Nicaragua: Protest Abstention, Dedazos and Electoral Farce

By Kenneth M. Coleman*

A group of people holding Nicaraguan flags and banners protest outside

Organized by the Sandinista dissident group Movimiento Renovador Sandinista (MRS), protesters took to the streets last year ahead of the general elections to demand recognition of their party, and free and open elections. Many members of MRS will abstain from voting in the upcoming elections. / MRS / Flickr / Creative Commons

The surge in protest abstentionism in Nicaragua’s presidential election last November appears likely to worsen in elections this November 5 – undermining the legitimacy of the Daniel Ortega government but not threatening its control.  The  Supreme Electoral Council, dominated by the ruling Sandinista Party (FSLN), proclaimed that 68 percent of the registered electorate had voted last November 6, but two more credible estimates – that of independent observers (closer to 30 percent) and post-election public opinion polls (50 percent) indicated a much lower turnout.  Non-voters come in at least two variants: the disinterested, disengaged, and poorly informed; and protest abstainers.  The evidence points to the latter reason.

  • Critics of the now-autocratic FSLN had nowhere meaningful to go electorally. In June 2016, the FSLN-controlled Supreme Court of Justice (CSJ) withdrew recognition of the Partido Liberal Independiente (PLI) from Eduardo Montealegre, a prior presidential nominee who had finished second to Daniel Ortega in 2006, and recognized Pedro Reyes, a political non-entity soon booted from party leadership.  Years before, in 2008, the government withdrew recognition from the Movimiento Renovador Sandinista, which included most of the well-known Sandinista dissidents (including author Sergio Ramírez, once Daniel Ortega’s Vice President, and several surviving members of the Sandinistas’ original nine-person National Directorate).
  • Focus groups organized by scholars at Florida International University (FIU) and follow up studies confirmed high abstention rates driven by unhappiness with the election. Interviewees said, for example, “There was no candidate who fulfilled my expectations for making the country better … none … capable of taking the country forward.”

Protest abstentionism appears likely to be equally high or even higher in the municipal elections on November 5, reflecting frustration from an unexpected source:  loyal Sandinistas opposing the imposition of candidates by President Daniel Ortega, and his wife and vice president, Rosario Murillo.  Adapting Mexican political discourse, many FSLN nominees for mayors, vice-mayors, and municipal councilors are now criticized as representing dedazos, candidates “fingered” from above.  Two unhappy Sandinistas told the opposition paper Confidencial on August 29 of their discontent.  “It hurts me … but that is what [the party] has left me… not to vote in the municipal elections,” said one in Masaya.  “They didn’t take the party loyalists into account [in picking candidates], so the party loyalists will not take the party into account in the elections in November,” said a former FSLN supporter in Corinto.

  • Associates of the old PLI, reconstituted as Ciudadanos por Libertad (CxL), have been granted legal registration – and intend to compete as long as the Organization of American States observes the elections. The OAS role remains unclear, however, prompting the initial CxL candidate for Mayor of Managua to resign his candidacy earlier this month.

What the opposition proclaimed an “electoral farce” last November seems likely to be repeated on November 5.  Ortega has taken steps to allow “same-day registration” of voters on election day – apparently to counter abstentionism – and recent reports of distributing cédulas (national identity cards necessary for voting) to minors have surfaced in La Prensa, presumably also with an intent to increase electoral turnout.  However, anger over dedazos may be deep enough to keep many members of the FSLN away from the polls.  In spite of high abstention levels, the Ortega family enjoys control over all branches of government – National Assembly, Judiciary, and Electoral Council – and continues to enjoy an implicit corporatist accord with COSEP, the leading business organization, while having long proven adept at undermining potentially competitive leaders.  Overreaching via the dedazos may have caused visible cracks in the partisan foundation of the dynasty – strengthening party dissidents’ portrayal of Daniel and Rosario as usurpers – but no leader capable of undermining their grip over governmental structures is yet visible or appears likely to emerge in the near term.

September 18, 2017

* Kenneth M. Coleman is a political scientist at the Association of American Universities who directed the 2014 AmericasBarometer national survey in Nicaragua.

2017: Happy New Year in Latin America?

By Eric Hershberg and Fulton Armstrong

posse_de_michel_temer_3

Brazilian President Michel Temer surrounded by members of his party in mid-2016. His government will continue to face questions of legitimacy in 2017. / Valter Campanato / Agência Brasil / Wikimedia / Creative Commons

The year 2016 laid down a series of challenges for Latin America in the new year – not the least of which will be adapting to a radically different administration in Washington.  Last year saw some important achievements, including an elusive peace agreement in Colombia ending the region’s oldest insurgency.  Several countries shifted politically, eroding the “pink tide” that affected much of the region over the past decade or so, but the durability and legitimacy of the ensuing administrations will hinge on their capacity to achieve policy successes that improve the well-being of the citizenry.  The legitimacy of Brazil’s change of government remains highly contested.  Except in Venezuela, where President Maduro clung to power by an ever-fraying thread, the left-leaning ALBA countries remained largely stable, but the hollowing out of democratic institutions in those settings is a cause for legitimate concern.  Across Latin America and the Caribbean, internal challenges, uncertainties in the world economy, and potentially large shifts in U.S. policy make straight-line predictions for 2017 risky.

  • Latin America’s two largest countries are in a tailspin. The full impact of Brazil’s political and economic crises has yet to be fully felt in and outside the country.  President Dilma’s impeachment and continuing revelations of corruption among the new ruling party and its allies have left the continent’s biggest country badly damaged, with profound implications that extend well beyond its borders.  Mexican President Peña Nieto saw his authority steadily diminish throughout the course of the past year, unable to deal with (and by some accounts complicit in) the most fundamental issues of violence, such as the disappearance of 43 students in 2014.  The reform agenda he promised has fizzled, and looking ahead he faces a long period as a lame duck – elections are not scheduled until mid-2018.
  • The “Northern Triangle” of Central America lurches from crisis to crisis. As violence and crime tears his country apart, Honduran President Hernández has devoted his energies to legalizing his efforts to gain a second term as president.  Guatemala’s successful experiment channeling international expertise into strengthening its judicial system’s ability to investigate and prosecute corrupt officials is threatened by a weakening of political resolve to make it work, as elites push back while civil society has lost the momentum that enabled it to bring down the government of President Pérez Molina in 2015.  El Salvador, which has witnessed modest strides forward in dealing with its profound corruption problems, remains wracked with violence, plagued by economic stagnation, and bereft of decisive leadership.
  • Venezuela stands alone in the depth of its regime-threatening crisis, from which the path back to stability and prosperity is neither apparent nor likely. The election of right-leaning governments in Argentina (in late 2015) and Peru (in mid-2016) – with Presidents Macri and Kuczynski – has given rise to expectations of reforms and prosperity, but it’s unclear whether their policies will deliver the sort of change people sought.  Bolivian President Morales, Ecuadoran President Correa, and Nicaraguan President Ortega have satisfied some important popular needs, but they have arrayed the levers of power to thwart opposition challenges and weakened democratic institutional mechanisms.
  • As Cuban President Raúl Castro begins his final year in office next month, the credibility of his government and his successors – who still remain largely in the shadows – will depend in part on whether the party’s hesitant, partial economic reforms manage to overcome persistent stagnation and dissuade the country’s most promising professionals from leaving the island. Haiti’s President-elect Jovenel Moise will take office on February 7 after winning a convincing 55 percent of the vote, but there’s no indication he will be any different from his ineffective predecessors.

However voluble the region’s internal challenges – and how uncertain external demand for Latin American commodities and the interest rates applied to Latin American debt – the policies of incoming U.S. President Donald Trump introduce the greatest unknown variables into any scenarios for 2017.  In the last couple years, President Obama began fulfilling his promise at the 2009 Summit of the Americas in Trinidad and Tobago to “be there as a friend and partner” and seek “engagement … that is based on mutual respect and equality.”  His opening to Cuba was an eloquent expression of the U.S. disposition to update its policies toward the whole region, even while it was not always reflected in its approach to political dynamics in specific Latin American countries.

 Trump’s rhetoric, in contrast, has already undermined efforts to rebuild the image of the United States and convince Latin Americans of the sincerity of Washington’s desire for partnership.  His rejection of the Trans-Pacific Partnership – more categorical than losing candidate Hillary Clinton’s cautious words of skepticism about the accord – has already closed one possible path toward deepened ties with some of the region’s leading, market-oriented economies.  His threat to deport millions of undocumented migrants back to Mexico and Central America, where there is undoubtedly no capacity to handle a large number of returnees, has struck fear in the hearts of vulnerable communities and governments.  The region has survived previous periods of U.S. neglect and aggression in the past, and its strengthened ties with Asia and Europe will help cushion any impacts of shifts in U.S. engagement.  But the now-threatened vision of cooperation has arguably helped drive change of benefit to all.  Insofar as Washington changes gears and Latin Americans throw up their hands in dismay, the region will be thrust into the dilemma of trying to adjust yet again or to set off on its own course as ALBA and others have long espoused.

 January 4, 2017

Nicaragua: A New Family Dynasty Taking Root

By Aaron T. Bell*

nicaragua-0919l

Left: Photo of Daniel Ortega celebrating his latest presidential triumph (July 20, 2012) / Fundación ONG de Nicaragua / Wikimedia / Creative Commons; Right: Anastasio Somoza DeBayle / DemonSabre / Wikimedia / Creative Commons

Events in Nicaragua this summer have demonstrated that President Ortega and his family have a vision for the future that erodes a key element of political democracy – the replacement of the executive through free and fair elections – and risks establishing a dynasty of corruption and authoritarian rule.  In May 2016, President Daniel Ortega of the Frente Sandinista de Liberación Nacional (FSLN) announced his candidacy for a fourth presidential term – his third consecutive.  Since then the government has taken several steps to ensure that Ortega and his family remain in power in November’s elections for President and National Assembly, and beyond:

  • Voting irregularities, a lack of transparency, and accusations of fraud have marred several successive elections since Ortega’s return to power in 2007. In June of this year, Ortega announced that he would not permit international election observers to monitor this fall’s elections.
  • Weeks later, the Supreme Court stripped opposition leader Eduardo Montealgre of his position as head of the Partido Liberal Independiente (PLI) and replaced him with Pedro Reyes, considered by observers to be an Ortega ally. In July, Nicaragua’s electoral council removed 16 sitting members of the National Assembly and 12 alternates after they refused to recognize Reyes.
  • In August, Ortega announced that Rosario Murillo, his long-time partner and wife since 2005, would serve as his vice presidential candidate in the November election. Murillo has been a prominent figure in the Ortega government while serving as both first lady and chief spokeswoman.  Her political ascension is complemented by the rise to prominence in recent years of her and Ortega’s children as operators of business and media interests, including the couple’s eldest son and presidential adviser on investments, Laureano Facundo, who helped sell the stalled interoceanic canal project to Chinese businessman Wang Jing.

Nicaragua’s opposition parties have thus far been unable to mount an effective response and have shown the lack of cohesion and focus that have plagued them for decades. Montealgre announced that the coalition led by the PLI would boycott the election and called on others to do the same.  But rather than present a united front, opposition leaders are fighting amongst themselves to seize the mantle of leadership and challenge Ortega through several competing parties and coalitions.  This will be no easy task: polling conducted by M&R Consultores this summer shows that over 60 percent of voters are likely to vote for Ortega, with the leading opposition parties drawing low single digits.  Over a quarter of potential voters said they were unsure whom they would vote for.  With the opposition beset by division and lacking much legitimacy – tainted as they are by a history of corruption, self-interest, and financial support from the United States – it is unsurprising that protests and civil unrest have been largely absent.  The ouster of the PLI delegates has also stirred the FSLN’s old opponents outside the government, who have been largely quiescent in recent years but condemned the decision: the Bishops of the Episcopal Council, the Nicaraguan-American Chamber of Commerce, and the Consejo Superior de la Empresa Privada (COSEP), the largest business chamber that has enjoyed a working relationship with the Ortega government.

The FSLN’s authoritarian turn, Ortega’s long reign, and the rise to prominence of both Murillo and the couple’s children invite comparisons between Ortega and Somoza family dynasties.  It may be from COSEP and the business sector, rather than among the weak and divided political opposition, that a serious challenge to Ortega could eventually emerge. It was after all the defection of non-Somoza family interests in the private sector, combined with a popular insurrection led by a guerrilla insurgency, that did away with Nicaragua’s previous family dynasty.  But that combination only emerged following the shock of the 1972 earthquake and resulting massive corruption, the assassination of a national figure like Pedro Chamorro in 1978, and the particularly bloodthirsty turn that the Somoza regime had taken. With similarly game-changing circumstances absent at this juncture, the sort of cross-sector revolutionary movement that ultimately toppled the Somozas appears unlikely.  For the moment at least, an Ortega family will be well on its way to firmly preserving its dynastic power come November.

 September 19, 2016

* Aaron Bell is an Adjunct Professorial Lecturer in History and American Studies at American University.

Nicaragua: Where’s the Canal?

By Fulton Armstrong

Canal Nicaragua

Coming soon to Nicaragua? Photo Credit: tryangulation / Flickr / Creative Commons

The Nicaraguan government and Chinese investment group leading the Nicaragua Grand Canal project continue to claim enthusiasm for their dream, but enough fundamental problems remain unresolved to suggest that prospects for its eventual construction are dimming – and the principals are maneuvering to avoid picking up the tab for the expenditures made so far.  In a year-end statement last December, President Ortega’s office said the canal project would be one of his government’s top 25 priorities this year and emphasized its benefits to the Nicaraguan people.  Hong Kong-based HKND Group had announced in November that it was “fine-tuning” the canal design to address problems raised in an environmental impact study, which would delay the beginning of major excavations and lock-building until the end of 2016.  Company officials have since said, however, that construction of a fuel terminal and wharf on the Pacific coast –necessary to bring in the massive equipment the project requires – could start as early as this August.  The company still claims that it will complete the canal in 2020 – a prediction that few, if any, outside experts see as feasible.

The project faces massive obstacles, with no solutions in sight.

  • The estimated US$50 billion in financing is nowhere to be seen. Chinese investor Wang Jing, who has already spent US$500 million of his own money on the project, lost some 85 percent of his US$10 billion personal fortune in last year’s Chinese stock market correction.  (Bloomberg named him the worst performing billionaire of 2015.)  Observers believe his losses as well as the problematic environmental impact study have cooled his and other private investors’ support.  An initial public offering of shares has been postponed indefinitely.
  • Project managers have yet to demonstrate the need for the canal and propose solutions to significant engineering challenges, such the need for construction able to withstand earthquakes made likely because of seismic faults along the route. HKND says the canal will handle 3,500 cargo ships a year, including ones bigger than those transiting the Panama Canal, but industry experts say there’s no demand for more than will be accommodated by the expansion of the existing canal – and that the United States has no ports capable of receiving the larger vessels.  Global warming, moreover, could soon open a faster and cheaper route north of Canada.
  • Public protests have diminished during the hiatus in canal-related news and activities, but opponents remain strident and are gaining international support. Detractors’ resolve to fight has been strengthened by the environmental report, by a credible UK firm, determining that the project will “have significant environmental and social impacts,” including dislocation of at least 30,000 Nicaraguans.  Indigenous and Afro-Nicaraguan groups on the Atlantic Coast are upset about disruptions to traditional territories, including cemeteries and holy places.  Amnesty International has condemned the treatment of affected persons as “outrageous” and “reckless.”

The “biggest earth-moving project in history” is still looking like one of the biggest boondoggles in history – yet another in a long series of chimera canals in Nicaragua since early last century.  The government says that popular support for the project remains about 81 percent, but a survey by Cid Gallup, published in the Nicaraguan newspaper Confidencial in January, showed that 34 percent of 1,000-plus respondents consider the canal to be “pure propaganda.”  One quarter believe technical studies have been inadequate and that funding will not materialize.  Those sentiments could be reversed somewhat by the appearance of massive excavation equipment and creation of related construction jobs, but support will still be tempered by concerns about persons whose lives are disrupted by the project – and by perennial and profound suspicions that corruption will take the lion’s share of benefits.  Some opposition leaders believe HKND’s big push to appear optimistic is to build a case for collapse of the project to be Nicaragua’s fault, so that the company can demand that Managua repay the $500 million that Wang has reportedly spent.  The lack of transparency surrounding the project only fuels such speculation. 

April 4, 2016

Honduras: Dare Anyone Criticize?

By Fulton Armstrong

Hernandez Honduras

Honduran President Juan Orlando Hernandez. Photo Credit: Presidencia de la Republica del Ecuador / Flickr / Creative Commons

The decision last week by the Constitutional Chamber of the Honduran Supreme Court to legalize presidential reelection appears to have benefited a man – current President Juan Orlando Hernández – whose political fortunes got a shot in the arm from the 2009 coup that removed President Mel Zelaya for proposing a constitutional assembly to consider just such an action.  A Liberal Party magistrate said he wanted to recant his vote the next day, but the ruling party published the decision in the Gaceta Oficial before he could.  The Supreme Court, ruling in favor of petitions by former Nationalist President Rafael Callejas and several members of Hernández’s National Party, repealed two key articles of the Honduran Constitution, including one that says “the citizen who has served as the head of the executive power cannot be president or presidential candidate.”  Callejas immediately announced that he was resurrecting his Callejista movement, called MONARCA, which won him the presidency in 1990, and his campaign literature appeared in the streets of Tegucigalpa soon after.

The Court did not explicitly overturn Article 4 of the Constitution, which states that an “alternation in the exercise of the presidency of the republic is obligatory.”  That action reportedly will fall to the National Party-led Congress, but President Hernández is almost universally seen as the big winner from the Court decision, culminating his effort to continue as President.  After the coup that removed Zelaya from power, Hernández had a hand in congressional strategies to give a constitutional and legal framework – widely debunked – to Zelaya’s military ouster and later, while serving as president of the Honduran Congress and while campaigning for president, Hernández engineered the removal of four of the five justices of the constitutional chamber of the Supreme Court and replaced them with more sympathetic judges.  He subsequently had a role in selecting a replacement for the fifth, who became Attorney General – making for a court unanimously indebted to him.  (He was sworn in as national President in January 2014.)  Reacting to the court decision last week, Hernández noted that “reelection is something that is a general rule around the world … Prohibition of it is the exception … [and] Honduras has to make progress.”  His opponents have vowed to fight the repeal.  Leaders of the Partido de Libertad y Refundación (LIBRE) have accused the justices of “betrayal of the fatherland.”  One said the court “guaranteed the impunity” of the Hernández government, but the opposition’s legislative strategies have failed before.

Representing Central America’s most violent and most corrupt nation, President Hernández is seen in Washington as essential to success of U.S. policy in Central America and initiatives such as the “Alliance for Prosperity of the Northern Triangle.”  With a request for a billion dollars on its way to the U.S. Congress, the Obama administration can ill afford to point out Hernández’s hypocrisy for doing what he condemned former President Zelaya for trying to do in 2009.  Political inconveniences aside, the political cynicism and tensions that his and former President Callejas’s maneuvering will incite in violence-ravaged Honduras can hardly be seen as helpful to the goals of good governance and democratic consolidation that all profess.  When Nicaraguan President Daniel Ortega engineered a similar judgment by his Supreme Court in 2009, allowing him to run for an additional term, the State Department did not mince words about its “concern” for its implications.  Hernández, in contrast, was in Washington securing support for funding when his court announced its decision.  The U.S. Southern Command’s new task force of some 250 Marines is expected to arrive in Honduras and begin training of security forces involved in “fighting the drug traffickers.”

May 1, 2015

Nicaragua’s “Great Canal” Draws Opposition

By Fulton Armstrong

9036608152_a199acb183_z

Protestors opposing the Chinese-Nicaraguan canal confront police / Jorge Mejía Peralta / Flickr / Creative Commons

Although questions continue to swirl around whether the Chinese-Nicaraguan canal – which its main investor called the “most important [project] in the history of humanity” – will be built or not, its opponents are taking it all very seriously.  A CID-Gallup poll in January showed that 41 percent of Nicaraguans interviewed strongly support the project, while another 21 percent and 17 percent back it somewhat and a little, respectively.  But another poll by the same firm suggested ambivalence:  asked if they supported the National Assembly vote giving the Chinese firm leading the project, HKND, a concession for the 278-km right of way for up to 100 years, some 39 percent of respondents said no.  Some political voices are growing more sharply opposed as well.  The powerful business group COSEP, for example, has gone from agnosticism about the project to a position of open disapproval.

Groups concerned about the project’s impact on the environment and rural residents have already held protests involving up to several thousand participants, and – despite the government’s promise that the canal will bring prosperity throughout the country – organizing efforts appear unlikely to fade.  Skepticism about HKND and the government’s commitment to protecting the environment, fueled by their off-the-cuff dismissal of concerns, is so deep that even a balanced comprehensive impact study by the British Environmental Resources Management, due next month, may fail to calm nerves.  Environmentalists cite studies warning that dredging Lake Nicaragua from its current depth of nine meters to the 27 meters necessary for cargo ships will stir up many layers of toxic materials, with catastrophic consequences for marine life and surrounding agricultural areas.  Other groups are rallying behind the 29,000 residents who are to be evicted from properties along the canal route.  Demonstrations have turned violent, with protestors injured by tear gas and rubber bullets.  Graffiti and banners demanding “fuera chinos” are common.

In the hemisphere’s second poorest country, the promise of growth spurred by the $40-50 billion project is still a powerful card in the government’s hand.  Many skeptics still wonder, however, if the whole scheme is a ruse to fleece the Chinese investors, who’ll bring in a couple billion dollars before realizing that the project will get bogged down in Nicaraguan political quicksand.  But opposition to the canal goes far beyond the usual Managua political game of fighting over corruption dollars and obstructing each other’s priorities.  President Ortega’s endorsement of the canal contradicts his own statements years ago that he wouldn’t compromise the lake’s eco-system “for all the gold in the world.”  According to The Guardian newspaper, the dredging will move enough silt to bury the entire island of Manhattan up to the 21st floor of the Empire State Building – which no one is prepared to deny will have serious environmental implications.  China’s Three Gorges Dam, completed five years ago, displaced 1.2 million inhabitants – proportionally twice as many Nicaraguans displaced by the canal – but Nicaragua’s ability to resettle them, give them jobs, and suppress their dissent is small compared to China’s.  The project may not be the greatest in the history of mankind as HKND claims, but it may provoke a crisis as great as any in Nicaragua.  For starters, if COSEP’s opposition persists, it threatens to unravel the modus vivendi under which Daniel Ortega has stayed in power, and could portend much deeper tensions.

March 5, 2015

Click here to see our previous article about the canal.

CELAC: Losing Relevance?

By Michael M. McCarthy

Presidencia de la República del Ecuador / Flickr / Creative Commons

Presidencia de la República del Ecuador / Flickr / Creative Commons

The announcement by Presidents Obama and Castro of their intention to normalize diplomatic relations could leave a big hole in the agenda of the Community of Latin American and Caribbean States (CELAC), which met January 28-29 for its third heads of state Summit in San José, Costa Rica.  Raúl Castro kicked off last year’s summit, in Havana, with a speech decrying the United States NSA spying scandal.  In San José, he moderated his tone, noting that “our America has entered a new era” since CELAC was founded (2010) while also calling on the U.S. to end the trade embargo – a point other member states echoed – and to return the naval station at Guantanamo Bay.  In concrete terms, the results of last week’s CELAC summit were modest.  The technocratic goals of quantifying progress on poverty and technology development announced by Ecuador, the group’s 2015-2016 President Pro-Tempore, suggest no major changes are imminent.

Since President Chávez’s death March 5, 2013, the former leader’s Bolivarian vision of Latin American and Caribbean integration and unity has shown signs of weakening.  CELAC now faces even tougher challenges defining and defending its identity and mission beyond the creation of a common political space for regional decision making insulated from the U.S. and Canada.  With Chávez’s successor, President Nicolás Maduro, losing support amid economic crisis, the Alianza Bolivariana para los Pueblos de Nuestra América (ALBA) can no longer throw its weight around on the international scene.  Cuba’s inclusion in the Summit of the Americas – increasing the likelihood of its participation in the OAS – is a major achievement but represents the loss of a major rallying point. 

Going forward, three issues will determine the groups trajectory.  The Cuba issue wont go away suddenly, but rapid change in U.S.-Cuba ties could reset hemispheric relations and leave CELACs mission muddled and potentially irrelevant.  Disagreement among CELAC members over issues such as Puerto Ricos status may create tensions, as they did when Nicaraguan President Daniel Ortega gave the island a high profile during the presidential plenary underlining the risks inherent in the unity within diversity principle embraced by CELAC.  (Ecuadoran President Correa, another ALBA supporter, chided Ortega.)  But perhaps the biggest determinant of the groups future relevance lies in its emerging relationship with ChinaA CELAC-China foreign ministers forum met in Beijing last month, formalizing the Asian nations relationship with CELAC.  The forum announced the 2015-2019 China-CELAC cooperation plan calling for the doubling of two-way trade and the increasing of Chinese investment in the region to $250 billion.  Exclusion of the U.S. and Canada may remain a tenet of CELACs platform, but the groups leaders may judge that its long-term relevance can be rescued by reaching out to China instead.

February 2, 2015

*Michael McCarthy is a Research Fellow with the Center for Latin American and Latino Studies.

July 19th Anniversary and the New Nicaragua

By Rose Spalding*

Photo credit: Globovisión / Foter / Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

Photo credit: Globovisión / Foter / Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0)

Daniel Ortega’s political rebirth has produced a remarkable partnership with the Nicaraguan business sector.  Thirty-five years ago, when he and the Nicaraguan revolutionaries ousted dictator Anastasio Somoza, a U.S. ally known for corruption and human rights abuses, they clashed with the business sector, the Catholic Church leadership, and a heterogeneous band of counterrevolutionaries armed and financed by the Reagan administration.  Ortega lost elections in 1990 but made a remarkable return to power in 2007, ushering in the “second phase of the Sandinista revolution.”  Unlike during his first term, he undertook to collaborate with COSEP, the Nicaraguan association of business chambers, and gave its members, perhaps more than any other group, regular access to high-level officials and a palpable voice in shaping legislation.  According to José Adán Aguerri, the current president of COSEP, 77 out of 81 of the Ortega government’s economic laws have been produced in dialogue with the business association.  These involve wide-ranging negotiations on minimum wage increases, tax reform, housing development, social security expansion, investment incentives, and other issues.

This partnership has contributed to economic growth and direct foreign investment.  The World Bank reports Nicaragua’s economic growth was 5 percent in 2012 and 4.6 percent in 2013, compared to 2.6 percent and 2.4 percent for the Latin American region as a whole.  According to CEPAL, foreign investment in Nicaragua reached $849 million in 2013, a level that was second only to the $968 million reported for 2011.  Nicaragua’s investment promotion agency, ProNicaragua, documents strong investment in tourism, agribusiness, textiles and outsourcing services.  The extractive sector is also growing rapidly.  Responding to strong commodity prices and a cordial reception in Nicaragua, Canadian gold mining company B2Gold recently announced a planned investment of $289 million to expand its operations in La Libertad.  Nicaraguan investors have developed new initiatives, including a major tourism project orchestrated by Carlos Pellas, the country’s richest man.  The relationship has benefited from the ALBA agreement Ortega signed with Venezuela President Hugo Chávez in 2007.  Venezuela assistance has totaled $3.4 billion in loans, donations and investments in the 2008-2013 period.  These funds regularized Nicaragua’s precarious energy supply and subsidized transportation, housing, microcredit and public sector wages, providing a general economic stimulus from which elites also benefitted.  Announcements of a projected $40 billion investment in an interoceanic canal reinforce the image of a new development era in Nicaragua.

The business-government relationship reflects mutual accommodation by Ortega and business leaders.  Nicaragua lost several decades of economic growth during the 1980s and the “contra” war, so upon his return to power Ortega put a premium on promoting growth, tread lightly on issues of tax reform, and eagerly pursued foreign investment.  He met repeatedly in closed sessions with business leaders and called for a “grand alliance” of government, business and workers to combat poverty, promote investment and create jobs.  A formal consultation mechanism brought together leaders from COSEP and the government, such as Bayardo Arce and Paul Oquist, for regular policy discussions.  Offering a stable economic environment and generous investment incentives, a non-conflictual labor force with the lowest wages in the region, a relatively low crime rate, and receptivity to business initiatives, Ortega won over business allies.  The business interests of current and former Sandinista leaders, some affiliated with COSEP, reinforced the collaboration and helped convince a new generation of business leaders to put aside traditional hostility and preoccupation with injuries of the revolutionary 80s.  They accepted the government’s legitimacy and bolstered its domestic and international credibility.  Enthusiastic about the growth of the Nicaraguan economy, economic elites also downplayed lingering questions about deficits in democratic institutionality and accountability.  But the heightened concentration of political power under Ortega and the weakness of other state institutions mean that economic rules are vulnerable to shifting political winds, and questions remain whether this development approach will resolve the problem of widespread poverty.  Even as the government-business relationship warms and the economy grows, these social and political concerns continue to bedevil the country.   

*Dr. Spalding is a professor of political science at DePaul University.

Nicaragua’s Canal: Great Leap (of Faith) Forward?

By CLALS Staff

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

The Nicaraguan government and a Chinese telecom tycoon took a big step on Monday toward the country’s long-held dream of having its own canal, but their prediction of supertanker traffic starting as soon as 2020 seems a bit far-fetched.  The project will cost $40 billion and, according to government officials, will create 50,000 jobs immediately, 1 million jobs over the life of the project, and will help lift another 400,000 people out of poverty.  President Daniel Ortega’s supporters claim the economy – currently projected to grow at 4.5 percent a year until 2020 without the project – will grow as much as 15 percent a year with it. The Chinese company, HKND, will enjoy a 100-year lease on the canal, with 1 percent of it reverting back to Nicaragua each year.  The proposed route for the canal is 278 kilometers long – about three times longer than the Panama Canal – and will be deep and wide enough to handle ships much larger than the “New Panamax” vessels.  Officials say the canal would “complement” the Panama waterway, which they say will be overcapacity even after its current expansion, and will save shippers some 800 miles on their way to the U.S. east coast.

Opposition from some politicians and environmentalists has been strong.  According to media reports, Nicaragua’s Supreme Council for Private Enterprise (COSEP) and other business organizations are generally positive but skeptical, with one leader calling Monday’s press conference “just an initial flow of information.”  Congressman Eliseo Núñez of the Independent Liberal Party (PLI), however, has been widely quoted as calling Monday’s announcement a “propaganda game” and blamed the media for generating “false hopes for the Nicaraguan people.”  Former Vice President Sergio Ramírez says that handing over national territory for development is a violation of the country’s sovereignty, and other critics claim the project violates 32 provisions of the Constitution.  Concerns about damage to Lake Nicaragua, an important source of fresh water that is already polluted, remain. Chinese investor Wang Jing told the press that avoiding environmentally sensitive areas was a major factor in determining the route, and he has promised that a full environmental impact study will be conducted before construction starts.  Opponents of the project doubt he will make the report public.

Ortega’s statement last year that a Nicaraguan canal “will bring wellbeing, prosperity, and happiness to the Nicaraguan people” may well be right – if the project gets off the ground and so many jobs are created.  However romantic that vision is, construction is still far from certain to begin this December, as claimed, or even within the next year or so.  Wang says that he has lined up “first-class investors,” but none has been identified yet.  In addition, criticism of his business record – opponents say his telecom company is poorly run – has hurt his credibility. And accusations that he’s a stalking horse for the Chinese government, which he says has had “no involvement,” will be difficult to dispel in view of Beijing’s other interests in the region and in shipping.  Equally troubling, as the ongoing expansion in Panama has shown, the shadow that corruption and inefficiency cast over any major project tempers optimism and argues against premature celebration.

Central American Governments Face Tough Challenges

by Benedicte Bull*

Embed from Getty Images

CLALS last week convened a panel in San Salvador to discuss the findings of its multi-year project on “Elites, States and Reconfigurations of Power in Central America.”  Attended by over 120 people, the event analyzed how the evolving role of elites will affect the new administrations in El Salvador, Costa Rica, and Honduras.  The following day featured a daylong event to launch the Instituto Centroamericano de Investigación sobre el Desarrollo e Inclusión Social (INCIDE), a new think tank that aims to foster fresh thinking about the difficult challenges facing the region.  Here are some key conclusions:

The leftist FMLN in El Salvador and the centrist Partido Acción Ciudadana (PAC) in Costa Rica have won crucial elections, but their ideological labels don’t fully capture how they will relate to three decisive actors: legal capital (the private sector), illicit capital (organized crime) and the United States.  The elections of Salvador Sánchez Cerén and Luis Guillermo Solís do not signal a strong turn to the left in Central America, but rather show that the population in both countries increasingly questions the political elites and institutions.  Solís capitalized on the corrupt image of Costa Rica’s two traditional parties, and what tipped the elections in El Salvador were all those who feared the return of a corrupt and elitist right, whose dirty laundry was made public in feuding between ARENA and the breakaway party GANA.

The new governments’ ability to restore confidence will depend firstly on how they relate to business and private capital.  All the countries of Central America are included in the free trade agreement with the United States (CAFTA-DR) and have been generally pursuing market-oriented development strategies since the late 1980s, but economic elites are still dependent on the state for survival.  Many build their business primarily on contracts with the state; all depend on the state involvement in infrastructure and services; but few are willing to pay sufficient taxes to allow their governments to face important challenges.  Honduras, which has accommodated elites the most, may establish a free zone fully exempt not only from taxes but all government regulations.  Nicaragua’s approach, under Daniel Ortega, is to build an alliance between the presidency and business, facilitated by Venezuelan assistance and growing integration into ALBA trade networks.

Institutional weaknesses throughout the region make it difficult to bring organized criminal groups under control.  In Guatemala, where congressmen frequently jump between political parties, organized crime easily buys political control and influence.  Weak parties, weakened ideologies, and leaders’ unwillingness and inability to build a state capable of implementing policies for the common good also allow organized crime a strong grip over politics.  In both Honduras and Guatemala, criminalization of politics has blurred distinctions between legal and illegal elites.

Central America’s relations with the United States also tend to hold it back.  While South America has come a long way towards independence from the United States, many Central Americans believe the old hegemon does not intend to let go of their region.  U.S. policy has in many ways become more sophisticated, but former members of governments speak freely of various methods the U.S. uses – often with the support of Washington lobbyists representing Central American rightwing elites – to restrict Central America’s room for maneuver.  This overshadows debate in Central America over China’s influence and Brazil’s growing leadership.

Taken together, these factors contribute to the conclusion that, even with winds blowing slightly to the left in Central America, the new presidents will have little space to make new policies.  For former guerrilla Sánchez Cerén and former history professor Solís, their experience and wisdom may be their best assets to move forward their agendas.

*Dr. Bull is Associate Professor at the Center for Development and the Environment (SUM) at the University of Oslo.