The Rise of Ortega-ismo

Critics call him a regional bully, a paranoid isolationist, or a once-and-forever Sandinista. He’s a former left-wing guerrilla who has been accused of taking bribes from drug gangs to finance city elections for his party. More recently, he was among the few to defend Muammar al-Qaddafi as the late Libyan dictator began to turn on his own people. And yet Nicaraguan President Daniel Ortega — about to coast to re-election for his third nonconsecutive term — may just be the most savvy left-wing firebrand in Latin America.

On Nov. 6, Nicaraguans head to the polls, and there’s little doubt that Ortega will win. The conventional wisdom in Managua is that Ortega will either win with a majority vote, or by any means necessary. Over the past few years, opposition parties have been blocked from ballots, critical journalists have been threatened, and independent election observers have been barred entry to the country.

But Ortega’s re-election, however imperfect, isn’t likely to provoke any serious conservative backlash. Ortega’s unique ability to thread the needle between his socialist leanings — and alliances with third-rail politicians like Hugo Chávez and Fidel Castro — and his lucrative partnerships with Western governments and business leaders makes him a formidable operator in the murky world of Latin American politics.

Despite many bitter memories of his first administration — a period marred by chaotic events ranging from his own suspension of civil rights to the Iran-Contra Affair — Ortega’s current term, beginning in 2007, has been a relatively stable one for most Nicaraguans. Thanks to a robust police force and Ortega’s complete control of the military, the people of Nicaragua have been spared the organized crime wave that has overwhelmed many of their Central American neighbors. Ortega managed to steer his nation through the global economic crisis, maintaining a steady rate of economic growth when recession was plaguing much of the world. Sure, Nicaragua is one of the poorest nations on Earth, but its current outlook is one of the best in the region — the International Monetary Fund (IMF) reported 4.5 percent GDP growth there last year. Despite his socialist background, Ortega has positioned himself as a pro-business president, endorsing so-called Free Zones: industrial areas throughout the country in which foreign and domestic companies can operate with incentives like total income tax exemption.

Of course, Ortega isn’t doing this entirely out of a newly discovered respect for the free market. Want to do business in a Free Zone? You have to get approval — from the president himself. Seeking to import or export foodstuffs? First Lady Rosario Murillo is the only one who can give the stamp of approval. "Ortega is pro-business, as long as they’re his," says one Western diplomat based in Managua, speaking on condition of anonymity. Local business leaders also quietly explain that while foreign investment is welcome, the two most profitable industries are already taken: The state runs energy, while Carlos Slim’s America Movil has telecommunications covered.

Ortega’s balancing act is clear in other ways, too. Nicaragua is currently working within the parameters of the Central American Free Trade Agreement, the Inter-American Development Bank, and the IMF, all at once, alliances that keep him in good international standing and protect him from attack. But Ortega’s cozy relations with what the Latin American left has traditionally considered imperialist debtmongers hasn’t severely impaired his relationship with his chief benefactor, Hugo Chávez of Venezuela. Through the Venezuelan president’s Bolivarian Alliance for the Americas (ALBA) program, Nicaragua receives a cash injection of about $500 million a year. Despite tensions between Venezuela and Nicaragua over what then-U.S. Ambassador to Nicaragua Robert Callahan called in a leaked 2010 cable "Ortega’s constant need for operating cash to offset forfeited donor assistance," the money is still flowing.

In terms of managing his relationship with the United States, Ortega has maintained his anti-American Sandinista fist-waving in public, while quietly accepting U.S. financial assistance for education and health services. Speaking to a Russian reporter last year, Ortega said that the only thing preventing the United States from arming his opposition was the fact that "they don’t have any military instrument to provoke a coup [here]." He has criticized President Barack Obama’s promises that Washington would seek a fresh start with Latin America: "How can President Obama ask us to forget [our] past if it’s so fresh and if it can be repeated, because we are seeing it now in Libya?"

Meanwhile, Nicaragua receives tens of millions of dollars in USAID assistance each year, and U.S. companies are free to bid for contracts there; about 100 already operate in Nicaragua. This year, the country is on track to experience the highest growth of apparel exports to the United States, a rate overtaking even China’s.

The West hasn’t completely turned a blind eye to Ortega’s hypocrisies. After electoral fraud during the 2008 municipal elections, Nicaragua lost over $100 million in international assistance. The U.S. State Department noted that a 2010 regional election was tarnished by fraud, and $64 million in development aid through the Millennium Challenge Corporation was subsequently cut. "We remain concerned about apparent irregularities in the Nicaraguan electoral process," said State Department spokesperson Victoria Nuland in a statement on Oct. 31.

In the eyes of experts, however, this condemnation doesn’t go far enough. "Some democracy advocates in Washington are notably indifferent to Ortega’s authoritarianism," says Michael Shifter of the Washington-based Inter-American Dialogue think tank. "They don’t want to play into the old Washington vs. Ortega narrative. They also recognize there no good options for the United States in this situation. That may be so, but it is still a serious mistake to refuse to call a clear violation of democratic norms for what it is." 

Within Nicaragua, sentiments vary over Ortega. While his approval rating has risen during his term — to a little over 40 percent in 2011 — he is largely seen as the only option. To run for a third term, Ortega used his influence in the Supreme Court to overturn a constitutional ban on acting presidents or multiple term-holders running for the office again. The overturning of the ban inspired outrage and some protests, and even some in Ortega’s own camp were apparently concerned. In March, Vice President Jaime Morales Carazo declined to stay on the ballot, setting off speculation that he was resigning in protest. His replacement will be retired Gen. Omar Hallesleven, furthering fears that Ortega’s relationship with the military might be too close for comfort and could bring harsher crackdowns than the relatively mild response to recent protests.

The Nicaraguan opposition is poorly equipped to take advantage of any slip-up on Ortega’s part. In the run-up to the election, whispers have circulated about the possibility of the "unforeseeable" occurring (i.e., a coup), but it’s not likely. The opposition is fragmented into four main parties, each weaker than the last. They have presented various lines of attack against Ortega, none that have stuck. Roger Guevara Mena, a candidate from the Alliance for the Republic party (APRE), argued in a recent Wall Street Journal op-ed that if Iran were to seek to attack the United States in any way, Ortega would be the picture of a willing helper — an argument that may stir up fears in Washington but falls largely on deaf ears in Managua, where citizens know Ortega is more inclined to engage in heated rhetoric than war. Fabio Gadea Mantilla, the candidate from the center-right Liberal Independent Party (PLI) who enjoys 30 percent support, according to the latest CID-Gallup polls, is a journalist-turned-politician whose blandness and age (he turns 80 next week) have probably cost him too many votes. Other candidates have been plagued by corruption allegations or have simply been too weak to register with voters at all; there is simply no one with the political capacity to stand up against Ortega — who now leads the pack with 48 percent.

Even Ortega’s long-time political opponents are working on incremental change, rather than on dethroning the president. "We need democratic [and] positive pressure" on the administration, says Antonio Lacayo, who served as prime minister in the early 1990s in his mother-in-law Violeta Chamorro’s anti-Sandinista government and is now a business leader in Managua. That, he says, is the only way to transform Ortega into a real pro-business president, one whose rhetoric matches reality.

It seems that the electorate in general simply doesn’t want to rock the boat; and the business community seems happy, for the most part, just to be making money. "Ortega’s effective co-optation of parts of Nicaragua’s private sector has been politically astute, not only in undermining the opposition at home but in neutralizing Washington," says the Inter-American Dialogue’s Shifter. The new president of the American Chamber of Commerce, Yali Molina Palacios, has been conducting damage control this year after several diplomatic cables published by WikiLeaks insinuated that his predecessor was actively working against Ortega in 2009 and 2010. Molina Palacios claims that the Chamber officials were simply invited to meet with the opposition in order to discuss democratic balance in the country. "It wasn’t a coup d’état or anything," says Molina Palacios. Although he believes democracy and legality is the only way forward, he is adamant that the Chamber of Commerce and its members "divorce ourselves from the politics and focus on development."

An Ortega victory on Nov. 6 will surely usher in a period of some unrest — minor demonstrations, perhaps some congressional clamoring — and investment uncertainty. But Ortega’s clever balancing act seems to have everyone in Nicaragua tip-toeing along with him. And as long as he can keep the cash flow coming in from all sides, that’s not likely to change.