Ortega Guerrilla Past Fades for Business Wooed in Nicaragua Vote

Nicaraguan President Daniel Ortega is likely to be re-elected to another five-year term as the former socialist guerrilla benefits from business-backed economic growth.

The 65-year-old leader of the Sandinista National Liberation Front, which toppled dictator Anastasio Somoza in 1979, leads in polls ahead of the Nov. 6 vote with the economy on course to expand more than 4 percent for a second year and exports rising 32 percent. In Ortega’s first years in power from 1979 to 1990, the government’s seizure of companies and war against U.S.-funded Contra rebels battered the economy.

Returned to power by voters in 2006, Ortega has encouraged investment in agriculture, tourism and alternative energy by companies such as Houston-based energy company AEI while his alliance with Venezuelan President Hugo Chavez provides the country with cheap oil. Businessmen alienated by Ortega’s seizure of land, banks and supermarkets in the 1980s say they can work with him now.

“If you compare Daniel Ortega of the 1980s to his last term, it’s an improvement for sure,” Cesar Zamora, a director of the American Chamber of Commerce of Nicaragua, said in an Oct. 20 phone interview from Managua. “He’s much more pragmatic now.”

Ortega had 48 percent support, followed by 30 percent for radio show host Fabio Gadea and 11 percent for former President Arnoldo Aleman, in an Oct. 10-17 poll by Managua-based pollster CID-Gallup. The survey of 1,200 people had a margin of error of plus or minus 2.95 percentage points. A minimum 35 percent of the vote is required to win in the first round.

Business Friendly

Nicaragua overtook Brazil this year in ease of doing business, according to the World Bank, moving up four places to 118 in the bank’s annual study of competitiveness after making three times as many improvements to its business climate than Latin America’s largest economy. The study was published Oct. 19.

While Ortega has avoided tampering with the economy, critics including Gadea say he’s steamrolled institutions in a way that has raised questions about his commitment to democracy. He became eligible to seek re-election after the Sandinista-led Supreme Court overturned a 1995 constitutional ban against consecutive presidential terms. Thousands of Nicaraguans marched in Managua and opposition justices stopped work to protest the court’s Oct. 19 ruling.

Ortega has promised the 3.7 million eligible voters to increase spending on schools and provide subsidized food for the poor. Nicaragua is the poorest country in the Western Hemisphere after Haiti, according to the World Bank.

Satirizing Sandinistas

Gadea, 79, the director of Radio Corporacion who is known for satirizing the Sandinistas in his folksy on-air show, has called on Aleman to bow out of the race so he can “unite Nicaragua.”

A similar split among the opposition enabled Ortega to take office in 2006. Aleman, 65, was released from house arrest in 2009 after serving seven years of a 20-year sentence for corruption.

“Nicaragua is tired of dictators and strongman politics,” Gadea said at an Oct. 29 campaign rally in Managua.

After contracting about 1.5 percent in 2009, Nicaragua’s $6.6 billion economy expanded 4.5 percent in 2010 and is projected to grow 4 percent this year, the most in Central America after Panama, the International Monetary Fund said in an Oct. 5 report.

The Washington-based lender last month approved the final installment of a $114 million credit program to assist poverty- reduction efforts, citing “broad based growth” and public spending restraint.

Beef Exports

Exports rose 32 percent in the first eight months of 2011 from a year earlier, driven by beef and garment sales. Nicaragua is part of the five-nation Central American Free Trade Agreement with the U.S.

Yields on local currency government bonds due in 2016 fell to 4.6 percent in October from 6.5 percent in January, according to the Managua stock exchange’s monthly report. Nicaragua’s currency, the cordoba, has weakened 4 percent this year to 22.79 per U.S. dollar.

Zamora, who’s also AEI’s country director, said companies are expanding in Nicaragua as the government aims to phase out fuel-based power plants in favor of geothermal, wind and hydroelectric energy.

AEI won a 15-year contract to build and operate a $45 million wind turbine project near the Pacific coast, while Ram Power Corp. (RPG) of Reno, Nevada has plans for a geothermal facility that may generate 200 megawatts of power in the northern city of Leon.

‘Little Dictator’

In the 1980s, Ortega nationalized thousands of homes and farms while asserting state control over large parts of the economy. Then-U.S. President Ronald Reagan, who called Ortega “the little dictator,” ordered a trade blockade of Nicaragua and funded the Contras rebel group to overthrow him. During his almost 11-year rule, gross domestic product per capita fell by more than a third and the economy was wracked by inflation that, according to the central bank, peaked at 33,548 percent in 1988.

Following three failed presidential bids, Ortega was voted back into office in 2006 on pledges to respect private property and reunite a country divided by the civil war.

“After these last five years, business owners are quite convinced that Ortega’s proposals are for the long term,” Francisco Mayorga, an economic adviser to Ortega, said in an e- mail.

Venezuelan Aid

Still, Ortega’s alliance with Chavez worries some investors, and any disruption in Venezuelan aid, which includes cheap oil, could cause Nicaragua’s economy to shrink by 2 percent, said Mario Arana, a former central bank president and director of the Nicaraguan Foundation for Economic and Social Development.

Foreign direct investment grew 17 percent to $508 million last year, the slowest gain in Central America, according to a report by the United Nations Economic Commission for Latin America and the Caribbean.

Since 2010, Moody’s Investors Service has rated Nicaragua’s foreign and local currency debt B3, six levels below investment grade, due to “concerns about institutional stability.”

The U.S. State Department has questioned the Supreme Court ruling that allowed Ortega to run and the fairness of the vote, including a failure to accredit some domestic organizations as observers and difficulties faced by voters in obtaining proper identification.

‘Intimidation, Violence’

“The Government of Nicaragua should also ensure that the campaign and the elections will be free of intimidation, violence, and harassment of Nicaraguan voters,” State Department spokeswoman Victoria Nuland said in an Oct. 31 statement.

Still, many voters aren’t objecting to any possible abuses by Ortega because his links with Venezuela bring about $500 million of aid into Nicaragua each year, said Eduardo Enriquez, the editor of La Prensa, the country’s largest newspaper.

“It’s sort of a petty crime in the eyes of people who are more interested in getting food on their children’s plates,” Enriquez, whose paper was censored by the Sandinista government in the 1980s, said in a phone interview from Managua. “Ortega has enough money to keep the economy afloat and the business sector happy.”

To contact the reporter on this story: Eric Sabo in Panama City at esabo1@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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