Politics, Business & Culture in the Americas

Nicaraguans Lose $62 Million in Assistance as Ortega Stands Firm in Defending Flawed Elections

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Eight months later, the consequences of last November’s municipal elections continue to reverberate throughout Nicaragua. Now the latest victim is not the legitimacy of the democratic process but Nicaraguan citizens. And the government of Nicaragua is to blame.

Last week, the Millennium Challenge Corporation (MCC)—a U.S. government entity established in 2004 that ties aid to good governance, economic freedom and investments in people—announced that it would cut $62 million in aid to Nicaragua. This money, suspended a few weeks after the municipal elections, was part of a five-year, $175 million agreement (or compact) that was signed with the Nicaraguan government in July 2005.

The reason? MCC assistance only goes to “governments who are governing justly,” and according to MCC Acting Chief Executive Officer Rodney Bent, Nicaragua has not shown “meaningful reforms or progress” in this area. The MCC had been looking for the government of President Daniel Ortega to address the voting irregularities that helped his Sandinista candidates win the mayorship of Managua, and the country’s second city, León. In Managua, Alexis Arguello defeated Eduardo Montealegre (Ortega’s challenger in the 2006 presidential election) amid accusations of voter identity fraud and suspicious polling station tallies. For the first time in 20 years, independent observers were barred from monitoring the election.

The international community has called on the government to find a Nicaraguan solution to the concerns about the election. Ortega’s response, according to Tim Rogers of the Christian Science Monitor, is to “thumb his nose at those who question his government,” leading Rodney Bent to bluntly state that “these guys stole the election.” Now with the aid cut off, the Sandinistas are blaming the opposition and civil society for being too vocal and forcing this type of response from the U.S. government. At the same time, the Budget Support Group—a collaboration among nine European countries and Canada—also suspended aid last year ($70 million) over electoral concerns and is now considering whether to follow the U.S. lead in canceling it altogether.

Ortega’s answer to all this is to go to Venezuelan President Hugo Chávez for $50 million, adding to Chávez’ regional commitments at a time of fiscal troubles back home. And at a recent rally, Ortega denounced U.S. President Barack Obama for having “the same policies as President Reagan,” who had provided support to the Sandinista opposition in the early 1980s.

But politics aside, the real losers are those that would have benefited from the now-cancelled roads projects and the $15 million land-titling program. After all, MCC funds had helped to build a positive working relationship in the field. “On a technical level, the relationship with the government is excellent,” according to the MCC’s in-country general director, Juan Sebastian Chamorro. Others projects that are now underway will continue, such as successful agricultural assistance programs, but the real impact will come once the compact runs out and no more financial or technical assistance comes along.

With few strings attached or means for oversight one can only wonder where the $50 million dollars of Bolivarian largesse will go.

Perhaps, if the Europeans follow the U.S. lead, Ortega may understand that the people and democracy need to come before his party’s political ambitions. That would be a welcome sign for democracy in Nicaragua. We can only hope.


Jason Marczak is deputy director of the Adrienne Arsht Latin America Center at the Atlantic Council. He previously served as senior editor of Americas Quarterly and director of policy at Americas Society and Council of the Americas.

Tags: assistance, Daniel Ortega, Elections, Hugo Chavez, Nicaragua
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