Same as the Old Boss

When Sandinista leader Daniel Ortega returned to power as president of Nicaragua last year, there were encouraging signs that this time would be different. Ortega’s first term as president in the 1980s was marred by failed socialist economic policies, his support of Communist revolutions in the region, and a military conflict with the U.S.-backed Contra rebels. Even so, at the time of Ortega’s election in late 2006, Latin American democrats hoped this onetime revolutionary had abandoned his radical past in favor of a more pragmatic, pro-growth, and pro-American future.

There were plenty of reasons to be optimistic. It appeared that Ortega had finally begun to recognize that free markets and business investment held the keys to prosperity for Nicaragua, one of the poorest countries in the Western Hemisphere. (Some 50 percent of Nicaraguans live in poverty.) He repeatedly assured the public that he desired a good working relationship with the United States. He put foreign and domestic investors at ease by maintaining his support for the Central American Free Trade Agreement. And he insisted he would continue pursuing the free-market polices initiated by his predecessors in the center-right Liberal Party.

Unfortunately, despite his pre-election rhetoric, Ortega has started to slip back into his old ways: strengthening friendships with radical leaders around the world, initiating regional disputes, dismissing promises made to the Nicaraguan people, and publicly denouncing both capitalism and America.

Only a year ago, his brother, Humberto Ortega, a former military leader, stressed that the president was determined to establish a government of national unity. “There’s no room for radicalisms or international alignments,” he said. Following his inauguration, President Ortega traveled around the region promoting the cause of Central American unity. At the time, many democratic supporters viewed his first trip to Guatemala as an attempt to distance Nicaragua from the increasingly radical governments of Venezuela, Bolivia, and Cuba.

But recently, Ortega has reverted to his old form. In September he addressed the United Nations General Assembly, where he was supposed to request humanitarian aid for the victims of Hurricane Felix. Instead, Ortega used the world stage to rant against global capitalism and denounce “the enemy”—--America. This is the language of Venezuela’s Hugo Chávez and other radical Latin populists.

Ortega has started to slip back into his old ways: strengthening friendships with radical leaders, initiating regional disputes, dismissing promises made to the Nicaraguan people, and publicly denouncing both capitalism and America.

Indeed, Ortega’s burgeoning alliance with Chávez became even more apparent last November at the Ibero-American Summit in Santiago, Chile. After Chávez repeatedly accused former Spanish prime minister José María Aznar of being a “fascist” and then asked the Spanish king if he had prior knowledge of Venezuela’s 2002 coup, which briefly removed Chávez from power, King Juan Carlos turned to Chávez and said, “Why don’t you shut up?” Ortega fueled the controversy—and underscored his partnership with Chávez—by accusing Spain of having intervened in Nicaragua’s elections, which prompted Juan Carlos to storm out of the summit.

More alarming than the Chávez-Ortega alliance is the small network of Latin American regimes that have boosted their strategic ties with theocratic Iran. President Mahmoud Ahmadinejad has made several trips to the region, most recently this past September, when he stopped in Venezuela, Bolivia, and Nicaragua. During his latest tour, the Iranian leader claimed that he and Ortega “have common interests, common enemies, and common goals.” During an earlier Ahmadinejad visit, Ortega honored his Iranian guest with two of Nicaragua’s highest medals of honor, the Liberty Medal and the Rubén Darío Medal. It was no surprise that, in his September speech at the UN, Ortega defended Iran’s (and North Korea’s) right to pursue nuclear technology. “Even if they want nuclear power for purposes that are not peaceful,” he said, “with what right does [the U.S.] question it?”

Ortega has agreed to help Iran and Venezuela finance a $350 million deepwater port at Monkey Point along Nicaragua’s Caribbean coast. The countries plan to lay down pipelines, rail tracks, and highways to connect this port to the Pacific Ocean. Iran has even established official diplomatic relations with Nicaragua, raising concerns among other Central American countries and also among the Israelis. During a recent television interview, Ehud Eitam, Israel’s ambassador to Costa Rica and its non-resident ambassador to Nicaragua, said it is difficult not to be suspicious of Iran’s intentions when its Nicaraguan embassy is heavily staffed with members of the Republican Guard, which the United States has branded a terrorist organization. In Eitam’s view, Iran’s presence in Nicaragua is clearly “a matter of intelligence.”

While cozying up to new friends in Caracas and Tehran, Ortega is also alienating many of Nicaragua’s old ones. In a speech delivered last month, he referred to the leader of the Revolutionary Armed Forces of Colombia, a terrorist guerrilla group deeply enmeshed in cocaine trafficking and hostage taking, as a “dear brother.” This infuriated the Colombian government.

Closer to home, Ortega has already damaged the Nicaraguan economy, which had been on an upward trajectory since he first left office in the early 1990s. (In fact, during the 16-year period following Ortega’s first presidency, the Nicaraguan government privatized more than 350 state enterprises, cut inflation, and reduced its foreign debt.) Ortega initially worked to assuage fears in the business community that he would scare away foreign investment. In January 2007, he told Cargill CEO Warren Staley that “you can count on Nicaragua as a country that is willing to continue working and increasing those investments.”

Yet despite his brief flirtation with market-oriented policies, Ortega is now moving Nicaragua back in a socialist direction. He recently asked his cabinet to come up with a plan for nationalizing the country's oil imports, and he appears determined to abandon all responsible macroeconomic policies.

This shift has not gone unnoticed. In recent months, Ortega’s poll numbers have plummeted, the political opposition has become increasingly aggressive in their attacks, and Ortega has backtracked a bit on his anti-American outbursts. Last February, only 17 percent of Nicaraguans told pollsters that their country was headed in the wrong direction. By June, that number had swelled to 57 percent. A poll released earlier this month found that more than 60 percent of Nicaraguans believe Ortega is an authoritarian ruler.

Nicaragua’s opposition parties have formed an alliance known as the “bloc against the dictatorship,” which includes a splinter group of Ortega’s Sandinistas. It has been launching more frequent and forceful attacks in recent months. The reformist opposition is now working to extend the so-called “Framework Law” in order to ensure that Ortega’s political appointments have to be approved by Congress.

Perhaps Ortega is feeling the pressure. Despite his anti-American grandstanding, the Nicaraguan president has not completely turned away from the United States. There have been recent U.S.-Nicaraguan discussions, for instance, over the Soviet-era missiles left over from Nicaragua’s civil war in the 1980s. Ortega is reportedly negotiating with the United States to get helicopters and medicine in exchange for these missiles. Whatever his public rhetoric, he continues to show interest in working with U.S. officials behind closed doors.

Just as Venezuelans stood up to Chávez in a referendum that would have greatly expanded the president’s powers, it appears that the Nicaraguan people and political opposition are setting up roadblocks for Ortega. Concerns in the business community may curb Ortega’s more foolish economic policies and help prevent the country from spiraling deeper into poverty and despair.

The situation in Nicaragua is serious. Let’s hope the political opposition can continue to check Ortega’s turn to the radical left and help redirect Nicaragua onto a path of political and economic freedom.