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Chávez oil fails to stem Nicaragua crisis

Pump prices have soared to more than $5.20 a gallon – the highest in Central America – despite the Venezuelan leader's promise to solve the country's 'oil problem.'

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Ortega managed to bring an end to the transportation strike two weeks ago by offering taxi and bus drivers a $1.30 subsidy on diesel, but prices have since gone up twice and the transportation sector is again threatening a work stoppage as their subsidy whittles away.

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As the situation worsens, a growing chorus of critics are questioning the oil promises made to Nicaragua under the label of the Bolivarian Alternative for the Americas, or ALBA – Chávez's leftist trade alliance among Venezuela, Bolivia, Cuba, and Nicaragua.

"ALBA is a mystery enveloped in a cloud of fog, wrapped in an enormous enigma," Mr. Aguirre says.

Though the lawmaker says that Venezuelan aid could "theoretically" be a great help to an impoverished country such as Nicaragua, the secrecy with which ALBA has been handled by Ortega has only fueled criticism and conjecture.

European donor countries – as well as the International Monetary Fund, opposition lawmakers, civil society, and the national media – have all asked for an explanation of Venezuelan aid under ALBA. But so far Ortega has remained tight-lipped, aside from admitting that Venezuelan aid to Nicaragua already totals $520 million.

The secretive oil ties to Chávez

Journalists' attempts to investigate the issue have been thwarted by the government. "Instead of answering any basic questions about Venezuelan aid, they accuse you of trying to destabilize the government and conspiring with the oligarchy," says investigative journalist Moisés Martínez of the national daily La Prensa.

Economists, too, are unable to explain ALBA, or account for the $520 million that Venezuela has supposedly given to Nicaragua – money that Ortega manages in a separate discretional fund with no third-party oversight.

Ortega's explanation of ALBA aid – including $35.3 million for unidentified "social programs" and $60.6 million for "other programs" – has done little to satisfy the opposition's call for transparency and accountability.

"Nothing about this is clear," says economist Adolfo Acevedo.

What is clear is that Ortega's handling of the government is translating into unfavorable polling numbers. In a poll released in May by M&R Consultants, 64 percent of those surveyed describe Ortega as an authoritarian ruler who wants to implement a dictatorship, and 88 percent said they don't think the Nicaraguan economy has improved under his watch.

Ortega argues that things would be worse without him.

"If we weren't in government, I don't know where Nicaragua would be right now," Ortega said in a recent speech in which he credited Venezuelan solidarity from saving the country from complete disaster. "Thank God we came to power. On the contrary, the country would be in a situation of total chaos, without energy or petroleum."

If oil reaches $150 a barrel, economists warn that widespread instability would be right around the corner.