Nicaragua's Ortega defiant after US, Europe yank aid

Amid growing concern that Nicaraguan President Daniel Ortega is leading his country off the path to democratic reform, foreign donors have started to cut off massive amounts of economic aid. Combined with the worsening global financial crisis, the Western Hemisphere's second-poorest country finds itself in increasingly dire financial straits.

"If 2009 will be a tough year worldwide, it looms as catastrophic for Nicaragua," says opposition lawmaker Francisco Aguirre, president of the National Assembly's Economic and Budget Commission. "Our ills are compounded by our severe governance problems. All of this political uncertainty is raising our country's risk and also turning off the donor community that sees democracy, transparency, and rule of law as important to development."

US Ambassador John Danilovich, the head of the US Millennium Challenge Corporation (MCC) and one of Ortega's few friends in the Bush administration, announced last week that the US was suspending the remaining $64 million of $175 million awarded in grants for sustainable development projects in Nicaragua. But Mr. Ortega, a former socialist revolutionary and cold-war nemesis of the United States, shrugged off the move, saying that Nicaragua would soon get some help from Russia and Venezuela, both of which are eager to expand their influence in the region.

US concern over alleged electoral fraud

Mr. Danilovich expressed "deep concern and disappointment" over allegations of electoral fraud in the Nov. 9 municipal elections in Nicaragua. The political opposition has refused to accept the results of the poll, and leaders of the private sector and the Catholic Church have called for an internationally audited nationwide recount.

"We had hoped, for the sake of the Nicaraguan people, that the government would continue the country's trend toward peaceful, democratic, and credible elections," Danilovich said in a statement issued to the press. "I am afraid recent evidence shows that this is not the case."

César Zamora, president of the Nicaraguan-American Chamber of Commerce (AMCHAM), calls the cutoff in MCC aid a "nuclear bomb on the economy." He warns that a permanent freeze in US aid could serve to "radicalize the government" of Ortega. AMCHAM is now lobbying the US to reverse its decision when the MCC's board of directors meets to discuss the situation Dec. 11.

"The government is paying dearly for electoral fraud," says economist and left-wing lawmaker Enrique Sáenz, of the opposition Sandinista Renovation Movement (MRS). "For the thousands of votes that were stolen, Nicaragua is paying with millions of dollars in lost cooperation."

Support from Venezuela

This isn't the first time Ortega has found himself at odds with the US. He led the Sandinista government's battle against US-backed contra forces in the 1980s.

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