Populism in Nicaragua: Daniel Ortega
Guerrilla leader, junta official, elected president, established autocrat.
This is the fifth post in our series of case studies on the five iconic cases of populism in 21st-century Latin America.
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A two-time populist
Daniel Ortega differentiates himself from the remaining leaders in the “iconic five” cases because he rose to power twice. By the time he reclaimed the presidency in 2006, he was already a well-known political figure in Nicaragua, having led the Sandinista Revolution that governed the country from 1985 to 1990.
Following his departure from office, Ortega repeatedly ran for president, ultimately securing a return to power thanks to a shady political arrangement known as El Pacto, which restructured the electoral system to benefit his Sandinista Party.
Ortega's first rule
To understand populism in Nicaragua, it's important to look back to the late 1970s. In 1979, the Frente Sandinista de Liberación Nacional (FSLN—Sandinista National Liberation Front) overthrew the government of Anastasio Somoza, who ruled Nicaragua from May 1967 to July 1979 as both an elected president and a dictator. (The name honors Augusto César Sandino, who led resistance against the U.S. occupation of Nicaragua in the 1930s.) He held de facto power as president between 1972 and 1974, between his elected terms.
FSLN, a revolutionary socialist militia, installed a military junta of National Reconstruction, a provisional government that ruled until 1985. The revolution quickly sought to take control of numerous institutions to extend their powers. A State Council, subordinate to the junta, was formed, but only 3 out of 47 seats were controlled by the opposition.
At the same time, the Sandinistas created local committees (Comités de Defensa Sandinista), which gathered one third of the adult population and were in charge of “production, distribution, health, education, and militia organization,” while also infiltrating labor unions to gain support from the working class (Williams, 1994, p. 173). Unionizing increased by a factor of almost 8, and 90% of the new unionization was from workers joining organizations with links to the Sandinistas.
The period was also marked by a guerrilla war, with opposing right-wing militias, the Contras, who were supported and funded by the United States government. On the other hand, the FSLN and the revolution received extensive support from Cuba and the Soviet Union. In total, it is estimated that 30,000 Nicaraguans died in the conflict (Walker and Wade, 2003).
In 1984, elections were held and one of the five members directing the junta, Daniel Ortega, ran representing FSLN and won with nearly 67% of the votes, with part of the opposition boycotting the process. In January 1985, the junta was dissolved, and Ortega took power as president. In practice, his government represented a mere continuation of the work started by the junta, with a large campaign for literacy and an extensive land reform.
At the beginning of the revolution, the FSLN expropriated land from Somoza and his allies, but it took time until it was redistributed in parcels. Because the country was heavily reliant on agricultural exports, radicalizing the land reform presented a threat to the regime’s economic performance. As a result, FSLN had conflicts with other groups and labor unions that would have otherwise been allies (Williams, 1994).
The first chapter of left-wing populism in Nicaragua came to an end in 1990, when Ortega lost the presidential elections to Violeta Chamorro, from the National Opposition Union (UNO), who took a conciliatory agenda to her government. Although FSLN lost the election, it remained very powerful, with large influence over the bureaucracy and civil organizations.
El Pacto
Ortega made a deal with Arnoldo Alemán, a former Nicaraguan president (1997-2002) from the Constitutionalist Liberal Party (PLC), who in 2003 was convicted of corruption. In short, the pact involved a constitutional amendment directed mainly at altering several electoral rules. In practice, it was a log-rolling scheme where the FSLN helped Alemán to get immunity against prosecution1 whereas Alemán's PLC would help Ortega to retake the presidency in the future.
The last part was made possible by lowering the required percentage of votes that would allow a victory in the first round, from 50% to 40%, or even 35%, provided there is a 5% margin relative to the second candidate.
Ortega, who faced an electoral ceiling of around 40% of votes, was able to return to the presidency in 2006, when he received 38% of votes, whereas the second candidate got 28.3%.
Ortega’s new administration marked a significant departure from his earlier leadership. He temporarily distanced himself from Marxist rhetoric and instead aligned with the Catholic Church—endorsing restrictive abortion laws and calling for a “spiritual revolution” in his inaugural speech (Torres-Rivas, 2007). He also brokered an agreement with the International Monetary Fund (Grigsby, 2010).
Despite these shifts, Ortega’s campaign remained rooted in promises of expansive social programs aimed at tackling hunger and unemployment, expanding microcredit for farmers, supporting small enterprises, and guaranteeing universal access to education and healthcare.
Alliance with Chávez
In 2007, the Ortega administration forged a strategic alliance with Hugo Chávez’s government, marking a new phase in Nicaragua’s foreign policy. That year, Nicaragua entered the Bolivarian Alliance for the Peoples of Our America (ALBA)—a regional bloc formed as a counterweight to the U.S.-backed Free Trade Area of the Americas (ALCA).
A key advantage of joining ALBA was access to highly favorable oil arrangements: Venezuela committed to delivering 10 million barrels of oil annually, with only half the cost due upfront and the remainder financed over 23 years at a 2% interest rate. Though framed as deferred payments, this arrangement effectively funneled financial support from Venezuela to Nicaragua.
Between 2008 and 2014, the country received an average of $470 million per year in aid, with total disbursements reaching $3.6 billion by 2017 (Cruz, 2018). Notably, these resources were kept off the official national budget, even though they were nominally meant to fund social initiatives.
Instead, they handled by Albanisa, a private company, subsidiary of the Venezuelan state-owned PDVSA, and Nicaraguan state-owned oil company, Petronic(Cruz, 2018). Because it is a private company, Albanisa is not required to disclose its financials to the public; even more, Petronic is run by the treasurer of FSLN, who is also vice president of Albanisa.
Without any transparency, the money is directed to the Consejos del Poder Ciudadano (Citizens Power Councils, CPC) – created at the same time by Ortega – which have the discretion to use the money in their localities.
While the government narrative is that this is done so that the people has the ultimate power to decide how they want the money spent, the CPC's are controlled by Sandinistas as centers for patronage. Councils can concede loans to allies, decide which streets will be paved, which stores will participate in the government-subsidized food program, and which farmers will get free seeds, cattle, and pigs. All committees are overseen by Daniel Ortega's wife, Rosario Murillo.
During this period, Ortega appeared to have adjusted his political strategy. Bolstered by Venezuelan assistance and international loans, his administration maintained fiscal stability while pursuing redistributive policies – earning the label “fiscally-responsible populism” from Cruz (2018). The significance of this external funding cannot be overstated: absent this support, Nicaragua would have faced consistent budget deficits throughout Ortega’s tenure.
On top of the oil deal, Chávez offered the Venezuelan army to build a highway that would connect Nicaragua's Pacific and Atlantic coasts, but that never happened. The mere promise was meaningful, though, as Nicaragua it is the only country of Central America that does not have its Pacific and Caribbean costs connected by roads and has no ports in the Atlantic (Grigsby, 2010).
Social program outcomes
Ortega’s social programs had disappointing results. From 2005 to 2009, the share of people living under $1.90 a day was reduced by a mere one percentage point, despite a 25% cumulative GDP per capita growth over the same period. That is roughly the same pattern observed in the 2001–2005 period, under the so-called “neoliberal” government of Enrique Bolaños, when GDP per capita grew but poverty rates remained unchanged (Grigsby, 2010). It is informative that, by 2010, 6 in every 10 families still use firewood for daily cooking (Meza, 2010, p. 5).
On top of that, there is a great disparity between urban and rural populations: the share of people living in poverty in rural areas is double that of urban areas, and the rate of extreme poverty is nearly five times higher (26.6% in rural areas vs. 5.6% in urban). Exclusion rates for healthcare reach 90% of the rural population, 60–80% of rural places do not have access via paved roads, and only 40% have access to electricity (compared to 92% in urban areas) (BID Nicaragua). Not surprisingly, the FSLN has its largest base of supporters in urban areas, especially in the capital, Managua (Torres-Rivas, 2007).
According to a 2012 report by the Inter-American Development Bank, although the government created a program for child care, the neonatal infant mortality rate had not changed since 2001. While 50% of children between 0 and 6 years of age lived in extreme poverty, and chronic malnutrition affected nearly 1 in every 5 children, 58% of those reached by the program were not poor. There was less than one doctor per 1,000 people, and the supply of nurses is even worse, with only 1.7 doctors per nurse. The latest data from the World Bank shows that, in 2018, there were fewer than 0.7 doctors per 1,000 people, roughly the same level as that of 1984.
Collapse of democracy in Nicaragua
In 2011, national elections were held; Ortega was able to circumvent the constitutional ban on consecutive terms and got reelected. The Supreme Electoral Council and the Supreme Court, both controlled by the Sandinistas, allowed Ortega to run, saying that the ban did not apply to him. Later, in 2014, he was able to approve a constitutional amendment revoking Article 147 of the Constitution that dealt with term limits.
Several independent organizations and international observers raised concerns about the lack of transparency in the voting process, and some even alleged electoral fraud. However, in the end, the results were generally accepted, even by the opposition. The FSLN won 62 out of 90 seats in Congress, a majority that would allow constitutional reforms to be approved (Colburn and Cruz, 2012).
In the 2016 elections, Ortega banned all oversight – national as well as international – also blocking access to electoral results and keeping many candidates from running (Sánchez, 2019). By the next election, more than 30 people had been arbitrarily detained, including 7 presidential candidates.
Indeed, the Supreme Electoral Council cancelled the legal status of the Conservative Party (Partido Conservador), Democratic Restoration Party (Partido Restauración Democrática), and the Citizens’ Party for Liberty (Partido Ciudadano por la Libertad). With this, Ortega was able to eliminate the only opposition candidate who had registered for the presidential election, according to a report from the Organization of American States' Inter-American Commission on Human Rights.
As a consequence, Ortega jumped from having received 38.07% of the votes in his first term, to 62.46% in 2011, 72.44% in 2016, and 75.87% in 2021 – not to mention having a whopping 83.3% of the seats in Congress in 2021.
Stages of Populism in Nicaragua
Ortega started with unfavorable external conditions. During the 2008 financial crisis, Nicaragua faced a sharp rise in inflation—reaching nearly 20%—alongside a roughly 25% decline in gross capital formation and a jump in unemployment from 5.1% at the start of Ortega’s presidency to 8.4% in 2009 (Grigsby, 2010).
Despite these setbacks, the country recovered relatively smoothly. After the initial shock, inflation stabilized at an average of 5% per year, and by 2012, capital formation had rebounded to its 2008 level, around 2% of GDP. Between 2012 and 2017, the regime sustained an average annual GDP growth rate close to 5%, while GDP per capita rose by 2%.
However, signs of economic and political decline began to surface at the beginning of 2014. Financial support from Venezuela fell sharply—from US$560 million in 2013 to half that amount by 2015, and down to just US$31 million in 2017, merely 5% of its peak in 2008. A political crisis followed as several European-led multilateral organizations suspended funding in response to allegations of electoral fraud and Nicaragua’s ties to Chávez’s regime (Grigsby, 2010).
Gross capital formation dropped from 29% of GDP in 2015 to 17% in 2019. Between 2017 and 2020, GDP per capita fell by a cumulative 12%. Perhaps most striking was the collapse in foreign direct investment, which declined from 9.1% of GDP in 2014 to just 1.4% in 2020. Politically, the period was marked by repeated electoral fraud attempts, increasing authoritarianism, and human rights violations.
In April 2018, facing the imminent collapse of the social security system due to an aging population, mismanagement, and corruption (Cruz, 2018), Ortega introduced a sudden reform with minimal legislative input, relying on his unchecked political authority. The move sparked protests from elderly citizens, who were met with harsh repression. As students joined the demonstrations, tensions escalated further. Over the following year, government forces and allied militias were responsible for the deaths of more than 300 people. Reports also emerged of rape, torture, and extrajudicial executions (Buben & Kouba, 2020; Cruz, 2018; Sánchez, 2019).
As expected, the economy contracted amid widespread road blockades, business shutdowns, and mass layoffs. GDP per capita fell by 6.5% in 2018 and another 4.2% in 2019, while unemployment doubled between 2017 and 2020. Progress in poverty reduction was undone, with 9.3% of the population slipping below the poverty line. By 2022, real wages were much lower than in 2006, strictly following the trajectory of macroeconomic populism, as described in Dornbusch and Edwards (1990).
Data from the Central Bank of Nicaragua also shows that the construction sector declined by 13.7% in 2018 and 34.5% in 2019. The tourism industry experienced similarly steep drops, with negative growth of −22.1% in 2018 and −32.5% in 2020. Private investment collapsed by 32.4% in 2018 and 37.9% in 2019, while public investment fell by 9.8% and 15.4%, respectively. In 2018 alone, private bank deposits dropped by 20%.
Importantly, the reform granted immunity from arrest or prosecution to the President, while also establishing that former presidents automatically gained a seat at the National Assembly following their presidential term. Because a 1995 amendment prohibited consecutive presidential terms, automatically granting a seat at the National Assembly to Alemán in his ousting from the presidency gave him an additional five years of immunity against prosecution. The National Assembly eventually revoked this proviso, and Alemán was prosecuted and convicted, but in 2009 the Supreme Court nullified his trial. For a complete description of the pact and the reforms implemented, see Torres-Rivas (2007), Bruntel (2009), and Purcell (2021).