This piece appeared in the 2017 Acheson Prize Issue of the Yale Review for International Studies.
A comparative analysis of Daniel Ortega’s interactions with COSEP and the private sector elite from the Sandinista Revolution to 2016
“The Sandinistas needed private enterprise like a zoo needs a gorilla.” [i]
–Large Cattle Rancher, August 6, 1991
On July 17 1979, Daniel Ortega and his Sandinista National Liberation Front
(FSLN) officially overthrew the forty-year family dynasty of Anastasio Somoza Debayle. This established for the first time a revolutionary government in Nicaragua and the first phase of the Junta of National Reconstruction. Ever since, Nicaragua’s Sandinista revolution has captured the attention of scholars and academics of the Cold War, leftist movements, and revolutions ever since. However, the initial success did not signal sustained peace and prosperity for Nicaragua. Internal strife, the deterioration of the economy, international opposition, and notable US interventionism in the form of sanctions and the Contra War plagued the first Sandinista period. Despite being defeated in 1990 in the national electoral process that he installed, Daniel Ortega remained a key member of the Sandinista party, campaigning unsuccessfully in two subsequent elections in 1996 and 2001. However, a radically changed Ortega was bolstered by a controversial strategic pact between the FSLN and the Constitutional Liberal Party (PLC), which lowered the percentage necessary to win a presidential election in the first round from forty-five percent to thirty-five percent. He was then able to secure the presidency once again in 2006 with thirty-eight percent of the vote.
The Sandinista Revolution was unique for many reasons, but one of these was the guerilla movement’s unification with the private sector and business elite of Nicaragua, more specifically its modern capital city of Managua. The powerful minority class of producers, business elites, and the bourgeoisie have exercised varying levels of control over Nicaraguan politics for the last century. They have formed both the strongest supporters and most effective enemies of the Sandinista movement in both of its phases, as supporters in the overthrow of the Somoza dynasty, as political archenemies following the revolution, and now, again as cautious supporters of Daniel Ortega’s second presidency. Given their impact and ability to influence international opinion, foreign direct investment, levels of interventionism, and domestic confidence in Nicaragua, the relationship between Ortega and the private sector elite offer a partial explanation for both his successes and failures in maintaining power in Nicaragua. Mark Everingham asserts that, “elite relationships constitute an important variable that mitigates the success or failure of new democracies. Various kinds of concerted elite action have been credited for the realization of effective democratic rules in developed and developing countries.”[ii] Therefore, by examining Ortega’s relationship with the private sector—mainly through his communications with the Superior Council of Private Enterprise (COSEP)[iii]—the initial success of the 1979 Sandinista Revolution, its subsequent failure in the 1990 elections, the return of the Ortega and the Sandinistas in 2007, and his relatively tenuous position today in 2016, straddling influence from both Venezuelan President Hugo Chavez and the United States, can be explained.
The Revolution (1978-1981): A Utilitarian Friendship
From 1939 to 1979, Nicaragua was ruled by the corrupt and wealthy Somoza dynasty, both indirectly through puppet presidents supported by the National Guard, or directly by members of the Somoza family. In the years preceding the revolution, there were increasing levels of discontent with the corruption and authoritarianism of the Somoza regime coming from many different factions and not just the Sandinistas, who based their grievances in Leftist, Marxist-Leninst ideologies.[iv] Humberto Ortega, Daniel Ortega’s brother, recognized the diverse nature of the opposition when he called for a united mass movement: “it is very difficult to take power without a creative combination of all forms of struggle, wherever they can take place…mass movement is the focal point of the struggle and not the vanguard with the masses limited to merely supporting it.”[v] Tangibly, the Ortegas and Sergio Ramirez, known as the Tercerista faction, took control of the FSLN guerilla movement and delineated a plan for strategic alliances and mass insurrection in the “General Political-Military Platform of Struggle of the FSLN.” Within this new blueprint, the FSLN “avoided leftist rhetoric, encouraged the creation of mass organization including workers and peasants, acknowledged the utility of courting businessmen, and called for the Sandinista unification.”[vi] Most importantly, the Terceristas attempted to appeal to potential elite collaborators, presenting themselves as a pragmatic option to the bourgeoisie for eliminating the Somoza dynasty, which proved to be an integral appeal in the creation of this cross-class coalition.[vii]
It is worth noting that the original motivations for both the private sector elite and the Sandinistas to overthrow Somoza were not necessarily aligned. The bourgeois private sector elites, those who did not flee the country to places like Miami under Somoza dictatorship, fought because “they had been so long denied their ‘right’ as the bourgeoisie to rule in their own interest.”[viii] They hated the corruption of the Somoza dictatorship, which became all too apparent following a powerful 1972 earthquake. It became known that Somoza illegally appropriated and mismanaged huge amounts of international relief aid, helping to balloon Somoza’s personal wealth to over $400 million USD, all while asking the elites to pay additional emergency taxes.[ix] The beginning of the elite class’s campaign against Somoza can be traced back to the formation of Los Doces (the Twelve), an organization of business and intellectual elites that opposed Somoza’s rule calling for “a process of political transformation that converts Nicaragua into an independent, democratic, pluralistic society.”[x] It was Somoza’s assassination of the elite owner of the pro-business, anti-Somoza newspaper, La Prensa, Pedro Joaquín Chamorro on September 17, 1980 that served as the final push to fervently mobilize the elite to remove Somoza from power through all means possible.[xi]
The shift of the bourgeoisie in Nicaragua was gradual as Somoza and the business elite traded blows throughout the late 1970s. In response to a deteriorating economy due to US sanctions, decreasing levels of foreign investment, and a growing intolerance of Somoza’s corrupt practices, COSEP organized a business “lockout” and issued a communiqué pledging to exact an economic price from Somoza in protest. In response, Somoza forced the Central Bank to cut off all funds to businesses that could not prove to be autonomous from political movements. Everingham comments on the Central Bank freeze, asserting that, “from an economic standpoint, the Somoza regime lost all credibility with COSEP. The complete absence of liquidity and forthcoming capital from foreign lenders made it imperative for businessmen to wrest the banking system from the state.”[xii] Therefore, to combat the massive fluctuations in short term external debt and repeated impositions on their business interests, the business elite saw it as a necessity to oust Somoza in order to “preserve its control over the state while simultaneously ensuring commercial, industrial, and financial interests.”[xiii] Responding to the appeals of the Sandinistas, the elite decided that the best option was to unite behind the burgeoning Leftist movement. On June 27, 1979, COSEP recognized the FSLN’s provisional government, the Junta of National Reconstruction, as the legitimate government expressing their “patriotic determination to participate in the reconstruction of the Republic that must be directed by the Junta of National Reconstruction, which was followed on June 27, 1979, by COSEP’s declaration of unconditional support for a mixed economy in exchange for full representation in the Council of State, the legislative body to be formed after the victory.”[xiv] For the business elite, this accommodation with the Sandinistas provided them with an opportunity assumedly to accomplish both of their aims: protect their economic interests and ensure positions of power in the Junta and Council of State after the ousting of Somoza.
However, the Sandinistas viewed this partnership through a much different lens. Ortega understood the value of mass movements and valued the alliance with the bourgeoisie. Dennis Gilbert writes that the FSLN, “believed that their allies possessed administrative and technical skills that would be useful to the young government and essential to the reconstruction of the war-damaged economy. They also understood that the bourgeoisie was the key that would open the door to friendly financial and diplomatic dealings with the West.”[xv] More importantly though, in the 1977 Platform and in an early 1979 interview, Daniel Ortega described the alliance with the anti-Somoza bourgeoisie as “tactical and temporary.”[xvi] Although the unlikely union succeeded in toppling Somoza, it became clear that COSEP’s backing of the FSLN to secure their own business interests while maintaining political power would be irreconcilable with Sandinista National Director member Jamie Wheelock’s vision of the future where the bourgeoisie functioned as “producers without power,” or his vision of Nicaragua’s future as “a mixed economy, guided by a strong government, in the interests of the poor majority…on the way to a society without capitalists.”[xvii] While they did not understand the adverse effects of the dissolution of such a utilitarian and transitory friendship, Ortega and the Sandinistas recognized that the private sector was key for their mass movement to overthrow Somoza and to provide comfort to international audiences regarding the revolution.
Post Revolution Period
“The private sector supported a national insurrection, not a social revolution.”[xviii]
–Enrique Dreyfus, COSEP President and owner of a large department store chain
Immediately following the revolution, the unlikely partnership began to unravel at the hands of the Sandinistas. Eager to create their own country and identity in a nation that had not been afforded such an opportunity for decades, the Sandinistas sought to consolidate their power. The first step towards the Sandinista’s alienation of the private sector came after the 1980 election when it was decided that the Junta’s Council of State was slated to have thirty-three seats, of which approximately half would go to traditional political parties or organizations dominated by the bourgeoisie. Instead, the FSLN and the Junta announced that fourteen additional seats would be added to the Council, most of which would go to mass organizations like the FSLN, not the bourgeoisie elite.[xix] Following this, the FSLN expropriated the largest group of bourgeoisie holdings to date through the property of the Somoza clan, followed by the nationalization of all of Nicaragua’s commercial banks, thereby taking over the financial nerve centers of the bourgeoisie. Highlighting the importance of this statement, according to the North American Congress on Latin America (NACLA), “virtually every ‘interest group’ within the bourgeoisie had either owned a bank or a major block of shares in one or more banks.”[xx] This was certainly intentional by the FSLN. A member of the National Directorate at the time recognized the implication of these expropriations not simply as a means to secure control but an attempt to isolate the COSEP elites “by taking control of the banks we have encircled the bourgeoisie.”[xxi] The cross-class partnership and COSEP’s hopes for a mixed economy started slipping away quickly.
These expropriations came with wide-ranging economic measures aimed at bettering the lives of ordinary Nicaraguans, which became the hallmark of the Sandinistas’ popular appeal. While announcing all of these new economic policies, Ortega, abandoning attempts to mask the Marxist-Leninist ideology of the FSLN, denounced “unpatriotic investors and producers who have decapitalized factories and farms,” and went on to say that, “this is a private sector that is consciously playing with fire, that wants to destroy popular power in order to impose the power to rob and oppress the workers.”[xxii] Victor Tirado of the National Directorate summed up the drastic shift in the relationship between the FSLN and COSEP in the years immediately following the Revolution: “We developed another project detached from the one that helped us triumph [Ortega’s multi-class coalition]…We let ourselves be guided, perhaps for comfort, by Cuban and Soviet ideas.”[xxiii] It was clear from the Sandinista’s very first political and economic actions that they planned to take an increasingly belligerent stance towards COSEP and the business elite. Perhaps most importantly though, the Sandinistas revealed that the vision they sold to the elite before the revolution for Nicaragua’s future was vastly different than that which they hoped to construct.
These actions sparked reactions from COSEP, notably in the form of letters published in La Prensa. Although it was a pro-business institution, the US embassy, which closely monitored the situation in Nicaragua, classified the exchanges between COSEP and the FSLN as “a ‘new campaign of hate’ unleashed by the FSLN trying to link the private sector with counter-revolutionary bans, accuse it of decapitalization, foment workers seizures of private businesses, and use credit availability to pressure small and medium producers to join FSLN groups” as early as 1981.[xxiv] COSEP’s main argument during the period was that “the State controls the keys to our economy, financial system, and foreign commerce and is responsible for 40% of national production.”[xxv] Daniel Ortega and the FSLN responded to COSEP’s complaints and subsequent demands for the protection of private property by asserting “we are not going to share power with those who only seek to weaken that power—neither in the Government Junta nor in the ministries.”[xxvi] Further, according to Spalding, FSLN leadership felt that the bourgeoisie had been given the opportunity to develop the country under the Somoza regime, and they had failed in this historic mission. Finally, after Humberto Ortega declared that national elections would be postponed until 1984 and claimed that “if they [those who consciously or unconsciously assist the plans of imperialism] do not mature, if they do not join the defense effort, when aggression comes they will be the first to be hanged along the roads and highways of the nation,” COSEP confirmed for itself that the FSLN planned to stay in power indefinitely.[xxvii] In a final response letter addressed to Daniel Ortega in 1981, COSEP warned of the preparation of a “new genocide” in Nicaragua targeting those who exercise the right to dissent. He concluded, “we identify an unmistakable ideological line of Marxist-Leninist tendency that is confirmed in the discourse of members of the national directorate, charged with threatening national security.” As could be expected, signatories to the document were arrested and imprisoned, the Sandinista regime closed and censored La Prensa for periods. Evidently, at that point in 1981, COSEP became the political archrival of the Sandinista revolution and Daniel Ortega.[xxviii]
Attempts at Reconciliation and the 1990 Election of Violeta Chamorro
As a result of the US trade embargo enacted in 1985, the financing of a counterrevolutionary war, and the Contra War, all working to oust Daniel Ortega and the Sandinistas, the Nicaraguan economy suffered following the revolution. The trade embargo affected about fifteen percent of Nicaragua’s foreign trade and the counterrevolutionary war forced the Sandinistas to direct fifty percent of government spending in 1985 on national defense.[xxix] Walker and Wade claim that overall, “the collapse of the Nicaraguan economy in the late 1980s was mainly a product of deliberate US policy,” and back up their assertion by stating that, “until the impact of the Contra War and other US destabilization techniques really began to hit in the mid-1980s, Nicaragua was one of the few countries of Latin America that actually registered a growth in GDP per capita.”[xxx] Within the context of the global Cold War, however, the Sandinista revolution faced great pressure both externally and internally, which only exacerbated their relationship with COSEP and the international business elite who grew angrier and angrier in the face of increased government centralization and lowered levels of foreign investment.
In the late 1980s, with increased US pressure, the Ortega and the Sandinistas started down a drastically different, but all too familiar, path by extending a cautious olive branch to the private sector in order to repair the economy and ensure their own reelection. The 1988 to 1989 period saw huge amounts of government concessions offered to the business elite. In April 1989, the government called for a full, open consultation with private producers in a two day-meeting, formally called the Proceso de Concertacion Nacional, which brought together Ortega, all the leading economic ministers, and over 600 private producers. The meeting was monitored by the diplomatic community.[xxxi] Following the meeting, the government agreed to reduce and fix the interest rates, reduce import taxes and port charges, lower other taxes by fifty percent for producers making investments to benefit their works, extend the grace period for loan repayment, and to take many other pro-business measures. [xxxii] The most important concession though was Ortega’s renewed affirmation of property rights. Ortega promised that private sector participants in his Concertacion process did not need to fear further expropriations, a main grievance of COSEP and the business elite during the Sandinista period.
In advance of the elections, the Ortega government attempted to project the image that they had rebuilt the confidence of business leaders and local producers in a variety of ways, including holding down the prices for basic public services like gas and water:
First, producers were included prominently as candidates on the FSLN slate. Second, the government offered a blizzard of new concessions to traditional elites. Third, the government staged a series of last-minute meetings with producers to demonstrate the access and ongoing dialogue that now marked their interaction.[xxxiii]
Although COSEP negotiated and accepted concession, in many ways, the Sandinistas’ appeals to the private sector seemed to fall on deaf ears. For example, COSEP refused to send delegates to Ortega’s May 1989 sojourn to Stockholm, Sweden aimed at soliciting foreign direct investment, refusing to be used as pawns for Ortega’s gain.[xxxiv] However, Spalding argues that actual renewed cooperation with the private sector was not necessarily the FSLN’s goal. Instead, they hoped to inspire domestic confidence in their own governance: “the government hoped to persuade the large numbers of peasants, workers, and unemployed Nicaraguans that the economy could be reactivated under their leadership through a renewal of private sector investment.”[xxxv] In this sense, Ortega, yet again, offered disingenuous appeals to the Nicaraguan elite in an attempt to serve his own purposes.
The Ortega government’s 1988 to 1989 attempts to reconcile with COSEP proved fruitless. Tim Merrill offered an explanation in a US government report that, the private sector organized by COSEP “was instrumental in President Ortega’s electoral defeat. Private industry had suffered heavy losses during the struggle to overthrow the Somoza regime and then fared even worse during the decade-long administration of the Sandinistas.”[xxxvi] Similarly, Spalding states that despite the concessions made by the Ortega government in 1988 and 1989, the elites felt that “the Sandinista revolution had not only reduced their ability to accumulate but also undercut their social status and the respect with which they were viewed in their community,” and this proved to be irreconcilable for Ortega.[xxxvii] Beyond that, for many Nicaraguans, Chamorro offered the only sure-fire way out of the Contra War and an alternative to Ortega’s confrontational style of politics, given the widespread knowledge that UNO was created and funded by Washington D.C.[xxxviii] In the end, Chamorro offered a politics of reconciliation, as well as connections to the small but powerful private sector, which proved to be more convincing to the Nicaraguan people and business elite than a pandering Ortega.[xxxix]
While the Sandinistas would transition power peacefully for the first time in Nicaraguan history after losing the 1990 election to Violeta Chamorro and the UNO Party, their actions during their final days may be the most predictive of the future of Nicaragua today. In the final “lame duck” days of Ortega’s government after Chamorro had been elected, they revealed one of two things: either the true colors of the FSLN party, or simply the immaturity of a young revolution. In a process that came to be known as the “La Piñata,” after the children’s game in which a hollow paper-mâché animal filled with candy is broken open, Ortega authorized the property grab of more than 5,000 houses and thousands of hectares of land, breaking one of its major promises made during the campaign season that they would cease expropriations of elites who participated in the Concertacion process of 1988 and 1989. [xl] Although Ortega and the Sandinistas said they were proud to create piñatas for the poor of Nicaragua, the real beneficiaries of two vague laws passed through the National Assembly in 1980 were the Sandinista leaders themselves, including Daniel Ortega. Notably, during “La Piñata” Ortega and his wife changed the registration on the mansion they expropriated from Jamie Morales Carazo during the Sandinista revolution in 1979, effectively making it their own.[xli] Chamorro’s refusal to do anything about “La Piñata” would come to be a point of contention with COSEP during her presidency.[xlii]
The Campaign and 2007 Election of Daniel Ortega
“Mr. Ortega was once pro-Marxist, but now he’s pro-Ortega. And that’s the problem.”[xliii]
Violeta Chamorro would govern for approximately seven years guided by her “politics of reconciliation,” attempting to mend the damage the Sandinista regime had done. She brought an end to the all-encompassing Contra War, in large part, because of US disinterest in the region following the fall of the Sandinistas. Unfortunately, she was unable to steady the economic situation in Nicaragua, and experienced a rocky relationship with COSEP, which would leave the door open for Ortega after two subsequent failed campaigns in 1996 and 2001. As the economic situation in Nicaragua continued to deteriorate drastically from increased US pressure, the Nicaraguans became increasingly undecided on the best choice for the future. As a result of this indecision, Daniel Ortega was successfully reelected in 2007 thanks to the power-sharing pact with former President Arnoldo Almenán, known as “El Pacto” that allowed for a president to be elected with only thirty-five percent rather than forty-five percent of the vote.[xliv] Most importantly, there was a marked shift in rhetoric used by Ortega to win the election. Just nine years before, in a 1998 New York Times article, Ortega fervently defended his Marxist guerilla ideologies, vowing not to change:
I know there are people who say that if the Front changes its attitude, then we’ll have more of a chance to win. It’s logical. But logic doesn’t always fit reality. It would be nice if this were Europe and the Sandinistas could be Social Democrats, but it isn’t. If we gave up our street tactics, we’d be betraying our base, the people who identify with us when we fight and rebel. I know we pay a price for that, that we lose votes, that it frightens some people . . .[xlv]
However, something did change as a result of two lost elections for Ortega. His 2007 campaign advertised Ortega’s reimagined image and newfound relationship with the private sector, which in both cases represented a direct betrayal of his own creed and ideology. He ditched his Marxist rhetoric of the 1980s and instead appealed to the Catholic nature of his nation and private business interests once again, similar to his tactics in the years leading up to the Sandinista revolution. This represented a marked turnaround for the man who authorized massive land grabs and commandeered his own mansion during “La Piñata” in 1990.[xlvi] Although it was a gradual process starting in 1989 and 1990 before his electoral loss to Violeta Chamorro and continuing through two failed subsequent campaigns to regain power, the ease with which Ortega abandoned his ideologies raises questions.
Perhaps most illustrative of Ortega’s transition from Marxist revolutionary to a calculated authoritarian is his choice of Vice President in Jaime Morales—the same man whose mansion Ortega seized in 1979 during the Sandinista Revolution and officially made his own during the 1980 “La Piñata.” According to Stephen Kinzer of the New York Times, Morales moved back to Nicaragua from Mexico after the civil war, reached a “private agreement” with the man he swore to defeat by joining the Contras in 1980, and gave up his claim to his old house.[xlvii] As Spalding asserts, “this odd alliance signaled that the self-declared ‘second phase of the Sandinista revolution’ would be different from the first.”[xlviii]
During the campaign in the days leading up to his 2007 inauguration Ortega made many promises of this “second phase of the Sandinista revolution,” documented widely by newspapers and international observers. Prior to his election, Ortega had already signed a pact with the chambers of commerce and subsequently followed up with the main business leaders of Nicaragua to assure them of his absolute respect for private property and wish to encourage enterprise and investment. Recognizing factors out of his control, Ortega even appealed to his Sandinista supporters not to occupy disputed land or houses, telling them they, too, must respect private property. These measures were received positively, prior to the election the private sector led by Erwin Kruger, head of COSEP, said it was prepared to work with Ortega.[xlix] International opinion of Ortega also shifted quickly, the Economist Intelligence Unit’s ViewsWire reported in January 2007 that, “Ortega is no longer the fervent Marxist revolutionary who led the country in the 1980s. He says he will respect private property, support free trade and pursue working relations with Washington. He will also retain some of the other policies of his predecessors.”[l] The commonality in these accounts, however, is their reliance on statements from Ortega and reported discussions between Ortega and business leaders and COSEP rather than actions. It is clear that Ortega understood the Nicaraguan political climate of the time and knew that he must respect private property. He also projected that he had the confidence of the business elite in order to win the election. He had tried this same tactic unsuccessfully in the 1990 campaign when his government held down the prices of water and gas and marketed his increased interaction and dialogue with the private sector even though COSEP still opposed his government. Charles Riples, an Arizona State University Latin American specialist and former Nicaraguan resident, asserts that “Ortega is a very brilliant politician,” and in regards to his 2007 election, “He has played his hand that wasn’t very good after he lost the  election so well to come back to power… He’s actually a brilliant strategist within the Nicaraguan context.”[li] Although his disingenuous 1990 strategy did work successfully in 2007, it remains to be seen whether these were simply empty promises designed to win the election or if they represent a real shift in Ortega’s character.
There are a few explanations that could validate a legitimate change in Ortega’s stances towards COSEP and business in general. One is necessity. Ortega began this process of reconciliation during the run-up to the 1990 election as the Nicaraguan economy crumbled under the heavy hand of the United States and appealed to private business in 2007 as a counter to the faltering economy under Chamorro. Spalding argues that this process of coalition building began in the late 1980s while the party attempted to redefine itself during the campaign in response to the realization that its core group had shrunk.[lii] Another possible explanation is simply that the revolution, and Ortega, had seventeen years to mature between the first and second phases of the Sandinistas. Adolfo Cadero, former head of one of the largest Contra factions, supports this notion, although he alludes to more greedy motivations:
When the Sandinistas came to power, they came in dirty uniforms, with no experience other than giving orders. They were barbarians at the banquet. Now they’re older. They have families, and many of them have very strong economic interests. I expect a totally different attitude. My hope is that power won’t seduce them, as it did last time, but make them more responsible.[liii]
In other words, Ortega’s aversion to the business elite came from a place of youthful, leftist paranoia. Now, at seventy-one years old, Ortega truly recognizes the influence of the private sector, which when united with UNO, successfully removed him from power in 1990. Yet another explanation could simply be that Ortega desires only power and control. Spalding argues that this “farcical saga” tells us that Ortega was much more interested in being president than in being principled. As a result, he now recognizes that anyone who wants to lead must convince voters he will respect the rule of law and private property, regardless of whether or not he actually believes in these things. Spalding highlights Ortega’s inconsistent nature revealed through his pursuit of power:
Mr. Ortega is, after all, a crusader for good government who has allied himself with the country’s most corrupt figures; an advocate of the poor who has become very rich through a series of mysterious business deals; and a leftist ideologue who has proven ready to embrace any cause — most recently a total ban on abortion — that will bring him political advantage.[liv]
Like an apt political operator, Ortega flip-flopped his positions in order to pander to different voting populations, and in this most recent case, the business elite and Catholic majority. Moises Hassan, the former Mayor of Managua who quit the FSLN in 1988, offers support for this notion: “Being a radical revolutionary is all Ortega knows. His vice is power. He’d gladly give up everything else for it.”[lv] By examining more recent primary source documents documenting Ortega’s relationship with COSEP since his 2007 election, it is possible to begin answering some of the questions raised.
In terms of gathering public support, his policies have worked. According to a public opinion poll released by M&R Consultants in January 2014, during Ortega’s unprecedented third term, he enjoyed sixty-five percent approval rating.[lvi] The question still remains though, to what extent do Ortega’s new policy stances represent a change, or increased maturity in the Sandinista party? Or is this simply the repetition of Ortega’s multi-class coalition strategy employed before the overthrow of Somoza in order to gain elite support? Will he abandon these relationships as soon as he feels comfortable with the centralization of his own power?
By most accounts, Ortega has held true to his promises. Mario Arana, a former central bank governor and finance minister reported following the election that, “Ortega has effectively co-governed with the private sector. He is aware that economic mistakes are politically costly.”[lvii] In order to avoid these same mistakes, Ortega has created a Comisión de Seguimiento, as requested by COSEP in 2009, which is composed of three representatives from COSEP and the government each and meets monthly as a forum where proposals can be made and views can be exchanged. As a result, in 2010, over sixty percent of all approved laws, and all but one of the economic laws, were found to involve the active collaboration and endorsement of COSEP delegates. Further, by 2011, COSEP had “official status on oversight boards for eleven public-private institutions, ten councils, four ministries and government agencies, and the presidential commissions on investment and trade facilitation.”[lviii] This tangible evidence represents a major shift from FSLN’s immediate attempts to dilute COSEP’s influence on the State Council in 1980 by adding non-elite member seats. Further, in strictly quantitative measures, Ortega has performed well. By 2011, Nicaragua posted the highest growth rate in the region at four percent and continues to outpace its Central American neighbors, with the exception of Panama. Under Ortega, GDP increased seventy-four percent from $6.78 billion in 2006 to $11.8 billion in 2014. Nicaragua has experienced record investment for the past five years; exports have expanded; and there have been significant improvements in socioeconomic indicators, all of which has won him praise from the business sector.[lix] In the first few years, Ortega appeared to be deferential once again to COSEP, holding true to his promises, and Nicaragua was being rewarded as a result.
However, some opposition forces in Nicaragua have criticized this newfound partnership, likening it to the status enjoyed by the business elite under the Somoza regime. As an example of the newfound closeness, in 2012 a group of COSEP business leaders traveled with Ortega to Washington D.C. to lobby successfully against threatened US aid cutoff to the Ortega government. Spalding writes that, “the willingness of these economic leaders to take action that buffered the Ortega regime reflects the balance of state-business relations in contemporary Nicaragua,” and goes onto say that unlike their predecessors in the 1980s, “Nicaraguan business elites now worked to avoid destabilization of the Ortega government.”[lx] However, Wade writes that this type of cooperation has frustrated opposition forces who claim that the alliance between the administration and COSEP amounts to an extra-parliamentary body. While COSEP has sometimes sought to balance Ortega’s policies, it has effectively replaced the electoral opposition in that role.[lxi] Nicaraguan newspaper, Confidencial, criticized COSEP further, asserting that, “the main reason COSEP has agreed with Ortega lies in an agreement for economic governance. Daniel Ortega gives favor to certain business associations and preferential treatment to certain companies,” and in return for this preferential treatment, “COSEP business elites have been silent about Ortega’s abuses of authority…the silence can be characterized as ‘don’t bite the hand that feeds.’”[lxii] Certainly, both the Ortega administration and COSEP business elites have benefitted from 2007 to 2015.
However, as Ortega becomes more authoritarian in nature, this effective, yet often questioned partnership, has become strained particularly since 2015. A US Congressional Research Report oversimplifies the phenomenon: “Ortega has continued to vacillate between populist, anti-US rhetoric, and pragmatic reassurances that his second administration will respect private property and pursue free-trade policies. His cabinet appointments include both Sandinista loyalists and supporters of a free market economy.”[lxiii] More importantly though, this rising tensions with COSEP displays more of a historical pattern than the Congressional Research Report identifies. The Economist Intelligence Unit’s ViewsWire, reported in their 2015 article titled, “Nicaragua Politics: Ortega’s Opponents Pray for Intervention,” that despite the special relationship enjoyed by business elites there is some caution:
Tensions in the business-government relationship have grown in 2015, with private-sector complaints over lack of consultation on a string of policy initiatives, in which the political and economic interests of the government and Mr. Ortega’s family have taken precedence over private business interests. The list includes changes to energy tariffs, the minimum wage, a proposed Internet law, and the management of customs and other government bodies. [lxiv]
For now it seems the private sector is placated by the decision-making power it is still enjoying, and it “has shown itself to be highly accommodating to the emerging business interests of the Ortega family, in exchange for influence over the direction of economic policy and, in particular, tax reform.” [lxv] Interestingly, in an attempt to both protect their economic interests and ensure positions of power within the state, as they did when throwing support behind the Sandinistas, COSEP has stressed the counterproductive effect that Mr. Ortega’s “virulently anti-capitalist rhetoric” has on the investment climate of Nicaragua, asking him to tone it down.[lxvi] Despite minor critiques like these, at this time the consensus is that there is little sign that this relationship will change fundamentally, “as private business still has more to lose than gain by backing the opposition.”[lxvii]
“We are in the pure and simple populism that hates democracy and has maintained through the manipulation of laws and institutions the preservation of an illusion of democracy.”[lxviii]
—Gioconda Belli, July 2, 2016
Despite Ortega’s closeness with COSEP, he still faces international economic pressure in response to his increased authoritarian tendencies, which threatens the entire partnership. Ortega’s opposition has begun to make its voice heard. As of September 2016, the Nicaragua Investment Conditionality Act (NICA) passed unanimously through the US House of Representatives.[lxix] NICA aims to pressure the Ortega regime by opposing loans for Nicaragua from international financial institutions until the US Secretary of State “certifies the Government of Nicaragua is taking effective steps to hold free and fair elections, promoting democracy, strengthening the rule of law, and respecting the right to freedom of association and expression.”[lxx] However, it is hard to ignore the similarities in the bill’s language to that used by the US in its support for the Contras and Violeta Chamorro’s UNO Party, which brought an end to Ortega’s first Sandinista phase only a few decades earlier: “The Department of State and the United States Agency for International Development should prioritize foreign assistance to the people of Nicaragua to assist civil society in democracy and governance programs, including human rights documentation.”[lxxi] If the US continues to increase economic pressure, it is possible that we will see another period of disenchantment between COSEP and Ortega as we saw in 1981 and even towards the end of Chamorro’s presidency.
Perhaps the most telling sign of the trajectory of Ortega’s authoritarianism comes from a familiar voice: Carlos F. Chamoro, son of former President, Violeta, and former, assassinated, editor of La Prensa, Pedro Chamorro, who were for many the figureheads of the Nicaraguan business elite. Chamorro identifies a trend of Ortega’s broken promises. Just like the promises broken to the business elite following the Sandinista Revolution, Ortega began his presidency in 2007 by breaking the critical political compact, “El Pacto,” with Alemán that allowed him to win the election, when he chose to take sole control, ignoring the power-sharing mechanism.[lxxii] Strictly through the lens of his relationship with COSEP, it appears that since 2007 Ortega has kept his promises despite some occasional tension. However, his authoritarian leanings, consolidation of ownership and control in the media industry by his family, obstruction of elections, and coziness with Venezuela’s Hugo Chavez have unsettled the international community, which will in turn affect his relationship with the private sector elite who rely on a stable Nicaragua to encourage a steady flow of foreign direct investment. Simply the fact that Chamorro—just as his father did 36 years ago—reported that there is “no reason, nor anyone to vote for,” in the recent 2016 elections suggests a dangerous pattern may be emerging in Nicaragua.[lxxiii] However, it may be Gioconda Belli, the Nicaraguan author, novelist, and poet, who summed it up most authoritatively in her July 2, 2016 Op-ed titled “Aproximaciones a un enigma.” Belli writes, “Dictators don’t learn, they only get better at knowing what to fear and how to placate those forces.”[lxxiv] With US action imminent and with tensions rising between the government and COSEP, it remains to be seen how much more Somoza the Nicaraguan business elite and Nicaraguan people will allow Daniel Ortega to exhibit, but he has certainly had time to learn.
Newspaper Articles and Editiorials:
New York Times
Wall Street Journal
Havana Times en Espanol
Diaria El Heraldo
Economist Intelligence Unit “ViewsWire”
Chamorro, Carlos F. “In Nicaragua, a Blatantly Rigged Election.” The New York
Times. November 4, 2016. http://www.nytimes.com/2016/11/05/opinion/in-nicaragua-a-blatantly-rigged-election.html.
Christian, Shirley. “Managua Journal; Victor’s Lament: To the Losers Belong the
Spoils.” The New York Times. June 8, 1991, sec. World. http://www.nytimes.com/1991/06/08/world/managua-journal-victor-s-lament-to-the-losers-belong-the-spoils.html.
“El COSEP También Es Un Actor Político.” Confidencial. September 12, 2016.
Goldman, Francisco. “The Autumn of the Revolutionary.” The New York Times.
August 23, 1998. http://www.nytimes.com/1998/08/23/magazine/the-autumn-of-the-revolutionary.html.
Kinzer, Stephen. “The Marxist Turned Caudillo: A Family Story.” The New York Times. November 12, 2006. http://www.nytimes.com/2006/11/12/weekinreview/12kinzer.html.
Llosa, Álvaro Vargas. “¡Viva El Capitalismo!” The New York Times. November 13, 2006. http://www.nytimes.com/2006/11/13/opinion/13llosa.html.
Montes, Juan and José de Córdoba. “Nicaragua’s Leftist Ortega Embraces Business–and Authoritarianism; Daniel Ortega, One of Latin America’s Best-Known Marxist Revolutionaries, is Living Out a Second Act as a Pro-Business, Increasingly Authoritarian Leader.” Wall Street Journal (Online). Nov 04, 2016. http://search.proquest.com/docview/1835944627?accountid=15172.
“Nicaragua: Gioconda Belli Alerta Sobre Daniel Ortega.” Havana Times En Español. July 2, 2016. http://www.havanatimes.org/sp/?p=116668.
“Nicaragua: Daniel Ortega Estrecha Su Relación Con La Empresa Privada.” Diario El Heraldo. Accessed December 13, 2016. http://www.elheraldo.hn/pais/993757-466/nicaragua-daniel-ortega-estrecha-su-relacióncon-la-empresa-privada.
“NICARAGUA: Ortega Will Lead Different Administration.” Oxford Analytica Daily Brief Service. Nov 22, 2006. http://search.proquest.com/docview/192445405?accountid=15172.
“Nicaragua Politics: Ortega is Back.” EIU ViewsWire. Jan 10, 2007. http://search.proquest.com/docview/466588489?accountid=15172.
“Nicaragua Politics: Ortega’s Opponents Pray for Intervention.” EIU ViewsWire. Jul 30, 2015. http://search.proquest.com/docview/1700218037?accountid=15172.
“Nicaragua Politics: Private Sector Calls for Dialogue.” Economist Intelligence Unit ViewsWire. Apr 13, 2009. http://search.proquest.com/docview/466455879?accountid=15172.
“Ortega, Again.” The New York Times. November 11, 2006. http://www.nytimes.com/2006/11/11/opinion/11sat3.html.
“Ortega Impone Sistema de Partido único.” La Prensa. July 30, 2016.
Nicaraguan Investment Conditionality Act (NICA) of 2016, H.R.5708, 114th Cong. (2016).
United, States Embassy. COSEP Superior Council of Private Enterprise] Refutes Ortega 1981. http://search.proquest.com/docview/1679108931?accountid=15172.
Taft-Morales, Maureen. “Nicaragua: The Election of Daniel Ortega and Issues in US Relations.” Congressional Research Service. April 19, 2007. http://congressional.proquest.com/congressional/result/congressional/pqpdocumentview:pdfevent?pgId=25ccfe2c-3aae-4e08-9808-f7d8efe68309&pdf=/app-bin/gis-congresearch/8/5/5/6/crs-2007-fdt-0532_from_1_to_14.pdf.
Conroy, Michael E., and María Verónica Frenkel, eds. Nicaragua, Profiles of the Revolutionary Public Sector. Westview Special Studies on Latin America and the Caribbean. Boulder: Westview Press, 1987.
Everingham, Mark. Revolution and the Multiclass Coalition in Nicaragua. Pitt Latin American Series. Pittsburgh: University of Pittsburgh Press, 1996.
Gilbert, Dennis L. Sandinistas: The Party and the Revolution. New York, NY, USA: Blackwell, 1988.
Orozco, Manuel. International Norms and Mobilization of Democracy: Nicaragua in the World. Aldershot, Hants, England ; Burlington, VT: Ashgate, 2002.
Ruchwarger, Gary. People in Power: Forging a Grassroots Democracy in Nicaragua. South Hadley, Mass: Bergin & Garvey Publishers, 1987.
Spalding, Rose J. Capitalists and Revolution in Nicaragua: Opposition and Accommodation, 1979-1993. Chapel Hill: University of North Carolina Press, 1994.
Spalding, Rose J., ed. The Political Economy of Revolutionary Nicaragua. Thematic Studies in Latin America. Boston: Allen & Unwin, 1987.
Walker, Thomas W., and Christine J. Wade. Nicaragua: Living in the Shadow of the Eagle. 5th ed. Boulder, CO: Westview Press, 2011.
Journal Articles and Reports:
Communication, Walter Cronkite School of Journalism and Mass. “Love Him or Hate Him, Few Doubt Ortega’s Political Skill.” Accessed December 15, 2016. https://cronkite.asu.edu/buffett/nicaragua/love-him-or-hate-him-few-doubt-ortegas-political-skill/.
Dore, Elizabeth, and John Weeks. The Red and the Black: The Sandinistas and the
Nicaraguan Revolution. University of London Institute of Latin American Studies Research Papers 28. London: Institute of Latin American Studies, 1992.
Everingham, Mark. “Neoliberalism in a New Democracy: Elite Politics and State Reform in Nicaragua.” The Journal of Developing Areas 32, no. 2 (1998): 237–64.
“Freedom House Welcomes Senate Introduction of NICA Act.” Freedom House. September 8, 2016. https://freedomhouse.org/article/freedom-house-welcomes-senate-introduction-nica-act
Roberts, James M. “Nicaragua’s President Ortega: The Balancing Act After One Year.” The Heritage Foundation. Accessed December 13, 2016. http://www.heritage.org/research/reports/2008/01/nicaraguas-president-ortega-the-balancing-act-after-one-year.
Schoultz, Lars. “United States Policy toward Nicaragua.” The University of North Carolina. March 1982, 11.
Spalding, Rose. “Business and State Relations in Post-Revolutionary Nicaragua: Elite Realignment and the New Strategy of Collaboration.” De Paul University, Chicago, IL. June 29, 2013. https://www.american.edu/clals/upload/Spalding_Business_and_State_in_Nicaragua.pdf.
Tim Merrill, ed. Nicaragua: A Country Study. Washington: GPO for the Library of Congress. 1993.
Unmaking of the Bourgeoisie.” NACLA Report on the Americas 14, no. 3 (May 1980): 8–11. doi:10.1080/10714839.1980.11723741.
Wells, Allen. “The Frente’s Bitter Defeat: The National and the Personal.” Bowdoin College. Accessed in Course Packet, Yale University.
[i] Rose J. Spalding, Capitalists and Revolution in Nicaragua: Opposition and Accommodation, 1979-1993, (Chapel Hill: University of North Carolina Press, 1994), 63.
[ii] Mark Everingham, “Neoliberalism in a New Democracy: Elite Politics and State Reform in Nicaragua,” The Journal of Developing Areas 32, no. 2 (1998): 237–64.
[iii] Originally, the Superior Council of the Private Sector, and later changed to COSEP in 1978, the non-profit, civil society organization was founded in 1972 as a coordinating body for the diverse business associations of Nicaragua.
[iv] Thomas W. Walker and Christine J. Wade, Nicaragua: Living in the Shadow of the Eagle 5th ed. (Boulder, CO: Westview Press, 2011).
[v] Gary Ruchwarger, People in Power: Forging a Grassroots Democracy in Nicaragua (South Hadley, Mass: Bergin & Garvey Publishers, 1987).
[vi] Mark Everingham, Revolution and the Multiclass Coalition in Nicaragua Pitt Latin American Series (Pittsburgh: University of Pittsburgh Press, 1996), 129.
[vii] Ibid, 130.
[viii] “Unmaking of the Bourgeoisie,” NACLA Report on the Americas 14, no. 3 (May 1980): 8–11.
[x] Everingham, Mark. Revolution and the Multiclass Coalition in Nicaragua, 130.
[xii] Ibid., 161.
[xiii] Ibid., 155.
[xiv] Ibid., 165.
[xv] Dennis L. Gilbert, Sandinistas: The Party and the Revolution (New York, NY, USA: B. Blackwell, 1988), 109.
[xvi] Ibid, 110.
[xvii] Ibid, 127.
[xviii] Everingham, Revolution and the Multiclass Coalition in Nicaragua, 168.
[xix] “Unmaking of the Bourgeoisie,” NACLA Report on the Americas.
[xxii] Gilbert, Sandinistas: The Party and the Revolution, 114.
[xxiii] Everingham, 171.
[xxiv] United States Embassy, COSEP Superior Council of Private Enterprise Refutes Ortega, 1981, http://search.proquest.com/docview/1679108931?accountid=15172.
[xxv] Everingham, 175.
[xxvii] Spalding, Capitalists and Revolution in Nicaragua: Opposition and Accommodation, 1979-1993, 70.
[xxviii] Lars Schoultz, “United States Policy toward Nicaragua,” The University of North Carolina, March 1982, 11.
[xxxi] Spalding, 111.
[xxxiii] Ibid., 119.
[xxxiv] Ibid., 115.
[xxxv] Ibid, 121.
[xxxvi] Tim Merrill, ed, Nicaragua: A Country Study, Washington: GPO for the Library of Congress, 1993.
[xxxvii] Spalding, Capitalists and Revolution in Nicaragua, 199.
[xxxviii] Wells, Allen. “The Frente’s Bitter Defeat: The National and the Personal.” Bowdoin College. Accessed in Yale University Course Packet.
[xxxix] Merrill, ed. Nicaragua: A Country Study.
[xli] Shirley Christian, “Managua Journal; Victor’s Lament: To the Losers Belong the Spoils,” The New York Times, June 8, 1991, sec. World, http://www.nytimes.com/1991/06/08/world/managua-journal-victor-s-lament-to-the-losers-belong-the-spoils.html.
[xlii] It is expected the Chamorro remained silent on the issue of “la piñata” as a tacit exchange for the Sandinista’s peaceful transfer of power, marked by an absence of violence.
[xliv] Llosa, Álvaro Vargas. “¡Viva El Capitalismo!” The New York Times, November 13, 2006, http://www.nytimes.com/2006/11/13/opinion/13llosa.html.
[xlv] Francisco Goldman, “The Autumn of the Revolutionary,” The New York Times, August 23, 1998, http://www.nytimes.com/1998/08/23/magazine/the-autumn-of-the-revolutionary.html.
[xlvii] Stephen Kinzer, “The Marxist Turned Caudillo: A Family Story,” The New York Times, November 12, 2006, http://www.nytimes.com/2006/11/12/weekinreview/12kinzer.html.
[xlviii] Rose Spalding, “Business and State Relations in Post-Revolutionary Nicaragua: Elite Realignment and the New Strategy of Collaboration,” De Paul University, 2013, https://www.american.edu/clals/upload/Spalding_Business_and_State_in_Nicaragua.pdf.
[xlix] “NICARAGUA: Ortega Will Lead Different Administration,” Oxford Analytica Daily Brief Service, Nov 22, 2006, http://search.proquest.com/docview/192445405?accountid=15172.
[l] “Nicaragua Politics: Ortega is Back,” EIU ViewsWire, Jan 10, 2007, http://search.proquest.com/docview/466588489?accountid=15172.
[li] Walter Cronkite School of Journalism and Mass Communication, “Love Him or Hate Him, Few Doubt Ortega’s Political Skill,” accessed December 15, 2016, https://cronkite.asu.edu/buffett/nicaragua/love-him-or-hate-him-few-doubt-ortegas-political-skill/.
[lii] Spalding, Capitalists and Revolution in Nicaragua, 119.
[liii] Kinzer, “The Marxist Turned Caudillo: A Family Story.”
[lv] Goldman, “The Autumn of the Revolutionary.”
[lvi] “Love Him or Hate Him, Few Doubt Ortega’s Political Skill.”
[lvii] Juan and José de Córdoba Montes, “Nicaragua’s Leftist Ortega Embraces Business–and Authoritarianism; Daniel Ortega, One of Latin America’s Best-Known Marxist Revolutionaries, is Living Out a Second Act as a Pro-Business, Increasingly Authoritarian Leader,” Wall Street Journal (Online), Nov 04, 2016, http://search.proquest.com/docview/1835944627?accountid=15172.
[lviii] Spalding, “Business and State Relations in Post-Revolutionary Nicaragua.”
[lix] Christine Wade, “Revolutionary Drift: Power and Pragmatism in Ortega’s Nicaragua,” World Politics Review, August 13, 2015, http://www.worldpoliticsreview.com/articles/16456/revolutionary-drift-power-and-pragmatism-in-ortega-s-nicaragua.
[lx] Spalding, “Business and State Relations in Post-Revolutionary Nicaragua.”
[lxi] Wade, “Revolutionary Drift: Power and Pragmatism in Ortega’s Nicaragua.”
[lxii] “El COSEP También Es Un Actor Político,” Confidencial, September 12, 2016, http://confidencial.com.ni/el-cosep-tambien-es-un-actor-politico/.
[lxiii] Maureen Taft-Morales, “Nicaragua: The Election of Daniel Ortega and Issues in U.S. Relations,” Congressional Research Service, April 19, 2007. http://congressional.proquest.com/congressional/result/congressional/pqpdocumentview:pdfevent?pgId=25ccfe2c-3aae-4e08-9808-f7d8efe68309&pdf=/app-bin/gis-congresearch/8/5/5/6/crs-2007-fdt-0532_from_1_to_14.pdf.
[lxiv] “Nicaragua Politics: Ortega’s Opponents Pray for Intervention,” EIU ViewsWire, Jul 30, 2015, http://search.proquest.com/docview/1700218037?accountid=15172.
[lxvi] “Nicaragua Politics: Private Sector Calls for Dialogue,” Economist Intelligence Unit ViewsWire, Apr 13, 2009, http://search.proquest.com/docview/466455879?accountid=15172.
[lxvii] “Nicaragua Politics: Ortega’s Opponents Pray for Intervention.”
[lxix] Nicaraguan Investment Conditionality Act (NICA) of 2016, H.R.5708, 114th Cong. (2016).
[lxx] “Freedom House Welcomes Senate Introduction of NICA Act,” Freedom House, September 8, 2016, https://freedomhouse.org/article/freedom-house-welcomes-senate-introduction-nica-act.
[lxxi] Nicaraguan Investment Conditionality Act (NICA) of 2016, H.R.5708, 114th Cong. (2016).
[lxxii] Carlos F Chamorro, “In Nicaragua, a Blatantly Rigged Election,” The New York Times, November 4, 2016, http://www.nytimes.com/2016/11/05/opinion/in-nicaragua-a-blatantly-rigged-election.html.