oligarchy, Nicaragua’s insignificance, clientelism and populist cooptation.

In Somoza’s times

The 1980s’ Sandinista revolution, among other social upheavals, shook up the way Nicaraguan elites were linked and interacted. The elements that made this shake-up possible can be traced back to the decades before the revolution.

The three elitist groups FSLN Comandante Jaime Wheelock identified in his 1979 book Imperialismo y dictadura (Imperialism and Dictatorship) were united against the common enemy that kept them from getting the lion’s share controlled by the loaded dice group: Somoza and his cronies. These three groups, each of which was buttressed by control of a bank, had very diverse interests. One is tempted to think of bankers as a monolithic group, only considering their obvious common interests and ignoring the fact that banks in Nicaragua have historically been the financial tongs of different sectors: agricultural, commercial and real estate. While these groups are no longer categorized by economic sectors, their interests still differ, as evidenced by the cannibalism that resulted in—and motivated—the bank failures at the turn of this century.

In the revolutionary years

When the Somoza sultanate fell, some members of these groups joined the revolutionary project, many left the country and others stayed and gradually mounted resistance to the Sandinistas. A now classic piece by Argentine sociologist Carlos Vilas reveals the ever-present links that have united these elites, but deep within those links ideological differences were hatching that turned out not to be purely ideological, given that some former members of the oligarchy are currently high-level salaried employees in NGOs and international agencies.­ In short, ideological divisions were abetted by the differences between economic sectors in which the stagnated capital in the eighties forcibly weaned some of them from their heritage just as agricultural small-holdings that can’t grow get fragmented when passed down to the next generation.

The privatization and rapid expansion of the service sector of Nicaragua’s economy since the nineties complicated the issue even further: the boom in every type of consultancy, the emergence of new exporting companies, the expansion in the insurance market and the proliferation of new and buoyant industries such as private security gave rise to a new and very diversified segment of wealthy entrepreneurial oligarchs in which one usually knows who’s who, but not always who’s with whom and even less who thinks what.

The canal scam

Daniel Ortega has been skilled in taking advantage of this diversity: he coopts, buys or rents groups, associations, people and consciences. High-level bribery is his best tool. Some examples illustrate his strategy. The Interoceanic Canal Project was projected to become the new “revolution of opportunities,” the same name the last Somoza gave to the 1972 earthquake because it enabled him to multiply his fortune by plundering international aid to the victims.

The canal itself is for all intents and purposes fictitious, but it is an opportunity for land-grabbing, among other things. There won’t be a canal, just a series of investments around its possibility and its collateral effects, what are called the “associated subprojects”:ports, free trade zones, airports, tourist centers… The least visible and yet most real aspect is job opportunities with astronomical salaries for the many former oligarchs, recycled as specialized technocrats on the environment, financial assessments, legal schemes and engineering works. They applauded the announcement of the canal project, ready to feed at its trough.

The canal fiction has crystallized into real benefits as well as promises of contracts for construction companies. That’s why some of the most noted members of the Superior Council for Private Enterprise (COSEP)—principally those linked to its Chamber of Construction—were seduced by an all-expenses-paid trip to China at the government’s invitation.

The financial elites

Another sector of the elites is linked to the Production Bank (BANPRO), one of the main beneficiaries of the compacting of Nicaragua’s 13 private banks into 7 in and around 2000. The origin of its capital can be traced to mid-20th century investments in cotton and commerce, but a new accumulation process—which anthropology and geography professor David Harvey calls accumulation by dispossession—took place with the bank failures and absorption of allegedly contaminated portfolios of banks the Superintendence of Banks condemned to bankruptcy in a process questioned with evidence in hand.

The Liberal opposition leader Eduardo Montealegre is a member of the oligarchic family from the largely commercial group that prospered under the Somoza umbrella and was originally clustered around the Nicaraguan Bank of Industry and Commerce (BANIC). In August 2001 BANIC was intervened by the Superintendence of Banks and put up for auction, with BANPRO offering the winning bid. More recently BANPRO has been the custodian of a large part of ALBA and Nicaraguan Social Security Institute funds.

BANPRO’s considerations haven’t stopped: in 2011 it bought El Nuevo Diario, a newspaper with Sandinista roots but by then very critical of Ortega and very conspicuously doing investigative reports that were uncovering corruption cases. Financially indulging BANPRO has reaped good results for the Ortega government: the bank’s flow of financial patronage to Montealegre’s political activities was cut off and a newspaper that promoted independent journalism was neutralized.­

Another subtle sign of the ties between Ortega and big capital can be seen in the Managua airport’s migration booths, where those arriving by plane present their passports and papers. None of the booths have any institutional logo but without exception they display advertising for Flor de Caña rum, a flagship company of the Pellas Group, the most powerful economic group in the country.

Divided oligarchy, bribed elites

As good strategists, the more astute FSLN members know that a fellow party member can betray but a well-paid adversary is a faithful ally. These small pacts with the elites are just a few examples of how the FSLN has won them over. As the saying attributed to Quevado puts it, “greasing the palms softens the heart.”

Ortega’s tax policy has been a more far-reaching tool. It maintains big capital’s tax exemptions at US$850 million a year, equivalent to 7% of the Gross Domestic Product—something unthinkable for a leftist government. It has also consolidated tax benefits for certain kinds of investment and generally a regressive tax structure. This tax generosity to big capital has been possible due to Venezuela’s original oil cooperation deal in which a full half of the oil received was to be paid for over 25 years at 2% interest a year with a 5-year grace period. The pact with national and foreign investors has also involved maintenance of low minimum wages and flexible labor laws, which is been music to their ears.

In this context of tacit and explicit alliances, the elite sector working in NGOs and the media—which isn’t very extensive but has a significant critical culture and quality—has been weakened. Some have Sandinista roots, while others are still the voice of the oligarchy, so they can’t unite for ideological reasons but they also haven’t figured out how to present a solid front separately. Both have lost the ability to obtain clear and serious support from the business oligarchy given Ortega’s effective financial bait. With a divided oligarchy and a high rate of informal underemployment—8 out of 10 Nicaraguans scratch out a living in the informal sector—there’s no possibility of a strike that could put the regime in check, as happened in the Somoza era.


The specter of the autarchy’s collapse is hovering. The FSLN well knows that the elites who played by Somoza’s rules for so long changed suddenly and actively collaborated in the dictatorship’s downfall. They are paid allies, and when the payment dries up, the pact collapses. The end of Venezuelan oil cooperation could make necessary a change in fiscal policy that would affect not only grassroots sectors but also the elites.

The importance of being unimportant

Nicaragua isn’t vital to US geopolitics. It isn’t presenting the levels of violence that have affected its northern Central American neighbors for decades and thus isn’t a country that sends out migrants in numbers comparable to those of what has come to be known as the Northern Triangle: El Salvador, Guatemala and Honduras. Nor does it have Venezuela’s vast quantities of oil.

The United States is still Nicaragua’s main trading partner, but Nicaragua is a tiny trading partner for the US and has none of the commodities the North most desires, whether through scarcity or value. Nicaragua is eminently replaceable commercially and scarcely visible politically. An easy measure of its marginal role in US geopolitics is Washington’s tolerance of Daniel Ortega’s empty anti-imperialist bluster, accompanied by the pathetic arm flailing of a drowning man.

Another indication of the scant interest the great power has in Nicaragua can be seen in the amount of US aid it gets (only $56 million a year) and the issues USAID deals with in the country: training young leaders, HIV/AIDS, scholarships for youngsters from the South Caribbean to study in primary and secondary school, scholarships to study English and the promotion of public-private associations in the social sector.

The apparent carte blanche Ortega enjoys, despite the Wikileaks revelations showing the US Embassy’s concern about police corruption and links with drug trafficking, is based on that lack of importance and the Ortega govern¬ment’s policy of collaboration on key issues, such as stopping migration. Hundreds and up to thousands of African, Haitian and Cuban migrants are currently stranded in Costa Rica because Ortega’s migration policy, which he officially and significantly calls a “firewall,” blocks them from continuing on their way northwards. US ambassador to Nicaragua Laura Dogu has expressed complacency with a policy she sees as stopping drug trafficking and coordinating efforts with the United States.

A CICIG for Nicaragua?

Daniel Ortega has greatly benefitted by governing such an unimportant country and by modest collaboration on sensitive issues. Will it always be like this? The Nicaraguan opposition has vowed to make the State Department and Capitol Hill its wailing wall, asking the all-powerful empire to agree to put its dominions in order.

Nicaragua’s opposition leaders—even those who present themselves as center left—visit US congressional representatives and take selfies with them which they later display on their social networks. They probably hope the Guatemalan experiment will be repeated in Nicaragua: In 2015 a US-backed UN organization called the International Commission against Impunity in Guatemala (CICIG), present in Guatemala for many years, revealed massive corruption that triggered considerable social pressure and brought about the deposition and imprisonment of President Otto Pérez Molina and Vice President Roxana Baldetti. Leftist sectors in Guatemala applaud these imperial interventions, which are admittedly very civilized compared to the inveterate big-stick policy.

Why couldn’t the good-hearted Obama do the same in Nicaragua? Might the bad-hearted Donald Trump do it now? Not for the moment, because Nicaragua isn’t Guatemala. Dodging the thorny issues of drug trafficking and high rates of violence, a single detail explains why the United States prioritizes Guatemala over poverty-stricken Nicaragua, reputedly the second poorest country in Latin America: According to official US data, 97,151 Guatemalans but only 2,912 Nicaraguans were detained entering the United States irregularly in 2014, a difference that also partly explains why Guatemala receives $162 million a year from Washington and Nicaragua just $56 million.


The empire may have lost interest in Nicaragua, but it could recoup it suddenly. Nicaragua could become an important area for Washington if the discontent that already exists with Ortega’s government model multiplies and it becomes a migrant ejector, adding Nicaragua to the three already unstable and expelling Central American territories.

A first step in that direction is the “Nica Act,” which imposes sanctions on Ortega’s government for human rights violations, the decline in representative democracy and the dismantling of the free election system. The later culminated this year with the staging of an election facsimile that left the main opposition force out of the game through a legal stratagem that adjudicated that the Independent Liberal Party’s legal status belonged to a tiny split headed by a politician in the service of Ortega’s group.

Although the House of Representatives has passed the bill, the Senate version has yet to be discussed. It could thus gather dust without major repercussions, but it could also be reactivated in 2017 and herald the start of an about-face in Washington’s dealings with Nicaragua.

Some indifference towards diminutive Nicaragua can perhaps be expected of Donald Trump. But he could also decide on more aggressive measures, not in an immediate cost-benefit instrumental calculation but rather as part of an extremely theatrical policy.

In such a scenario—a term usually used as a metaphor but here it’s meant literally—Nicaragua could serve the role of “Punishing Peter so Paul understands.” Bolivia, Ecuador or any other reluctant vassal Trump finds for the role of Paul would get the message.

Ortega’s clientelist cocktail

Only analysts besotted with the FSLN claim they won the latest elections with the Supreme Electoral Council’s announced 72%. But to claim that these figures hide a total rejection of Ortega who’s starving for social support is an opposition pipe dream.
The FSLN governed “from below” for 17 years (1990-2006) and, faithful to their leaders’ guidelines, its activists cut off street traffic, paralyzed universities and made many gang members their poorly paid but extremely efficient condottieri in order to distribute persuasive beatings. All three governments in the neoliberal intermezzo could only govern with the FSLN, sometimes against the FSLN, but never without the FSLN.

According to Latin American researchers Evelina Dagnino, Alberto Olvera and Aldo Panfichi, Latin America’s great political projects can be classified as either authoritarian, neoliberal or participatory. After Ortega’s FSLN returned to power in 2007, he has tried a cocktail of all three: participatory in rhetoric, neoliberal in aims and authoritarian in means. Neoliberalism is evident in his pact with the elites and his desire not to make structural changes. Authoritarianism is obvious in his dealings with the opposition and even with his fellow party members, from whom he demands absolute submission. The rhetoric is accompanied by certain undertakings that have a daily impact on the pockets of population sectors that were forgotten or crushed by the governments preceding Ortega.

21st-century welfare State

The social programs and other changes Ortega has introduced are sending a message to the poorest people and the middle sectors that the opposition’s analysts often miss or undervalue at best. Since his return to government Ortega has kept Managua bus fares frozen and electricity rates subsidized for consumers using less than 150 kilowatts/hour. In an inflationary context, this means an ongoing reduction in the costs of daily mobility and electricity. For workers who have to take two or more buses daily to get to and from work, subsidized transport is a substantial benefit. From their comfortable vehicles, many analysts fail to see the impact of this measure.

With an eye on the social security coffers, the traditional petty cash box for governments of both the right and left, Ortega also issued a decree in his first new term (2007-2011) obliging all employers to register all workers as contributors, regardless of their contract’s duration. Up until then, this was only compulsory for indefinite contracts. In a context of high underemployment, informality and job rotation, this doesn’t mean these contributors will necessarily accumulate enough to be eligible for a long-term benefit like an old-age pension, but joining the contributors’ club enables many working class people and their families to have access to medical services and medicines, a subsidized leave for maternity and illness and other benefits that employer weren’t formally obliged to recognize.

A multicolored cronyism

Ortega’s government has created new markets, set up as fairs, where artisans and farmers from places as remote as Wiwilí and even the Caribbean Coast gather twice a week to sell hammocks, leather handbags, cheeses, cream, orchids and traditional Caribbean coconut bread. Municipal governments help them with transport and the central government makes available an infrastructure that assumes maintenance, security and cleaning costs without charge.

The recompense is in the message these fairs give to the urban middle classes who go there to buy at prices far below those of the supermarket. Puerto Salvador Allende in Managua, built on the shores of Lake Xolotlán with Venezuelan funds, has a similar profile and intention. The esplanade that used to harbor brothels and rough bars is now a safe and clean family complex, cordoned off by a row of restaurants and handicraft shops.

All such new infrastructures, including the new parks in Managua and throughout the country, walls, benches, trash cans and signs display the First Lady’s signature designer colors. Everybody knows she’s the author of these street cosmetics, including the omnipresent “trees of life” whose Klimt-like yellow-gold color has now been repainted in the same designer colors and become a rainbow-colored logo that saturates the government’s websites, official documents and even some institutional buildings. Her “signature” is always there to remind us of her omnipresence. And although it may seem too many that this bizarre decoration borders on the ridiculous and is well on the way to taking a special place in the annals of bad taste, the colors serve their purpose: they announce the creator and redefine public areas.

It’s impossible to erase from our mind such a personal and party seal that constantly reminds us who’s responsible for every object of public investment. Splashing the country from top to bottom with her multi-colored palette, relegating the party’s traditional red and black, Murillo has built a hyper-politicized space in an ongoing and ubiquitous electoral campaign.

21st-century clientelism copies 20th-century fascisms’ invasion of the public space. It shouldn’t therefore be surprising that, similar to European fascism, the new urban cosmetics, markets and museums provide jobs, establishing an open clientelism that could lead to its expansion.

The selective and closed clientelism is geared to contracting the workforce needed for these projects, whereas the indiscriminate and open clientelism is for the public that approaches them as consumer, with no denominational motivation. These investments, which the opposition reviles or minimizes, are the material foundation of a social base.


But this foundation is erected on volatile ground because, right from the start, all these achievements—as well as the distribution of cows, sows, hens, zinc roofing sheets and bags of food—have depended on Venezuela’s oil cooperation. Without Chávez, Chavism and the rising prices for crude, the projects may languish. The oil pipeline has stopped nourishing them. If 21st-century socialism in Venezuela was a rentier socialism, that of Nicaragua was a parasitic socialism, based on mendicancy and not on negotiating with and charging big capital.

Now Ortega faces the crossroads of maintaining the projects or favoring his pact with certain sectors of the elites. He’s already taken one measure to the detriment of the middle classes and a certain sector of the elites: control over foreign aid funding, which led to the flight of cooperation agencies, including reducing the presence of the United Nations Development Programme to its bare bones. The crisis of Venezuelan resources and the flight of international cooperation may undermine his social base and bring the unrest to the boiling point, which is the point where the interests of many sectors coincide to repeat the nightmare of the 1990 elections: all against the FSLN.

For the moment, a sneak peek at the “All against the FSLN” was perceptible in the “Many without the FSLN” campaign that resulted in the scant presence of voters at the polling stations on November 6. If the political analysts of the governing party aren’t negligent, they would do well to make a real vote count for internal use. But the inveterate practice of killing the messenger prevails, ensuring that nobody nominates themselves as the herald of bad news. Those selling the presidential couple soap bubbles of new patronage ideas will be better received.

The snares of faith: coopting populism

For the moment, bank deposits and the economy are both still growing. Elites and grassroots organizations have faith that they can co-opt the Ortega-Murillo version of populism.

The leaders of the cooperative federations—the Association of Rural Workers and the National Union of Farmers and Ranchers—have obtained perks and sinecures that have left them sated. The elites have maintained their privileges and added more: neoliberal labor laws and a stability that’s the envy of their counterparts in the region. The governments of Alemán and Bolaños, which preceded “Sandinismo reloaded,” were thrown by the coffee crisis, conflicts among former and new National Police chiefs, and the turn-of-the-millennium bank failures, bailouts and mergers. In Ortega’s era there’s been stability and the financial sector has been buoyant with a notable increase in deposits and credit placements.

Both poles—the organized grassroots sectors and the business leadership—assume they’ve domesticated the regime’s populism and put it to work in their interests. But this belief in their achievements as negotiating agents comes from a belief in the power of public policies. The likelihood of maintaining certain conditions has only partly been based on the government’s strategy and their achievements are volatile because they’re based on Venezuela’s cooperation, a debt whose importance will be felt as the deadlines come due.

The other macroeconomic factors for these conditions—favorable prices for the main export products (meat, dairy produce, coffee, gold), foreign investments and the remittances migrants send to their families—don’t depend on Ortega’s strategies.

The prices of export products have fallen in these past two years but the economy wasn’t affected because this decline was accompanied by the drop in the price of oil and, concurrently, an increase in domestic consumption. The blow was also cushioned by the constant growth in remittances and in foreign investment attracted by low wages, low land cost, labor flexibility, political stability and the almost unlimited possibility of obtaining ad hoc agreements through the monetary greasing of political connections.


This bonanza has feet of clay. The new jobs are of low productivity because they’re concentrated in the informal sector. The much-vaunted reduction in poverty is based on what is called the demographic dividend, a population pyramid change that has reduced the average number of dependents in each home. Any disturbance to the stability—such as could come from the Nica Act—could change at a stroke the macroeconomic conditions on which the regime rests. Its allies could begin to feel they can no longer co-opt Ortega’s strategies. And in reality it isn’t about Ortega but about his circumstances, although for all practical purposes it’s the same thing: the allies—elites and grassroots sectors—will conclude that they have no place in 21st century clientelism.

And the future?

To recap, the success with which Ortega’s authoritarianism has withstood being shaken by external or domestic disturbances has rested on the division of the elites; the marginal but cooperative role Nicaragua has played in current US geopolitics; stable macroeconomic conditions; and the patronage of Venezuela’s rentier socialism, which has paid for the social programs and subsidies; the cooptation of alleged allies through more or less explicit pacts.

The end of Venezuelan aid changes this scenario and could force a rethinking of the alliance model. The instability that this reconfiguration could trigger is a lethal risk for Ortega’s regime because Nicaragua could regain importance for the United States, the elites could present a united front, the grassroots sectors could rebel and foreign investment could wane, resulting in a vicious circle—from Ortega’s perspective—where some factors catapult the development of others.

The opposition could be contemplating this scenario and speculating on the possibility of taking from the streets what they couldn’t get from the polls. It knows that the silent vote shown by abstention is a bad omen for the regime’s stability. What it probably isn’t considering is that, regardless of how events shift, Nicaragua’s future stability and the possibility of progressing towards greater equity will be linked to what happens with the formidable and extremely skillful political machine the FSLN has become: a party with a social network and certain strategists unmatched by any other political force in the country.

José Luis Rocha is a researcher for the Institute of Social Research and Projection on Global and Territorial Dynamics (IDGT) at the Rafael Landívar University of Guatemala. A version of this article was published in the November-December issue of Nueva Sociedad.

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