San José, Costa Rica, since 1956

Tensions Build Following MCC Aid Cut

MANAGUA – The political fallout from the recent cancelation of millions of dollars in U.S. development aid has led to a war of words that threatens to worsen U.S.-Nicaraguan relations and further polarize an already divided country.

Due to serious unanswered concerns over last November’s municipal elections, in which the ruling Sandinista Front is accused of stealing more than 40 mayor’s seats, the U.S. Millennium Challenge Corporation (MCC) decided June 10 to cancel the remaining $62 million of its $175 million aid compact for Nicaragua (TT, Internet Daily, June 11).

Also lost is an additional $129.2 million in complementary financing that the MCC had secured from the Inter-American Development Bank for road construction.

The government of President Daniel Ortega has reacted to the news with a combination of angry accusations and revolutionary celebration.

Sandinista officials and media outlets were quick to blame the MCC decision on “blackmailing” by the U.S. government and Nicaragua’s political opposition leaders, namely Eduardo Montealegre, whom they accused of lying about election fraud and lobbying the U.S. to cut aid. Sandinistas attacked Montealegre and other political opponents as “anti-patriotic bootlickers.”

Ortega, for his part, called the MCC program a “big lie and manipulation.” He compared U.S. President Barack Obama to former President Ronald Reagan, whose government in the 1980s funded the Contra war against the first Sandinista government and declared a crippling economic embargo against Nicaragua.

But the government’s anger was mixed with equal doses of triumphalism.

On June 13, Ortega convoked a massive party rally in the RevolutionaryPlaza to announce the birth of the “ALBA-Solidarity Fund,” a $50 million Venezuelan-bankrolled mechanism that is allegedly going continue some of the canceled MCC projects. Ortega did not specify whether the ALBA aid would be a grant or a loan that would have to be repaid. But he celebrated it as a victory nonetheless.

“Thank God we have ALBA,” Ortega gushed before the Sandinista crowd that included thousands of state workers obliged to attend the rally.

By government order, the event was broadcast on all national TV and radio stations. But behind the flag waving and the din of celebratory revolutionary music, the government this week delivered several more ominous messages that warned of worsening relations with the United States.

Edwin Castro, the Sandinistas’ top-ranking legislator, called U.S. Ambassador Robert Callahan a “blackmailer” and accused him of conspiring against the Nicaraguan government. Castro, as well as several other party figures, suggested Callahan should be thrown out of the country.

Ombudsman Omar Cabezas, meanwhile, accused the embassy and the U.S. Central Intelligence Agency (CIA) of meddling in internal affairs and funding an indigenous separatist movement on the Caribbean coast.

Ortega, for his part, accused U.S. embassy staff members of traveling around the country to meet with and fund the Sandinistas’ “enemies.” The president said such activity is a crime and promised his government “will continue to document (the U.S.’ behavior) and make a decision when the time is right.”

Callahan does not deny that he meets with opposition leaders, but says it doesn’t qualify as meddling. He has said it is the embassy’s duty here to meet with all Nicaraguans, not only the government but also the opposition and everyone in between.

In Washington, D.C., U.S.-Nicaraguan relations are also on precarious footing these days. The Sandinista government has been without an ambassador to the United States for several months, yet still hasn’t named a replacement following the resignation of Ambassador Arturo Cruz earlier this year.

The Next Battle

In addition to the Sandinistas’ cries of foul over the canceled MCC aid, the government is also warning that the United States is trying to further blackmail them over other forms of bilateral aid, which amount to roughly $40 million a year.

Attorney General Hernán Estrada this week accused Ambassador Callahan of employing similar pressure tactics over the issue of the property waiver, which the U.S. government  has to grant Nicaragua every year in order to maintain its eligibility for U.S. aid.

Under U.S. law, the United States cannot give money to any government that has confiscated the property of U.S. citizens. In the case of Nicaragua, where hundreds of properties were confiscated in the 1980s, the United States has made an exception to the law by granting Nicaragua an annual waiver based on its continued compliance in resolving outstanding claims by U.S. citizens.

The Ortega government notes that many of the remaining cases are Nicaraguan nationals who only became U.S. citizens after their property was confiscated and they fled to the United States. Ortega said the United States should not advocate for such people.

Though Callahan said the U.S. government “wants to continue cooperating” with Nicaragua in other areas of bilateral aid and is satisfied with progress being made to resolve pending property claims, the Sandinista administration claim the ambassador is trying to twist their arms on the issue.

Estrada announced he is going to travel to Washington, D.C. to denounce Callahan’s meddling.

Callahan replied by saying he would be happy to help set up meetings for Estrada on Capital Hill so the Sandinista official can “learn the concerns of senators, congressmen and the citizens of the United States” regarding the Nicaraguan government.

Targeting Domestic Opponents In the wake of the MCC decision, the Sandinistas’ ire has not been limited to Callahan and the U.S. government. The Sandinistas have also escalated their attacks on opposition leaders such as Montealegre, the Chamorro family (which controls the country’s two largest newspapers) and the Nicaraguan “oligarchy” in general.

In a separate but curiously timed move – within hours of the MCC decision – the state prosecutor’s office announced it is moving forward on its prosecution of Montealegre and La Prensa director Jaime Chamorro –along with 37 other people – for a 2002 banking bailout scandal that cost the country some $600 million.

Both Montealegre and Chamorro insist they had nothing to do with the scandal and say their inclusion in the investigation is part of a political witch hunt.

Indeed, both men have already been declared guilty publicly by the Sandinista media and even Ortega – raising questions about how either could expect to get a fair trial in a country where the president who appointed most of the judges has already announced his verdict.

Ortega even talked about the issue during his speech at last week’s Petrocaribe presidential summit in St. Kitts & Nevis, alluding to Montealegre by calling him a “delinquent” who should be stripped of his legislative immunity to face trial.

Montealegre, meanwhile, has not let up on his attacks on the Sandinista government. He blamed the MCC aid cutoff on Ortega for defending what he dubbed “the most documented election fraud in Latin American history.”

“The election fraud was an open confirmation that (Ortega) is not willing to govern democratically,” said Montealegre during a June 11 press conference.

The U.S. government, too, claims there is plenty of evidence to suggest serious shenanigans in the 2008 vote.

At a press conference June 12, Ambassador Callahan listed some of the U.S. concerns with the electoral process: the government’s refusal to allow credible election observers; “serious problems” with the voter registration process; voting stations that closed early on election day; the arbitrary annulment of ballots cast for opposition candidates; opposition ballots found thrown in the garbage; the government’s continued failure to comply with its legal obligation to publish the final results of each voting station; and post-electoral violence aimed at the opposition to prevent them from denouncing election fraud.

“The whole electoral process was profoundly irregular and the range of irregularities has been well-documented by a variety of respected national and international organizations,” Callahan said. “There were serious problems with the process before, during and after the elections.”

The First Domino to Fall

Following the MCC’s decision last week, all eyes are now on the European budget support group to see if it will follow suit with the $70 million it suspended in aid last year.

The Europeans were expected to make their decision this week.

For the MCC, the choice was clear. Said MCC Chief Executive Office Rodney Bent in a written statement June 10, “The MCC regrets that the government of Nicaragua has not taken steps to respond to concerns expressed by its people and the international community surrounding the recent municipal elections. This has made it impossible for us to fully continue our collaboration with the government of Nicaragua.”

Bent told The Nica Times last April that the United States felt it was going out of its way to work with the Ortega administration and continue the MCC program. But in the end, he said, the Sandinista government breached its contract with the MCC by not complying with democratic standards of governance.

“Although the Board would like to continue in full MCC’s support for Nicaragua’s economic development, we remain committed to upholding MCC’s founding principles of working with those countries whose governments actively demonstrate a commitment to democracy and the rule of law,” Bent said. “Given the lack of meaningful reforms or progress in these areas by the government of Nicaragua, the Board has agreed to terminate these projects.”


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