Daniel Ortega, the former Marxist-Leninist dictator who transformed Nicaragua into a Soviet client state during the 1980s, is not a true friend of either capitalism or democracy. But his grudging tolerance of the former is now enabling him to dismantle the latter.
After losing a much-publicized election to Violeta Chamorro in 1990, Ortega took advantage of a sinister political deal with the disgraced Arnoldo Alemán to reclaim the Nicaraguan presidency 16 years later. Before the Ortega-Alemán pact, a presidential candidate needed at least 40 percent of the vote to secure victory. After the pact, that threshold dropped to 35 percent. Thus, in November 2006, Ortega was able to win election with only 38 percent of the vote. (His two main conservative rivals, Eduardo Montealegre and José Rizo,won a combined total of more than 55 percent.)
He has since displayed a visceral contempt for democracy. For example: His Sandinista Party blatantly stole the 2008 Managua mayoral election, and Ortega used legal thuggery to gain the appearance of constitutional support for his reelection campaign. Indeed, under any objective reading of the Nicaraguan constitution, Ortega should be prohibited from seeking another term: The document explicitly limits presidents to two non-consecutive terms in office, and it explicitly bars incumbent presidents from seeking reelection. Ortega is currently finishing his second term (his first having occurred during the 1980s), so both of the aforementioned constitutional restrictions apply to him.
But the Nicaraguan Supreme Court has become a thoroughly corrupt body, and in November 2009 its Sandinista members conspired to remove the constitutional obstacles to Ortega’s reelection. The Sandinista justices held an unannounced meeting of the six-magistrate constitutional panel, at which they substituted three “replacement” judges for the three relevant opposition judges. This kangaroo court then proceeded to invalidate the term-limit provisions despite the fact that, according to the text of the constitution, the only institution empowered to make such changes is the National Assembly.
It was a Sandinista power grab, pure and simple. It showed Ortega’s true colors. And it provided a stark warning that Nicaraguan democracy is in danger of being extinguished. The same leader who formed a Cuban-style police state during the Reagan years seems intent on resurrecting authoritarian rule and pursuing a belligerent foreign policy. His regime has harassed critical journalists and political opponents. During a border dispute in the fall of 2010, Nicaraguan troops invaded and occupied the sovereign territory of Costa Rica, an act of naked aggression against a country with no military.
Given this record, why isn’t the Nicaraguan business community actively campaigning for Ortega’s defeat? Simple: The Sandinista leader has embraced relatively pragmatic economic policies, and he has enjoyed a massive infusion of cash from Venezuelan strongman Hugo Chávez. Fueled by strong exports, tourism, and Venezuelan investment, the Nicaraguan economy experienced solid growth last year and has continued performing well in 2011. Nicaragua remains a very poor country (the second poorest in the Western Hemisphere, behind Haiti), but it has benefited from the Central American Free Trade Agreement (CAFTA), which took effect in 2006. Ortega fiercely opposed CAFTA as a presidential candidate, but he has upheld the trade accord since taking office.
In short, where Chávez has waged war on private enterprise and scared away foreign investors, Ortega has (thus far) governed as an economic moderate. “To my surprise,” wrote Miami Herald columnist Andres Oppenheimer after a recent trip to Managua, “the business community seems relieved with Ortega, who unlike his benefactor Chávez, has not yet nationalized or confiscated major private companies. Many business people I talked to emphasized that, despite his fiery rhetoric against capitalism, the business community, independent media and the United States, Ortega has maintained a semi-independent Central Bank and accepts pro-market economic conditions set by the International Monetary Fund.”
The business lobby’s sense of relief is understandable. But what about the fate of Nicaraguan democracy, a cause for which the country fought a bloody civil war? Are business leaders willing to let Ortega create an autocracy in return for prudent economic management? Do they really want to live under an economically enlightened dictatorship? For that matter, isn’t there a big risk that Ortega will resort to Chávez-style economics once he finishes reestablishing one-party rule?
Lest we forget, Sandinista governance led to massive capital flight and hyperinflation during the 1980s. Nicaraguans are unwilling to go down that road again. Ortega realizes this. He also realizes that appeasing the business lobby is critical to his success. So he has cynically combined economic pragmatism with authoritarian politics. Ortega supports CAFTA but also steals elections. He encourages foreign investment but also manipulates the judicial system. He promotes a good business climate but also flouts the constitution.
Thus far, his formula appears to be working. Thanks to impressive economic growth and a weak, fractious opposition, Ortega seems poised to win reelection without much trouble. Another five years of Sandinista rule may suit the Nicaraguan business community just fine. But it will undoubtedly contribute to the further erosion of democracy, and it could possibly exacerbate regional instability (if Ortega pursues more foreign adventures like his 2010 invasion of Costa Rica). Is this really the future that Nicaraguans want?