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Nicaragua's Continuing History of Upheaval, Corruption & Dictators


JC Scull taught international business relations and strategies at universities in Panama and China.


If you have followed the news recently, chances are you read about the riots that erupted on April 2018 in several Nicaraguan cities over the newly decreed social security reforms. The changes were put in place by President Daniel Ortega, at the behest of the International Monetary Fund (IMF), as a way of limiting the generous but insolvent retirement program the Nicaraguans had enjoyed since it was originally established in 1956. The riots, however, were severe enough for Ortega to rescind the reforms five days after the riots began. Unfortunately, this violence and upheaval have been going on in Nicaragua since the colonial era.

Issues and Topics About Nicaragua

  1. Country Data
  2. Economic Data
  3. Colonial Era
  4. U.S. Occupation and the Somoza Dynasty
  5. Sandinista Government
  6. Non-Sandinista Governments
  7. Daniel Ortega and Socialism
  8. Corruption
  9. China's Desires to Build a Canal
  10. 2018 Economic Underperformance
  11. Daniel Ortega's Attack on a Free Press
Country Data of Nicaragua

Country Data of Nicaragua

Economic Data of Nicaragua

Economic Data of Nicaragua

Colonial Era

The violence and social upheaval we see today have been commonplace in Nicaragua since the arrival of Christopher Columbus in 1502. Since the first Spanish settlements in 1524, the conquistadors engaged the indigenous population in battles for territory and gold. These clashes culminated in the destruction of the aboriginal people of the area as well as their culture.

All this, while different factions of Spanish forces fought each other for dominance and possession of territory and gold mines. Called the “War of the Captains,” these battles gave way in 1527 for Pedro Arias Dávila to declare victory and become the first governor of León, the first capital of the Nicaraguan colony.

The conquistadors committed many misdeeds, from forcibly taking Nahua and Chorotega tribe women as wives and partners and creating a subclass of mestizo children, to the introduction of infectious diseases that killed a large portion of the indigenous population. In addition, large numbers of local tribespeople were captured and transported to Panama and Peru, where they were forced to perform slave labor, until this group began to die off in 1540.

Atrocities, oppression, and skirmishes with the local people—which included the newly created mestizo population and the various indigenous groups—continued until Nicaragua’s independence from Spain in 1821. Although independence from the oppressive European power took place, Nicaragua was still not altogether free, as it was absorbed by the Federal Republic of Central America. Complete independence came in 1853 when the federation was disbanded.

U.S. Occupation, the Somoza Dynasty, and Sandinismo

Upheaval in the form of factional wars between different groups of elites, often leading to civil wars continued well into the early part of 20th century. In 1909, the U.S. overthrew the government of President José Santos Zelaya over a dispute regarding the proposed Nicaraguan canal, installing Adolfo Diaz as head of government. Consequently, the U.S. occupied Nicaragua from 1912 to 1933.

During nearly the two decades of the U.S. occupation, the Somoza dynasty was established, starting in 1927 and lasting until 1979. The following are the Somoza family members who served as presidents of Nicaragua during this time:

  • Anastasio Somoza García (1937–1947), (1950–1956) (Assassinated in 1956)
  • Luis Somoza Debayle (1956–1963)
  • Anastasio Somoza Debayle (1967–1972), (1974–1979)

In 1960, just four years after the assassination of Anastasio Somoza Garcia a revolution to overthrow the government was formed under the name of the Sandinista National Liberation Front, named after Augusto Cesar Sandino, who fought against the U.S. invasion and was assassinated in 1934. Coincidentally, current president Daniel Ortega is the leader of the Sandinista Party named after this revolutionary leader.

The Somoza family was the wealthiest and most influential of any group or firm in the country. Their wealth came from a large number of monopolies and industries they acquired over their years in power. Their clout and influence were so far-reaching, it was said nothing could be done in the country without the Somoza family having a hand in it.

The country's elite’s support for the family began to wane however, immediately after the earthquake of 1972 which resulted in 90% of the Managua infrastructure to be destroyed. Instead of helping to rebuild the capital, Somoza siphoned off relief money into his various corporations. For this reason, Managua remained in ruins for close to a decade.

Fast forward to July 1979 when the revolutionary forces of the SNLF forcefully took power from Anastasio Somoza Debayle, prompting a large number of the middle class, rich, and landowners to flee Nicaragua for refuge in the U.S. as well as other countries.

Starting in 1979, a group of anti-Sandinista soldiers known as the contras, meaning “against” in Spanish, began operations in the jungles of Nicaragua. While originally not funded by the U.S., they began to receive support shortly after from the CIA as well as money from the U.S., after Ronald Reagan was inaugurated.

Although Daniel Ortega called for election in 1984 and was duly elected president of Nicaragua in a free general election, the Contras continued their fight to overthrow the government. As a known Socialist, who had travelled to Cuba to receive training in guerrilla warfare, and was involved in exporting communism to other Latin countries, his Sandinista government became the target of President Reagan’s effort to roll back Communism globally, especially in the Americas.

While Ortega put in place controversial Marxist-Leninist programs of nationalization, land reform and wealth redistribution, it was his desire to partner with Fidel Castro to export communist revolution throughout Latin America that had leaders of the region as well as the U.S. concerned.

Eventually, the brutal anti-government revolution the Contras were waging, began to put enough pressure on the Sandinista government causing it to call for elections. Daniel Ortega was defeated by Violeta Chamorro in April of 1990, who became the first woman to be democratically elected president in Latin America.

Daniel Ortega arrest record

Daniel Ortega arrest record

Daniel Ortega's First Presidency (1984–1990)

In 1967, Daniel Ortega, who was then 22 years old, dropped out of law school and joined the Sandinista cause. Shortly after, he held up a branch of Bank of America in Managua as a way of raising funds for the cause. He was arrested and spent seven year in jail.

In 1974, he was released from prison along with several other Sandinista fighters in an exchange-for-hostages deal. One of the conditions of his release was for him to leave the country. He used this opportunity to move to Cuba and receive training in guerrilla warfare from the Castro’s Communist government. After receiving ample training, he clandestinely slipped back into Nicaragua and joined the nascent insurgency against the Somoza regime, which was about to turn into full-blown civil war.

In 1984, he became the FSLN candidate during the free presidential election, winning over 60% of the vote. During his first period in office, he instituted Marxist-Leninist style controversial programs of corporate nationalization, land reform, and wealth redistribution. On the other hand he was praised for instituting literacy programs and initiating health care investments.

While the U.S. government provided his government with tens of millions of dollars in economic aid, initiated by the Carter Administration, Ortega’s relationship with Washington soured when it was discovered, the Nicaraguan government was providing arms to leftist Salvadoran rebels. This was the catalyst for the Reagan Administration to provide funding to the Contras, leading to a bloody insurrection conducted in the jungles of Nicaragua, as well as in the streets of most cities.

A peace proposal by Democratic Speaker of the House Jim Wright and Ronald Reagan created the impetus for the five Central American presidents at the time to broker a peace agreement, which called for presidential elections in 1990. Daniel Ortega lost the election to Violeta Chamorro.

During the war between the Contras and the Sandinista army, it is estimated that 30,000 people lost their lives.

During the war between the Contras and the Sandinista army, it is estimated that 30,000 people lost their lives.

Post-Sandinista Presidents

Violeta Chamorro

Violeta Chamorro became president of Nicaragua in April of 1990 and served until January of 1997. Originally the owner and publisher of the newspaper La Prensa was a supporter of the Sandinista revolution and agreed to become part of the Junta of National Reconstruction, a provisional government organized to run the country, until elections could be held. Her relationship with the junta soured when it signed cooperation agreements with the Soviet Union and began closer relationships with the Cuban regime of Fidel Castro. At this time she quit her involvement with the government and returned to her duties at the newspaper.

When Chamorro took over as president, it marked the first time in more than fifty years that a peaceful transition of power had occurred in the country. She is credited for ending the Contra war as well as stabilizing an economy mired by hyperinflation. With great negotiating and compromising skills, Chamorro was able to maintain a constitutional regime as well as peace in a country hindered by economic and social unrest.

José Arnoldo Alemán Lacayo

Arnoldo Aleman, as he was commonly known, served as president of Nicaragua from January of 1997 until January of 2002. Convicted of corruption in 2003 and sentenced to 20 years in jail, Aleman was named the ninth most corrupt leader by Transparency International. With a long and distinguished political career culminating in his candidacy and eventual victory for the presidency as the leader of the Liberal Alliance Party, Aleman was successful in reducing inflation as well as growing the nation’s GDP.

With his national initiative of "Obras, no palabras! (Actions, not words)", he was able to rebuild roads severely damaged by the earthquake of 1972 as well as the long-lasting Contra war. This initiative also led to the building of schools in the poorest areas of the country.

Aleman was succeeded by his vice president Enrique Bolaños, who upon taking office, accused Aleman of concealing massive corruption in his administration. During the trial it was shown that Aleman and his wife had misappropriated government funds, had engaged in embezzlement and money laundering. On January 16th, 2009, the Supreme Court of Nicaragua overturned the 20-year conviction of Aleman generating a great deal of controversy.

Enrique Bolaños

Enrique Bolaños served as president of Nicaragua from January of 2002 until January of 2007. His presidency followed his position of vice president under President Arnoldo Aleman. His presidency was known for his anti-corruption campaign in which various former and present government officials were investigated and prosecuted, including Arnoldo Aleman, the previous president under whom he served as vice president. He also oversaw the signing in 2006 of the Central American Free Trade Agreement (CAFTA) between the U.S., Costa Rica, Guatemala, Dominican Republic, El Salvador, and Nicaragua.

Post-Somoza Presidents

11 January 1985: Cuban leader Fidel Castro talks with Nicaraguan President Daniel Ortega in Timal, Nicaragua. Discussing joint cooperation in sugar production.

11 January 1985: Cuban leader Fidel Castro talks with Nicaraguan President Daniel Ortega in Timal, Nicaragua. Discussing joint cooperation in sugar production.

Daniel Ortega Is Elected Again (2007–2012, 2012–2017, 2017–Present)

Although Ortega vowed to continue with his political involvement after losing to Chamorro, he still lost the next two elections to Arnoldo Aleman and Enrique Bolaños.

During the18 years prior to his victory to a second term as president in 2007, the Soviet Union collapsed and the money flowing from the Kremlin into the hands of Cuba’s Communist government, as well as any other insurgent group attempting to overthrow duly elected governments in Latin America, dried up.

Revolutionary groups such as the FARC, ELN, the Shining Path and many others, either disbanded or signed peace agreements with the governments they were attempting to overthrow. Communism was largely discredited as a viable political ideology or economic system. It was during this time that Daniel Ortega began the process of reinventing himself by moderating his political Marxist-Leninism to a more palatable democratic socialist stance.

During his second term in office, he created alliances with other Latin American socialist leaders such as Cuba’s Fidel Castro, Venezuela’s Hugo Chavez and Bolivia’s Evo Morales. Under his leadership, the country also joined the Bolivarian Alliance for the Americas also known as ALBA.

Hugo Chavez along with Fidel Castro created ALBA as a way to use profits generated by Venezuela’s oil industry to consolidate a group of Latin American countries that could rival and replace the United States’ economic influence. Billions of dollars earned through the sale of Venezuelan oil flowed to a total of eleven countries, some of which were Cuba, Bolivia, Ecuador, Saint Lucia, Grenada, Saint Vincent and the Grenadines, and Nicaragua.

As it has been the trend with many socialist leaders, such as Xi Jinping of China and Vladimir Putin of Russia, in 2014 the National Assembly approved changes to the constitution allowing for unlimited presidential term limits. In essence, this means that Daniel Ortega can remain in the presidency indefinitely.

Daniel Ortega and China's Canal Proposal

Daniel Ortega also courted and reached an agreement with the Chinese government in the proposed construction of a canal that would cut across Nicaragua through the Nicaragua River, from the Pacific to the Atlantic Ocean. Conceived as a competitor to the Panama Canal and offering wider and deeper shipping lanes, the Nicaraguan canal was slated to break ground sometime in 2017. Originally proposed to be financed through the Hong Kong Nicaragua Canal Development Investment Company (HKND Group) and Chinese billionaire Wang Jing, the Canal has been put on hold due to the recent Chinese stock market crash that nearly evaporated all of Mr. Jing’s fortune.

The environmental damage this canal would have done was broadly estimated to be devastating, not only to native species but also to farmers and indigenous populations.

China's motivation for such an ambitious undertaking was obvious: financial, political and cultural hegemony in a country neighboring the U.S. For Daniel Ortega, the motivation is somewhat more dubious. Some have pointed to the possible allure of hundreds of millions of dollars in Chinese payments as bribes.

Protests Against Ortega

Thousands protesting Ortega during 2016 election..  Banner reads "Ortega Sells the Country"

Thousands protesting Ortega during 2016 election.. Banner reads "Ortega Sells the Country"

Corruption and Economic Underperformance

During the 2016 election, as he sought an unprecedented third term, he tapped his wife Rosario Murillo as his vice-presidential running mate. Seen as highly irregular by most Nicaragua observers, as well as voters, it is thought to be meant as a way to further tighten his grip on power. With every election he has won, international scrutiny points to mounting fraud allegations.

Ortega today still rails against the evils of “savage capitalism.” However, the reality is that he owns and manages multi-million dollar business ventures providing him with a personal wealth of more than $100 million. For a man of humble beginnings from a poor country like Nicaragua, this is quite a fortune.

In addition to his personal wealth, Ortega’s ruling Sandinista National Liberation Front (FSLN) controls all four branches of government: the executive, judiciary, electoral authority, and national assembly and has a majority of seats in the assembly, making him a powerful and influential president. This sort of control over the government and political process allows for kleptocratic government officials to operate with impunity.

While Nicaragua has sustained economic growth during the past two decades, 2018 was not kind to the economy. It is very possible that the economic contraction experienced in 2018 and the one that is forecasted for 2019 are caused by the political and social crisis suffered since April of 2018, when thousands went into the streets to protest the fiscal reforms implemented by the government. The ensuing protest and social upheaval responsible for hundreds of deaths, detainees, exiles and work stoppages, caused a 10% shrinkage of the economy. Similarly, 2019 is expected to result in the second recessionary year in a row.

On the other hand, it seems that endemic corruption, misappropriation of government funds and an overall failure to manage the economy by the Sandinista government is responsible for its overall reduction in economic activity. All of it causing a reduction of foreign investment, lower consumer demand, higher unemployment and an increase in poverty.

Attacks on Journalists (a Daniel Ortega Strategy)

In late September of 2019, El Nuevo Diario—Nicaragua's number two newspaper—announced it would shut down its operations after 40 years of service. Originally founded by Xavier Chamorro Cardenal, brother of Pedro Joaquín Chamorro Cardenal, husband of ex-president Violeta Chamorro, has been known for fair and unbiased reporting of the news, oftentimes in opposition to Nicaragua's strongman, Daniel Ortega.

The management claimed this decision was due to "economic, technical and logistical difficulties." The closure came as a surprise to the journalists who worked at the publication. Especially to Eliud Garmendia, who said:

"We did not know anything. All we were told was we would have a meeting first thing Friday morning. But that was it. During that meeting they confirmed to us the closure of both digital and print publications"

Other workers commented that the closure can be directly attributed to threats and pressure the government has been putting on the financial organization, Grupo Promerica, which acquired El Nuevo Diario in May of 2011. Some of the pressure stems from a government campaign to discredit Promerica and its subsidiary financial institution Banpro with accusations of money laundering.

In a separate incident, the Nicaraguan national police stopped a truck owned and operated by Ardisa, the printing company for the newspaper Editorial Nuevo Amanecer, which was carrying newspapers for delivery containing articles considered against Ortega and his government. Spokespeople for the government claimed charges against the company would be made eminently. Charges are yet to be made, however.

Besides these incidents, there have been others in which the government is attempting to stifle a free press as more people see Daniel Ortega as a tyrant bent on holding on to power and engaging in corruption.

Dozens of journalists have been dragged from their offices and arrested, including Miguel Mora and Lucía Pineda Ubau who remain in jail without formal charges being made since February of this year. In April of 2018, shortly after the onset of the protests, the offices of Radio Dario was attacked and burned to the ground by a mob.

On April 21, 2018, Angel Gahona a reporter covering the protests was shot to death at the moment his Facebook Live stream was being forecast to a live audience, which included his wife. Although he has been the only journalist in Nicaragua for far this year to lose his life, journalists continue to work under constant threats from government officials and police organizations. As a result, dozens of journalists have fled the country fearing their safety.

The attacks to certain media outlets seen as not in favor of the government are in direct benefit to the ones owned by Ortega's family members and allies, who are mere conduits of state propaganda.

Additional Resources and References

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

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