Countries at the Crossroads 2006 - Nicaragua

(Scores are based on a scale of 0 to 7, with 0 representing weakest and 7 representing strongest performance.)

Introduction

Nicaragua has evolved within an outwardly democratic framework during the 16 years since Violeta Chamorro ousted the revolutionary Sandinistas from their grip on power in 1990. During this time a climate of respect for civil liberties has generally prevailed. But attempts to root out historically entrenched corruption and make government responsive to citizens have foundered, while the rule of law is perilously weak, and the fairness of the electoral system is fraying at the edges. What explains this pattern is the failure of the dominant elites of the Sandinista National Liberation Front (FSLN) and the Liberal Constitutionalist Party (PLC) to assimilate the ethos that must permeate a consolidated system of democratic rule. While Sandinista leader Daniel Ortega remains committed to a basically socialist political vision, former president Arnoldo Aleman, who has been convicted of money laundering but still holds sway over the PLC, strives to recreate a variant of the strongman rule of the Somoza family era.

Making matters worse, stalemate between these parties and their leaders (locally called caudillos) has twice, in 2000 and 2004, led them into power-sharing pacts at the expense of other forces, making the development of democratic institutions even more difficult. In these pacts, which involved reforms to the constitution, the two caudillos divided up power in the Supreme Court, the electoral branch, and the Office of the Comptrollers General, providing them with impunity from prosecution. The first of the two arrangements also restricted the elections law in order to limit the formation of rival parties. Not surprisingly, faith in the institutions affected by these pacts has withered.

The persistence of authoritarianism has likewise impeded the nation's economic advance. Nicaragua remains the Western hemisphere's second poorest country, with a per capita income of just over $800 a year. Though the proportion of the population who are poor may be declining in percentage terms, their absolute numbers are rising, and the distribution of national income has become severely unequal. Poverty coupled with political weaknesses means that most people, though conscious of certain rights, lack effective political resources with which to use their rights. One consequence is that in comparison with the rest of Latin America, political protest and demonstration are surprisingly timid. Another is that (non-business) civil society, though slowly gathering strength, is still too weak to pressure the government in most policy areas or force lawmakers to pass legislation beneficial to its interests.

Convinced that Nicaragua's long-term viability is threatened, current president Enrique Bolanos Geyer, elected in November 2001 on the PLC ticket, has tried finally to get development under way and has crafted a national development plan to take advantage of the growth opportunities offered by the Central America-US Free Trade Agreement (CAFTA). But the policy continuity needed to reap the fruits of these efforts after a new administration takes office in January 2007 is doubtful given Bolanos' lack of a political heir. Similarly, government under Bolanos has gone some way toward controlling ordinary corruption. In mid-2002, Bolanos also began pursuing his predecessor (he had been Aleman's vice president) in the courts for malfeasance, but his government's efforts to prosecute officials of the previous Liberal administration have run up against a deeply politicized and increasingly corrupt judiciary, whose integrity was vitiated by the pacts. The Bolanos administration has likewise sought to promote institutional reform in the judicial and electoral branches of state but has seen its efforts in this regard stymied by a very weak legislative base. The PLC bench in the assembly went into opposition to Bolanos in 2003, and most of the lawmakers have remained staunchly loyal to Aleman.

As a result, gridlock among the powers of state has increasingly set in. This gave rise to a 10-month-long crisis after Bolanos refused in December 2004 to accept constitutional reforms voted by the majority Sandinista and Liberal parties that stripped the executive branch of certain prerogatives. The crisis was resolved in October 2005 through a political agreement facilitated by the Organization of American States to postpone the changes until January 2007.

Accountability and Public Voice – 4.49

Fairness and public confidence in the electoral system have slowly declined since the 2000 political pact and ensuing reform of the election law. This pact completely politicized the Supreme Electoral Council, which is under the firm control of the major party leaders. Doubts about its ability to conduct fair elections grew in 2004 in the wake of a flagrant fraud apparently committed in the city of Granada during municipal voting, in which the arbitrary annulment of a single vote board's tally threw victory to the FSLN. The case demonstrated that the dominant parties could be relied on to count each other's ballots fairly but not necessarily those of third-party rivals.

In a similar vein, the electoral law (Law 331) spawned by the 2000 pact imposes stiffer requirements for the registration of political parties than anywhere else in Latin America. This law clearly aimed to restrict electoral competition to the advantage of the Liberal and Sandinista parties. Only one other party contested the 2001 elections. As the 2006 election approaches, fear is widespread that the major party leaders will use their control over the electoral and judicial branches of government to arbitrarily prohibit potential challengers from entering the race. However, Nicaraguan elections since 1990 have not been characterized by intimidation of or violence against voters, nor are restrictions placed on the campaign activities of any party. No incidents of this kind were reported in the 2004 municipal voting.

Political finance laws and regulations are weak, allowing economically powerful actors wide latitude to exert undue influence and tainted money to contaminate campaigns. Although the law provides significant public funding for party campaigns, it imposes no restrictions on campaign media spending. Rules for the disclosure of campaign financing sources are unspecific, and enforcement is lax and subject to political manipulation. In November 2002, charges arose that monies pilfered from the state by ex-president Aleman had filtered into the campaign coffers of the new president, Enrique Bolanos. Instead of investigating promptly and fairly, the major party leaders held the charges over Bolanos' head as a political club for the following three years. The harassment only ended in December 2005 when a Sandinista judge dropped the charges against Bolanos and his ministers.

The branches of state do not check one another as liberal-democratic governance requires. Since 2000, the dominant Sandinista and Liberal parties have used their control over the National Assembly to colonize and subordinate other branches and agencies of government, with the current exception of the executive. In 2005, these parties continued to control the elections council, judiciary, comptroller's office, attorney general's office, and ombudsman's office, politicizing each and vitiating the independence of and separation among the powers of government, thereby fostering corruption.

The iron personal grip of Daniel Ortega and Arnoldo Aleman over their parties' nominations for deputies also gives them very strong leverage over their party benches in the assembly, often relegating the political concerns of ordinary citizens to the sidelines when laws are debated. At the same time, domestic banking groups exercise excessive influence over some economic policies through direct lobbying of the president.

In addition, fully a third of the national budget is financed by foreign aid, giving multilateral institutions and foreign donors strong influence over government policy. Still, by steering clear of gross corruption, the Bolanos government has regained the confidence of donors and achieved some degree of freedom to launch independent policy initiatives such as the national development plan, which guided much public investment during 2003-2005.

According to a 2003 civil service law, the recruitment and promotion of public servants must be based on merit. However, procedures for applying the law have not been developed, and it has not been implemented.

Civil society organizations engage in considerable lobbying and a certain amount of demonstrating to influence public policies and the national budget. Most groups lack much depth of representation or capacity to mobilize their supporters to the streets, however, so their influence over policy or legislation, though at times tangible, is usually limited.

Certain groups, notably the Consumer Defense Network, have learned to use the judicial system to block initiatives of the executive or legislative branches. As opposed to the Aleman administration, which was widely accused of harassing national and even foreign nongovernmental organizations (NGOs), the Bolanos administration has not been accused of restricting the organization of any civil society group or exerting pressure on such groups' funding sources.

Alone among the three post-1990 governments, the Bolanos administration has accorded the constitutionally mandated national economic and social planning council (Conpes) a modest, although intermittent consultative role. Conpes, which was originally comprised of representatives from business groups, unions, professional associations, and NGOs, has provided the government with recommendations on fighting poverty, the national development plan, and the annual budget. Along with select civil society actors, the government furthermore drafted the Citizen Participation Law, which passed the assembly in late 2003. In 2004-2005, it created department-level development councils intended to provide input into the national development plan. Also in 2005, Conpes was reorganized on a territorial basis ostensibly to provide the interior of the country with representation. As NGOs headquartered in the capital that address social issues were shunted aside in the process, it is not clear whether this change was an improvement.

The Bolanos administration generally respects freedom of the press and media. Its only recent lapse was a three-day closing in June 2005, allegedly for tax evasion, of La Trinchera, a political news bulletin published by supporters of former President Aleman. The government owns the official Radio Nicaragua and a semi-defunct TV station but does not control any media distribution networks or printing facilities other than the official gazette. Nor does it directly fund any private media or impose restrictive requirements for their registration. Of considerable weight in the total advertising market, government advertisements were allocated mainly in proportion to the audience reached by each media outlet, but with some minimum doled out to the smaller players. The administration does not interfere with access to or communications over the Internet. Similarly, it does nothing to limit freedom of cultural expression but little either to promote national culture.

Rather than the executive branch, the national assembly and the political parties controlling it are among the important threats to press and media freedom. In late 2004, the FSLN and PLC voted a constitutional reform that abrogated the media's right to import equipment and supplies duty free, and an ordinary law subsequently limited customs exemptions for these goods. Media owners denounced the limits as an attack on their freedom, some seeing them as a political reprisal by the major parties against sharp criticism of their political pact, especially from the daily newspaper La Prensa and TV Channel 2. Other institutions have posed occasional threats. In a few instances, the police or the courts have attempted to force journalists to reveal sources of information under an outdated law. The affected journalists all refused to comply, however, and the spotlight of publicity thrown by the media themselves induced the offending institutions to draw back.

A still latent threat is the College of Journalists, a professional association approved by the assembly in 2003, in which membership is supposedly required. La Prensa and Channel 2 have appealed the law in the Supreme Court as unconstitutional, and its implementation is currently stalled. It is feared that the college could fall under political control and infringe upon journalistic freedom.

Organs of government have also failed to protect journalists from violent attacks or fully investigate them. Three murders of journalists occurred in 2003-2005, a signal departure from prior years in which no cases were recorded. The investigations into the January 2004 slaying of radio station owner Carlos Guadamuz, a Sandinista dissident, and the killing of La Prensa reporter Maria Jose Bravo by a former PLC mayor after the November 2004 municipal elections, resulted in the apprehension and eventual conviction of suspects. But the inquiry into the Guadamz murder failed to convince the family of the deceased that the attorney general and police had the will to uncover the identity of those ultimately responsible for the killing. In the case of the August 2005 murder of La Prensa reporter Adolfo Olivas, justice was apparently done but suspicion has lingered, as the reporter was investigating drug trafficking in his home area of Estel. In addition, during the period other La Prensa journalists reportedly received death threats from both drug traffickers and local police officials for publishing exposes of the traffic on the Atlantic Coast.

Recommendations

• Political finance regulations in the 2000 elections law need to be revised to limit campaign media spending and greatly strengthen disclosure rules for contributions.
• The relevant authorities should deepen their investigations into the killings of Carlos Guadamuz and Adolfo Olivas.
• The national assembly should reconsider its decision to create the College of Journalists in light of criticism from international media watchdogs.

Civil Liberties – 4.20

No state-sponsored murders or politically motivated disappearances have been recorded since the early 1990s. Similarly, there have been no arbitrary arrests by security forces of political opponents of the government. However, the arrest of mayoral candidate Alejandro Fiallos in August 2004 on corruption charges was widely viewed as a political act orchestrated by the PLC. Running in Managua under the APRE party flag, Fiallos threatened to take votes from the PLC's candidate.

In 2004, 20 allegations of unlawful killings were lodged against members of the national police; seven of the accused were exonerated and 11 received an administrative punishment; none of the cases were sent to court. Denunciations of physical abuse by police officers were numerous in relation to the size of the body. In a force of only 6,600, in 2004, 1,336 abuse charges were reported to the police general inspectorate, of which 528 were found to have merit. Beatings to obtain confessions and excessive force when detaining suspects were common complaints. Some investigation of the cases by the inspector general clearly took place, and a large number of officers, some 728, were sanctioned in some fashion. In addition, 77 accusations of arbitrary detention by police were brought before the human rights ombudsman in 2003, the last year the body published a report. However, few officers were remanded to the courts for processing, and fewer court verdicts have been forthcoming, suggesting a significant level of impunity.

In addition to the police's general inspectorate, until recently the human rights defense procurator or ombudsman served as a barrier against certain rights abuses. In 2003, the last year for which data have been published, the ombudsman investigated 263 denunciations against the national police, mostly allegations of physical mistreatment, psychological abuse, and illegal detention. The body judged that the police authorities complied with some 40 percent of the 75 resolutions with recommendations for action it had made after processing the cases. Unfortunately, the national assembly elected new authorities for this body in December 2004 who were drawn from the FSLN and PLC parties. This action deeply politicized the institution, and top officials responsible for the rights of women, children, and indigenous minorities resigned in protest during 2005. The body has consequently lost much of its credibility and now receives many fewer complaints.

Now that application of the 2002 criminal procedure code has been extended to all new cases, instances of long-term detention without trial, frequent under the former code of criminal instruction, have noticeably waned from 26 percent of all prisoners in the penitentiary system in 2002 to 14.7 percent in 2004 and should eventually disappear. Police holding cells, where short-term detainees are routinely held during the course of their trials, are grossly overcrowded and conditions wretched. With 5,601 inmates, the prison system itself is running slightly above its capacity of 5,358. Severe resource limitations lead to harsh conditions – food rations are clearly inadequate for even minimum nutrition, and medical care and drugs are sorely lacking. Prison guards, who receive human rights training from international donors and the Nicaraguan Human Rights Center (Cenidh), are judged to have treated prisoners well. The government regularly permits independent human rights groups access to prisons to monitor conditions. One of these, Cenidh, has detected the emergence of prison gangs that in recent years have challenged the penitentiary authorities for control of some institutions.

Protection against abuse by nonstate actors is extremely weak on the Atlantic coast, where drug traffickers appear to have penetrated the police and are able to intimidate judicial system personnel and the population at large without being checked by an effective state response. In May 2004, armed men reportedly linked to the traffic attacked the police headquarters in the South Atlantic port of Bluefields, slaying four officers; the crime has not been solved. Though far less developed than in other Central American countries, juvenile gangs (pandillas) cause pervasive insecurity in poor neighborhoods in Managua, where they are linked to drug distribution; in one survey, one-third of urban residents reported being affected somewhat or a lot by gangs. Since 2003, efforts by the police to organize vigilance by local residents and work by civil society activists with youthful offenders have curbed the gangs in certain areas of the capital.

Women and children are very poorly protected against sexual abuse and intra-family violence, which is endemic. In 2004, 17,281 complaints of such abuse were lodged before the women's commissariats of the national police, which have been expanded and are playing an increasing role as the first instance in processing cases. Government does little beyond this initial point, however, referring victims to civil society organizations for further help. As in the past, prosecutions for domestic and sexual abuse remain rare. The Cenidh has roundly criticized the attorney general for failing to take rape and family violence cases to court.

Although the 1987 constitution bans almost all forms of discrimination, the state is not committed or working to eradicate discrimination against women. A draft equal rights and opportunities law that would give teeth to constitutional provisions has languished in the legislature since late 2003. The Bolanos government has given minimal attention to women's issues, and the budget of the official Nicaraguan Institute for Women (INIM), which should be at the forefront of efforts to combat discrimination, is meager. Protection against discrimination in hiring and wages is especially weak. Sexual harassment is also a frequent and serious problem in the workplace, where little is done to stop it.

Although the extent of the phenomenon is unclear, cases of trafficking of young Nicaraguan women to work as prostitutes in Guatemala and Mexico continued to be reported and for the first time have elicited some government response. Migration authorities have begun questioning young women crossing border points unaccompanied by family and turned back some 1,500 between December 2004 and September 2005, suspecting they were being trafficked. Although the trafficking is not formally illegal, the women's commissariats have done educational work in high schools about the danger from the trade.

The human and civil rights of minority religious groups, mainly evangelical Protestants, are respected without limitation. But the full exercise of rights by the ethnic minorities of the Atlantic Coast (Miskito, Mayangna, Garifuna, and Rama) is a distant prospect, in particular given the very weak fiscal base of the regional governments. With the overall coast population increasingly mestizo, the political representation of ethnic minorities in the regional councils has weakened, contradicting the spirit of the 1987 Autonomy Statute, which reserves a certain number of candidate slots in regional council elections for the indigenous. Unfairly excluded from the 2000 municipal elections, the Miskito political party Yatama had to appeal to the Inter-American Court of Human Rights, which issued a ruling in its favor in June 2005. On the positive side, indigenous children receive education in their native tongues through the third grade. Although court proceedings are conducted in Spanish, bilingual personnel are currently being trained for an alternative dispute resolution program.

A 1998 law enjoins the government to take positive steps to assist people with disabilities, estimated in this post-civil war country to number more than 500,000. But there are no government programs in this area, and civil society provides the little help that is available. A civil service law passed in 2003 effectively reserves employment in the public sector for the physically able. As is the case with women and indigenous people, protection for people with disabilities against discrimination in hiring and wages is basically nonexistent.

Although 75 percent of Nicaraguans are Roman Catholics, there is no state religion, and government has consistently respected the right of citizens to hold and freely express their religious beliefs. The state places no restrictions on religious observance or education, though only Catholic schools receive subsidies. The government also refrains from interference in the appointment of religious leaders or the internal affairs of churches. In a possible exception to this rule, the Bolanos government was alleged in 2004 to have tried to persuade Pope John Paul II to retire Cardinal Miguel Obando y Bravo, the leader of the Catholic Church in Nicaragua, for political reasons.

The constitution guarantees the freedoms of association and assembly, with the usual exceptions for military and police personnel. The national assembly continues to routinely grant legal status to all new civil associations requesting it, including churches. The Nicaraguan government has ratified ILO Conventions 87 and 88 on freedom of union organization. However, the 1996 labor code makes union organization difficult, as employers can legally fire organizers providing they are willing to pay extensive severance pay. During the report period, credible allegations surfaced of labor ministry collusion with employers to prevent the formation of new unions. The Sandinista Workers Central (CST), the victim in most instances, lodged a 2004 suit before the ILO, but no action has been taken. The restrictive labor code mandates complicated and cumbersome procedures for going on strike, making legal strikes rare and dampening the incentive to unionize.

The labor code forbids compulsory membership in unions, and the result is that many workplaces have more than one union representing the workers. In many instances, this is a result of the post-1990 organization of progovernment unions to counter those affiliated with the FSLN. No laws mandate obligatory membership in business and professional organizations, with the exception of the College of Journalists (see "Accountability and Public Voice").

As protest demonstrations normally draw few people, the need to control them is slight. Police regularly grant permits for rallies. Far from using excessive force against demonstrators, the national police have arguably been lax in their treatment of student and other protesters who employ tactics including low-level violence and intimidation. In May 2005, a policeman was killed in one such clash with students. Judicial system favoritism toward FSLN-linked students and other protesters means that charges are never brought against demonstrators for violent behavior, fostering impunity.

Recommendations

• The National Assembly should revise and approve the equal opportunities law submitted in late 2003 to provide a legal basis for discrimination suits.
• Reform of the penal code is urgently needed to make child prostitution and trafficking of women illegal.
• The 2003 civil service law should also be reformed to eliminate bias against people with disabilities.
• The 1996 labor code should be changed to prevent employers from firing union leaders through the awarding of severance pay and recognize the right of union federations and confederations (not just individual unions) to strike.
• The assembly should amend the 2003 law on municipal budget transfers to include mandatory funding for the Atlantic coast regional governments.

Rule of Law – 3.61

The lack of judicial independence from political influence is one of Nicaragua's most severe problems. The two FSLN-PLC pacts have put the Supreme Court under tight political control by the big party caudillos, Ortega and Aleman, who choose the magistrates through the assembly. The assembly then appoints all lower-level personnel. The independence of the lower-court justices is therefore minimal, as the upper ranks interfere ever more pervasively in decisions. A judicial career law passed in October 2004 ostensibly aims to provide a nonpolitical merit system for the hiring, promotion, and disciplining of lower court justices, but it has not been implemented; in practice clientelism still dominates the selection of judges. Both judicial training and general legal education are weak; for example, there is no bar exam for lawyers.

Political interference was notorious in a number of high-profile civil suits involving businessmen in 2004. These cases sparked serious tension between the executive and judicial branches, with President Bolanos protesting several key decisions publicly and accusing the Supreme Court of corruption. In the past two years, with increasing frequency, the executive branch has simply ignored judicial decisions it regards as political. The most serious conflict of this kind occurred over constitutional reforms passed by the legislature in late 2004 and ratified by the Supreme Court that the Bolanos government refused to accept. Instead, Bolanos obtained a ruling supporting his position from the Central American Court of Justice, which he argued had legal precedence over his nation's Supreme Court.

According to the constitution, everyone charged with a crime is presumed innocent until proven guilty. A new penal procedure code, introduced in December 2002 and expanded in late 2004 to apply to all new cases, has established an oral accusatory system for criminal proceedings. Trials are now public, justice is more prompt, and the proceedings have arguably become fairer. In 2004, few prisoners were held beyond the 48-hour time limit to be brought before a judge, and the average time to arrive at a verdict has been reduced to less than 15 days. A drawback, however, is that the politicized attorney general now has most of the say over which cases are taken to court. As in the past, the jury system has also proven subject to bribery or pressure from the judges. The code of civil procedure has not been reformed and would benefit from oral procedures to reduce the time in which suits are decided. Courts are lacking altogether in outlying rural areas, where alternative dispute resolution is run by an OAS-sponsored system of judicial volunteers.

Since 2002, the state has made the services of public defenders available on a limited basis to those unable to pay lawyers. In 2005, however, there were still only 78 throughout the country, meeting a third of the demand at most. Judges may compel private attorneys to fill this role, but most pay a fine to avoid service. With the new procedure code, a new crop of public prosecutors has also been recruited and trained by foreign assistance missions. But the public ministry remains politicized, and informed sources reveal that prosecutors at all levels continue to be pressured by their superiors as to how to investigate certain cases.

Under Article 27 of the constitution, all persons are equal under the law and entitled to the same protection. Nevertheless the belief that people without means bear the full brunt of the law while the well-to-do buy their way out of trouble is pervasive. Serious judicial system corruption, combined with the lack of prosecution of police misbehavior (see "Civil Liberties"), suggests that this belief is justified in very large part. The constitution likewise bans discrimination on grounds of gender, ethnic origin, and nationality, though not sexual orientation. But specific legislation that might allow discrimination cases to be brought before the courts is lacking, and of six observers of the Nicaraguan justice system, none was able to recall a single case of prosecution for discrimination of any kind.

The civilian branches of state do not exercise full and effective control over the military, security, and police forces. Presidential authority is limited to the naming of the three top-ranking officers in the army. While the legislature exercises pro forma vigilance over the military budget, there is little outward sign of deputies being informed of the details, or questioning military budget requests. Control over the police was until recently somewhat firmer, but after President Bolanos removed the PN's second-in-command in May 2005, the national assembly passed legislation in November stripping him of this power. Supervision by the finance ministry and comptrollers general over the assets held in the army's pension fund institute is similarly superficial, so that control over possible cases of illicit enrichment is lacking.

Despite this de facto autonomy, the armed forces have refrained from interfering in the political process. They have actively resisted calls from civilians to become involved in the power struggles among political groups, notably during the 2005 conflict over constitutional reform, and occasionally acted behind the scenes to dampen these conflicts. Both the army and the police receive extensive human rights training from donor groups and civil society organizations. Few army officers have been accused of human rights violations in recent years.

The right to individual private property is recognized in the constitution, while cooperative and indigenous communal holdings are covered by ordinary law. The executive branch has not committed acts of unjust expropriation (defined as without fair and prior compensation) in many years. The judicial branch is a different story. Influenced by corruption, lower-level judges revoke property titles, many of them provisional, held by peasant smallholders and cooperative members frequently, leading to periodic evictions of scores of poor families by the police. This usually occurs in response to efforts by former property holders to recover their holdings, but other parties may also be involved. However, property rights are not fully protected even for the well-to-do, and 60 percent of the respondents in a recent World Bank survey of the business climate expressed a lack of confidence in the judicial system in this respect. The manipulation of outdated property registers, which are managed by the Supreme Court and staffed largely by Sandinista-nominated officials, magnifies the problem. The passage in late 2003 of a law to demarcate and provide title for indigenous communal landholdings is an important advance, but its implementation has barely begun.

The pervasive influence of the Sandinista and Liberal parties and a poorly trained, ill-equipped judiciary also make contract enforcement fragile. On procedural complexity in contract enforcement, Nicaragua ranks above the Latin American average, which in turn is far above the OECD average.

Recommendations

• Significant improvement in the rule of law in Nicaragua is impossible without depoliticizing the judicial system. Ideally, the choice of Supreme Court justices should be made professional and non-partisan, but the likelihood of Nicaragua taking this step in the medium term is low. Absent such a change, the 2004 Judicial Career Law should at least be revised to transfer control of the hiring, promotion, and disciplining of judges from the magistrates of the Supreme Court to an independent body.
• The system of property registers should likewise be transferred from the ambit of the Supreme Court and placed under the governance ministry.
• Complex contract enforcement procedures should be simplified through reform of the appropriate codes.
• Reform of the National Police Organic Law should be considered to strengthen the president's appointment and dismissal powers.

Anticorruption and Transparency – 3.40

As is traditional in Latin America, Nicaraguan public administration is beset by excessive regulations and red tape. In a recent survey, senior executives in medium and large firms reported spending upwards of 20 percent of their time dealing with regulations. Although the current government lacks a program for overhauling the system in its entirety, it has eliminated unnecessary regulations in areas of importance to major economic agents, opening so-called one-stop windows for exporters and foreign investors and greatly reducing the time needed to open a business. Starting under the Aleman government, customs procedures were notably streamlined through a so-called self-dispatch system.

Government interference in the economy is minimal. With very few exceptions, the vast system of state enterprises inherited from the Sandinista period has long since been liquidated, many public utilities have been privatized, and few prices are controlled.

The separation of public functions from the private interests of officeholders is established in Article 130 of the constitution. Conflicts of interest are dealt with in the Probity Law for public servants approved in mid-2002. The Probity Law lacks clarity regarding enforcement agents as well as coercive power. Despite these flaws, the observance of the law by the current executive branch has been reasonably good, while that of other powers of state has been poor. In October 2005, the Supreme Court came under intense media scrutiny after one of its magistrates permitted $600,000 to be returned to a suspect convicted for money-laundering through an elaborate judicial ruse.

The law also provides rules for asset declarations by public officials. However, declarations are made only upon officials' entering and leaving office and not on a yearly basis. More important, the law does not enjoin the comptrollers' office to publish the officials' statements, greatly reducing transparency. Bolanos administration officials have generally filed asset declarations upon taking and leaving their posts.

An office of public ethics established in 2003 has conducted extensive training seminars for public officials concerning the above-mentioned laws and developed manuals for their conduct. However, the government has not focused on ways to curb corruption in the private sector, leaving that task to business groups. Citizens aggrieved by corrupt acts may denounce these to the state attorney (procurator general, an executive branch official), the public ministry (attorney general, elected by the national assembly), or the police. In theory, a citizen could also seek an injunction known as a writ of amparo and bring suit before the administrative law chamber of the Supreme Court, but this undertaking is very complex and the chances of success given the court's politicization are minimal. Up to half of the cases taken to court by the state attorney's office originate in private denunciations. However, denunciations are relatively rare due to fear of reprisals and the lack of any way to protect whistleblowers against them.

Until recently, a university autonomy law passed by the outgoing FSLN government in 1990 has shielded public universities from scrutiny of how they spend a constitutionally mandated 6 percent share of all government revenue. This lack of transparency led rectors to be questioned sharply, as clientelism plays a major role in their election. A revised budget law passed in 2005 will henceforth oblige them to render an accounting. Control over all government revenue could also be bolstered, as the revenue branch of the finance ministry lacks proper internal audits (although in 2005 it began to review systematically the collection performance of its department offices).

Formally speaking, both the general comptrollers of the republic (CGR) and the human rights defense procurator (PDDH and ombudsman) are independent organs of state whose leaders are elected by the national assembly. In practice, both have become highly politicized, and their effectiveness is severely compromised. Corruption investigations by the public ministry are highly selective and distinctly lacking in vigor, especially when the fate of Aleman-era officials is at stake. Although the state attorney may take corruption cases to court, the new criminal procedure code requires the public ministry to desist from a case before the government attorney can take it up.

Coupled with judicial system malfeasance, these limitations mean that most corruption allegations are never properly investigated and courts issue few convictions. Instead, a string of high-ranking Aleman-era officials has been acquitted in recent years, or charges have been dropped after deliberate delays allowed the application of the statute of limitations. Although President Aleman himself was sentenced to 20 years imprisonment for fraud and money laundering in December 2003, the appeal of his conviction has been converted into a political bargaining chip between Aleman and Daniel Ortega. As the appeal dragged on, Ortega used his control over the judicial process to extract concessions from Aleman and enhance his power quotas in the institutions under the pact.

Starting in the Aleman years, the newspapers and television became the most vigorous investigators of official abuses, and they have won public confidence. Press exposes of corruption regularly spark at least some response on the part of relevant state organs.

In the absence of specifying legislation for Article 66 of the constitution, which guarantees citizens the right to "true information," Nicaraguans still lack the legal tools to demand information from their government. A draft access to information law was submitted to the assembly in late 2003 but has not been approved. Although President Bolanos is strongly committed to the law, access to government information in practice is spotty and subject to the discretion of ministers and lower-ranking officials. In the face of legislative paralysis, the Bolanos administration has begun a pilot project to place official information online in six ministries.

Though still inadequate, the budget process has become more open and comprehensive. A state financial administration law approved in 2005 has unified public investment with other spending and imposed reporting requirements on autonomous state agencies, municipalities, and public universities for the funds they receive from the public budget. However, the ministry of finance and public credit posts a review of expenditure execution on its website only on a quarterly basis, and the data are neither complete nor presented in as prompt or detailed a fashion as would be helpful to professional users. Previous law allows the deputies to raise the budget ceiling provided they specify matching revenues, and legislative scrutiny of the budget in recent years has been consistent. However, the deputies mainly transfer money among spending categories without raising the ceiling.

In contrast to the previous Aleman administration, in which corruption was rife, under Bolanos an IDB-funded efficiency and transparency program has improved transparency in public bidding. Scandals involving bidding have been few, and the number of bids subject to challenge by the losing parties has dropped. But the stagnation in Transparency International's index of corruption perceptions (2.6 in 2005, down from 2.7 in 2004 ), as well as anecdotal evidence from businesspeople, suggest that the government has not succeeded in decisively curbing unfair manipulation of bidding terms and procedures by public officials.

Until recently, most foreign assistance was monitored directly by donors to ensure probity and efficacy. In May 2005, major European donors together with the World Bank agreed to begin converting their project assistance into undifferentiated budget support for the central government, signaling confidence in the Bolanos administration's management of their aid monies. However, the transport and infrastructure ministry has failed to exercise proper oversight over several major road projects tendered to foreign construction companies.

Recommendations

• The executive branch should finalize a general anticorruption strategy and implement a comprehensive plan to eliminate needless regulations from government at all levels.
• The Probity Law should be revised to make asset declarations by government officials public.
• The state financial administration law needs to be reformed to include absolutely all agencies of government in the national budget and more clearly specify procedures for public reporting of budget execution.
• The National Assembly should stop delaying and approve the pending access to information law forthwith.

Author

David R. Dye is a political consultant who lives in Nicaragua. He has worked as the correspondent for the London-based Economist Intelligence Unit in Nicaragua since 1994 and is currently consulting for the mission observing the 2006 elections.