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US may punish Nicaragua's Daniel Ortega with $64 million aid cut

Secretary of State Hillary Clinton meets Wednesday with the Millenium Challenge Corporation to decide whether to cancel US aid in response to the leftist leader's alleged attempts to steal elections.

By Tim RogersCorrespondent of The Christian Science Monitor / June 9, 2009

“Maybe [President Daniel Ortega] doesn’t need the help, but the poor do and we’re thankful for it,” says Nicaraguan cassava farmer Luis Salazar, who credits assistance from the Millennium Challenge Corporation with helping him turn his farm around and save it from the brink of ruin in 2007.

Tim Rogers

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León, Nicaragua

US concerns over last year's questionable municipal elections in Nicaragua could be strong enough to cause leftist President Daniel Ortega, a cold-war nemesis of the US, to lose $64 million in development aid.

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In a Wednesday meeting with the board of directors of the Millennium Challenge Corporation (MCC), an international development initiative started during the Bush administration, Secretary of State Hillary Clinton will discuss whether to cancel the remaining portion of a $175 million compact awarded in 2006.

In December, the US government froze new aid after expressing serious concern about "the government of Nicaragua's manipulation of municipal elections and a broader pattern of actions inconsistent with the MCC eligibility criteria."

Those concerns haven't diminished with time, as Mr. Ortega refuses to address the electoral issue and thumbs his nose at those who question his government. The situation has MCC officials feeling exasperated.

"I mean, these guys stole the elections," says Rodney Bent, chief executive officer of the MCC.

Mr. Bent says the MCC was initially willing to "suspend judgment" of Ortega because the US "really wanted to prove that we could make it work." The MCC, which considered its Nicaraguan project exemplary, urged Ortega to find a "Nicaraguan solution" to the electoral problem so they could continue building roads, providing assistance to small farmers, and push forward on a project to title property.

'Freer' without the aid?

Instead, Ortega wrote off the MCC, saying the suspended aid made Nicaragua feel "freer" and that any aid canceled by the US will be replaced by Venezuelan President Hugo Chávez, whose list of promises to Nicaragua grows longer all the time.

Bent and the MCC team, including a Nicaraguan staff that's working with more than 5,000 small producers in the northern Pacific agricultural region, can only shake their heads at Ortega's willingness to blow off aid to the second poorest country in the hemisphere. The situation, according to one MCC insider in Nicaragua who refused to be named, is like a "family gathering getting ruined when the drunken uncle shows up."

Nicaragua is not the only country to have trouble complying with the MCC's basic democratic eligibility criteria. There are 14 "threshold" countries that don't quite qualify for MCC programs, but are receiving smaller assistance packages aimed at working toward specific areas of compliance so they can eventually apply for a full MCC grant.

But with the exception of Madagascar, which recently had its MCC program canceled following a coup, Nicaragua is one of the few countries moving away from eligibility criteria, rather than working toward it.

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