Chávez plays oil card in Nicaragua

Since that time, Ortega's party has managed to consolidate enormous power in the legislative, judicial, and electoral branches of government, despite losing three presidential bids in the process. He's currently polling third among Nicaragua's presidential candidates, but is only six points behind the pro-business frontrunner and US favorite, Eduardo Montealegre.

Last month, the incumbent PLC accused Chávez of planning to finance Ortega's campaign to the tune of $50 million - an allegation that was denied by both Ortega and Venezuela's ambassador to Nicaragua.

President Enrique Bolaños, in statements to the local press, went as far as to warn Chávez that giving oil on credit to Sandinista mayors could constitute an electoral offense in Nicaragua.

Ortega maintains that the oil agreement is about helping the people of Nicaragua, rather than helping himself get elected. Yet the political implications of the pact with Chávez are obvious, and Ortega isn't afraid of playing that card.

"Where is the United States when Bolaños needs help resolving problems with oil prices?" Ortega demanded last September, following Chávez's initial promise to broker a deal with the Sandinistas. "The yanquis had hundreds of millions of dollars to invest in the war in Nicaragua; hundreds of million of dollars to kill Nicaraguans. But where is the US when Nicaragua has to start rationing energy?

"Chávez has an alternative, a proposal that's being implemented," Ortega added.

The US government, for its part, maintains that its commitment to Nicaragua's economic and social development is "longstanding, regardless of political affiliation," says US Embassy spokeswoman in Managua, Preeti Shah. "Since 1990 the United States has provided the people of Nicaragua with more than $1 billion with programs designed to improve health, education, trade and development, as well as democracy and the rule of law."

The Chavez-Ortega pact has led to the creation of a Nicaraguan-Venezuelan oil firm, Alba Petróleos de Nicaragua, which will be managed by Nicaragua's Sandinista-controlled municipal government association, known as AMUNIC.

Patricia Delgado, executive director of AMUNIC, says that the agreement is still "in the beginning stages of analysis," and that the logistics are still being worked out.

She estimates that the first shipment of oil could be made in October, but admits there are a lot of external factors at play. But once the company is up and running, she says, it could generate some serious income for the local governments.

"This will strengthen the autonomy of municipal governments and facilitate local development," Ms. Delgado says. "The municipalities can't wait for the central government, we have to keep moving forward and advancing with whomever will take our hand."

Sandinista congressman and hardliner Bayardo Arce agrees that the initiative will strengthen his party's leadership. "We are trying to offer answers on the municipal level, but when we return to govern the country, we will start to offer more integral answers," he said, after returning from Venezuela to help negotiate the oil deal.

Political analyst Carlos Fernando Chamorro says the Sandinistas should wait until the oil is distributed before they take too much credit for resolving the countries problems. "There is still a lot that is not clear about this agreement, and as long as the oil isn't coming, it remains just a campaign promise."

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