Instability in Venezuela affects Nicaragua
With the postponement of Hugo Chávez’s inauguration for his fourth term, uncertainty about Venezuela’s political future is causing concern among Latin American countries under the influence of chavismo, particularly Nicaragua.
Nicaraguan President Daniel Ortega asked his countrymen to pray for Venezuelan President Hugo Chávez’s recovery from cancer during a Mass in Managua on Dec. 31. Chávez has provided financial support to Ortega’s administration. (Hector Retamal/AFP)
The country led by Daniel Ortega – Chávez’s strongest ally in Central America – may suffer an economic setback due to the political turmoil in Venezuela, experts said.
During the past five years, Nicaragua received more than US$2.5 billion in financial aid from Venezuela.
Chávez, who is committed to promoting a “Bolivarian alliance” in Latin America, worked closely with the leader of the Sandinista Revolution who first ruled Nicaragua from 1985 to 1990.
“It’s an ideological relationship that is convenient for both parties. For Chávez, it signifies a presence in the region and, for Ortega, it keeps his political image clean,” said political analyst Roberto Antonio Wagner, a professor at Guatemala’s Francisco Marroquín University.
Wagner added Ortega’s background as a guerrilla fighter, which is viewed positively within chavismo, only strengthened his relationship with Chávez.
When Ortega returned to power in 2007, he found in Chávez a rising Bolivarian leader who could help him boost his prominence in domestic and international politics.
In El Salvador, Honduras and Guatemala, with their more conservative leftist parties and greater presence in the private sector, Chávez’s influence was not as strong as it was in Nicaragua, which was aligned with the 21st-century socialism advocated by Venezuela.
Venezuela’s economic aid to Nicaragua, which is essentially derived from oil revenues, finances social programs and private businesses run by Ortega’s supporters. The funding also subsidizes the energy sector, particularly with regard to oil, according to political analysts.
“[Venezuela’s assistance] fills the gaps left by other sources of cooperation that no longer reach Nicaragua due to reasons such as corruption and the lack of transparency in Ortega’s re-election in 2011,” Wagner added.
Without Chávez, who has not appeared in public for more than a month following his surgery in Cuba as part of ongoing cancer treatment, Venezuela’s financial assistance to Nicaragua could decrease.
The support of the National Assembly, the Supreme Court and the Venezuelan military for the indefinite postponement of Chávez’s inauguration may impact Nicaragua’s economic reserves and compromise the political framework of Ortega’s administration, according to analysts.
“It will all depend on the outcome of an upcoming election in which [current vice president] Nicolás Maduro would be the candidate for chavismo, as well as the current economic situation in Venezuela,” said Carlos Fernando Chamorro, director of the Managua’s weekly Confidencial newspaper.
Venezuela is Nicaragua’s third-largest export market, after the United States and the rest of Central America. The annual aid of about US$500 million allows Ortega to run a budget parallel to the one voted on by the National Assembly, as the amount is equal to 7% of Nicaragua’s Gross Domesitc Product (GDP), or 20% of all taxes collected.
“If the cooperation with Venezuela were to be reduced or suspended, Ortega’s administration would face financial pressures, and many programs that are now financed outside the budget would have to be assumed by the government,” Chamorro said. “This would primarily decrease their margin for engaging in political patronage.”
But the scarcity of resources would not lead to a collapse of the regime, as Ortega has economic reserves, Chamorro added. But during the medium term, the loss of financial support from Venezuela could significantly impact Ortega’s political career.
In some circles of the Nicaraguan government there already is talk of promoting a “Plan B” in case Chávez is no longer in the picture, which is to diversify the sources of economic income and reduce Ortega’s dependence on the Venezuelan government.
But financial aid to Chávez’s allies in the region depends mainly on Venezuela’s economy, according to Francine Jácome of the Venezuelan Institute for Social and Political Studies (INVESP). The internal economic crisis may prevent any government from maintaining its oil subsidies and transferring funds to other countries.
“If elections are held in the coming months, and barring any unforeseen events, it’s likely that the ruling party will remain in power. In that case, there would be no major changes in foreign policy,” she said.
There also are questions surrounding the fate of the Bolivarian Alliance for the Americas (ALBA), a bloc created in 2004 under the influence of the chavista doctrine that includes countries such as Venezuela, Nicaragua, Cuba, Bolivia and Ecuador.
“ALBA is an asymmetrical bloc that depends on oil funds from Venezuela. Without Chávez and with the weakening economic capacity of the Venezuelan government, it’s likely that there will be a decline in the bloc’s influence,” Jácome said.
Luis Padilla of Guatemala’s Rafael Landívar University added that without Chávez, “ALBA will certainly lose strength, given that one of the groups’ strongest points was Chávez’s personality and leadership.”
Venezuela’s economic and political crisis could be an opportunity for Brazil, as the South American giant could benefit from the decline of Chávez’s influence in Latin America, Wagner said.
“Brazil is closely following this process because it is the ideal candidate to fill the void that would be left by Venezuela, but it would do so through other institutions such as the Southern Common Market (MERCOSUR) and the Union of South American Nations (UNASUR), while also strengthening ties with Central America,” he added.
Meanwhile, Ortega seems willing to fight to maintain his cooperation with Venezuela. On Jan. 10, when Chávez was supposed to be re-inaugurated, Ortega traveled to Caracas to participate in a symbolic show of support for the Bolivarian leader.
Bolivia’s President Evo Morales, Uruguay’s José Mujica and Suriname’s Dési Bouterse joined Ortega in demonstrating solidarity with the Venezuelan leader.
