San José, Costa Rica, since 1956

Ortega in old form after U.S. aid cuts

From the print edition

The political fallout from the U.S. government’s withdrawal of bilateral aid to the Sandinista government has polarized Nicaraguan society to greater extremes and stirred old ghosts in a country that seems to be moving forward by walking backwards.  

President Daniel Ortega this week announced his government will block all U.S. aid to Nicaraguan civil society in retaliation for the U.S. government’s suspension of assistance to his government last week. In a fiery speech on June 23, Ortega said if the United States will not support his government, then there won’t be U.S. funding for anyone in Nicaragua – a move that would affect thousands of Nicaraguans working on a wide variety of civil-society projects.

“If there is no money for [government] health, if there is no money for environment, if there is no money for the war on drugs, then there won’t be any money for the agents of the empire either,” Ortega said, referring to Nicaraguan nongovernmental organizations that receive funding from USAID. “We will close all their programs here. We will we close the spigot on all these programs.” 

The president’s saber-rattling came in response to the U.S. government’s decision last week to cancel its fiscal-transparency waiver for Nicaragua, effectively terminating $3 million in bilateral aid, most of which went to funding a government HIV program. Officially, the U.S. transparency waiver was terminated due to concerns over Ortega’s opaque handling of more than $500 million in annual loans and other support from Venezuela. But the timing of the cut is clearly meant to be political pushback after Ortega’s controversial re-election last year.

In practical terms, the U.S. has been cutting bilateral aid to Nicaragua since the Sandinistas’ initial ballot mischief in the 2008 municipal elections, when Ortega’s party was accused of stealing 40 polls – a power grab that cost his government $64 million in U.S. Millennium Challenge development funds. Since then, other U.S. programs have been scaled back to the point where last week’s cancelation was more symbolic than stinging.

USAID does, however, still give some $27 million to Nicaraguan civil society groups and NGOs working on democracy-building, free-market enterprise and independent media.

Those programs and assistance from the U.S. Defense Department for the drug war will not be affected by the suspension of the transparency waiver.

Ortega, however, doesn’t trust civil society. The Sandinista leader and his leftist confederates in the Bolivarian Alliance for the Americas (ALBA) claim all U.S.-supported civil society activity in their countries is aimed at destabilizing their regimes. ALBA’s foreign ministers this week released a statement calling for member countries to oust USAID entirely.

“In most ALBA countries, USAID and its different organizations and facades is acting illegally and with impunity, without any legal structure, to finance illegitimate media outlets, political leaders and nongovernment organizations,” the ALBA declaration said. “Our countries don’t need any external financing of any type to sustain our democracies and consolidate the will of the Latin American and Caribbean people.”

A return of old tensions

Though Ortega spent his past term (2007-2011) calling for new relations of mutual respect with the U.S., he now seems to be returning to old form.

 “What moral or social lessons are the yanquis going to come teach us here?” Ortega barked during his speech announcing a freeze on USAID for civil society. 

The silver-tongued Sandinista strongman went on to blast the “yanqui” government as the “biggest delinquents on our planet.” 

In Washington, D.C., the feeling is mutual. Strangely enough, Ortega has fewer friends in Washington now than he did during the 1980s when the U.S. funded a counterrevolutionary war against his government.

On June 22, U.S. Senator Marco Rubio,  a rising star in the Republican Party, released a statement calling Ortega a “thug” who “illegally stood for re-election and then abused his power to secure a victory.”

Rubio called on the Obama administration to “take a hard look” at the actions of the Ortega government before deciding on the property waiver next month. He also called on other Central American nations to take a more active role in demanding democracy and transparency in Nicaragua.

“Ortega’s misrule continues to negatively impact the security and prosperity of the Nicaraguan people and that of their neighbors,” Rubio said.

Florida Republican Congresswoman Ileana Ros-Lehtinen, chairwoman of the U.S. House Foreign Affairs Committee, also applauded the Obama administration’s cancelation of the fiscal-transparency waiver and called on the U.S. government to “not issue the confiscated-property waiver unless and until the Nicaraguan regime commits to settling these outstanding claims swiftly.”

The property saiver ‘A-Bomb’

Now that the transparency waiver is history, Nicaragua is holding its breath to see what will happen next month with the property waiver, the far more important of the two waivers needed for the U.S. to give aid to Nicaragua.

To circumvent a U.S. law prohibiting bilateral assistance to countries where governments have confiscated U.S. citizens’ properties without compensation, the U.S. government each July issues Nicaragua a property waiver. The conditional waiver allows the U.S. to provide Nicaragua with support in multilateral lending institutions as long as the Central American government continues to make headway resolving pending U.S. citizen claims from the 1980s.

Since the waiver program started 19 years ago, Nicaragua has forked over nearly $433 million in compensation to thousands of U.S. citizens whose properties were among the 28,000 confiscated by sticky-fingered Sandinista officials in the ’80s, according to official statistics.

Only 193 claimants – mostly Nicaraguans who were naturalized U.S. citizens after the revolution – remain on the list. Nicaragua this year has resolved more than 50 additional cases, and claims it is on track to fulfill its obligations to have the property waiver renewed next month.

If the property waiver gets canceled, the U.S. would immediately pull its support for Nicaragua in multilateral lending institutions such as the World Bank and the Inter-American Development Bank. That would jeopardize the future of $1.4 billion in already-approved development loans over the next five years, depending on how hard the U.S. wants to arm-twist in Washington.

While the cancelation of the transparency waiver last week was like a slap in the face, the cancelation of the property waiver next week would be like “an atomic bomb” dropped on the economy, business leaders say.

Though Nicaragua’s frustrated private sector hopes Nicaragua is well positioned to get another extension of its property waiver due to continued compliance with the property-confiscation program, some fear Ortega’s politics could trip up the country right at the finish line.

The president this week berated the remaining list of property claimants as “thieves who prey upon the people of Nicaragua.” 

Business leaders in the Nicaraguan-American Chamber of Commerce can only shake their heads and cross their fingers that Ortega’s recent return to old form will not “irreparably harm our country” or return Nicaragua to “unnecessary confrontation with the United States” after several years of sustained economic growth and relative social peace.

Tim Rogers is editor of The Nicaragua Dispatch,

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