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The Political Economy of the Nicaraguan Elections In a country that suffered 11 years of disastrous Marxist economic policies, political repression and war, it was hard to believe that Ortega could win. The Sandinistas claimed to have changed their tune, running under the banner of the National Convergence (CN) and recruiting leaders from other parties to broaden their appeal. The CN ticket included Agustin Jarqu�n for vice president and Antonio Lacayo (from the Chamorro government) for foreign minister. Apart from these appointed positions, the party did not allow outsiders to be included on its list of candidates for the Legislative Assembly, instead sticking with Marxist cadre such as Tom�s Borge and Lenin Cerna. Ortega spurned the request of the US ambassador to resolve long-standing cases involving the confiscated property of American citizens. The latest polls before the election showed a dead heat between Bola�os, with 38% of the vote, and Ortega, with 37%. Some pollsters made much of the large undecided vote, but in the end, the election was not as close as had been predicted. Bola�os won by a margin of about 10% over Ortega-roughly 54% to 44%, according to the preliminary count. The Economy In the late 1990s, the Nicaraguan economy enjoyed substantial growth of about 5% annually. However, the government twice fell out of its three-year IMF agreement, supported by the Poverty Reduction and Growth Facility. The economy is now under a Staff-Managed Program (SMP) with no disbursement of funds. The goals of the SMP are to carry the economy through the political transition, achieve a 3% GDP growth rate, continue the 6% exchange rate crawl against the US dollar, get inflation down to 8%, and reduce the combined public sector deficit to 7.4% of GDP (it was an astounding 8.3% in 2000). Nicaragua is eligible for the Highly Indebted Poor Country (HIPC) initiative administered by the Paris Club and supported by the IMF. The goal is to forgive $4.5 billion in debt. After reaching an agreement with the IMF, Nicaragua must implement a one-year poverty reduction strategy to qualify. This should be the top economic priority for Bola�os and his team when they take office on January 10, 2002. Other priorities for the new administration might be to ensure successful implementation of the new tourism law and to pass new investment legislation. One success story in Nicaragua has been the country's Free Trade Zone, which has doubled its employees from 10,000 to 20,000. However, the slowdown in the US economy has been felt here as well, and the FTZ has begun cutting back. Finding new industries is vital. Compared to the other Central American countries, Nicaragua has not taken advantage of the opportunities offered by the Caribbean Basin Economic Recovery Act. Nicaragua exports about $700 million, about one-fifth of total exports for Costa Rica. Similarly, Nicaragua's exports to Florida in 2000 were $398.5 million, compared to $2.34 billion for Costa Rica. US Reaction to the Electoral
Dead Heat The Post-election Scenario The vote count for deputies to the National Assembly was still inconclusive two days after the elections. The CSE reported that only 21.15% of the total ballots were officially counted. Nonetheless, the press reported that the M&R polling firm projected the PLC ahead with 48 deputies, the CN with 41 and the PC with one. As a result of reforms in the law last year, the winner and closest rival in the presidential elections are also given seats in the Assembly, for a total of 92 seats. The Conservative leader claimed that his party would ultimately win five to seven seats; this seems unlikely, but the PC did win more than twice as many votes for deputies as it did for president. Two days after the elections, some Sandinista leaders, among them Victor Tinoco, were calling for changes in the party's leadership and methods. After three consecutive losses, some party stalwarts were calling for Ortega to step aside. This sentiment will undoubtedly grow in the coming months, although Antonio Lacayo claimed that the CN would remain a cohesive political force after the elections. The US quickly offered its congratulations to President-elect Bola�os, as did the presidents of Costa Rica and El Salvador. California Congressman Theodore Dreiser, who served as an election observer with the International Republican Institute, praised the elections and predicted that US-Nicaraguan ties would become closer than ever. Observations The United States' open support for one candidate in the Nicaraguan election has been criticized as an unwarranted intrusion in the electoral process of a foreign country. However, it is easy to understand the Bush administration's concern. The US already has a full plate; given the timing and symbolism of the election-and mindful of its past painful and costly disputes with the Sandinistas-it did not want to add to its problems by having Ortega in power in Central America. President-elect Bola�os quickly moved to establish his independence from President Arnoldo Alem�n. When asked by a reporter about a motion to make Alem�n president of the National Assembly, he said he thought it was a bad idea and that new leaders are needed. Bola�os may have trouble negotiating with the PLC majority in the Assembly to achieve his government's goals. The FSLN traditionally turns to civic disturbances-such as strikes by government workers-to protect its interests, but Alem�n remains a strong force in the PLC. There will undoubtedly be a struggle to see which faction-Alem�n or Bola�os-will dominate the party.
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