Re-Blogged From Stratfor
- Nicaragua’s government is gaining the upper hand over a 3-month-old protest movement, but demonstrations could flare up again as President Daniel Ortega tries to cement his rule.
- Because renewed protests would further strain Nicaragua’s economy, thereby inserting a wedge between Ortega and the country’s business elites, the president will try to draw as many allies to his side by distributing benefits to them.
- Nicaragua will pursue a more authoritarian path if protests continue but fail to unseat Ortega.
- Though ending the protests will temporarily reduce business risks in Nicaragua, the specter of U.S. sanctions against Ortega and his allies will loom.
(MARVIN RECINOS/AFP/Getty Images)
Three months after unrest began convulsing the country, Nicaragua’s government is slowly reestablishing control over the Central American nation. Between July 6 and 8, the government of President Daniel Ortega staged new raids on protest barricades in Jinotega, in the country’s north, and in Carazo, near Lake Nicaragua. The interventions follow weeks of police deployments against protesters guarding barricades elsewhere in the country, particularly in the opposition strongholds of Leon, Masaya and Monimbo.
As the Ortega government slowly reasserts control over the country ahead of presidential elections in 2021, some observers might assume the country’s political instability is coming to an end. For nearly three months, frequent roadblocks and violent confrontations between police and protesters have put bystanders at risk of injury or death and disrupted road transport through Nicaragua, harming both the nation’s economy and those of its neighbors. The government’s present actions suggest that force ultimately will quell the demonstrations following its previous decision to eschew negotiations (at one point, it refused to call early elections to defuse the conflict). Though the government’s offensives will likely impose a relative calm, the prospect of renewed demonstrations will never be far away. Ortega will be well aware that any serious unrest would do further damage to the economy — thereby exposing rifts within the ruling Sandinista National Liberation Front (FSLN) that could ultimately spell an end to his rule.
The Big Picture
A wave of protests across Nicaragua appears to be slowing, as government security forces slowly dismantle barricades and reestablish control. Though the government of President Daniel Ortega is strangling the protests, it remains unclear whether the government can sustain its gains or whether additional protests will erupt later, creating new political problems for Ortega.
Managua Isn’t out of the Woods
Although the protests have attracted the lion’s share of attention, disagreements within the FSLN, especially over who should follow Ortega as president, might do just as much to determine Nicaragua’s future. Now 73, Ortega has positioned his wife, Rosario Murillo, as his heir apparent, meaning that if all goes according to the president’s plan, Murillo may run under the FSLN banner in 2021. The degree of unrest in the run-up to the election, however, will likely determine whether old political spats within the FSLN rise to the surface. The main conflict within the ruling party centers on the rivalry between Murillo and Ortega’s political adviser Bayardo Arce, likely because of disagreements about who should succeed the incumbent. Arce, a longtime confidant of the president, has worked with the government for many years as a key adviser negotiating between the government and the private sector. Through Arce, Ortega has negotiated individually and collectively with private-sector representatives to ensure their continued loyalty to the government.
Ortega’s bid to either win re-election in 2021 or ensure the candidacy of his wife will likely attract more protests. In the months before the election, demonstrations may erupt again as the government’s opponents, radicalized by this year’s confrontations, press forward to oust Ortega. If the current wave of unrest precipitates more violent protests, Ortega’s ability to win re-election or position Murillo for victory will come under greater doubt.
The widespread demonstrations are disruptive to the business operations of the country’s economic elites, as the opposition’s use of roadblocks threatens wide swaths of the economy. Manufacturing, retail outlets, fuel stations, construction services, tourism and road transport have suffered significant setbacks as protesters have severed access to parts of the country for weeks at a time. Ortega is governing in an increasingly authoritarian manner, but his ability to rule the country rests on a delicate balance of private interests with those of the FSLN, meaning what’s bad for the private sector is ultimately bad for Ortega. If business leaders succeed in persuading sympathetic FSLN leaders that Ortega must step aside for the good of the country’s economic stability, key officials such as Arce, who has influence within the private sector and the government, may be inclined to listen.
Naturally, this is only one possible path. Ortega and his immediate family and political allies will resist any attempts to oust them from government, especially as their rule has gained them significant power and wealth. Ortega has likely already sought to persuade his political allies that he is the best option going forward. Ahead of the 2021 vote, Ortega may yet succeed in retaining the loyalty of business elites and FSLN figures by selectively distributing patronage benefits, such as political posts. If Ortega keeps enough allies on his side, it will become very difficult — even with pressure from certain private sector elites and government figures — to dislodge him. In this scenario, the government will clamp down on dissent in the same fashion as the administration of Nicolas Maduro has done in Venezuela, selectively rewarding allies and harshly punishing political opponents — even those within its own ranks.
For businesses, a scenario in which political opponents slowly oust Ortega presents some near-term risks. The effects of a renewed protest wave ahead of the 2021 vote will be very similar to those seen since April. Roadblocks and violent confrontations on the streets will eat into company profits by keeping workers off the job, reducing the availability of fuel and forcing the evacuation of foreigners.
But the pursuit of an authoritarian path like Venezuela could incite the United States to impose sanctions in the longer term. If the Ortega government defeats domestic political contenders and tightens its power, the U.S. Treasury Department could target key leaders with financial sanctions, thereby prohibiting U.S. companies from doing business with them. The United States has already sanctioned three Nicaraguan officials under the Global Magnitsky Act, which targets foreign government officials implicated in human rights abuses. This could disrupt business for Nicaraguans who fall afoul of the sanctions, while also raising concerns for foreign businesses operating in the country, especially if they conduct business with officials on the sanctions list.
The Nicaraguan protest wave is waning, but its political consequences are far from over. Ortega may yet retain sufficient political support to mount a 2021 re-election campaign, but renewed demonstrations across the country over the next few years would put that plan under threat. With greater violence on the streets, Ortega’s political allies may turn on the president in the belief that his departure would be in Nicaragua’s best interests. But before that happens, Ortega and his allies will strive to defend their positions and power by doling out largesse to allies, all in the hopes of keeping the government’s numerous opponents at bay.