In a last-ditch effort to plead Nicaragua’s case in the court of U.S. public opinion and prevent politics from sabotaging the country’s recent economic gains, a mixed group of representatives from the government and private sector has traveled to Washington, D.C. to promote the country as a hot investment opportunity and a good place to do business.
On Monday morning, the Nica travel team will host a forum titled: “The Nicaraguan Economy: Opportunities for Growth.” The roundtable discussion, which the Nicaraguan panel hopes will be attended by U.S. politicos and business leaders in Washington, will mark the first time in five years that Nicaragua’s private sector, opposition politicians, academics and government representatives have all sat down together in the same room to talk about Nicaragua from the perspective of one nation.
It’s not exactly the national dialogue that the opposition and civil society groups have been demanding for years, but it is an interesting attempt at achieving an eleventh-hour national unity on the eve of what could be troubling inflection point in U.S.-Nicaragua relations.
“Nicaragua is difficult to explain in the U.S.,” says Nicaraguan businessman and forum member César Zamora, vice president of the Association of American Chambers of Commerce in Latin America (AACCLA), a hemispheric association of AMCHAMS. “Despite our political differences at home, outside of the country we have to demonstrate that the nation comes first. Nicaragua is first and it’s time to close ranks for sake of the poor in this country.”
Nicaragua’s instinct to circle the wagons comes in response to increasingly alarming concerns that the U.S. government is beating the war drums in preparation to cancel its property waiver and fiscal-transparency waiver for Nicaragua, thereby freezing most bilateral aid and jeopardizing the future of international development loans for the country. The possible waivers-whack, which would happen before the end of July, has been likened to an “atomic bomb” dropped on Nicaragua’s nascent yet budding economy.
The cancelation of the property waiver would indeed be nuclear. In addition to the loss of bilateral aid, the U.S. would also pressure the Inter-American Development Bank, the World Bank and the International Monetary Fund (IMF) to cancel new loans to Nicaragua. Private sector leaders estimate the suspended property waiver would result in the loss of more than $1.4 billion in approved development funding for Nicaragua over the next five years.
The fiscal transparency waiver, however, is tied only to U.S. bilateral aid—something the U.S. has been shaving, snipping and cutting since the initial cancelation of $64 million in Millennium Challenge Corporation (MCC) funding after the cloddish municipal elections of 2008. After four years of continual reductions and redistributions of bilateral aid, at this point the cancelation of the transparency waiver wouldn’t feel like a bomb, rather like a brick thrown off the top of a building: you don’t want to be the unfortunate gadabout who happens to be standing on the spot where the brick lands, but everyone else on the sidewalk would probably survive just fine, if they manage not to trample one another in the initial panic of the moment.
Though the U.S. government has not said how much bilateral aid is tied to the transparency waiver, unofficially The Nicaragua Dispatch has learned it’s in the neighborhood of about 10% of the $30 million that U.S. gives Nicaragua each year. For the mathematically challenged, that’s only $3 million dollars, which is ALBA cushion change. The rest of U.S. aid is already directed towards civil society and other non-governmental groups, according to a diplomatic source.
That’s the good news for Nicaragua. The bad news is that a good chunk of that $3 million in direct government aid is reportedly earmarked to fund an HIV program in Nicaragua, making it hard to understand how the cancelation of the transparency waiver would be a punishment fit for the crime.
In terms of military assistance, the cancelation of the transparency waiver would result in a cut of approximately $1.8 million from two training programs: Foreign Military Financing (FMF) and International Military Education and Training (IMET). Most of the U.S.’ operational assistance related to the drug war is channeled through the Department of Defense and is not subject to the transparency waiver.
“The bulk of military aid wouldn’t be affected,” a source said.
What are the waivers?
In 1994, the U.S. Congress passed the Helms-Gonzalez Amendment to the Foreign Relations Authorization prohibiting U.S. economic assistance or support in international financial institutions to any country in which U.S. citizens have not received compensation for confiscated property. Based on the Nicaraguan government’s efforts to resolve pending property claims from the confiscations of the 1980s, the U.S. government extends Nicaragua a “property waiver” each year, allowing the country eligibility for U.S. aid and backing in financial institutions.
The fiscal transparency waiver, meanwhile, prohibits the U.S. State Department and USAID from providing any bilateral economic assistance or international security assistance to a government that fails to publicly disclose its national budget. Nicaragua receives an average of $500 million a year in Venezuelan aid that that is managed privately—outside of the budget—in murky accounts controlled by the first family and its inner circle of confederates. The IMF, the Nicaraguan opposition, and the media have been trying for five years to get the Sandinista government to open the books on its ALBA slush fund (Sandinista financial handlers have responded with the equivalent of Sharon Stone’s leg-crossing move from Basic Instinct).
The Ortega administration’s reluctance to offer full disclosure—coupled with Republican pressures on the Obama administration to turn the screws on Nicaragua—lead many to believe the transparency waiver is already a lost cause.
There’s also political pressure to nix Nicaragua’s property waiver.
“Five months after the fraudulent elections, the Obama administration continues to ignore the severe threats to democracy in Nicaragua under Daniel Ortega. It is up to the Obama Administration to justify the use of these two pending waivers by documenting how they advance U.S. interests and priorities. I do not believe these waivers will bring democracy, transparency, and rule of law back to Nicaragua,” said U.S. Rep. Ileana Ros-Lehtinen (R-FL), Chairman of the House Foreign Affairs Committee, in an April 3 statement. “The U.S. must make it clear to the Ortega regime that his actions last year in violation of the Nicaraguan Constitution are unacceptable.”
The prescient possibility that both waivers get canceled has also been heralded by those in the Obama administration.
In January, U.S. Secretary of State Hillary Rodham Clinton lamented what she called a “setback to democracy in Nicaragua.” She said the U.S. government will review its policy of assistance for Nicaragua. Then on May 11, U.S. Ambassador Phyllis Powers warned that Nicaragua’s “continuing lack of fiscal transparency, the failure by the Nicaraguan government to make adequate progress in regards to resolving new takings and invasions of American citizen property, and especially the significant irregularities in the elections process of last year and the absence of indications of improvement for this year’s elections, make the decisions on waivers for this year especially difficult.”
Both Clinton and Powers have stressed that other forms of U.S. aid to Nicaragua will remain intact, regardless of the fate of the waivers.
“We will continue to support civil society and promote human rights in Nicaragua,” Clinton said.
‘The battle is for the property waiver’
Among Nicaraguan business leaders, many suspect the fiscal transparency waiver is already a lost cause. The fate of that waiver—ironically—depends on a decision-making process that is not transparent itself, making it a hard one for Nicaragua to defend.
“The transparency wavier is based on a situation that is more about perception or interpretation—there’s no concrete issue to define how the U.S. government determines whether there is transparency or not,” José Adán Aguerrí, president of COSEP, the nation’s largest business chamber, told The Nicaragua Dispatch before departing Sunday morning for Washington. “It could argue that the IMF has played a role assuring that Venezuelan funds are managed with more transparency every year.”
On the other hand, many business leaders and politicians in Nicaragua—though no one will admit so publically—may be satisfied with sacrificing the transparency waiver to save the property waiver.
Political analyst Arturo Cruz, President Ortega’s former Ambassador to Washington and a political science professor at INCAE business school in Managua, thinks it’s unlikely that Nicaragua can continue to eat its cake and have it too. Cruz says the cancelation of MCC aid following the contested 2008 municipal elections set a precedent that the U.S. will most likely continue in the aftermath of the contested 2011 general elections.
If he’s right, the U.S. is almost certain to cancel the transparency waiver. The property waiver, however, might be the U.S.’ last card to play in Nicaragua—and one they’ll want to hold close to their chest until after this November’s municipal elections.
Either way, Nicaragua thinks it has a solid opportunity to hold the line, starting Monday morning in Washington.
“The real battle now for the property waiver,” AACCLA’s Zamora told The Nicaragua Dispatch. “The possibility of saving the second waiver represents an opportunity that we can’t afford to miss.”