Steps for Restoring Nicaragua’s Democracy and Resolving Its Political Crisis

Report Americas

Steps for Restoring Nicaragua’s Democracy and Resolving Its Political Crisis

January 28, 2021 21 min read Download Report
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Senior Policy Analyst, Latin America and Western Hemisphere
Ana Rosa Quintana leads The Heritage Foundation’s efforts on U.S. policy toward Latin America.

Summary

Nicaragua has been locked in a turbulent political crisis since April 2018. After years of discontent with leftist president Daniel Ortega’s growing authoritarianism, peaceful anti-government protests were violently repressed by the government and state-sponsored paramilitaries. Government-initiated violence catalyzed widespread demonstrations around the country, and political repression forced 70,000 Nicaraguans to flee to neighboring Costa Rica. The Trump Administration quickly responded to the violence with a series of robust targeted sanctions, yet the ongoing political crisis requires additional stakeholders. The U.S. and like-minded stakeholders should leverage Ortega’s governance and economic fragility to push for a long-term resolution to the current political crisis.

Key Takeaways

Marxist rebel-turned-president Daniel Ortega has turned Nicaragua into an authoritarian state where international pariahs profit from its strategic location.

Returning Nicaragua to democracy requires free and fair elections, with mechanisms that reflect the Nicaraguan people and are uncontrolled by the ruling party.

Getting Nicaragua on the right path will require strong U.S. action, such as re-evaluating civil society funding and increasing international pressure on Ortega.

Nicaragua has been locked in a turbulent political crisis since April 2018. After years of discontent with leftist authoritarian president Daniel Ortega’s growing authoritarianism, peaceful anti-government protests were violently repressed by the government and state-sponsored paramilitaries. Government-initiated violence catalyzed widespread demonstrations around the country, and while the worst of the violence is over, repression continues, forcing 70,000 Nicaraguans to flee to neighboring Costa Rica. The Trump Administration quickly responded to the violence with a series of robust targeted sanctions, yet the ongoing political crisis requires additional stakeholders.

While neither an influential economic actor nor a military tactician, the former Marxist rebel turned president, Daniel Ortega, has turned Nicaragua into an authoritarian dynasty where international pariahs profit from the country’s strategic location in Central America’s isthmus. The number of Nicaraguans displaced due to the political turmoil could also grow with Ortega’s reckless mismanagement of the COVID-19 pandemic. Facilitating Nicaragua’s return to democracy requires free and fair elections with mechanisms not controlled by the ruling party and reflective of the Nicaraguan people. In order to see these reforms, U.S. and international partners must depoliticize Nicaragua’s national electoral commission, broadening U.S. support beyond traditional civil society groups, and coordinate targeted sanctions with like-minded partners.

Rise of the Ortega Dynasty

Nicaragua’s modern history, particularly during the revolution from the 1960s to 1990, is plagued by political instability, violence, and economic uncertainty. After leading the ouster of the corrupt Somoza dynasty in 1979, the Sandinista National Liberation Front (FSLN)REF and the de facto dictator Daniel Ortega controlled Nicaragua until losing the first democratic elections in 1990 to Violeta Chamorro. Ortega had converted Nicaragua into a client state of the Soviet Union and its allies. In exchange for financial aid, and resources from the Soviet Union, the U.S.’s former adversary had a permanent and bicoastal presence next to the U.S.-controlled Panama Canal. After repeated attempts at the presidency, Ortega was elected president in 2006, 2011, and 2016.

In 2006, Ortega won only 38 percent of the vote, the lowest percentage in the past 20 years, and largely the result of a corrupt political alliance between the FSLN and opposition political parties that delivered a constitutional amendment lowering the threshold for victory from 45 percent to 35 percent. In 1999, following the corruption and embezzlement conviction of former President Arnoldo Aleman of the Constitutional Liberal Party (PLC), Ortega and Aleman granted each other protection from prosecution on corruption charges. In 2009, President Ortega’s Supreme Court overturned Aleman’s corruption sentence.

These results should not be interpreted as the will of the people, as international observers characterize every election from 2006 onward as “seriously flawed” and nontransparent.REF Going into the 2011 elections, Ortega ordered his loyalist Supreme Court to remove Nicaragua’s ban on presidential term limits. Various other constitutional changes and authoritarian policies were passed to cement his power, culminating in 2016, when Ortega illegally installed his wife Rosario Murillo as his running mate after setting his children up in key government, private-sector, and media posts.REF Article 147 of the Nicaraguan constitution prohibits blood or affinity relatives to the president from being a candidate for president or vice president, but FSLN legislators tried to claim that since she was not a blood relative, she was exempt. In essence, Ortega has governed Nicaragua unlawfully for much of the past four decades.

Ortega’s Provocative Foreign Policy

Ortega’s contempt for democratic norms and hostility toward the U.S. did not end with the Nicaraguan revolution. Rather, the relationships of hostile foreign regimes were modernized for the 21st century. Under Ortega, the Russian government and private-sector presence in Nicaragua, as well as intelligence and security cooperation between the two countries, has expanded.REF In 2016, Ortega purchased $80 million worth of 50-T-72B tanks from Russia. Ortega’s Nicaragua is also one of only five countries in the world that recognizes the Russian-occupied Georgian regions of Abkhazia and South Ossetia as independent states. Nicaragua’s armed forces facilitated preferential port access for the Russian military. Following a 2012 space-cooperation agreement between both governments, Russia commissioned a new Global Navigation Satellite System (GLONASS) in 2017, allegedly a civilian system.REF Yet the lack of transparency and the Russian state’s extensive espionage history indicate a high likelihood that GLONASS is espionage-related. The Russian presence in Nicaragua is highly unlikely to elicit the military behavior of the Cold War—Moscow’s security interests and regional threats do not rise to the level they previously did. Yet the U.S. should be concerned about Russian dual-use technologies donated or sold to Nicaragua, as Russia is increasingly moving toward building capabilities that service both military and civilian capabilities. Russia might be low in financial resources and occupied elsewhere with higher priorities, yet Nicaragua’s location and historical ties hold symbolic and strategic importance. Meaning, there is high likelihood of increased Russian support if Ortega or an FSLN successor appears weakened.

As in the recent past, regimes hostile to American interests financially sustained Ortega. The late Venezuelan dictator Hugo Chavez also supported the former guerilla’s ambitions. Following Nicaragua’s 2006 presidential election, Venezuela’s ambassador to Managua said of Venezuela’s assistance: “Over the next five years Nicaragua is going to feel the effects of true co-operation based on solidarity, not one of trade and speculation…. [W]e want to infect Latin America with our model.”REF

Back when Venezuela’s oil sector was functional, regime leadership kept like-minded allies in office by providing them with cheap fuel to artificially promote economic growth and expand the welfare state—its base of support. From 2007 to 2016, an estimated $3.7 billion in subsidized Venezuelan oil reached Nicaragua and also directly benefited the Ortega family and party loyalists. Large sums were embezzled from Nicaragua’s state-run oil company and joint ventures with Venezuela (companies run by Ortega relatives) according to the U.S. Department of the Treasury.REF

Despite maintaining diplomatic relations with Taiwan, in 2012 Ortega accepted a $50 billion construction bid from a Hong Kong-based firm with Chinese ties paid over the course of 50 years to construct an interoceanic canal. The Hong Kong Nicaragua Canal Development Investment Co. was created specifically to construct a canal running through Nicaragua connecting the Atlantic with the Pacific Ocean, and partnered with Chinese state-owned China Railway Construction Corporation (CRCC) calling Beijing’s intentions into question. Critics claim the canal was an illusion created to generate false hope of economic prosperity, largely because of the opacity of the deal and the construction. In 2019, U.S. sanctions exposed the canal project as a money-laundering tool for Ortega’s son and current senior government official.REF As of April 2018, the company shut down its operations and plans for the canal.REF

April 2018 Revolt

In mid-April 2018, Ortega approved by executive action broad social security reforms. Private-sector officials and pension recipients across the country rejected the measure. Immediately, the decision generated widespread antigovernment protests, including the largest student mobilization since the Nicaraguan civil war. The protests were peaceful until government security forces, in coordination with armed government-sanctioned paramilitary groups, brutally repressed protestors.REF Even though Ortega withdrew the controversial executive order days later, the government’s heavy-handed repression catalyzed an even larger anti-government response, with hundreds of thousands participating in demonstrations against Ortega, even in traditional FSLN strongholds, calling for his ouster.

Ortega ordered a “shoot to kill” strategy of crowd control, leading to widespread violent clashes against human rights activists, students, and social leaders.REF Ortega’s police and paramilitary groups committed serious religious-freedom violations by attacking Catholic clergy and worshipers, and desecrating places of worship.REF Government officials, including members of the Supreme Court and Ortega’s son, frequently harassed Monsignor Silvio Baez, former Auxiliary Bishop of Managua, demanding he leave the country for the Vatican.REF The frequent Ortega critic and defender of human rights activists was eventually recalled to Rome after frequent death threats. Protestors detained by police and armed pro-government groups report other serious abuses and even torture, including sexual assault, nail removal, electric shock, and asphyxiation.REF

From April 2018 to April 2019, state-sponsored violence resulted in 325 deaths, over 2,000 injuries, and nearly 1,000 people arrested and prosecuted, many charged with “inciting terrorism.”REF From April 2018 to October 2019, an estimated 82,000 Nicaraguans left the country. Close to 70,000 of them resettled in neighboring Costa Rica and are now nearly 1.5 percent of the country’s total population; many of them anti-government activists, students, and journalists.

While the majority of Nicaragua’s political prisoners have been released, at least 70 remain in custody.REF Various attempts at dialogues mediated by the Catholic Church failed as Ortega regime officials refused to participate in good faith, prolonging the political crisis. The Organization of American States’ Inter-American Commission on Human Rights (IACHR) continues to monitor the human rights violations, including ongoing arbitrary detentions and targeting of opposition activists and making recommendations through its Special Monitoring Mechanism for Nicaragua (MESENI). Presidential elections are scheduled for November 2021, yet with Ortega in control of the legislature, the Supreme Court, and the Supreme Electoral Council (which organizes elections in the country), free elections are impossible.REF At different stages of the crisis, the United States, the European Union, and Canada have implemented targeted sanctions against regime officials responsible for human rights violations and corruption.

Nicaragua’s Economic Decline

In addition to the humanitarian fallout and the political unraveling, the economic downturn from the crisis has left cash-strapped Nicaragua in dire straits. Going into the protests, it was the Western Hemisphere’s second-poorest country (after Haiti) with a gross domestic product (GDP) per capita of $2,162 in 2017.REF Unlike its regional counterparts in Central America’s northern triangle, Nicaraguan outmigration was typically low because despite its poverty, it was relatively safe. In fact, the country was a major hub for tourists and American retirees capitalizing on its competitive prices. Ortega maintained a close relationship with powerful private-sector officials, on the condition that they allowed him to govern as he sees fit, and they supported him unconditionally—an arrangement that led to varied levels of economic growth under Ortega from 2010 to 2018. Yet following the April 2018 crisis, those dynamics changed. With more than 82,000 Nicaraguans fleeing, the country lost an estimated 10 percent of its labor force.REF The 2018 and 2019 GDP contracted by nearly 4 percent. Seeing the instability and political uncertainty, foreign direct investment declined by an estimated 53 percent, and domestic investment declined by 25 percent according to Nicaragua’s leading business association.REF Even Ortega’s former business allies, leading private-sector representatives and the economic backbone of Nicaragua, have come out against the Ortega regime. Meaning, that economic recovery cannot occur without the government regaining the confidence of these industries.

The various rounds of U.S. sanctions against human rights violators and their enablers were a powerful inducement for the Nicaraguan private sector to change its perspective. Many officials have investments and property in the U.S., and children that study in American universities. U.S. sanctions would block their U.S.-based assets and terminate their visas. The Nicaraguan Investment Conditionality Act, a bipartisan piece of legislation signed by President Donald Trump, applies strict conditions to Nicaraguan-bound loans from international financial institutions to which the U.S. is a party. With Venezuelan assistance and oil production drying up, economic forecasts paint a grim picture in the short and mid-term, with projections calling for the worst economic depression since the 1980s. The Economist Intelligence Unit projects that Nicaragua’s economy will contract by 7.5 percent in 2020, with short-term growth prospects complicated by the global economic recession.REF

Nicaragua’s COVID-19 Denial and Deception

Ortega’s pandemic response has neglected basic pandemic-response policies. The regime conceals the true infection rates, encourages mass public gatherings, and retaliates against health care professionals and journalists for contradicting the government’s narrative. According to the Miami Herald, on August 17, the hacker group Anonymous accessed the Nicaraguan Ministry of Health database, uncovering that the government reported less than 2 percent of publicly known cases and has one of the world’s highest rates of positive cases per test.REF

New York Times reporting finds that in efforts to hide the death toll, the regime is forcing late-evening, rushed burials immediately after a suspected COVID-19 death.REF Officially, as of November 2, Nicaragua reports 5,515 confirmed cases and 154 deaths,REF but Citizen’s COVID-19 Observatory, a nongovernmental organization (NGO) of medical professionals, places the actual number closer to 10,778, with a 2,780 death toll.REF The NGO does stress that its numbers do not reflect the total scale of the pandemic as limitations with underreporting persist.

Impact of the November 2020 Hurricanes

In November, Nicaragua was battered by two back-to-back hurricanes, including Category 4 Hurricane Eta, the most catastrophic storm since 1998’s Hurricane Mitch.REF Mitch was the most devastating in terms of damage and lives lost in Central America’s history, with more than 10,000 fatalities in the region. Initial evaluations after the 2020 storms place the economic damage in certain parts of Nicaragua higher than that of Mitch. According to the Nicaraguan government, more than 43,000 houses, schools, and health facilities were damaged or destroyed, and 98 percent of the country’s roadways were damaged. Flooding and landslides caused widespread damage to crops and agriculture facilities, a key source of Nicaraguan livelihoods and top source of export earnings. Nicaraguan officials estimate damages totaling around $738 million and the United Nations is claiming that losses and reconstruction could equal nearly 6 percent of the country’s GDP.REF Over 1 million of Nicaragua’s 6.4 million people were affected by the hurricane. Ortega has wasted little time exploiting the crisis for his political benefit. Shortly after the storms, local Nicaraguan newspapers reported that his ruling party sent loyalist medical professionals to afflicted areas.REF The doctors arrived playing music, riding pickup trucks emblazoned with the socialist party flag, in the midst of the tragedy impacting the region.

With the extensive damage from the storms, many international organizations and countries will provide assistance to alleviate the humanitarian crisis. The relief could strengthen Ortega’s grip on power, as his government, not the opposition, controls the relief distribution and implementation networks. Strict care must be taken by humanitarian actors to ensure that aid reaches the vulnerable and is not politicized by Ortega. While direct U.S. assistance is minimal due to Washington’s concerns that assistance will be controlled by the regime, international donors should be mindful of how many leaders have purposefully mismanaged foreign aid funding during the COVID-19 pandemic. Previous natural disasters, most notably Hurricane Mitch, were also fraught with government corruption. Then-President Aleman was accused by prosecutors of embezzling $100 million in government disaster relief funds and ultimately indicted on a lesser amount. Nicaragua’s lack of transparency and accountability are fostering similar conditions for a massive corruptions scheme. Equally, U.S. and regional policymakers should prepare for a worsening of the Nicaraguan migration crisis to neighboring Costa Rica. The regional economic downturn already expanded the vulnerable pool of potential migrants, and with the loss of crops and jobs, there is an increased probability that more will flee. Minimum wage for agricultural workers in Costa Rica is roughly $510 a month, while it is in $127 in Nicaragua.

Why Nicaragua’s Democracy Matters

Ortega’s authoritarian regime has dismantled democracy and governed with absolute political control. His violent response against unarmed citizens resulted in hundreds of deaths and a massive exodus of Nicaraguans to neighboring Costa Rica, undermining regional stability, trade relations, and U.S. business interests.REF The challenge for policymakers looking at Ortega’s Nicaragua is that while it is not an existential threat to the U.S. nor neighboring countries, the dynamics are not contained within Nicaragua’s borders. The convergence of Ortega’s authoritarianism, state-sponsored violence, religious-freedom violations, hostility to the U.S., and support for international pariahs undermines U.S. interests and regional stability.

Going back to the 1980s, Nicaragua was valued by U.S. adversaries because it was the closest Central American country to the U.S. with both Atlantic and Pacific coastlines. Meaning, whichever country has a relationship with the government in charge of Nicaragua has access to strategic international waterways and ports. Due to drug-trafficking organizations’ use of both Nicaragua’s coastlines and corrupt public-sector officials to transit drugs to the U.S., bilateral cooperation on drug control is limited and haphazard.REF Russian counter-drug cooperation with Nicaragua ramped up in 2017 when Moscow funded a counter-drug training facility.

U.S. policymakers should consider the potential impact on migration that continued destabilization could have. Poverty has traditionally not driven Nicaraguans to leave their country for the U.S., unlike the citizens of other countries in Central America. Yet state repression led to the exodus of 70,000 to neighboring Costa Rica, much like during the revolution when Nicaraguans fled the conflict. The U.S. and regional stakeholders cannot allow, nor afford, an even worse Central American migration crisis.

International watchers should also be mindful that Nicaragua’s political instability could deteriorate due to transition dynamics within the FSLN. Rumors about Ortega’s poor health are reinforced by his frequent and unexplained long-term absences from the public sphere. Most recently from March to April 2020, the 74-year-old disappeared for 33 days and re-emerged without an explanation.REF His ailing health, coupled with his wife’s rumored unpopularity within the ruling party leadership, could create a destabilizing power vacuum should he pass away.

What the U.S. Should Do

Ortega went from taking down one dictatorship to creating his own corrupt family-run autocracy. The U.S. should not allow one dictatorial transition in Central America to another. Nicaragua needs free and fair elections. In order to get Nicaragua on the path to democracy, the U.S. should:

  • Re-evaluate U.S. civil society funding for Nicaragua. The April 2018 uprisings changed Nicaraguan society, with new anti-government civil society groups emerging. Yet the majority of support from the U.S. Agency for International Development (USAID) and the State Department is for traditional civil society organizations that should be able to function after having received decades of assistance. Instead the U.S. should broaden its financial support beyond the professional class of opposition politicians to faith-based organizations, rural activists, and students. Congress should ask USAID and State to review whether long-term civil society grant recipients are promoting U.S. interests.
  • Increase U.S. government support and private-sector support for Nicaragua’s persecuted religious groups. The Biden Administration should bring attention to the plight of persecuted religious groups in Nicaragua through its religious freedom working groups, so that domestic civil society groups can support these communities of faith.
  • Replicate lessons learned from coordinating with Venezuelan opposition groups. Much like in Venezuela, secret governing agreements between opposition figures and the Sandinistas dating back to the era of the Chamorro government have long-plagued Nicaragua, robbing the country of real opportunity for reform. State Department officials should support reform-minded civil society actors in their efforts to overcome regime-imposed political divisions.
  • Coordinate targeted sanctions policies with international partners on necessary electoral and human rights reforms leading into the 2021 elections. Ortega’s brutality and authoritarian rise has been met with a haphazard and uncoordinated Western response. U.S. diplomats should develop a proactive policy and sanctions response with their Canadian and EU counterparts, rather than reacting to the anticipated electoral fraud and human rights violations.
  • Advocate for immediate reform of the Ortega-controlled Supreme Electoral Council. Free and fair elections are impossible without an independent national electoral authority, where political parties can register and voter rolls are updated. Despite Ortega’s unpopularity, the regime will dominate the 2021 elections as it maintains control of the electoral system.
  • Encourage international partners to pressure Ortega for transparency and better behavior on the COVID-19 pandemic. Ortega’s disinformation and inaction are a health and economic threat to Nicaragua and its regional neighbors. Regional stakeholders must press Ortega for better behavior and where possible, provide health care workers with needed medical supplies.
  • Push the Organization of American States (OAS) members to support the OAS’s Inter-American Commission on Human Rights’ (IACHR) work in Nicaragua. Responding to government violence and authoritarianism is consistent with the purpose and practices of the OAS. Yet Nicaraguan authorities prohibit the commission from assessing the human rights situation in country. OAS members cannot allow authoritarian Nicaragua to undermine the institution’s credibility and the region’s commitment to the Inter-American Democratic Charter. Nicaragua must adopt the IACHR’s recommendations, including dismantling pro-government paramilitary groups and ending political repression and other human rights violations.
  • Reject unilateral electoral reform proposals. Due to external and domestic pressure, the ruling party and its legislative allies are attempting to create a façade of electoral reform. Yet they are excluding civil groups, opposition political party members, and electoral reform recommendations from previous election observation missions led by the OAS and EU. The U.S. must reject Ortega’s latest attempt at electoral manipulation.
  • Press Taiwan to raise its standards on engagement with Ortega and provide targeted assistance to Nicaragua. Taiwan must balance the delicate approach of maintaining its allies but also avoid empowering Ortega.REF U.S. diplomats should communicate to the Tsai administration that aid from Taiwan should be routed directly to humanitarian causes in Nicaragua to prevent misuse by Ortega.
  • Develop plans for a future, reform-minded Nicaraguan administration. The U.S. State Department and Department of Defense should develop plans to support reforming Nicaragua’s security sector and resolve major human rights abuses. U.S. officials should also work with Nicaragua’s private sector to strengthen its free-market economy. The U.S. Trade Representative and the Commerce Department should proactively work to ensure that in the future the Nicaraguan administration meets its rule-of-law obligations under the Dominican Republic–Central American Free Trade Agreement.

Conclusion

With Nicaragua’s presidential elections next year, U.S. and like-minded stakeholders should leverage Ortega’s governance and economic fragility to push for a long-term resolution to the current political crisis. Getting Nicaragua’s democracy on the right path will require fixing the U.S. approach to Nicaraguan civil society, promoting robust and inclusive electoral reforms, and pressing like-minded partners to synchronize their efforts with those of the United States.

Ana Rosa Quintana is Senior Policy Analyst for Latin America and the Western Hemisphere in the Douglas and Sarah Allison Center for Foreign Policy Studies, of the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, at The Heritage Foundation.

Authors

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Ana Rosa Quintana

Senior Policy Analyst, Latin America and Western Hemisphere