Daniel Ortega tightens his grip on Nicaragua

But an economic slump could eventually weaken the president’s power

TWO months ago Monimbó, a neighbourhood of Masaya, south-east of Managua, was in turmoil. Opponents of Nicaragua’s authoritarian president, Daniel Ortega, had taken over the city. Roadblocks guarded by masked men defended it from government forces. The opposition’s short-lived rule was the peak of a widespread uprising against Mr Ortega, in which perhaps 320 people died. Monimbó was the first place to rise up against the Somoza dictatorship, which Mr Ortega overthrew in 1979. In July this year it was the last to fall as his paramilitary forces retook Masaya.

Now the neighbourhood seems calm. Street sweepers, who have been back at work for a fortnight, clear up rubbish while the police look on. Young men, who led the fight, “have all left”, says a shopkeeper. Most have joined the 23,000 Nicaraguans who have sought asylum in Costa Rica.

The four-month rebellion and the government’s suppression of it have wrecked Nicaragua’s economy but left the autocrat firmly in power, at least for now. The economy had been one of the strongest in Central America, with annual growth of 5%. This year GDP is expected to shrink by nearly 6%. In the three months to June the formal workforce shrank by a tenth. Tourism, which accounts for 5% of GDP, has plummeted. On a recent Friday stray dogs outnumbered tourists on the promenades in Granada, a lakeside resort. Some $1bn in capital, the equivalent of 8% of GDP, has left the country, weakening the banks.

Despite the slump, the challenge to Mr Ortega’s rule has ebbed. It began in April as a protest against cuts to pensions, which the government soon reversed. It quickly became an expression of anger at his subversion of democracy since 2007, when he returned to power after a 17-year absence. He rigged elections, disbanded opposition parties and scrapped presidential term limits. Last year Mr Ortega named his wife, Rosario Murillo, who runs the government day to day, as his vice-president. Many of Nicaragua’s leading businessmen, a pillar of support for the ostensibly left-wing president, backed the protesters’ call to hold an election next year rather than in 2021. Momentum seemed to be with the protesters.

The turning point

That changed after paramilitary troops killed 16 peaceful protesters in a massacre on May 30th, Nicaragua’s Mothers’ Day. The private sector lost its nerve; Mr Ortega did not. Armed groups loyal to the regime wrested control of university campuses and towns back from dissidents. Gangs invaded properties owned by the regime’s critics. The army looked on.

The government is hunting down its opponents. They face “exile, jail or death”, say its spokesmen. During the unrest “Citizens’ Power Councils”, Cuban-style local spy networks, took notes on troublemakers. Now police are sending some to clandestine prisons where they are tortured. The government has sacked 135 medical staff who treated wounded dissidents. Only the most committed protesters attend the sporadic demonstrations that still take place. “I used to go to all of them,” says one dissident. “But now I just feel numb.”

Despair could become anger again as the economic situation worsens. The regime’s blighted image will discourage investors. Many talented Nicaraguans have left. Venezuela, which has given $4bn in aid over ten years, has stopped providing the money because its own economy is collapsing. In July Nicaragua’s government passed a budget that reduces spending by nearly 10%, double the cut that took place after the global financial crisis. It will cancel projects like building roads, which will lead to job losses in construction. It will have to reinstate unpopular cuts to pensions, but that will not be enough to close a huge deficit in the pension system.

It is desperate for cash. It has raised short-term loans to provide liquidity to banks and plans to issue new bonds, though it is unclear whether foreign investors will buy them. Mr Ortega may try to replace Venezuelan support with financial aid from Russia or China, whose communist government Nicaragua does not recognise. Without outside help, he will have difficulty continuing to supply his poor supporters with benefits such as microloans in return for their votes.

The middle class has turned definitively against him. One resident of Managua says that Mr Ortega’s younger children are no longer spotted in the capital’s bars and supermarkets. He may take comfort from Venezuela’s president, Nicolás Maduro, who has kept power even though the economy has shrunk by 40% since 2013. Like him, Mr Ortega is unloved, and for the time being unbudgeable.