Nicaragua’s Sandinista National Liberation Front (FSLN) still brings to mind negative images for foreigners who remember the former revolutionary government’s land confiscations and the Reagan-sponsored Counterrevolutionary war (Contra War) in the 1980s.
Although the party has evolved over the last fifteen years since being voted out of office in 1990 (Sandinista leaders now are among some of the largest tourism boosters in the Nicaraguan government, not to mention some of the most successful businessmen in the country), the prospect of a Sandinista victory in the 2006 presidential elections has some investors on edge.
The Sandinistas won a majority of the seats in the November 2004 municipal elections (87 out of 152 mayoral seats), and, with a divided opposition on the right, the former revolutionaries appear to be in the best position ever to return to the nation’s highest office in November ’06 (provided their own current internal party divisions don’t crack the FSLN in half before the elections).
Former revolutionary President Daniel Ortega is once again the FSLN’s candidate for 2006, after losing the last three presidential elections. Herty Lewites, the former Mayor of Managua, a successful businessman and a self-described “Sandinista Lite,” also has his eyes on the presidency – an ambition that threatens to split the Sandinista vote between the hardliners and the reformers.
Ortega’s candidacy has the opposition party tasting early victory. Liberal Constitutional Party congressman Wilfredo Navarro, a loyal disciple of former President Arnoldo Alemán, has already declared his intentions to run for President on the Liberal ticket. He said Ortega’s candidacy ensures his victory, because the Sandinista leader is already a three-time loser. Navarro has also said that in the event Alemán is pardoned from his 20-year jail term for money laundering and embezzlement, he will cede his party’s candidacy to the former president and run on the lower half of the ticket as the V.P. candidate. That possibility would pit Alemán versus Ortega – two of the country’s least popular political leaders, and both members of the U.S. black list – against each other in the presidential elections.
While both the FSLN and the Liberals are deeply divided, the prospect of a Sandinista return to power has some potential investors on edge. Some realtors are reporting that U.S. buyers are looking at properties, but waiting to see how the elections go before putting down any money.
Still other buyers – who are not worried about the Sandinista return to power, or who believe that it won’t happen – are buying property now, hedging their bets by assuming that Ortega’s fourth defeat is inevitable and that property values will soar after he loses again.
The country’s political situation has created a curious circumstance for the real estate and investment market. If Ortega were to win the presidency in 2006, real estate prices might suffer a temporary dip, and the investment market would take a hit. However, if the Sandinistas lose again, real-estate prices will most likely continue their upward swing with more gusto than ever before.
So now might be the time to buy, if you are betting that the anti-Ortega vote will win out over the pro-Ortega vote, as it did during the elections in 1990, 1996 and 2001. But, in the event Ortega wins again, real estate prices could suffer a temporary dip, due to investor uncertainty.
Most insiders seem to be confident of two things: 1) Ortega won’t win. 2) Even if he does, he won’t be able to derail the train that is Nicaragua’s investment and development (nor does he want to).
The political and economic realities of the world have changed dramatically since 1979, when Ortega first took power after the Sandinista’s revolutionary victory. Successful socialist governments in other Latin American countries, such as Chile and Brazil, have developed a new, business friendly hybrid economic model, which uses money generated from capitalist activities to fund social spending programs.
Another factor that will ensure a continuance of economic development and investment is the fact that the Sandinista leadership is among the leading businessmen in the country.
As AMCHAM President René González recently noted, there is a real disconnect between the Sandinistas’ political rhetoric and their own economic interests.
“They are capitalists,” he said, adding that investors shouldn’t expect anything to change if they win, which they most likely won’t.
Even if the Ortega wins, there is a very slim chance that the revolutionary policies of the past – namely the property confiscations – would be re-implemented.
While the Sandinista leadership has admitted that it made mistakes in the past by confiscating properties (and they swear they won’t do it again), some leery-minded Nicaraguans believe that Ortega will win the elections, and will then be cornered by the Bush administration, prompting some of the reactionary policies of the past.
There still remain many pending property claims resulting from the confiscations of the ‘80s. While most have been settled since the mid ‘90s, the U.S. Embassy still has 760 pending claims yet to be resolved.
And Congress’ move to name a new Property Superintendent to handle the remaining property claims has some people worried. Critics of the new Property Superintendency claim it will be a Sandinista-controlled post used to legalize the infamous property grab in 1990 (known as the Piñata) and use pending properties as electoral leverage to win votes at the polls.
Currently, an estimated 25% of rural properties (mostly in the north) and 10% of urban properties still have conflicting property title claims. According to 2005 calculations by the Property Forum, there are 1.8 million manzanas of disputed property in Nicaragua, and an additional 100,000 properties still without title.
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