Nicaragua's leader plays both sides

NAGAROTE, Nicaragua — At a rally here last month to mark the 28th anniversary of his Sandinista revolution, President Daniel Ortega thrilled a partisan crowd and his partner on the dais, Venezuelan President Hugo Chavez, when he called President Bush a "tyrant."

That kind of talk is common for the former Marxist leader whose government fought a war against U.S.-backed contra rebels in the 1980s and who returned to power this year. And he keeps making moves that might provoke the U.S., including signing a deal recently for a port and hydroelectric plant funded by Iran.

But it's clear that times have changed. The same week Ortega appeared with Chavez, Nicaragua's vice president welcomed a U.S. Navy ship to nearby Corinto to provide free medical care to Nicaraguan citizens. Ortega also has vowed to honor the Central America Free Trade Agreement, a top U.S. priority.

In his first seven months in power, Ortega has expanded free trade with his country's former enemy, the U.S., while landing high-profile projects funded by Venezuela and Iran. His Sandinista party holds a minority of seats in the National Assembly and has no easy answers to revive one of Latin America's poorest nations, so he has been looking for help anywhere he can get it.

So far Ortega has maintained this delicate balancing act between Cold War-era firebrand and pragmatist who campaigned last year on a platform of reconciliation. But both his allies and skeptics say the diplomatic juggling act can go only so far.

Some Sandinista backers want more radical change from Ortega, not just eloquent and provocative speeches. U.S. officials and business leaders, meanwhile, are saying Ortega's coziness with Venezuela and Iran could scare off foreign investors and hurt the economy.

Either way, Ortega faces a tough road, having been elected in November with just 38 percent of the vote and without a clear mandate. The country is still rebuilding infrastructure damaged by the war, and nearly half of the residents get by on less than $1 a day.

Ortega's first impulse was to turn to Venezuela, which welcomed him into a growing club of leftist leaders who take issue with the U.S.-backed model of free trade and privatization. After the Nagarote event, Chavez and Ortega laid the first brick for a $2.5 billion oil refinery billed as Nicaragua's largest project ever.

U.S. officials expected Chavez to wield influence here, but they see a red flag in Ortega's closer ties to Iran, which is trying to expand its foothold in Latin America.

So far, U.S. Ambassador Paul Trivelli has issued only vague warnings, recently saying that Iran would be a "problematic partner" for Nicaragua.

U.S. officials say the relationship is not a serious concern as long as it doesn't include military cooperation. U.S. State Department spokesman Sean McCormack said recently he does not expect Iran's presence to complicate the "good relationship" with Nicaragua. "What decisions that government makes in terms of a relationship with Iran and inviting Iran in is going to be up to them," he said.

Rhetoric and reality

Geoff Thale, program director for the Washington Office on Latin America, a liberal think tank, said Ortega's foreign policy has been nimble, given that his economic and political constraints force him to play both sides.

Some of Ortega's hard-core supporters want socialist economic policies and more confrontation with the U.S. But Venezuela and Iran have not proved to be reliable patrons, as the Soviet Union was in the 1980s, Thale said.

"Nicaragua is a really poor country that is dependent on international assistance. Any president, left or right, has a limited set of choices," Thale said. "While Daniel would like to be independent of the U.S., just because he wants (to be) doesn't mean he can be."

The juggling act has been evident this month as Nicaragua battles an energy crisis that has forced rationing of electricity. Neighborhoods in the capital, Managua, often endure long stretches in the dark, while government offices and factories are forced to interrupt work or rely on pricey generators. Other cities also go dark.

The gap between Ortega's rhetoric and actions has left some supporters disillusioned, including Gonzalo Salgado, who runs the National Consumer Defense Network near a tent city in Managua that operates under a sea of red-and-black Sandinista flags.

Salgado's group has fought for years to reverse the privatization of state-run enterprises that occurred in the 1990s after Ortega was voted out of office and successive governments rolled back his leftist policies. He had hoped that Ortega's election would bring the government back in control of key sectors. Ortega has honored his pledge that the government will not seize land and industries as it did in the 1980s. But his denunciations of capitalism have a chilling effect nonetheless, business leaders say.

Mayor Eduardo Hollmann and real estate agents in San Juan del Sur, a beach town on the Pacific Ocean swamped by American investors, have seen land sales drop 30 percent to 50 percent since Ortega took power. But the slumping U.S. market is partly to blame because Americans don't have as much money to invest in property in Nicaragua.

Likewise, business leaders say they are witnessing an overall slowdown in foreign investment as companies wait to see whether Ortega will pursue policies contrary to the "savage capitalism" that he often criticizes on the stump.

"Investment comes only with confidence," said Jose Adan Aguerri, president of the Chamber of Commerce of Nicaragua. "Daniel Ortega is not an opposition leader anymore. He is the president, and his words affect everyone."