Nicaragua: After the presidential elections
President Daniel Ortega of the ruling leftist Sandinista National Liberation Front (FSLN) won a third term in office on November 6. He gained 63% of the vote compared to his nearest rival, Fabio Gadea of the Independent Liberal Party (PLI), who received just 31%. Ortega also strengthened his position further in the legislative elections also held November 6, with the FSLN securing 63 of the 92 seats in the National Assembly (legislature). Ortega will lead the country for another five year term commencing in January.
Despite allegations of widespread electoral fraud and concerns about the constitutional validity of his candidacy, Ortega was likely to have won the election in any event. It appears that the alleged fraud was largely an attempt by Ortega to safeguard the election at all costs. Steady economic growth, as well as populist rhetoric and pre-election measures – including stipends, land titles and subsidies for public-sector workers in the months running up to the vote – contributed to his victory. Ortega was also boosted by a weak and fragmented opposition, which struggled to articulate a coherent strategy to tackle poverty, voters' main concern.
Ortega is likely to use the FSLN's congressional majority to further entrench his pro-investment agenda. Despite his anti-capitalist rhetoric, he has increasingly favored a pragmatic approach, largely eschewing conflict with the powerful business elite, as well as attracting foreign investment in key sectors such as mining and energy. However, while broad macroeconomic stability is expected to be maintained in the short-to-medium term, the country is likely to remain over-dependent on Venezuelan aid – equivalent to more than $500 million – approximately 8% of GDP. The threats associated with the country’s over-reliance on Venezuela are likely to heighten over the coming months as uncertainty increases in Caracas ahead of the 2012 presidential elections as well as with the state of President Hugo Chávez’s health.
The size of the FSLN's congressional majority is likely to exacerbate existing concerns over the politicization of state institutions under Ortega. The FSLN's majority will give it virtual carte blanche to pick magistrates, as well as the governor of the Central Bank, the CSE and the country's chief human-rights official. There is already widespread concern over the politicization of the judiciary, the CSE and police under Ortega.
Furthermore, there is a realistic prospect that Ortega will use his newfound majority to amend the constitution to allow him to remain in power beyond his mandate. He previously relied on the heavily politicized judiciary to ratify his unconstitutional 2011 reelection plans, bypassing the legislature altogether. Ortega is likely to see constitutional reform as a means of increasing the legitimacy of his presidency, as well as any future reelection bids.
Corruption is widespread and deep-rooted in Nicaragua and is likely to continue to represent the major operational obstacle for foreign investors. Corruption watchdog Transparency International's 2010 Corruption Perceptions Index ranked Nicaragua 127th out of 180 countries, where first place is awarded to the country that is considered least corrupt. Only Honduras, Paraguay, Venezuela and Haiti are ranked worse in the region. Furthermore, despite having low crime rates within the Central American context, businesses will continue to face security threats, including opportunistic crime such as theft and robbery.
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