Carlos Fernando Chamorro, Editor, Confidencial
Arturo Cruz, Jr., INCAE Business School
Shelley McConnell, The Carter Center
Richard Feinberg, University of California, San Diego

On November 5, 2006, former Nicaraguan president and long-time Sandinista leader Daniel Ortega emerged triumphant in the country's presidential election, garnering 38 percent of the vote—the lowest percentage of any winning candidate in the last twenty years but enough to defeat his closest competitors. The Latin American Program asked four distinguished analysts of Nicaraguan affairs to interpret the results of the election and what they bode for Nicaragua's domestic and foreign policy in coming years.

Carlos Fernando Chamorro , editor of Nicaraguan news weekly Confidencial, praised the electoral process for being both competitive and for producing a definitive result. But he cautioned that the country's electoral system was in need of serious reform. Recent changes to Nicaragua's electoral laws, pushed through by Ortega in alliance with former president Arnoldo Alemán, allow a presidential candidate to emerge victorious as long as he or she wins 35 percent of the popular vote and holds at least a five percent lead over the closest runner-up. Chamorro likened the reform to "a suit tailored to [Ortega's] own electoral quota," attributing his win to three factors: Ortega's ability to rally his hard-core base, the split within the Liberal Party between the Partido Liberal Constitucionalista (PLC) and the Alianza Liberal Nacional (ALN), and the 35 percent rule. The fact that Ortega won with a minority mandate will force him to collaborate with other parties in the legislature if he is to deliver on his promises of higher wages, increased employment, and zero hunger, and confront the country's growing energy crisis.

Chamorro predicted that Ortega would attempt to control and expand his political power in the state apparatus and make the most of his preferential relationship with Venezuela's Hugo Chávez. Over the long-term, Chamorro stressed that Ortega must work on dismantling the controversial strategic agreement between the Sandinistas and the PLC known as el pacto and transform the corrupt judiciary. Chamorro urged the international community to give Ortega the benefit of the doubt as he takes up his new term in January 2007.

Shelley McConnell of the Carter Center deemed the Nicaraguan electoral process a success, citing their multi-party, competitive nature, protections against double voting, the accessibility of polling places, and easily-verifiable voter registries; any minor procedural flaws were attributable more to underdevelopment than to partisan interference. However, she called Nicaragua's electoral system "the most exclusionary in Latin America," with overly-restrictive requirements to form a political party. The parties themselves are deeply undemocratic, she said, and the closed list system makes deputies in the National Assembly respond to party leaders rather than their constituents. McConnell argued that Nicaragua's electoral system depends not on a neutral administration, but rather on the degree of organization the political parties have to defend their own interests. This "cartelization of the state" is dangerous for Nicaragua's democratic spirit. McConnell took issue with the notion that Ortega has maintained the same political base but has been unable to woo new voters. The Sandinista revolution took place nearly 30 years ago, she said, and is past history to young Nicaraguan voters today. If Ortega's base stands at 35-40 percent of the electorate, it must mean that he is able to win over new supporters, she concluded.

Evidence of democratization in Nicaragua can be seen in the neutral, apolitical role of the army, an end to hyper-presidentialism, a burgeoning of active parties, and free and fair elections that are viewed as "the only game in town." Now, she maintained, Ortega must deal with second-generation problems of the democratic transition, such as corruption, poverty, inequality, and crime, all in the context of weak state institutions and a weak civil society. Ortega's constituency expects results, she concluded, in addressing poverty and other core problems of Nicaragua, the second poorest country in Latin America.

Arturo Cruz, Jr. of INCAE challenged the notion that left-right dichotomies help explain Nicaraguan politics; rather, he argued, the basic divide concerns modern institutions and rationality versus a traditional society and caudillo-based politics. Pointing to the extreme poverty that affects the majority of Nicaraguans, Cruz questioned whether the country has the "social corpus" to support modernity based on representative democracy and a market economy. According to World Bank figures, close to 80 percent of the population subsists on less than $2 a day, making Nicaragua the second poorest country of the hemisphere after Haiti. Sixty percent of those in urban areas who have jobs earn wages below the cost of the basic food basket (canasta básica). Citizens live on the verge of emergency, Cruz observed; they are concerned with whether or not they will eat, not the quality of political institutions.

Cruz described a "political gap" in Nicaragua created by a society that is heavily rooted in tradition but has aspirations of modernity. Whereas political modernization implies—in addition to the rule of law--the creation of distance between rulers and the ruled, Nicaraguan voters are deeply attached emotionally to such figures as Daniel Ortega and former President Alemán. The overwhelming loyalty that is characteristic of traditional politics is reflected in polling data demonstrating that 58 percent of Nicaraguans always vote for the same party. Figures such as Ortega and Archbishop Miguel Obando y Bravo understand the need "to have the people close to them," treating Nicaragua "as it is, not as we wish it to be." Cruz outlined major challenges that lie ahead in the areas of social security, public sector wages, internal debt, productivity and growth, municipal transfers, and energy. He advocated a form of responsible populism where short-term goals can be met without abandoning long-term objectives. He described significant benefits for Nicaragua deriving from Ortega's good relations with Hugo Chávez: cheap oil, the renegotiation and purchase of portions of Nicaragua's internal debt, basic inputs for the rural economy, and symbolic and visible project such as a bridge or highway. The United States, he implied, offers more indirect benefits, from CAFTA, remittances, and support in the World Bank and IMF. Cruz concluded by emphasizing the need for political stability in order for modernization to proceed, and argued for "benign neglect" on the part of the United States.

Richard Feinberg, University of California, San Diego, took issue with the distinction between "representative" and "participatory" democracy, noting that more than 10,000 poll watchers from each of four parties oversaw the election and that popular participation was high. He called the election a "victory" for U.S. interests in Nicaragua and Latin America, emphasizing the purposeful and successful U.S. efforts to improve and institutionalize the democratic process itself. He said that the United States needs to learn the right lessons from history; it should emphasize to the opposition the importance of preserving democratic institutions rather than encouraging obstruction and disinvestment (as the Nixon administration did to defeat Allende in Chile). Feinberg called the Central American Free Trade Agreement (CAFTA) a way of locking Central American countries into market economies and democratic institutions. Noting that the FSLN had publicly embraced CAFTA, Feinberg said it will prove vital to Ortega in overcoming poverty: with per capita income stagnant, very limited budgetary discretion, and the danger of a recession, CAFTA serves as a tool for regaining investor confidence. Land and labor are low-cost in Nicaragua and the country could attract significant investment. Not only did the Nicaraguan National Assembly approve CAFTA, it also passed a complimentary series of reforms reflecting the cutting edge of development thinking. Those measures include higher international standards for agricultural quality and certification, new road systems, technology in schools, competition laws to protect small and medium-sized businesses, a modernized commercial code, and credit promotion for small enterprises. With over $1 billion in foreign aid promised by the United States, the Millennium Challenge Account, the Inter-American Development Bank, and the World Bank, Nicaragua could be on the brink of spurring substantial growth and consolidating democracy. Feinberg warned that Ortega does not have the luxury of engaging in a dual discourse favoring capitalist development but also denouncing market mechanisms and aligning himself with non-market forces. While the United States cannot prevent Nicaragua from developing a relationship with Hugo Chávez, U.S. policy should encourage the Chileans and Brazilians to engage with Nicaragua, who can draw on their own histories of overcoming distrust among political factions and supporting market economies combined with strong social programs.

Prepared by Cynthia Arnson, Director, Latin American Program, and Kelly Albinak, Program Assistant