Running against the wind of all forecasts of instability with the recently-reinstated Sandinista government, foreign investment and exports continue apace. During the first year in office, there was $335 million in investment from abroad, according to the chief of the government investment promotion agency Javier Chamorro. That was 15.5% more than the year before. Projections are that the increase in that figure over 2008 will be around 18%, rounding the figure for fresh investment up to $400 million. As of first quarter 2008, some $60 million had been invested, mainly in free trade zones and the food processing industry. Read the rest of this entry »

Daniel Ortega is beginning to feel what it is like to be the president in a budding democracy. He naturally faces opposition from some people protesting government policy decisions and actions. When it was announced that municipal elections (slated for early November) would be postponed in three municipalities of the North Atlantic Autonomous Region because of a lack of physical conditions due to the effects of last year’s Hurricane Felix, there were marches and demonstrations, along with attempts to block highways and close the regional airport. Then in May, cargo and passenger transport operators launched a first round of protests against incessantly rising fuel prices. Read the rest of this entry »

A Nicaraguan is likely to be the next President of the United Nations General Assembly. The mechanics of that world body are geared towards sharing the post of President of the General Assembly among the regions of the planet, one of which is Latin America and the Caribbean. Nicaragua has put a former Sandinista foreign minister (in the 1980s) up for the post to be decided on in June. Miguel D’Escoto Brockmann, an Ortega loyalist, was one of a handful of Catholic priests chastised by the late Pope John Paul II during his visit to Nicaragua in 1983 for participating in the government. Later, that Pope prohibited all Catholic priests from holding posts in secular governments.

Nicaragua’s energy authorities recently announced the approval by the Iranian government of a 150 million euro loan to build a dam on the Tuma River in the Department of Jinotega to produce 70 megawatts of hydroelectricity. Construction of the hydro project is slated to begin late this year, the work being done under an Iranian firm over an estimated three years. Approval by the Nicaraguan National Assembly, however, is still pending. Expect delays and much politicking, especially around the loan terms that were initially reported as a payback period of 10 years with 5% annual interest. Nicaragua has grown used to receiving much more favorable conditions, if not out-and-out donations.

The country’s biggest sugar producer, the San Antonio Sugar Mill, and their owners Nicaragua Sugar Estates are betting heavily on ethanol production. More than half the recent sugarcane harvest will be processed into this fuel. They produced 11 million liters last year and want to triple that figure in 2008. New tanks are being built at the Port of Corinto to store it in readiness for loading onto tanker ships.
The same sugarcane is also used to make sugar and the Flor de Caña line of rum for export and domestic consumption, along with the popularly-priced varieties of Ron Plata. Company officials have assured that ethanol production will not affect the supply of sugar in local markets. Nor that of Nicaragua’s national libation, we presume.

A wave of consternation swept through the ranks of free trade zone (zona franca) workers in early February. Labor union officials had issued a statement protesting a reported threat from eight multinational textile firms to pull out of Nicaragua, affecting more than 8500 workers. Álvaro Baltodano, the President of the Free Trade Zone Corporation (government agency in charge of overseeing these operations throughout the country) quickly tried to assuage such fears, saying that only a thousand jobs are at stake at present.
The labor unionists claim that the clothing companies want to pull out because things have changed since the Sandinistas came back into power. Others point out that demand in the United States may have declined because of the burgeoning economic crisis there, though it is doubtful that the impact of that would be felt so quickly, especially when Nicaragua won a large quota for textile product imports to the USA in the negotiations of the regional free trade agreement (CAFTA).
Some in the know say it all has to do with the 10-year income tax shelter granted to such industries for setting up here, which in some cases is about to expire. Free trade zone enterprises are always on the lookout for the best conditions for maximizing profits, and paying more taxes is not one of them. They would also like the government to be more predictable with its announcements of increases in the minimum wage so that they can factor that increased cost into the bids they make for production contracts. Look for negotiations between the government and these companies to resolve the situation in such a way that US customers can continue to be supplied with different clothing lines.

Couch potatoes rejoice! Nicaragua is a paradise for television viewers. The main local cable provider Estesa is expanding throughout the country, taking over small mom-and-pop cable operations in different towns, offering more than 80 channels. DirectTV has been supplanted by SkyNet with its different packages and DishNet has entered the fray, offering even US network channels along with hundreds of others.
If you like watching DVDs, there are plenty of rental shops and bootleg versions of even the newest movies are available along the streets or in parking lots for a dollar or two. A word of warning though for those of you who may use English-language movies with Spanish subtitles to help learn the language. Those subtitles may be somewhat misleading. For example, in the film 3:10 to Yuma, when Russell Crowe’s character says upstairs in the hotel room, “Discretion is the better part of valor,” the Spanish subtext says, “Por eso usted es maricón,” or literally, “That’s why you’re a fag.”

Investment in tourism continues apace in different parts of Nicaragua. A new $2 million boutique hotel is going up on the Masaya Highway just outside of the capital. Construction at the Gran Pacifica oceanfront project one hour west of Managua continues. In San Juan del Sur, the Pelican Eyes – Piedras y Olas complex recently joined forces with Paradise Developments and they have announced a new project called Marea Alta (High Tide). Designed to be a luxurious residential and hotel destination with world-class restaurants, it will have a tramway connecting the development on the hills overlooking the ocean with a seafront boardwalk. Just north of that tourism hotspot, the owners of another project, Cala Azul, have begun earthmoving work.
The famous coastal highway was in the news again, though it will still be a while before work actually begins and no one is holding their breath. The projected investment for 131 kilometers running north from the Costa Rican border is between 105 and 120 million dollars. It will likely be a toll road. Ten US cents per kilometer has been proposed.
Meanwhile, government roadway contracts are being executed and key stretches for tourism are in the process of being rehabilitated and upgraded, including the highway going west out of Granada and the stretch from the Pan-American Highway to San Juan del Sur.
Some have argued that the money for these highways would be better spent on roads to support agricultural production in the interior of the country. But with tourism having replaced coffee as the number one earner of foreign exchange (even with the currently high price for coffee), the economics speak for themselves. According to the government, the country earned $244.8 million from tourism, and that does not include the boosts to local economies from the construction of hotel projects.

The National Police have been recognized by the US Drug Enforcement Administration (DEA) for their outstanding work in recent years against the drug trade, including numerous busts totaling several tons of cocaine. Top DEA officials recently met with President Daniel Ortega, who has been critical of the work of the agency here.
Ortega took the opportunity to propose further joint cooperation with patrols in the Caribbean, including the waters that Nicaragua was awarded in a World Court ruling on a long-running territorial dispute with Colombia. This poses a conundrum for the United States. It brokered the treaty back in the early 20th Century to divide the sea at the 82nd meridian, slicing off a large portion of Nicaragua’s offshore holdings, including the archipelago of San Andrés, occupied by Columbia since 1822. The DEA also has a cooperation program with that government to stem the flow of coke.
The Colombian Foreign Minister was quick to respond to Ortega’s proposal, calling it a provocation that could lead to chaos and threatening to extend Colombia’s control in the Caribbean to Nicaragua’s shores. So which way will the US lean? Towards the country that produces much of the cocaine or towards the one that is intercepting tons of it on its way to the US consumers?

It was a classic set-up for Third World confrontation: a feisty populist government faces off against a multinational oil company that owns the only refinery in the country. Last century, it would have been resolved with a military coup as happened in Iran (1953), Guatemala (1954), and Chile (1973). But in Nicaragua in the 21st Century, negotiations and the signing of a business deal were the order of the day.
Last year, a company called Albanisa, made up by the State-owned oil companies of Nicaragua and Venezuela (Petronic and Petróleos de Venezuela, respectively), wanted to use some tank farm storage facilities at the Port of Corinto in Nicaragua, owned by Esso Standard Oil, for importing Venezuelan crude. Talks dragged on with little progress. National customs authorities got involved and embargoed the tank farm, alleging certain failures to pay some taxes.
A showdown would have had major repercussions for the country since Esso also owns the only refinery in the country. Instead, negotiations intensified and a deal was finally brokered. Petronic will rent out the facilities till end-2008 and will then proceed to purchase them outright. No details were released about prices.
Each year, Esso imports about seven million barrels of crude that are then processed into gasoline, diesel, and other petroleum products at its refinery in Managua. According to Nicaraguan energy authorities, this represents about 70% of local fuel demand. Imports have been coming from several countries: Mexico, the USA, Ecuador, Canada, Trinidad and Tobago, and others. The plan now is to import 10 million barrels just from Venezuela, which is offering a sweet deal that allows Nicaragua to pay half the bill within 90 days and the rest over 25 years at 1% annual interest.
The arrangement is criticized by the opposition, claiming that President Ortega is simply saddling the next generation with a massive debt tomorrow in exchange for energy today. Ortega, on the other hand, speaks wholeheartedly in favor of this cooperation relation with Venezuela within the framework of the recently-formed Bolivarian Alliance or ALBA, an initiative started by Venezuela’s Hugo Chávez in order to promote regional independence in Latin America and the Caribbean.
Apparently, part of the bill is to be paid off in kind, with Nicaragua shipping beef, beans, and corn to Venezuela, as well as providing technical advice in the field of geothermal energy to that country.