By William Vigil*

Three years of political unrest, COVID-19, and back-to-back Category 4 hurricanes last November have created a precarious situation in Nicaragua – raising the probability of increased instability, poverty, and migration into Costa Rica and northward toward the United States. Long ranked the second poorest country in the hemisphere (after Haiti), the country has experienced worsening socio-economic conditions since 2018, and shrinking democratic and civic spaces have deepened political polarization.

• In 2018, the government cracked down on protests triggered by cuts in social security benefits, followed by months of violent suppression of unrest and demands for a democratic opening. The result was more than 325 dead, thousands wounded, mass detentions, and the exodus of more than 100,000 persons.
• The turmoil drove a steep downturn in the economy. According to the Nicaraguan Central Bank (BCN), Nicaragua’s economy contracted 4.0 percent in 2018 and 3.9 percent in 2019, while inflation increased to 3.9 percent and 6.1 percent respectively. Other sources estimate a 4.0 percent decline in 2020. According to the World Bank, investment and consumption fell sharply, prompting significant unemployment, particularly in construction, commerce, and tourism. A 2019 household survey by Fundación Internacional para el Desafío Económico Global (FIDEG), a Nicaraguan think tank, indicated that poverty rates had increased at the national level, both in terms of general poverty and extreme poverty.
• Efforts by national and international groups to advance dialogue to reduce political tensions have not been successful. Framework accords in March 2019 on the release of political prisoners and the restoration of civil rights were only partially fruitful. Targeted international sanctions against government individuals and entities have been intermittent and have not changed government behavior. Some measures have led to retribution, moreover, such as the abrupt closure of the UN and OAS human rights missions in the country.

Nicaragua’s policies regarding COVID‑19 have been erratic and haphazard, and recovery from last November’s hurricanes has been slow. Leaders initially argued that the country’s economic challenges made quarantine largely untenable, and Nicaragua attempted Sweden’s policy of “herd immunity” despite the dramatically different national and institutional capacities of the two countries. In addition, Hurricanes Eta and Iota left tens of thousands of people homeless and without drinking water. According to the Nicaraguan Finance Minister, 3 million people in 56 municipalities were affected, with estimated economic damages of $738 million.

• Nicaragua has experienced a surge in unemployment, but – in contrast to other countries – has not adopted policies favoring a return to pre-crises levels. Some economists estimate that basic necessities and services now cost more than double the average household income. According to a Gallup poll taken in January, six out of every 10 Nicaraguans would migrate to other countries if they had the opportunity.

These crises do not show credible signs of abating. They significantly increase the likelihood of a challenging outlook, particularly for the country’s most vulnerable population groups. Systematic and comprehensive action has been lacking in and outside the country, however. The international community, including donors, multilateral banks, development agencies, and NGOs, has not been in a position to respond to the crises in a coordinated fashion. Their natural desire to seek a prominent role for civil society in any comprehensive strategy – with accountability and transparency – is frustrated by government resistance.

• Nicaragua’s volatile political situation could eventually evolve into a humanitarian crisis with repercussions for the rest of the region. Tensions will increase as national elections scheduled for November approach, as all indications are that the government will further restrict civil and political rights. The country’s problems, moreover, could easily spill over its borders. Migration has traditionally been an escape valve. A new wave of refugees could be expected in Costa Rica, but that country’s own economic challenges may well instead drive many to head north.
• International assistance alone won’t be enough. Conditions of strict accountability, transparency, civil society engagement, and close consultation with affected populations are necessary for it to have significant impact. Together, donors, multilateral banks, the UN, and NGOs have a degree of leverage to ensure the correct use of resources, such as by conditioning it on full respect for human rights. UN human rights chief Michelle Bachelet last month called on the government to “urgently adopt effective electoral reforms and establish a genuine and inclusive dialogue with all sectors of society,” but slowing or stopping the country’s downward spiral will require much more from all sides.

March 23, 2021

* William Vigil is co-director of the South-North Nexus. He is a former Nicaraguan diplomat who served in New York (at the United Nations) and in Washington, D.C. This article is based on a South-North Nexus report entitled Nicaragua’s Converging Crises.