During the 1970s, Dionisio Marenco was one of many young Nicaraguans who decided to risk their lives by joining the rebel Sandinista National Liberation Front. He helped rob a payroll office to finance the group, joined in planning spectacular commando raids, and narrowly escaped death in a firefight when he and a band of comrades stormed a police station in Managua. After the Sandinistas seized power in 1979, Marenco held several ministerial posts under President Daniel Ortega, and then became chief of the Sandinista propaganda department. He remained by Ortega’s side during the convulsions that shook the Sandinista Front after it was voted out of power in 1990. While in opposition, Ortega helped engineer Marenco’s election as mayor of Managua in 2004. Like many other veteran Sandinistas, though, Marenco finally became fed up with Ortega, who was reelected president in 2006. The two are now on bad terms.

I recently visited Marenco at his modest City Hall office. On the walls hang portraits of Nicaragua’s two most famous historical figures, the brilliant modernist poet Rubén Darìo, who died in 1916, and the guerrilla hero Augusto César Sandino, who held off repeated US Marine assaults in the 1920s and 1930s. After an aide brought us coffee, we sat silently for a moment. I was thinking back to the turbulent 1980s, when the Sandinistas were fiery radicals and President Reagan was sponsoring a brutal war to overthrow them. When Marenco finally spoke, I realized that he too had been remembering those days. “It’s amazing,” he said wistfully, “to see how this country has gone from such superinflated importance to less than nothing.”

By many standards Nicaragua is worse off than ever. It is one of the poorest countries in the Americas. There is money to be made, but most goes to the elite; 10 percent of Nicaraguans earn nearly half the country’s total income, while 80 percent subsist on less than two dollars a day. According to the UN Food and Agricultural Organization, 27 percent of the population is undernourished. Hundreds of thousands of people have left to find work in Costa Rica or elsewhere. A twenty-six-year-old American who lives in a northern town lamented that he has no friends his own age, because every young man who lived there has left.

Grinding poverty has been endemic in Nicaragua for decades. Governments of the left, center, and right have failed to ease it. In the countryside it is even more palpable than in the capital. Many people are so frustrated at the lack of employment opportunities that they have given up looking for full-time jobs and simply do what they can to scrape by. Chronic energy shortages make it difficult for factories to operate, and this keeps away foreign investors. Rates of domestic violence are among the highest in Latin America. If there is one bright spot, it is that levels of violent crime outside the home are remarkably low, nearer to the rates in placid Costa Rica than to those in Guatemala, El Salvador, and Honduras, the region’s comparably poor countries. Some attribute this to a gentle streak in the national character. Others suggest that it is due to the professionalism and social consciousness of the National Police, which is among the positive legacies of the first Sandinista government that ruled during the 1980s.

The gentleness of Nicaraguans is one of their country’s most endearing qualities. Despite their troubles, many remain cheerful and feel a strong sense of solidarity with their fellow citizens. I met more than a few poor people who struggle to live on pennies yet told me their lives are not bad. Nicaraguans are accustomed to difficulty. The land around them is majestic and, as tourists are discovering in steadily increasing numbers, they seem eager to share it with visitors.

By most standards, though, Nicaragua remains caught in an acute version of the underdevelopment that has gripped much of Latin America for generations. Aid agencies ameliorate some of the worst problems, the Ortega government has embarked on a food project with the aim of “zero hunger,” and local leaders like Mayor Marenco have done what little they can to bring low-priced rice and beans to the poor. None of these efforts, however, is backed by enough resources to make a real difference.

“There are no jobs and no prospects,” Mayor Marenco told me. “People don’t have enough to eat, to dress themselves, or to go to the hospital when they need to. The sense of hopelessness is tremendous. Where’s the way out? I don’t see it.” Then, as if grasping for some bright spot, he added, “Only Chávez can help us.”

While the Sandinistas were insurgents, and while they governed Nicaragua during the 1980s, Fidel Castro was their hero and inspiration. Cuba is still sending what aid it can to Nicaragua, notably a corps of doctors who practice in remote regions and have won much admiration for their hard work and willingness to live in difficult conditions. The central object of Daniel Ortega’s admiration today, though, is President Hugo Chávez of Venezuela, who has replaced Castro as the chief demon in Washington’s Latin American cosmology. Chávez has visited Nicaragua four times since Ortega took office as president in early 2007, and Ortega rarely makes a foreign trip without stopping in Caracas. Perhaps, as the Nicaraguan psychiatrist Gioconda Cajina suggests, Ortega has a need for a father figure. Most Nicaraguans of all political perspectives, including Mayor Marenco, nonetheless agree that his relationship with Chávez has been crucial for the Nicaraguan economy.


Nicaragua’s most urgent priority these days is energy. Without energy there is no hope of securing the investment or achieving the economic growth the country must have if it is to begin pulling itself out of its misery. Yet it produces no oil and cannot afford to buy what it needs. By providing all of Nicaragua’s supply, a total of about 10 million barrels per year, on generous credit terms, Chávez has become Nicaragua’s greatest benefactor. “Without Venezuela’s oil cooperation, the Nicaraguan economy would already have collapsed,” Ortega said during a visit to Caracas in January. “We simply would not have had energy in our country, so productive activity would have stopped. That is to say, there would have been chaos.”

Even aid from Venezuela, however, has not been enough to resolve Nicaragua’s intensifying energy crisis. Prices for oil and electricity have been rising steadily. This has led to power rationing, rolling blackouts, and spreading demands for subsidies that the government says it cannot provide. Popular anger erupted into a paralyzing transport workers’ strike in May, the first strike Ortega has faced since taking office last year. Protests over energy costs weakened previous governments, and if Ortega cannot calm this one, even his supporters may come to question the wisdom of his alliance with Chávez.

Ortega shares with Chávez an old-fashioned developing-world leftism based on scorn for traditional democracy and denunciations of Western power. Chávez described President Bush as “the devil” during a speech at the United Nations in 2006; a year later, Ortega took to the same podium to assert that the United States is history’s “biggest and most impressive dictatorship.” At a summit of Spanish-speaking leaders in Chile last November, King Juan Carlos of Spain told Chávez to “shut up” and then, when Ortega tried to defend him, stood up and left the room. When regional leaders met in Managua recently to discuss world food shortages, Ortega ascribed the shortages to the “tyranny of global capitalism.”

In his dealings with Western nations, however, Ortega’s actions are more conciliatory than his rhetoric. He signed an agreement with the International Monetary Fund that imposed on Nicaragua the same conditions previous Nicaraguan presidents had accepted. In January he welcomed the director of the US Peace Corps with a speech saying that its programs are of “great value.” Then he accompanied the director of the Millennium Challenge Corporation, which offers American aid to developing countries, on a tour of the countryside. While I was in Managua, I was surprised to see a group of uniformed American military officers at the restaurant where I was having lunch; they turned out to be part of a visiting delegation led by General Norman Seip, who directs US Air Force operations in Central and South America.

In March, soldiers from Colombia, which is the Bush administration’s closest ally in South America, crossed into neighboring Ecuador to chase leftist guerrillas who had sought refuge there. The soldiers found evidence suggesting that Chávez had been aiding those guerrillas, which led to a full-fledged diplomatic crisis in which President Álvaro Uribe of Colombia demanded that Chávez be brought to trial before the International Criminal Court. Ortega, eager as always to show solidarity with Chávez, immediately announced that his government was breaking relations with Colombia. Just a day later, before the Colombian ambassador had had time to leave Managua, he changed his mind and reestablished relations. The incident suggested both Ortega’s reflexive anti-imperialism and his ability to make tactical retreats when he deems it wise.

In January the United States opened the largest embassy ever built in Nicaragua. Located on top of a commanding hill, it will reportedly have working space for six hundred people. Around the same time, the State Department informed Nicaragua that President Bush’s choice to become the new US ambassador was Robert Callahan, a protégé of Deputy Secretary of State John Negroponte. Callahan was Negroponte’s spokesman not only while he was ambassador to Iraq and director of national intelligence, but also while Negroponte, as ambassador to Honduras in the 1980s, was helping to direct the contra war that aimed to defeat Ortega and his Sandinista comrades.


This nomination seemed an obvious provocation, and Ortega would have had good reason to reject it. Instead he accepted it almost immediately. He has even named Arturo Cruz Sequeira, who supported the contras in the 1980s and whose father was selected by the CIA to run against Ortega for president of Nicaragua in 1984, as ambassador to the United States. So although he leaves no doubt about his anti-imperialist convictions, he also seems careful not to burn his bridges to Washington. Nicaragua, however, is not getting from the United States anything like the help it receives from Venezuela.

President Ortega was elected with just 38 percent of the vote, with most of it coming from poor people who see him as more sympathetic to their plight than other Nicaraguan politicians. He remains unpopular. Recent opinion surveys conducted by a Mexico-based firm in twenty Western Hemisphere countries found him to have lower approval ratings than any other president except Nicanor Duarte of Paraguay. He campaigned on a platform of reconciliation, but since taking office in January 2007 he has been coldly dismissive in his relations with Nicaragua’s business leaders and investors. He governs in isolation and refuses requests for interviews. Yet those who voted for him in the hope that he would attract lavish aid from Venezuela have not been disappointed. That aid sustains not only Nicaragua, but Ortega’s hold on power.

Traveling through the Nicaraguan countryside, I found some poor people still hoping for better times. Several told me that the three pro-Western presidents Nicaragua had after 1990—Violeta Chamorro, Arnoldo Alemán, and Enrique Bolaños—seemed to govern only for the rich or for themselves, and that Ortega cares about the poor even though he has not been able to do much for them. “Life is still hard, but that isn’t his fault,” said a peasant farmer in the northern province of Matagalpa. The director of the public library in the south-central town of Nindirì, José Luis Sánchez, agreed. “Over the last fifteen years, we had three governments that weren’t able to improve people’s lives or resolve any of our great national problems, so people looked somewhere else,” he told me.

I see some improvements in health and education, but the economy is our big problem. We are not our own masters. We’re at the mercy of foreign corporations and governments. People are eager for something better. We’ve waited a year for this government to give us hope. We’re still waiting.

For the last hundred years Nicaragua, perhaps more than any other country, has been subject to the cycle of foreign intervention, repression, and rebellion. In 1909 US Secretary of State Philander Knox engineered the overthrow of President José Santos Zelaya, the most formidable leader Nicaragua ever had, mainly because Zelaya was trying to exert control over American corporations like the Philadelphia-based La Luz and Los Angeles Mining Company, which Knox had represented during his years as a corporate lawyer. Three years later, the weak new regime—headed by the mining company’s former chief accountant—had to call on US Marines to put down a nationalist revolt. The Marines stayed in Nicaragua for more than twenty years, notably failing to suppress the guerrilla movement mounted by Augusto César Sandino in the 1920s and 1930s. Sandino was assassinated in 1934, and for the next four decades the United States supported the Somoza family dynasty, founded by General Anastasio Somoza Garcìa, who had ordered the assassination. The dynasty’s repressive rule provoked another uprising that began in the 1960s and finally swept today’s Sandinista National Liberation Movement to power.

Wherever I traveled in Nicaragua, I found references to the country’s violent history. On a plain thirty miles from Managua, I found a small museum commemorating a battle fought there in 1856 between Nicaraguans and invaders loyal to the mad American adventurer William Walker. At a hotel where I stayed in the north, I found a brochure urging tourists to travel the “Sandino Route”: it includes a stop in Ocotal, where on July 16, 1927, American planes attacked Sandino’s guerrillas in the first use of close air support in a military engagement; and San Rafael del Norte, where Sandino gave his only interview to an American journalist. He told Carleton Beals of The Nation that “there may be bandits in Nicaragua, but they are not necessarily Nicaraguans.” In Masaya, where more than 350 Sandinista guerrillas were killed while fighting the National Guard in 1978 and 1979, a ground-floor room at City Hall houses a poignant display of photos, weapons, and other memorabilia from that uprising. It includes a farewell letter from one guerrilla to his parents, saying he had decided to fight against “the brutal force that is imposed upon us every day.”

History suggests that when Nicaraguans assert themselves, “the brutal force,” whether represented by Philander Knox or Ronald Reagan, falls upon them. When they languish quietly in misery, as they are doing now, few foreigners seem to care. A prosperous and stable Nicaragua would be a powerful asset to the United States, especially as corruption, violence, and drug trafficking increasingly undermine other Central American countries; but with the US so intently focused on Iraq and the Middle East, it devotes little attention or resources to confronting nonviolent challenges closer to home. Nor do Nicaraguans themselves seem able to unite in ways that would allow them to change their destiny.

One morning I drove to the outskirts of Managua to visit Emilio Álvarez Montalván, a retired ophthalmologist, former foreign minister, and political patriarch who is sometimes described as the wisest man in Nicaragua. He is now, by his own account, “eighty-eight and a half” years old, and his mind is as sharp as ever. I asked him what he sees when he surveys his country today. “We have not been able to take advantage of sixteen years of peace,” he replied.

The Sandinistas lost the election in 1990, but they made life impossible for Violeta [Chamorro], so her six years were very precarious. Alemán was very political and charismatic, but totally irresponsible with money. He and his friends turned the treasury into their own private fund. Bolaños was a good administrator, very capable, but he had no political party and no bloc in Congress, so he couldn’t do anything on a large scale. And during all those years, the Sandinista Front remained a strong political force here because it’s so well organized….

There is no civil war in Nicaragua, and elections are held every five years. Other than that, we haven’t accomplished anything important. Nicaragua’s problem is structural. We are a country full of cliques, clans, and social groups. There is no sense of nationhood or long-term purpose. People look for what’s good for them, not what’s good for the country. The Spanish were able to take over this country because the Indians were divided, and that pattern still exists today. We have still not discovered that there is a country called Nicaragua, or that unity is the only thing that can save us.

Everyone I met in Nicaragua agreed that only investment and job creation can improve people’s standard of living. Many investors, however, are put off by the lack of political stability and legal protection for private enterprise, and frightened by President Ortega’s anticapitalist rhetoric. Others worry that they would not have reliable access to the energy needed to maintain businesses.

Some Nicaraguans see reason to hope for better times ahead. Engineers and other experts believe that Nicaragua could produce energy from wind and geothermal sources. Tourism also has large potential: Nicaragua is among the safest and cheapest places in Central America, and a booming tourist enclave has already emerged around the beach town of San Juan del Sur. Some entrepreneurs also dream of creating retirement communities to attract middle-class retirees from the United States. With global food prices steadily rising, moreover, Nicaragua could make money from beef and dairy exports. If, as now discussed, an oil refinery were to be built on the Pacific coast, with aid from Venezuela, it could produce considerable income. Even more ambitious is the “mega-project” of which Nicaraguans have dreamed for more than a century, a new transoceanic canal, which a handful of visionaries including Mayor Marenco see as the country’s only chance to make a decisive leap toward prosperity.

In 1992, the Nicaraguan government created a free-trade zone near Managua’s airport. More than 50,000 Nicaraguans now work there sewing clothing for export. Mayor Marenco told me he is grateful to the Taiwanese businessmen who run the workshops there, because “without those jobs we would have an explosion here.” But he also said that although the Taiwanese provide desperately needed employment, “they don’t leave anything behind, no education or chain of production—we are kept at the most primitive level.”

A dramatically different kind of foreign investment is taking place just across the border in Costa Rica, where in 1997 the American computer manufacturer Intel built a $300 million assembly and test plant. Although Intel employs less than one tenth as many people as the Taiwanese employ in Nicaragua, analysts from the World Bank believe the plant has had a “profound impact” on the whole country. In a recent report, the bank attributed this transformation in part to the willingness of the government to carry out economic reforms:

Costa Rica worked resourcefully and with a novel sense of urgency to enhance the country’s technical education, incentives law, regulation, and infrastructure. Over time the effects could be seen in an improved investment climate…. The Intel investment also reached far into the local community, affecting education and the country’s knowledge base, workplace standards and business culture.

Costa Rica places great importance on education, and as a result, Intel can count on a large pool of engineers, programmers, and other trained professionals, many of them English-speaking. Nicaragua, by contrast, invests very little in education. School-teachers are grossly underpaid, and many have barely more skills than the children they are supposed to teach. “Our educational system needs to be radically transformed,” the Nicaraguan economist Israel Benavides Cerros recently wrote,

or else we will be condemning our children and young people to mediocrity, with all the consequences that implies in a market system that functions according to the law of the jungle.

Few would disagree, but the Ortega government has proven unable to respond to the challenge of providing decent education in a country where some 44 percent of the population is under the age of eighteen.

President Ortega’s government has decreed that parents may no longer be asked to contribute to their local public schools. That benefits some poor people, but since the government has not added any funds to compensate for what parents used to pay, the total amount available for education is now less than before. Since taking office, Ortega has been preoccupied with political questions rather than public policy. He has sought to eliminate the ban on presidential reelection and, failing that, has suggested the adoption of a parliamentary system that might allow him to remain in power after his term ends in 2011. His government has ignored the deeper social and economic problems that afflict Nicaragua. Unless they are addressed, they will prevent the country from climbing out of its current predicament.

One striking aspect of Ortega’s new administration is the emergence of his wife, Rosario Murillo, as the country’s second most powerful person. She accompanies her husband everywhere, often speaks on his behalf, and is evidently one of his closest advisers. Among her various titles are minister of the presidency, coordinator of the Communication and Citizenship Council, and executive secretary of the Economic and Social Planning Council. She is a moving force behind the network of pro-Sandinista neighborhood groups that the government is creating as a partisan power base; it is supposed to provide low-cost food, fuel, and other benefits to poor people in the name of the Sandinista Front, as distinguished from the government bureaucracy. But it has not become as potent as Ortega would like because there is little surplus available to distribute. Nothing like this conjugal co-government has ever been seen in Nicaragua. Only in Argentina has power been so fully and publicly shared by husband and wife, first by Juan and Eva Perón and recently by Cristina Fernández and Néstor Kirchner.

Ms. Murillo is not popular, and critics of the government claim she is responsible for Ortega’s refusal to address fundamental issues. “Daniel Ortega was born under a dictatorship and fought against it, but today his ambition is to become the dictator he helped overthrow, by establishing a dynasty for the benefit of his family and friends,” Henry Ruiz, one of the nine comandantes who ran the country after the Sandinistas seized power in 1979, asserted in a recent speech. “He mouths phrases in favor of the poor in order to confuse them, when in reality he is bowing before the International Monetary Fund.”

During the 1980s, the nine comandantes, led by Ortega, ruled Nicaragua as a revolutionary “directorate.” Now Ortega rules with the active support of only one of his eight former comrades, Bayardo Arce. Even Ortega’s own brother, Humberto, who was Nicaragua’s defense minister during the 1980s, has broken with him. Since neither the President nor his wife grants interviews, I was eager to talk to Arce, now a prosperous businessman who holds the title of adviser to the president on economic and financial matters. Some political analysts told me he is one of the few people not related to Ortega who still has his ear.

I met Arce in an office dominated by a huge trophy that had just been presented to the country’s most popular baseball team, Boer, which had won the national championship the night before; he heads its governing board. When I asked him about Rosario Murillo’s position in the government, he compared it to that of Vice President Sergio Ramìrez in the 1980s. “Anyone who has watched this country since 1979 knows that Daniel Ortega was never an administrator,” Arce told me.

He is a man of policy and strategy. That’s why when we were in power, Sergio Ramìrez ran the country. Now this role is being filled at least in part by Rosario.

Since he left the Sandinista movement in the mid-1990s, Sergio Ramìrez has been officially retired from politics and devotes his time to writing novels. Because he is so widely admired by the Latin American left, his break with Ortega helped convince many in the hemisphere that the revolutionary idealism that once supported the Sandinista Front is dead. At dinner one night, I asked him why Ortega has not sought to reach out to the Nicaraguan businessmen and foreign investors who everyone agrees offer the only hope for the country’s revival. “He feels part of the club with Chávez, Evo Morales [of Bolivia], and the other Latin American leftists,” Ramìrez replied. “He can’t be negotiating with the center while his leftist allies are denouncing imperialism.”

With us at dinner was Carlos Fernando Chamorro, Nicaragua’s leading journalist and son of the newspaper publisher whose assassination in 1978 helped turn the political tide against the Somoza dictatorship. “From the day Daniel was elected on November 10 [2006] until the inauguration on January 10 [2007], he had this country in his hand,” he said.

There was a lot of talk about national unity, and even hints that some of the ministers from the last government would be held over. But for whatever reason, Daniel didn’t go that way. He’s off on another project that doesn’t seem to have any long-term goal other than keeping himself and his family in power.

When I asked Bayardo Arce about Ortega’s economic policy, he conceded that the current government lacks expertise:

When Sergio Ramìrez and his group left the Sandinista Front, most of the party’s intellectuals went with them. That meant not just priests and writers, but also economists. We were left without economists…. So I began teaching myself about economics. We have new people, especially new people who don’t know much history. And as for me, I have to laugh when people call me an economist. I’m a journalist who learned something about economics.

But he insisted that pursuing Ortega’s pragmatic alliance with Chávez is more important than the pursuit of far-reaching economic reforms:

Blackouts are a much bigger problem than rhetoric. Even if Daniel were to speak tenderly to investors, they’re not going to come here if there are blackouts every day. And that’s one reason why the cooperation we’re getting from Venezuela is so important.

The timing of Ortega’s return to power is unfortunate. He governs an impoverished country with few resources or prospects. In one sense, though, he is reemerging at a propitious moment. With the United States consumed by troubles in the Middle East, it is unable or unwilling to intervene in Latin America as it has for much of the last century. This has allowed independent-minded leftists to come to power in half a dozen countries. Ortega has taken advantage of this new environment to score an extraordinary diplomatic coup. He has arranged for his close friend and ally Miguel D’Escoto Brockmann, a Maryknoll priest who was his foreign minister during the 1980s, to be elected president of the United Nations General Assembly for a one-year term that is to begin in September.

No foreign minister in the modern history of Central America has been as outspokenly critical of the United States as D’Escoto was. He bitterly condemned what he called “the systematic policy of murder and terror that Mr. Reagan’s government has carried out against Nicaragua.” Under other circumstances, former contra supporters in the Bush administration, who range from Vice President Cheney to Elliott Abrams of the National Security Council, might have sought to block his ascent. But with Latin America now setting an increasingly independent course, and with officials like Cheney and Abrams preoccupied with challenges elsewhere, Ortega saw his chance and organized a deft diplomatic campaign that brought him a high-profile victory. So while the domestic situation he faces is bleak, he is taking advantage of Latin America’s leftward drift to reclaim his place on the world stage.

The second-place finisher in the 2006 presidential election, a pro-American banker named Eduardo Montealegre, is planning to run for mayor of Managua in the election scheduled for November. Since Mayor Marenco is unable by law to seek reelection, Montealegre would be a strong favorite, and would presumably use the mayor’s post as a springboard to run again for the presidency in 2011. While I was in Nicaragua, though, I heard several people predict that Ortega will find some ruse to keep him off the ballot. Ortega grew up at a time when law was used as a tool to defend the powerful; now that he is in power, he has no interest in the impartial rule of law. Some Nicaraguans believe he will do whatever necessary to prevent an opposition figure from replacing him in 2011.

During the decade between 1996 and 2006, real wages in Nicaragua grew by 40 percent. That is a small increase over a ten-year period, especially considering the low base from which Nicaragua started, but it was at least progress. During the first year of Ortega’s presidency, according to figures from the Central Bank, real wages fell by 10 percent.

“By almost any economic standard, we’re worse off now than we were thirty years ago,” I was told by Edmundo Jarquìn, an economist who was part of the original Sandinista government but turned against it and was the fourth-place finisher in the 2006 presidential election. “The big question is when or whether the social and economic disenchantment with Ortega will become political disenchantment.”

No one I met in Nicaragua dared to suggest that the country has any prospect of becoming appreciably happier or more prosperous in the short or medium term. Its challenges are enormous, and only partly attributable to poor political leadership. With a population of less than six million and plenty of land available for everyone, Nicaragua should be able to offer its people some prospect of a better life. What outside force, if any, might help fix it? President Chávez would evidently like to, but he is juggling a host of projects and has dwindling supplies of free cash. The United States could make assistance to Nicaragua a priority, and quite possibly turn it into a success story, but is too bogged down in the Middle East to pay much attention. Once an urgent focus of world interest, this poor country is now a forgotten backwater. Few outsiders have much sense of its unhappy past. Even fewer consider it important enough to help.

May 14, 2008

This Issue

June 12, 2008