2012-02-03 Election Year Venezuela: It’s Washington vs. the Chávez-Ortega Alliance

Authored by Nikolas Kozloff

As the Venezuelan presidential election approaches in October, Washington is undoubtedly hoping that Hugo Chávez will go down to stinging electoral defeat and that the populist leader's geopolitical alliance will crumble and come to an ignominious end. Of particular concern to both the Bush and Obama administrations has been Nicaragua, a country which moved into Chávez's orbit when Daniel Ortega, a leader of the Sandinista Revolution, captured the presidency in 2006. According to secret cables recently released by whistle-blowing outfit WikiLeaks, the State Department has been furious with Ortega for conducting an independent foreign policy, and U.S. diplomats have resorted to threats and intimidation in order to head off the Venezuelan-Nicaraguan alliance.

American diplomats in Managua would have surely preferred to see a continuation of the Enrique Bolaños administration, which predated the Ortega regime and proved much more amenable to Washington's conservative agenda. In early 2006, prior to Ortega's election, the Nicaraguans told the U.S. ambassador that they would not back Venezuela for a non-permanent seat on the United Nations Security Council and would support Guatemala for the spot instead. In fact, Nicaragua went so far as to act as a kind of ringleader against Venezuela, rounding up Central American support for Guatemala in an effort to "forestall" Chávez's rising influence.

As the election neared, the Bush administration became increasingly concerned about what an Ortega win might mean at the regional level. In Managua, the American ambassador complained to the Nicaraguans about "the pattern of harassment directed by the Venezuelan government" against U.S. diplomats. The Nicaraguan Foreign Minister sympathized, adding that he was worried about "Chávez's interest in Sandinista (FSLN) leader Daniel Ortega's winning the November election." In a follow up meeting, the Americans told the Bolaños government that Washington was closely monitoring Chávez, who had proposed an oil deal with the Sandinistas.

Washington Loses a Key Ally

With the re-election of Ortega in late 2006, who had previously served as president of Nicaragua at the height of the U.S.-funded Contra War of the 1980s, the Bush administration's foremost fear had come to pass. Flying down to Managua, Assistant Secretary of State Thomas Shannon met with President elect Ortega in the conference room of the FSLN Secretariat. After Ortega announced that he would seek a trade agreement with Venezuela, Shannon remarked sternly that "President Chávez knows what he has to do to improve relations. He is the author of the present confrontation."

If that was not clear enough, U.S. diplomats later warned the incoming Ortega administration that Washington would respect Nicaraguan sovereignty, but "if the FSLN government were, for example, to recruit hundreds of Venezuelans to man its ministries, we would be concerned." The main purpose of such advisers, noted the U.S. ambassador to his superiors, would be "to indoctrinate Nicaraguans against the United States and democracy." It would be absolutely "essential," the ambassador noted, to convey a sense of U.S "red lines" toward the Ortega regime such as the need to follow the directives of large, international financial institutions.

If the Americans hoped that Nicaragua would distance itself from Chávez, however, they got a shot in the arm during the Ortega inaugural in early 2007. Singing the praises of his Bolivarian "twin" Hugo Chávez, the new Nicaraguan president proclaimed the failure of so-called "neo-liberal" economics. During the ceremony, Ortega pledged to bring Nicaragua into Venezuela's ALBA alliance and end privatizations of public companies. In another jab at the Bush administration, Ortega said he would like to "revisit" certain elements of the Central American Free Trade Agreement or CAFTA. Both Chávez and Bolivian leader Evo Morales were at the inaugural to proclaim the "death of imperialism."

Divide and Conquer in Latin America

With the alarm bells going off, U.S. ambassador to Nicaragua Paul Trivelli invited fellow Central American ambassadors over for breakfast and a discussion. During the get together, the conservative dignitaries said they were "startled by the populist rhetoric and procession of infamous guests surrounding the inauguration of President Daniel Ortega," and were "dismayed" by Ortega's accession to agreements with Venezuela. Perhaps, they opined, Nicaragua's neighbors could help to "offset the negative influence" of Chávez.

Not content to stop there, Trivelli then organized yet another breakfast, this time inviting the Spanish, Mexican, Chilean, Brazilian and Colombian ambassadors to Nicaragua, respectively. All the diplomats echoed the previous chorus of concern, declaring preoccupation over Chávez's "destabilizing" influence. The over the top pro-U.S. Colombian ambassador was particularly worried, declaring hyperbolically that Chávez could cause mischief in Central America and thus "open the door to drug trafficking and the movement of terrorists."

Ratcheting up International Pressure

The atmosphere became increasingly poisonous by March, 2007 with Trivelli going into overdrive in an effort to recruit international allies against the incipient Ortega-Chávez alliance. The campaign bore fruit as both Spain and Germany joined the fray and warned Ortega not to issue "contradictory statements and actions regarding foreign affairs, press freedom, and investment." Hosting yet another breakfast, Trivelli invited the Nicaraguan Foreign Minister, Economics Minister and Presidential Advisor as well as the Spanish and German ambassadors.

Trivelli quickly let the Nicaraguans know who was boss, opening the breakfast "by remarking that the administration's moves to centralize government, criticize the press, scapegoat international investors, and engage pariah regimes...raise questions about the new government's commitment to maintain an open democracy and friendly relations with all."

The breakfast, Trivelli wrote, served to put the Nicaraguans on notice. The U.S. ambassador intended to issue a warning to the government's more moderate faction that "we and other embassies are monitoring investor relations closely, a message they can use to push back against party radicals urging Ortega to strengthen alliances with Venezuela." Nervously, the Nicaraguans blamed the "sensationalist press" for distorting Ortega's record, adding that all new governments go through a "period of adjustment."

Push and Shove over Economic Policy

In an effort no doubt to mark a line in the sand or "red lines," Trivelli also met with the new Minister of Finance. In light of Ortega's recent actions, including the signing of important economic deals with the likes of Chávez, what kind of economic model was Nicaragua planning to pursue, Trivelli asked? The Finance Minister responded that his country's foremost concern was maintaining macroeconomic stability and holding talks with the likes of the IMF. Trivelli seemed skeptical of such claims, noting that "U.S. investors had begun questioning what sort of economic model the new government plans to pursue."

From there, the discussion got somewhat frosty with the ambassador pressing the Finance Minister about the need to resolve property claims stemming from expropriations that took place in the 1980s during the height of the Sandinista Revolution. Trivelli personally handed over a list of "high profile" expropriation cases. The Minister responded defensively that Ortega had no plans to expropriate property as in the 1980s, "nor do anything that will damage the favorable investment climate that currently exists."

Despite such assurances, Trivelli pressed on. Would Ortega limit foreign investment in sensitive sectors such as energy and coastal property, Trivelli asked? Seeking to placate the ambassador, the Finance Minister replied that "Nicaragua is not going to shut the door on anyone (nor) obstruct investment in any sector."

Unconvinced, Trivelli prodded Nicaragua's Central Bank President about Nicaraguan economic policy in a follow up meeting. Testily, Trivelli asked the Nicaraguan how a closer relationship with Venezuela would facilitate a sensible business climate. In a game of cat and mouse, the official responded that recent economic agreements with Chávez did not represent "a reflection of a political vision for Nicaragua, but rather an acknowledgment that Nicaragua depends upon [Venezuela's] largesse ... for oil."

Still skeptical, Trivelli brought up Ortega's recent statements attacking "neo-liberalism" and calls to end "dependency" on the International Monetary Fund. Ortega's desire to review privatization of the telephone and power sectors was likewise a concern, and the ambassador prodded the Central Bank President as to the particulars of ALBA economic aid for Nicaragua.

Game of Cat and Mouse

U.S. Embassy staff continued to press the Nicaraguans, hoping to identify moderate factions within the government which could help to reel in Ortega's pro-Chávez leanings. By speaking with Magda Enríquez, a high level official at the Ministry of Foreign Affairs, the Americans hoped to make their case. Within the Sandinista hierarchy, Enríquez appeared to be "aligned with the FSLN moderates, recognizes the value of positive engagement with the United States, and probably lends a voice of reason to balance the more extreme views of the Sandinista hardliners."

When the Americans complained that Ortega's discourse regarding the U.S. had become "increasingly belligerent and unconstructive," Enríquez nodded in agreement and promised to urge the president to dial back his rhetoric. Hoping to calm tempers at the U.S. Embassy, Enríquez added that while Ortega saw Chávez as his "friend and ally," Nicaragua did not see eye to eye with Venezuela on all issues.

Nicaragua's Business Community vs. Ortega and Chávez

Having made overtures towards other foreign powers as well as moderates within the Sandinista government, the Americans proceeded to court the Nicaraguan business sector. At an economic roundtable, Trivelli hosted heavy hitters linked to international investment such as Alberto Chamorro of the Bank of Central America, which was almost 50% owned by GE Financial and Joaquim de Magalhaes of Esso Nicaragua. Speaking with the Americans, the businessmen complained about Ortega, who in their view was intent on regaining his standing as a Latin American revolutionary by praising Chávez.

Venezuelan oil diplomacy surely did not go over well amongst the ambassador's guests. According to them, Venezuelan petroleum shipments to the Ortega government were arriving faster than Nicaraguan state oil company Petronic could handle them, and this in turn was creating difficulties for local fuel distributors. Even worse, Ortega had undertaken a nationalistic energy policy by seizing fuel storage tanks owned by Exxon. Overall, the guests believed that the Ortega regime saw Petronic and Venezuelan oil as a "giant ATM" from which it could withdraw cash at any time.

Investors grew even more jittery when the board of the Millennium Challenge Corporation cancelled more than $60 million in U.S. economic assistance to Nicaragua as a result of alleged election fraud marring the November, 2008 municipal contests. As Ortega railed against the U.S., arguing that Washington was unduly interfering with Nicaragua's own sovereignty, local businessmen lamented the cutoff in aid.

Obama Era: Tensions Continue

If the Americans, however, hoped that such punitive measures would dissuade Ortega from cozying up to Venezuela, they would be sorely mistaken. Indeed, if anything the cutoff encouraged Nicaragua to look for alternative funding, and by 2008 Ortega had already received more than $1 billion from Venezuela in the form of loans, grants, and foreign direct investment. According to the U.S. Embassy, the FSLN used part of the assistance to invest in party building and propaganda. To add insult to injury, Ortega also lambasted the Bush administration, claiming that the Americans had conspired to assassinate Chávez.

WikiLeaks cables hint at the further deterioration of U.S.-Nicaraguan relations during the Obama era, and underscore Ortega's growing ties with Venezuela and ALBA members such as Cuba. Joining with his left allies in Latin America, Ortega called for the development of a new regional organization which would exclude the U.S. and resist the political influence of "the Empire." Speaking on Cuban television, Ortega criticized Obama for maintaining Bush era policies such as freezing of the Millennium Challenge Account for Nicaragua.

In private meanwhile, Sandinista officials told the Americans they were becoming frustrated with the Obama administration and would deepen joint projects within the ALBA alliance, thus leading the U.S. Embassy to further lose patience with Ortega and his clique, which displayed a "skewed" world view "claiming a moral right to demand more resources, without conditions, while at the same time denouncing the very countries that provide such aid."

The WikiLeaks cache ends in early 2010, so we don't know the inside story of U.S. diplomacy in the region during the recent past. Yet, it's no secret that the Obama administration, like the Bush White House before it, views the Latin populist left as an irritant and would like to be rid of Chávez and his allies. If the cables are any indication, American diplomats in Managua most likely continued to pursue their earlier approach of cultivating support within the Nicaraguan business elite, peeling off Sandinista moderates and drumming up conservative support in the wider region against Ortega.

Unfortunately for the State Department, such tactics have not yielded concrete results. Indeed, it would appear that Ortega has now consolidated his political grip on Nicaragua following the Sandinista's recent reelection to a third presidential term. Yet, 2012 will be a momentous year in the region, as Chávez too risks everything on his own reelection bid. If Chávez should go down in defeat, Nicaragua would be deprived of a key political and economic benefactor and suggest further problems for the populist left in Latin America.

Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left. Visit his new web site, The Revolutionary Handbook.