Nicaragua: In Brief

Summary

This report discusses Nicaragua’s current politics, economic development, and relations with the United States. The report also provides context for Nicaragua’s controversial upcoming elections.

After its civil war ended, Nicaragua began to establish a democratic government in the early 1990s. Its institutions remained weak, however, and they have become increasingly politicized since the late 1990s. Current President Daniel Ortega was a Sandinista (Frente Sandinista de Liberacion Nacional, FSLN) leader when the Sandinistas overthrew the dictatorship of Anastasio Somoza in 1979. Ortega was elected president in 1984. An electorate weary of war between the government and U.S.-backed contras denied him reelection in 1990. After three failed attempts, he won reelection in 2006, and again in 2011. He is expected to win a third term in November 2016 presidential elections. As in local, municipal, and national elections in recent years, the legitimacy of this election process is in question, especially after Ortega declared that no international election observers would be allowed and an opposition coalition was effectively barred from running in the 2016 elections.

As a leader of the opposition in the legislature from 1990 to 2006, and as president since then, Ortega slowly consolidated Sandinista—and personal—control over Nicaraguan institutions. As Ortega has gained power, he reputedly has become one of the country’s wealthiest men. His family’s wealth and influence have grown as well, inviting comparisons to the Somoza family dictatorship. As president, Ortega has also implemented social welfare programs that have benefited Nicaragua’s poor—reducing poverty, raising incomes, and providing subsidies and services—and thereby buoyed his popularity.

The United States and other countries have responded in critical but measured terms to Ortega becoming more authoritarian. For many in the international community, Ortega’s cooperation on issues of importance to them, such as counternarcotics efforts and free trade, and the relative stability in Nicaragua seem to outweigh Ortega’s perceived provocations and authoritarian proclivities. Similarly, in the minds of many Nicaraguans, Ortega’s authoritarian tendencies appear to be outweighed by populist measures that have improved their standard of living.

Although President Ortega’s stated goal has been to implement socialism in Nicaragua, which he defines as a mixed economy, he has maintained many elements of a market-based economy. Nicaragua has maintained growth levels above the average for Latin America and the Caribbean in recent years. Over the past decade, poverty has declined significantly. Nevertheless, Nicaragua remains the poorest country in Central America and the second-poorest country in the Western Hemisphere, ahead of Haiti. The Ortega administration is taking steps to prepare for a probable sharp contraction in funds from Venezuela, a major source of government revenues in recent years. Controversy and conflict have been growing over Ortega’s decision to grant a 100-year concession for an inter-oceanic canal through Nicaragua to a Chinese company. The government maintains the project would stimulate the economy and provide jobs. Critics argue it would displace rural communities and harm the environment.

The United States and Nicaragua cooperate on issues such as free trade and counternarcotics. U.S. aid has sometimes been reduced over concern for the narrowing democratic space in Nicaragua. Currently, Nicaragua is part of the U.S. Strategy for Engagement in Central America. Tensions rose recently when Nicaragua expelled three U.S. officials. Other U.S. concerns include violations of human rights, including restriction on citizens’ rights to vote, government harassment of civil society groups, arbitrary arrests and killings by security forces and corruption. The Administration and some Members of Congress have expressed concern about Nicaragua’s relationship with Russia, especially recent military purchases.