MANAGUA (Reuters) – After clinching a third straight term by a landslide, Nicaragua’s president faces headwinds from an economic crisis in financial ally Venezuela and increasingly rocky relations with top trading partner the United States.
Boosted by a robust economy, former Marxist guerilla leader Daniel Ortega won over 72 per cent of the vote in a final count, buoyed by robust growth and a sharp decline in poverty on his watch, neutralizing critics who allege he is setting up a family dynasty.
That bonanza for the second poorest nation in the Americas was in part the result of a thaw in ties with Cold War foe the United States that allowed trade and investment to blossom, and billions of dollars that have flowed from socialist fellow traveler Venezuela.
Now both pillars of support are on shaky ground. Washington harshly criticized Ortega’s “flawed” victory on Monday, and a law under discussion in the US Senate seeks to sanction Nicaragua unless it improves its record on human rights and democracy.
The outcome of today’s US election is likely to further affect ties and trade. While Republican candidate Donald Trump is arguably the bigger threat to Nicaragua, with policies seen as isolationist and anti-Latino, Democratic rival Hillary Clinton is cooler on trade pacts than her predecessors.
In Venezuela, economic and political turmoil is jeopardizing millions of dollars in annual loans.
Venezuelan financial support to Nicaragua plunged 37 per cent in the first half of the year following a cut of almost 40 per cent to $300 million in 2015, central bank figures show.
“It’s a perfect storm, because it affects growth and economic stability, two open flanks,” said economist Nestor Avendano of the troubles with Nicaragua’s leading partners. “President Ortega will need to seek political consensus.”
Thanks to close ties with late Venezuelan leader Hugo Chavez, an ideological ally, Ortega has negotiated more than $3.7 billion in cheap loans from Caracas since 2007, according to Nicaraguan central bank figures.
A deeper financial crunch in oil-rich Venezuela could drain more assistance, leaving Ortega on the hook for popular social programmes and oil imports that have been backed by petrodollars.
