Consolidating a Dictatorship in Central America

But no matter: In October of that year, the Sandinista members of the Supreme Court cooked up a scheme to give Ortega’s reelection bid a constitutional imprimatur. In a maneuver worthy of Venezuelan autocrat Hugo Chávez, the Sandinista-controlled court held a meeting of its constitutional panel at which three pro-Sandinista “replacement” justices filled the spots normally held by three opposition justices. These six magistrates then issued a (technically illegal) ruling that let Ortega run for another term in 2011.

After the 2012 municipal elections, there is no way to sugarcoat it: The second-poorest country (after Haiti) in Latin America and the Caribbean is -- once again -- home to an emerging Sandinista dictatorship.

Indeed, the widely respected organization Freedom House no longer considers Nicaragua to be a true electoral democracy, largely because of the “irregularities” surrounding the 2011 presidential election. In its 2012 Freedom in the World report, Freedom House gives Nicaragua and Venezuela the same numerical rating in the category of political rights. (Each country receives a 5 on a scale of 1 to 7, with 1 being the best rating and 7 the worst.) Between 2008 and 2012, Nicaragua’s aggregate score in the Freedom House survey fell by 13 points. Only four countries -- Bahrain, Mauritania, Madagascar, and Gambia -- suffered a larger decline.

And yet, Ortega has skillfully placated the Nicaraguan business community by maintaining reasonable economic policies, supporting the Central American Free Trade Agreement, and, perhaps most important, securing generous oil and financial subsidies from Venezuela. As journalist Mike McDonald has written: “Nicaragua’s state-owned petrol enterprise purchases discounted oil from Venezuela, sells it and delivers the profits to the privately owned joint Venezuelan–Nicaraguan oil company Albanisa.” (McDonald adds that “Ortega has allegedly used the funds to finance social programs, but critics have denounced the lack of transparency surrounding the deal and fear he could secretly be amassing billions.”) In addition, Venezuela is now receiving more than 12.5 percent of Nicaraguan exports, up from less than 1 percent in 2007. Venezuela has been purchasing these exports “at a handsome markup,” observes The Economist.

Without this Venezuelan assistance, Nicaragua’s economic situation would be much worse. After all, it is still a painfully impoverished country that does not have an especially attractive business climate. In the latest Ease of Doing Business Index put together by the World Bank, it ranks 119th, right behind Yemen and the Pacific-island nation of Kiribati. In the Heritage Foundation’s 2012 Index of Economic Freedom, Nicaragua places 101st, but it scores abysmally low for property rights, ranking behind every Latin American and Caribbean country apart from Bolivia, Cuba, Haiti, and Venezuela.

At some point, the Venezuelan subsidies will end, and Ortega will become significantly less popular. But by then it may be too late to save Nicaraguan democracy.

(You can read this article in Spanish here.)