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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.
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Initially, it seemed as if Chavez was perfectly poised to capitalize on a wave of anti-American discontent felt throughout the hemisphere. But then, a series of dramatic reversals cast doubt on Chavez's ambitions to become a truly hemispheric leader and a lightning rod against U.S. influence.
Over the last few months, I had begun to doubt whether Venezuelan President Hugo Chavez would indeed have the kind of political staying power that I described in my book, Hugo Chavez: Oil, Politics, and the Challenge to the U.S. (recently released by St. Martin's Press).
Initially, it seemed as if Chavez was perfectly poised to capitalize on a wave of anti-American discontent felt throughout the hemisphere. Throughout South America, Chavez exchanged oil for political influence with newly emerging leftist regimes in Uruguay, Argentina, and Brazil; the election of Evo Morales in Bolivia, a key Chavez ally, seemed to underscore Venezuela's rising influence.
But then, a series of dramatic reversals cast doubt on Chavez's ambitions to become a truly hemispheric leader and a lightning rod against U.S. influence.
Chavez's Reversals, from Peru to the United Nations
In Peru, Chavez openly endorsed the nationalist candidate Ollanta Humala in the country's presidential election. But Chavez's strategy backfired when Humala's opponent, Alan Garcia, charged that the Venezuelan leader was interfering in Peru's internal politics. Garcia successfully exploited the issue to his advantage and went on to beat Humala in last April's election.
In Mexico, pro-business PAN candidate Felipe Calderon ran a negative campaign against his leftist challenger Andres Manuel Lopez Obrador. In his TV ads, Calderon linked Obrador to Hugo Chavez, proclaiming "Lopez Obrador is a danger to Mexico." Though Lopez Obrador cried fraud in Mexico's July presidential election, the Electoral Tribunal ruled that Calderon had won the election and rejected Obrador's allegations. Calderon is set to assume office in December.
The next set back for Chavez came in Ecuador, where the Venezuelan leader's would be protégé, Rafael Correa, went down in defeat in the first round of the country's presidential election last month. A Correa win would have added another oil-rich country to Chavez's anti-American alliance.
Correa, a leftist economics professor, denied that Chavez had funded his campaign and the Venezuelan leader, chastened by his defeats in Mexico and Peru, was uncharacteristically quiet about the Ecuador election.
However, it's no secret that the two had a personal rapport. Correa in fact visited Chavez's home state of Barinas in August, where he met with the Venezuelan leader and spent the night with Chavez's parents. Correa, who opposes an extension of the U.S. lease at an air base in Manta, which serves as a staging ground for drug surveillance flights, has nothing but contempt for George Bush.
When he was recently asked about Chavez's "devil" diatribe against the U.S. president at the United Nations, Correa remarked amusingly, "Calling Bush the devil offends the devil. Bush is a tremendously dimwitted President who has done great damage to the world."
But Correa was shocked by a strong last minute showing by his challenger, pro-U.S. banana magnate Alvaro Noboa. Like Lopez Obrador, Correa has cried foul and declared that his campaign might have fallen victim to electronic fraud on the country's voting machines. He will face off with Noboa in another runoff election in November.
Then there was Venezuela's failed bid to secure a non permanent seat on the United Nations Security Council. When the United States proposed its own candidate, Guatemala, things turned ugly. Chavez characterized the race as a struggle against U.S. domination throughout Latin America; Venezuelan diplomats went so far as to describe Guatemala as a U.S. stooge.
But in the end, Venezuela failed to come up with the requisite votes. Chavez could take some satisfaction that Guatemala too failed to come up with the necessary votes at the United Nations, and had to withdraw in favor of Panama.
The reality, however, is that despite Chavez's frenetic shuttle diplomacy throughout Africa and calls for Third World solidarity, he could not muster more votes than a small Central American country with very little regional influence and an appalling human rights record.
It was hardly an impressive showing.
The Chavez-Ortega Alliance
Events in Nicaragua, however, suggest that it won't be so easy for the Bush administration to roll back Chavez's ambitions. It now seems as if the Sandinista candidate Daniel Ortega will cruise to victory in the country's presidential election and avoid a run off. As of Monday night, preliminary results show Ortega with about 40 percent of the vote, more than enough to avoid a future runoff.
For the White House, it's a nightmare that officials had long sought to avoid.
Though Ortega, who was president from 1985 to 1990 during the U.S.-fueled Contra War, is a pale shadow of his former self, having jettisoned his leftist rhetoric and hostility towards his northern neighbor, nevertheless Washington must now recognize that it has patently failed to isolate Chavez diplomatically. Nicaragua now seems poised to join the wave of left leaning regimes throughout the hemisphere inspired by Chavez.
When Ortega traveled to Venezuela for a meeting with Chavez last year, the friendship between the two began to bear fruit. During the meeting at Miraflores, the presidential palace, Ortega remarked that Latin American unity was necessary to confront globalization. He added that Chavez's electoral victory convinced him that revolutionary change could be achieved through the ballot box. "I thought that they were going to overthrow Chavez," Ortega remarked, "and that he would meet the same fate as Salvador Allende."
Ortega later alarmed Washington by remarking that if he won the election he would make sure that Nicaragua would join ALBA, Chavez's Bolivarian Alternative for The Americas. Chavez's trading plan, which is designed to sideline traditional corporate interests and Bush's Free Trade Agreement of The Americas (FTAA), is based on barter agreements between Latin American countries. Recently, to the chagrin of U.S. policymakers, Bolivia joined Venezuela and Cuba in ALBA.
Chavez, Ortega and ALBA
"Without a doubt," Ortega declared during a Cuban summit meeting with Morales, Castro and Chavez, "we have to look towards the south, we have to look towards integration, and ALBA is an open door, it is Latin American and Caribbean integration."
Ortega later added that he opposed U.S.-backed trade deals. "Central America's trading future lies not with the U.S. but with Venezuela, Brazil and Argentina," he said.
Ortega, smarting from three successive electoral defeats after the fall of the Sandinistas from power, added that he was "convinced after 16 years of neo liberal policies in Nicaragua that the conditions are ripe for the Sandinista Front to retake power, now via the ballot box."
In the Plaza de La Revolucion in Havana, Chavez approached Ortega and remarked, "Daniel, we are inviting you next year to come here as the president of Nicaragua."
According to Ortega, Chavez followed up on his promising words by offering to help Nicaragua join in ALBA. Speaking before hundreds of workers in Managua, Ortega said that Chavez and the president of the Venezuelan Economic and Social Development Bank (known by its Spanish acronym Bandes) had pledged to help open a development bank in Nicaragua. "Venezuela is willing to provide support so that this bank will become a reality and campesinos will have credits and a secure market," Ortega told supporters. According to Ortega the Venezuelan aid formed part of ALBA.
Chavez, Ortega and CAFTA
In seeking to recruit Ortega for his ALBA scheme, Chavez found a willing ally in Ortega. Indeed, Nicaragua's experiment in "neo-liberal" economics since the fall of the Sandinistas in 1990 has not been a very happy one. Like Venezuela, which experienced political unrest as a result of neo liberal policies pushed by Washington, Nicaragua has been buffeted by "savage capitalism," as Ortega has put it.
Today, Nicaragua is a bleak place. Per capita income is a paltry $700 and more than 70% of the population lives on less than $2 a day. Successive governments have failed to restore Managua from a 1972 earthquake. Within yards of the presidential palace lie slums and empty buildings; beggars and barefoot children splash around in the gutters of Managua instead of heading to class.
Like Chavez, Ortega has spent a lot of time over the past years criticizing U.S.-led free trade deals. For example, the Sandinista led the charge against CAFTA, the Central American Free Trade Agreement. Ortega pledged to pull Nicaragua out of CAFTA and "end savage capitalism when we win." CAFTA, Ortega argued, was an effort by the U.S. to exploit poor countries in a rush to the bottom and cheap labor.
"Bush is taking up CAFTA," Ortega remarked in an interview with the Christian Science Monitor, "because it is his way of keeping Central America from looking south." Ortega furthermore suggested that Washington was seeking to splinter Nicaragua's solidarity with the Left in Latin America such as Chavez's regime.
CAFTA was pushed ruthlessly by U.S. trade representative Robert Zoellick over the objections of labor, environmentalists and human rights groups [for more on Zoellick, see my profile of the diplomat in my book].
"CAFTA is the opportunity of a lifetime," Zoellick remarked in an address given at the Heritage Foundation. "If we retreat into isolationism, Daniel Ortega, Hugo Chavez and others like them, leftist autocratswill advance."
Zoellick's efforts to link Ortega and Chavez in order to ram through CAFTA were echoed by paranoid, red baiting Republicans in the House and Senate. Oklahoma Republican James Inhofe warned his fellow Senators: "These Communists, these enemies of the United States, Chavez, Ortega, and Castro, are all in opposition to CAFTA. If you want to be on their side, you would vote against CAFTA."
In the House, Republican Rep. Mike Kirk of Illinois took the fear mongering prize by arguing that Chavez was "Venezuela's Mussolini." Chavez, claimed Kirk, was purchasing weapons in order to fight a new war in Central America. "Let us enact a free trade agreement with Central America to lock in democratic growth and stability," Kirk exclaimed, "and let us make sure that President Hugo Chavez's Venezuelan agents find no fertile ground in America's back yard."
In the end CAFTA passed narrowly in Congress. In Nicaragua, CAFTA was opposed by the Sandinistas in the National Assembly as well as key figures in civil society, including the president of the country's largest agricultural organization, who warned that the agreement would give rise to greater poverty in the countryside.
According to experts, CAFTA stood to encourage the growth of more maquiladora assembly plants, but any positive benefit would be offset by the loss in farm jobs as a result of the influx of cheap U.S. agricultural goods. Despite domestic opposition, Nicaragua passed CAFTA in October 2005.
Efforts to Demonize Ortega and Chavez
Despite its CAFTA public relations victory, the Bush administration was clearly still worried and kept up the pressure on Ortega during the run up to the presidential election. Paul Trivelli, the U.S. Ambassador to Nicaragua, warned that Ortega's victory would signify "the introduction of a Chavez model" in Nicaragua.
Meanwhile the conservative press flew into a tirade against Ortega, with the Washington Times remarking that "Ortega will take Nicaragua out of CAFTA and into Mr. Chavez's Bolivarian Alternative for the Americas, and almost synonymous with this is a move to nationalize industry, much like Evo Morales did in Bolivia."
The Washington Post was similarly hostile, remarking in an editorial that Ortega "is about to return to power and increase the alliance with non-democratic countries [such as] Venezuela." The Post, interestingly criticized the Bush administration for reacting too slow to the Chavez and Ortega threat.
On the pages of National Review, Otto Reich, a former State Department official who dealt with Venezuelan opposition conspirators in the run up to the coup against Chavez in 2002, remarked that "The emerging axis of subversion forming between Cuba and Venezuela must be confronted before it can undermine democracy in Nicaragua."
As per the case in Peru, the Nicaraguan right sought to link its Sandinista opposition to Chavez in an effort to instill fear in voters. Presidential candidate Jose Rizo remarked that Chavez and Ortega were "a threat to regional and hemispheric stability," and claimed that the Venezuelan leader was financing Ortega's campaign [both Venezuela and Ortega deny the accusation]. "Ortega will become Chavez's lieutenant in Central America and the Caribbean in the same way that he represented the extinct and failed Soviet Bloc," Rizo added.
Ortega Unlikely to Radicalize
Unlike Peru however the opposition's strategy of trying to scare Nicaraguan voters proved unsuccessful and at long last Ortega has prevailed in his drive to reach the presidency. Despite the hyperbolic claims by the U.S. and conservative politicians in Nicaragua however, Ortega is hardly in a position to become Chavez's steward overnight. Unlike Venezuela, Nicaragua is poor and foreign investment and aid accounts for 35 percent of the budget. That money could disappear if Ortega started to radicalize the country and expropriate industry.
In an effort to appease jittery investors, Ortega recently signed a pro-business pact in which he pledged to promote the private sector. Though he has spoken about the need to renegotiate aspects of CAFTA, Ortega now says he will build on free trade agreements. Ortega will have to tread lightly: the U.S. is Nicaragua's largest trading partner and accounts for about one fifth of the country's imports and approximately a third of its exports. About 25 wholly or partially owned subsidiaries of U.S. corporations operate in Nicaragua.
With so much at stake, Ortega has predictably moderated his rhetoric by stating that he would work with the International Monetary Fund, the World Bank, and Inter American Development Bank.
Carlos Fernando Chamorro, son of former president Violeta Chamorro and editor of the weekly Confidencial newspaper, is not too concerned about a radical Ortega agenda. He argues that Ortega is a pragmatist and will try to appease the United States. Observers believe that the right wing Liberal Constitutionalist Party (known by its Spanish acronym PLC), the main opposition to the Sandinistas, will hold onto its many seats in the National Assembly following this election, which would further complicate any radical agenda.
But, Chavez's Oil Diplomacy in Central America Could Be a Factor
Nevertheless, Chavez seems to be trying hard to bring Nicaragua into its political orbit. Chavez has enhanced his stature in South America by trading oil for other goods, and seems to be pursuing a similar strategy in Nicaragua. Venezuela has in fact already provided cheap fuel to Nicaragua through Sandinista mayors. Speaking on his television and radio program Alo, Presidente!, Chavez told Ortega that Nicaragua could pay for Venezuelan oil with meat, milk, cheese and other goods.
Ortega and Chavez have held personal discussions about setting up a mixed Venezuelan-Nicaraguan company that would import the cheap oil. Chavez is apparently willing to invest in Nicaragua to set up necessary oil infrastructure. Best of all, Chavez's offer could prove politically beneficial to Ortega since restive students have protested any move to raise transportation costs. Farmers meanwhile would not have to increase their production costs.
What does it all add up to? Despite some setbacks, Chavez stands to at least gain some diplomatic and political leverage in Central America. Ortega will be hampered in bringing about radical change, but will at least look upon Venezuela as an important regional ally and friend. Try as it might, the Bush administration has not been able to isolate Chavez. To the contrary, the U.S., through its efforts to demonize both Chavez and Ortega, has unwittingly brought them together.