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Central American University - UCA  
  Number 338 | Septiembre 2009



Corruption Is the Most Serious Aspect of The Ortega-Chávez Relationship

A deputy foreign minister in the eighties, now a National Assembly Representative on the Sandinista Renovation Movement bench, this author analyzes some aspects of the second Ortega government’s foreign policy.

Victor Hugo Tinoco

Daniel Ortega began governing before Obama was elected, when the US government was dominated by the most rightwing conservatives. He also began when leftist governments from two different currents had arisen in Latin America, one represented by the group around Brazilian President Lula de Tabaré and the other by the group around Venezuelan President Chávez. I believe the main difference between the two isn’t about the level of investment in social programs or whether the anti-poverty programs are more or less palliative or go deeper, but about their conception of the role of individual liberties and civic freedoms in a country’s social development. The heart of the difference is whether the government considers these freedoms the fundamental basis for social development and the transformation of society or sees them as an obstacle. It will act differently in a given political situation depending on which concept it follows. It’s in this framework that Ortega’s foreign policy arises. From the beginning he very clearly sided with the group of leftist Latin American governments led by the President of Venezuela. From a political point of view he made this choice in line with the prevailing concept within the FSLN known as Orteguismo, or Danielismo.

The only limit is political cost

This authoritarian concept considers civil liberties as obstacles and believes that in the struggle for power one has the right to violate the rights of anyone who opposes you. When you have this viewpoint there are no limits other than the political cost of acting so arbitrarily. If it’s too costly, you don’t do it; if it’s cheap to ride roughshod over another, you go for it.

The Ortega government’s authoritarian belief leads it to think that since it’s in power it can do what it wants against anyone who opposes it because if the others were in power they would do the same. Omar Cabezas, ironically the government’s human rights ombudsman, often sadvocates this idea. Recently he stated, “The power we have is to be used and defended. And this means not allowing people to demonstrate who dispute our power.” There are no rights, limits, laws or liberties in this viewpoint.

The dangers of privatizing Venezuelan aid

While this political concept thus underlies the Ortega government’s alliance with the Latin American group led by Chávez, another fundamental reason has to do with economics. Venezuela guarantees the Ortega government a supply of oil under very favorable conditions. This help is fundamental since Nicaragua depends totally on oil as its energy source, but a crucial advantage is that this and other Venezuelan economic aid is granted to the Ortega government privately.

The privatization of the Venezuelan aid explains a lot of what’s happening in Nicaragua today. It was clear in this government’s original design that the Venezuelan aid wouldn’t pass through the national budget or be under any institutional control; it would be handled by Albanisa, a Venezuelan-Nicaraguan joint venture. A large part of the Nicaraguan share of this firm is in the hands of the Ortega group, which decides where and how to use the resources with no intervention or supervision by any government entity. We estimate that Albanisa managed at least US$250 million in 2008 and is handling about US$125 million this year, a lesser quantity because these amounts come from the oil contract, which fluctuates with the price of oil.

The oil contract with Venezuela allowed the Ortega group enormous earnings in 2008, before the outbreak of the economic crisis, because the international oil price per barrel shot up to as much as $150. While the income doubled for the Ortega group, Nicaraguans paid more for their oil, because this is the logic of the privatized oil contract: the more expensive the oil, the more people pay for gas and the richer the Ortega group gets.

Why the secrecy?

There’s no reliable information on how the Ortega government uses this money because everything is cloaked in the practice of official secrecy. Who controls what part of this money? Is it already in a tax haven? Nobody knows because these resources, which should be public, are administered privately. When we ask, they tell us the Venezuelan resources are dedicated to social programs, for example to Zero Hunger. But this program’s funds are miniscule.

We do know that some of these funds are being used as a patronage system that rewards those who work for, sympathize with or are willing to get closer to the government party. Thus, in addition to the problem of political cronyism and possible inefficiency when there are no controls, there’s now the added inevitable problem of corruption. With no controls or follow-up there’s no doubt that this key piece of the government’s foreign policy—its relationship with Venezuela—is generating a get-rich process for people and groups aligned with Orteguismo. The most important negative impact of the relationship between Ortega and Chávez is this ethical issue. The circles of corruption generated around the Venezuelan aid are distorting parts of the Nicaraguan Left, which have historically been the most socially sensitive but today are involved in underhanded private business deals with no controls.

One of the most extreme cases of the confusion and inevitable corruption created by the Venezuelan aid can be seen in the energy arena. In 2007 President Chávez sent diesel-run electricity generators to help eliminate the daily energy cuts that since 2006 had affected the whole country with blackouts lasting between four and twelve hours. The Taiwan government also donated generators to contribute to the government’s potential to provide electricity. They came on line in June 2007 and drastically reduced the blackouts, which was a big political success for the Ortega government. Over time, however, we’ve learned that Albanisa privatized the Venezuelan generators, which produce energy at very high cost and were presented to us as an expression of Venezuelan solidarity, as gifts. Now, however, we’ll be paying dearly for them in our monthly energy bills for the next 15 years. We’ve further learned that Albanisa somehow mysteriously privatized the generators donated to the government by Taiwan as well.

The corruption and inefficiency generated by the Venezuelan cooperation are having destructive ethical, economic and social results. On the other hand, the Venezuelan support and privatization of these resources explain why the Ortega government rants and raves against other governments in the world and isn’t very interested in its relationship with Europe, despite its importance.

The worst part is that all of this is done secretly, while publicly they speak in favor of the poor. Who are they hiding it from? Not the opposition, but the Nicaraguan people. Arnoldo Alemán knows perfectly well what happened, because he was complicit in it. The head of INE, the government entity in charge of overseeing consumer energy, is David Castillo, a Constitutionalist Liberal Party member close to Alemán. Castillo is the one who authorized the contracts between Albanisa, managed by the Ortega group, and Union Fenosa, the transnational corporation that bought up the electricity distribution system. In those contracts the government accepted really high prices for the generators and very high electrical rates for the consumers. So, what was solidarity with the Nicaraguan people in 2007 are private generators today, paid for dearly by the very same Nicaraguan people. Who’s benefiting from these transactions and this great business deal?

Joining ALBA was a correct decision

Nicaragua’s foreign policy today is subject to Venezuela, which explains both some of the correct decisions, like joining the Bolivarian Alternative for the Americas (ALBA), and others that are absurd. was a correct decision. Even if ALBA had been an initiative of Colombia’s President Álvaro Uribe, joining and supporting it still would have been a good idea it. Having an alternative market in addition to our traditional US market gives us more leverage as a country. Building business and socioeconomic associations and alliances where we have shared political understanding is very positive. ALBA is an old dream: to join as Latin Americans to protect ourselves first economically and commercially and then politically. The problems arise when the political understanding runs into citizens’ rights and freedoms.

Because the relationship with Venezuela is the lynchpin of its foreign policy, it explains why Ortega prioritizes those countries with which Venezuela has a relationship. A clear example is the absurd recognition that Nicaragua gave Abkhazia and Southern Ossetia when they separated from Georgia. Except for Russia, we’re the only country in the world that recognized these “new states.” It was an unnecessary foreign policy decision and is counterproductive to our interests. There are similarities between the segregation of these territories and the proposal for independence of the northern Caribbean areas of Nicaragua. The United States, as the power in our area, could theoretically apply the same principle Russia used and defend Miskitu independence. Why did Nicaragua recognize Abkhazia and Southern Ossetia? Because Russia is an important ally of Venezuela and perhaps might give us something in exchange.

The importance of the Honduran coup

The international context has changed since Ortega took office. One important change is Barak Obama’s election as the US President and the new relationships he wants to build with Latin America. The Ortega government hasn’t yet assimilated this change and expressed it in a more up-to-date posture.

The other political change in the continental context that we need to analyze is what happened in Honduras with the coup d’etat, an event that could strongly influence our region. There’s no doubt that Honduras’ coup was motivated by medium- and long-range calculations and by short-term fear. Whatever the motivation, it was a blow against the Honduran President by the political groups and the military. Did Zelaya violate several laws and even the Constitution? Absolutely he did. He wasn’t following the law in various aspects. But this is no excuse for a coup. For this reason, the Sandinista Renovation Movement (MRS) condemned it as a coup d’état four hours after the event.

How serious is it? Not long ago our continent was plagued by military dictators and these men are still with us, both those on the side of the military and those in the opposition. In the eighties, when I began my time as deputy foreign minister, there were military dictators from Guatemala to Argentina with very few exceptions. It’s not been that long ago that Latin America got out from under the experience of military establishments dominating both the political and civil societies. We’ve left this behind just in the last 25 years. This change was influenced by the US political decisions once Washington recognized the warning in the Nicaraguan revolution and other Central American revolutionary processes that there would be violent revolutions as long as the military regimes kept denying people their civil liberties. Across the continent military regimes were increasingly disappearing or becoming more civilian. We can’t lose sight of this change, which has been the most important strategic advance our people have had.

People’s struggle for their rights, recognition, social justice and a better and more just world wasn’t possible under military dictatorships. Only with civilian governments have citizens’ rights been respected to some extent. Experience has shown that there can’t be sustainable social transformation in Latin America if citizens’ freedoms and rights aren’t respected and developed. This means putting the military in the place where it should be.

The people’s victory of continuing to substitute civilian governments for military regimes—whether of the right, center or left—is one of the most important advances in Latin American in the last three decades. Based on it we in the Left have been able to enter into the struggle for social transformation with political proposals rather than military weapons. It’s on this basis that the leftist governments now existing in Latin America have arisen.

With the exception of the Nicaraguan revolution and, before that the Cuban revolution, all leftist Latin American governments were born in the space built once we left behind the military caste and began to experience civil liberties. Then came the split: some leftists believe that civic freedoms must be developed to make the social change they want sustainable, while others don’t consider this important.

What happened in Honduras is, without a doubt, a threat and a setback. It’s a sign that the historic success of the last 30 years that allowed the Left to emerge could begin to recede. Returning to the use of force as the rule in politics is a major rollback. For this reason we must condemn the coup. If Zelaya violated the Honduran Constitution he should have been subjected to the rules of democracy: press charges, begin legal proceedings, pressure, make alternative proposals, mobilize the people. Never, however, resort to force and violence, use of the military or a coup. This is unacceptable and explains the unanimous condemnation of all governments in Latin America. Rightwing elements in Latin American politics and the US Right have tried to justify the coup by citing Zelaya’s mistakes. This, however, is extremely dangerous for all of Latin America. If this idea were to move forward and the coup were to become consolidated, it would be extremely serious.

There’s a generalized view—hopefully we’re not wrong about this—that Nicaragua is one of the countries with the least risk of copying what happened in Honduras. This is because our military class has shown its capacity to work with any democratically elected government, whether of the right, left or center. There’s a real risk in El Salvador or Guatemala, however. It’s thus very important to find a way for Zelaya to return so a mechanism for restoring democratic institutionality can be found and a transition developed that leads to observed, transparent elections even if they end in a rightwing government. It could be considered a success even if it’s only possible to rescue democratic practices and civil liberties, putting them above violence and the abuse of force, as Oscar Aria’s proposal aims to do. This is possible, viable and desirable and is best for all of us who are part of the Left on this continent.

Is there such a thing as unconditional aid?

Finally, another aspect of the Ortega government’s foreign policy is that it has created serious problems for Nicaragua with the international aid agencies that have traditionally supported it, and not for ideological reasons. The relationship with Iran, for example, is laced with high-sounding rhetoric but it hasn’t been significant from either a political or economic point of view. The cultural differences with Iran are great and the Iranian economic support hasn’t been what was announced. The new US government isn’t going to pay much attention to this type of rhetoric. It’s going to pay attention to what the Ortega government does, not what it says.

The reason for the problems with the traditional international aid agencies is Ortega’s desire to be unconditionally accepted and to maintain these aid relationships independent of what his government does or doesn’t do internally. The government’s problems with the international aid agencies have had nothing to do with Ortega’s relationship with Iran or Russia, or even with Chávez. From the beginning they’ve had to do with the 20% of the budget—the amount of the Venezuelan aid—that’s managed without controls. From the outset this created resentments and difficulties, because it has to do problems of governability: lack of respect for human rights and civil liberties, civil rights violations, including the major violation of people’s will in the electoral fraud of November 2008. The results of 20% of the voting stations still aren‘t known almost a year after the elections. This government’s disregard for the concept of governability, which the international aid agencies demand in any country of the world, has created serious problems for us.

We’ve always been on the periphery

I left for last something I believe ought to be fundamental in our foreign policy. Nicaragua is a very small country. . We were on the periphery of the Aztec and Inca empires and on the periphery of the Spanish conquest. We’ve always been on the periphery. If we want to emerge, we must first of all join together with our close neighbors. Central American unity and integration are keys to our economic and political future.

A responsible government should work to create a domestic social agreement; enough of a national understanding to maximize our capacities and potentialities and help us integrate with the rest of Central America. If we’re unable to voice a basic consensus inside the country, even less will we be able to do so within Central America. But while we’re not building consensus, Central America’s finance capitalists have already joined together.

I think the original political and economic design Daniel Ortega began with has already created a crisis and is unviable; Nicaragua isn’t functioning well. What is functioning well is the creation of an economic power center around him and his group, which has made him rich.

Nicaragua will only have a future if we can understand the basics of what’s happening economically, socially and, above all, politically. I want to emphasize politically. There’s no way that Nicaragua will move ahead economically if there’s no agreement on political and civil rights. As someone who participated in the Sandinista revolution for 35 years, I can say it was a revolution in which the demands for political and civic freedom were central to ending the dictatorship. These demands were the main motivation for a whole generation of youth to join the revolutionary struggle against the dictatorship. Economic demands and social justice were part of our program, but they weren’t our priority. Political rights were the key. It has always been this way in our country: respect for political rights and civil liberties has been the key that allows Nicaragua to move forward. Disregard for these rights has buried us in the repetitive cycle of crises we continue to live through.

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