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Nicaragua: moving up

Monday, February 13, 2012

It may be a strange brew of business and politics, but in many ways the recipe is working. On one hand, newly re-elected President Daniel Ortega and his Sandinista party do unsavory things. The last election campaign was in many ways rigged. Ortega professes his admiration for the socialist policies of Venezuelan President Hugo Chávez, and rolls out the red carpet on a visit to Managua by President Mahmoud Ahmadinejad of Iran, currently the leading pariah nation of the United States and its allies.

On the other hand, Ortega would have been elected, even if no one had manipulated the process. The Sandinista government may praise regimes, which Washington opposes. But in practice, the Nicaraguan government behaves in ways, which are good for the economy, while the business sector is generally supportive of the Ortega regime.

Business people should be optimistic. Foreign investment reached a record $900 million last year, an increase of 50 per cent, compared to 2010, according to preliminary estimates. Most of the investment came from North America (United States, Canada and Mexico), along with Venezuela. Last January, Nicaragua exported $220 million worth of goods and services, an increase of 17% over the same period in 2010. In addition, the country is also developing geothermal energy resources, which would produce anual savings in energy expenses of close to $1 billion.

There are potential problems ahead. Ortega and his family are getting vast personal benefits from the economic boom, according to Nicaraguan media. Nicaragua saves hundreds of millions of dollars on petroleum purchases, through the Venezuela-led Petrocaribe Alliance, which could end, if Chávez is not reelected. But after many years of living in the economic dumps, Nicaragua is looking up.