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Nicaragua (02/05)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME: Geography People Government Economy PEOPLE The 1995 constitutional reform guaranteed the integrity of the regions' several unique cultures and gave the inhabitants a say in the use of the area's natural resources. Roman Catholicism is the major religion, but Evangelical Protestant groups have grown recently, and there are strong Anglican and Moravian communities on the Caribbean coast. Most Nicaraguans live in the Pacific lowlands and the adjacent interior highlands. The population is 54% urban. HISTORY Much of Nicaragua's politics since independence have been characterized by the rivalry between the Liberal elite of Leon and the Conservative elite of Granada, which often led to civil war. Initially invited by the Liberals in 1855 to join their struggle against the Conservatives, an American named William Walker and his "filibusters" seized the presidency in 1856. The Liberals and Conservatives united to drive him out of office in 1857. Three decades of Conservative rule followed. Taking advantage of divisions within the Conservative ranks, Jose Santos Zelaya led a Liberal revolt that brought him to power in 1893. Zelaya ended a longstanding dispute with Britain over the Atlantic Coast in 1894, and reincorporated that region into Nicaragua. By 1909, differences had developed over an isthmian canal and concessions to Americans in Nicaragua; there also was concern about what was perceived as Nicaragua's destabilizing influence in the region. In 1909 the United States provided political support to Conservative-led forces rebelling against President Zelaya and intervened militarily to protect American lives and property. Zelaya resigned later that year. With the exception of a 9-month period in 1925-26, the United States maintained troops in Nicaragua from 1912 until 1933. From 1927 until 1933, U.S. Marines stationed in Nicaragua engaged in a running battle with rebel forces led by renegade Liberal Gen. Augusto Sandino, who rejected a 1927 negotiated agreement brokered by the United States to end the latest round of fighting between Liberals and Conservatives. After the departure of U.S. troops, National Guard Cmdr. Anastasio Somoza Garcia outmaneuvered his political opponents--including Sandino, who was assassinated by National Guard officers--and took over the presidency in 1936. Somoza, and two sons who succeeded him, maintained close ties with the United States. The Somoza dynasty ended in 1979 with a massive uprising led by the Sandinista National Liberation Front (FSLN), which had conducted a lowscale guerrilla war against the Somoza regime since the early 1960s. The FSLN established an authoritarian dictatorship soon after taking power. U.S.-Nicaraguan relations deteriorated rapidly as the regime nationalized many private industries, confiscated private property, supported Central American guerrilla movements, and maintained links to international terrorists. The United States suspended aid to Nicaragua in 1981. The Reagan administration provided assistance to the Nicaraguan resistance and in 1985 imposed an embargo on U.S.-Nicaraguan trade. In response to both domestic and international pressure, the Sandinista regime entered into negotiations with the Nicaraguan resistance and agreed to nationwide elections in February 1990. In these elections, which were proclaimed free and fair by international observers, Nicaraguan voters elected as their President the candidate of the National Opposition Union, Violeta Barrios de Chamorro. During President Chamorro's nearly 7 years in office, her government achieved major progress toward consolidating democratic institutions, advancing national reconciliation, stabilizing the economy, privatizing state-owned enterprises, and reducing human rights violations. In February 1995, Sandinista Popular Army Cmdr. Gen. Humberto Ortega was replaced in accordance with a new military code enacted in 1994 by Gen. Joaquin Cuadra, who espoused a policy of greater professionalism in the renamed Army of Nicaragua. A new police organization law, passed by the National Assembly and signed into law in August 1996, further codified both civilian control of the police and the professionalization of that law enforcement agency. Despite a number of irregularities--which were due largely to logistical difficulties and a baroquely complicated electoral law--the October 20, 1996 presidential, legislative, and mayoral elections were judged free and fair by international observers and by the groundbreaking national electoral observer group Etica y Transparencia (Ethics and Transparency). This time Nicaraguans elected former Managua Mayor Arnoldo Aleman, leader of the center-right Liberal Alliance. The first transfer of power in recent Nicaraguan history from one democratically elected president to another took place on January 10, 1997, when the Aleman government was inaugurated. In November 2000, Nicaragua held municipal elections--the country's third free and fair election since 1990. President Aleman's Liberal Constitutionalist Party (PLC) won a majority of the overall mayoral races, but the FSLN fared considerably better in larger urban areas, winning a significant number of departmental capitals, including Managua. Presidential and legislative elections were held in November 2001. Enrique Bola駉s of the Liberal Constitutionalist Party was elected to the Nicaraguan presidency on November 4, 2001, defeating FSLN candidate Daniel Ortega by 14 percentage points. The elections, characterized by international observers as free, fair and peaceful, reflected the maturing of Nicaragua's democratic institutions. During his campaign, President-elect Bola駉s promised to reinvigorate the economy, create jobs, fight corruption, and support the war against terrorism. Bola駉s was inaugurated on January 10, 2002. GOVERNMENT AND POLITICAL CONDITIONS The president and the members of the unicameral National Assembly are elected to concurrent 5-year terms. The National Assembly consists of 90 deputies elected from party lists drawn at the department and national level, plus the defeated presidential candidates who obtained a minimal quotient of votes. In the 1996 elections, the Liberal Alliance won a plurality of 42 seats, the FSLN won 36 seats, and nine other political parties and alliances won the remaining 15 seats. In the 2001 elections, the Liberal Party won 53 seats, the FSLN 38 seats, and the Conservative Party (PC) 1 seat. The Supreme Court supervises the functioning of the still largely ineffective and overburdened judicial system. As part of the 1995 constitutional reforms, the independence of the Supreme Court was strengthened by increasing the number of magistrates from 9 to 12. In 2000, the number or Supreme Court justices was increased to 16. Supreme Court justices are elected to 5-year terms by the National Assembly. Led by a council of seven magistrates, the Supreme Electoral Council (CSE) is the co-equal branch of government responsible for organizing and conducting elections, plebiscites, and referendums. The magistrates and their alternates are elected to 5-year terms by the National Assembly. Constitutional changes in 2000 expanded the number of CSE magistrates from five to seven and gave the PLC and the FSLN a freer hand to name party activists to the Council, prompting allegations that both parties were politicizing electoral institutions and processes and excluding smaller political parties. Freedom of speech is a right guaranteed by Nicaragua's constitution and vigorously exercised by its people. Diverse viewpoints are freely and openly discussed in the media and in academia. There is no state censorship in Nicaragua. Other constitutional freedoms include peaceful assembly and association, freedom of religion, and freedom of movement within the country, as well as foreign travel, emigration, and repatriation. The government also permits domestic and international human rights monitors to operate freely in Nicaragua. The constitution prohibits discrimination based on birth, nationality, political belief, race, gender, language, religion, opinion, national origin, and economic or social condition. All public and private sector workers, except the military and the police, are entitled to form and join unions of their own choosing, and they exercise this right extensively. Nearly half of Nicaragua's work force, including agricultural workers, is unionized. Workers have the right to strike. Collective bargaining is becoming more common in the private sector. Political Parties Principal Government Officials Nicaragua maintains an embassy in the United States at 1627 New Hampshire Avenue, NW, Washington, DC 20009 (tel. 202-387-4371). ECONOMY Nicaragua remains the second-poorest nation in the hemisphere. Unemployment is officially around 22%, and another 36% are underemployed. Nicaragua suffers from persistent trade and budget deficits and a high debt-service burden, leaving it highly dependent on foreign assistance--as much as 25% of GDP in 2001. One of the key engines of economic growth has been production for export. Exports were $640 million in 2001. Although traditional products such as coffee, meat, and sugar continued to lead the list of Nicaraguan exports, the fastest growth is now in nontraditional exports: maquila goods (apparel); gold; seafood; and new agricultural products such as peanuts, sesame, melons, and onions. Nicaragua also depends heavily on remittances from Nicaraguans living abroad. Nicaragua is primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years. Foreign private capital inflows topped $300 million in 1999 but, due to economic and political uncertainty, fell to less than $100 million in 2001. Rapid expansion of the tourist industry has made it the nation's third-largest source of foreign exchange. Some 60,000 Americans visit Nicaragua yearly--primarily business people, tourists, and those visiting relatives. An estimated 5,300 U.S. citizens reside in the country. The U.S. Embassy's consular section provides a full range of consular services--from passport replacement and veteran's assistance to prison visitation and repatriation assistance. Nicaragua faces a number of challenges in stimulating rapid economic growth. Long-term success at attracting investment, creating jobs, and reducing poverty depend on its ability to comply with an International Monetary Fund (IMF) program, resolve the thousands of Sandinista-era property confiscation cases, and open its economy to foreign trade. This process was boosted in late 2000 when Nicaragua reached the decision point under the Heavily Indebted Poor Countries (HIPC) debt relief initiative. However, HIPC benefits will be delayed because Nicaragua subsequently fell "off track" from its IMF program. The country also has been grappling with a string of bank failures that began in August 2000. Moreover, Nicaragua continues to lose international reserves due to its growing fiscal deficits. The United States is the country's largest trading partner by far--the source in 2002 of roughly 25% of Nicaragua's imports and the destination in 2002 of about 60% of its exports. About 25 wholly or partly owned subsidiaries of U.S. companies operate in Nicaragua. The largest of those investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, mining, franchising, and the distribution of imported consumer, manufacturing, and agricultural goods. The U.S. Embassy's economic and commercial section advances American economic and business interests by briefing U.S. firms on opportunities and stumbling blocks to trade and investment in Nicaragua; encouraging key Nicaraguan decisionmakers to work with American firms; helping to resolve problems that affect U.S. commercial interests; and working to change local economic and trade ground rules in order to afford U.S. firms a level playing field on which to compete. U.S. businesses may access key Embassy economic reports via the mission's Internet home page at http://usembassy.state.gov/managua/wwwhemba.html. FOREIGN RELATIONS On the San Juan River there have been disagreements regarding navigational rights in the Nicaragua-Costa Rica border area. Nicaragua and Costa Rica signed a three-year agreement in September of 2002 to defer presenting these issues before the International Court of Justice (ICJ) for resolution. Meanwhile, the governments of Nicaragua and Costa Rica have agreed to work toward an amicable solution and to jointly fund community development projects in the border area. At the 1994 Summit of the Americas, Nicaragua joined six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA, or CONCAUSA, to promote sustainable economic development in the region. Nicaragua belongs to the United Nations and several specialized and related agencies, including the World Bank, the International Monetary Fund (IMF), World Trade Organization (WTO), UN Educational, Scientific, and Cultural Organization (UNESCO), World Health Organization(WHO), Food and Agriculture Organization (FAO), International Labor Organization (ILO), and UN Human Rights Commission (UNHRC). Nicaragua also is a member of the Organization of American States(OAS), the Non-aligned Movement (NAM), the International Atomic Energy Commission (IAEA), the Inter-American Development Bank (IDB), and the Central American Bank for Economic Integration (CABEI). In July 2004, Nicaragua抯 ambassador to the OAS assumed chairmanship of the Permanent Council (the Organization抯 second-highest decision-making body) for a 3-month period. U.S.-NICARAGUAN RELATIONS The resolution of U.S. citizen claims arising from Sandinista-era confiscations and expropriations still figures prominently in bilateral policy concerns. Section 527 of the Foreign Relations Authorization Act (1994) prohibits certain U.S. assistance and support for a government of a country that has confiscated U.S. citizen property, unless the government has taken certain remedial steps. In July 2004, the Secretary of State issued an 11th annual national interest waiver of the Section 527 prohibition because of Nicaragua's record in resolving U.S. citizen claims as well as its overall progress in implementing political and economic reforms. Other key U.S. policy goals for Nicaragua are:
Since 1990, the United States has provided $1.2 billion in assistance to Nicaragua. About $260 million of that was for debt relief, and another $450 million was for balance-of-payments support. The U.S. also provided $93 million in 1999, 2000, and 2001 as part of its overall response to Hurricane Mitch. Aside from funding for Mitch reconstruction, the levels of assistance have fallen incrementally to reflect the improvements in Nicaragua. FY 2000 assistance was $25 million and FY 2001 amounted to about the same. This assistance was focused on promoting more citizen political participation, compromise, and government transparency; stimulating sustainable growth and income; and fostering better-educated and healthier families. In 2001, the United States provided a total of $6.2 million to the Supreme Electoral Council and to a wide range of non-governmental organizations to ensure free, fair, and transparent elections. Principal U.S. Officials The U.S. Embassy in Nicaragua is located at Kilometer 4.5, Carretera Sur, Managua (tel. country code 505, phone 266-6010). Letters mailed in the U.S. should be addressed to American Embassy Managua, APO AA 34021. Other Contact Information American Chamber of Commerce in Nicaragua Caribbean/Latin American Action |
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