Déjà Vu in Central America: Iran’s recent push into Nicaragua

On January 23, 1981, President Reagan chose to suspend aid to Nicaragua, fearing that the Sandinista revolution and Daniel Ortega’s subsequent rise to power could turn the small Central American country into “another Cuba” that eventually would destabilize the region. Today, Ortega is president once again, and Barack Obama has terminated a large sum of aid to Nicaragua, much like Reagan had done in the 1980s. On June 10, 2009, citing concerns over democracy, rule of law and the preservation of a free market economy, the Obama administration canceled $64 million of aid from the U.S.-funded Millennium Challenge Corporation (MCC). Ortega expressed his disappointment over the aid termination gesture by comparing Obama to President Reagan: “He expresses good will,” Ortega said shortly after the MCC decision was made final, “but in practice, he has the same policies as President Reagan.”

Differing Motives
Ortega’s assertion that “President Obama is repeating Reagan’s policy by cutting aid to Nicaragua” may be valid, but this shift in policy is being pursued for far different reasons. Washington chose to suspend the provision of MCC aid to Nicaragua last December over concerns regarding “the government of Nicaragua’s likely manipulation of municipal elections and a broader pattern of actions inconsistent with the MCC eligibility criteria.” The MCC is a United States-funded government corporation designed to work with some of the poorest countries in the world to promote sustainable economic growth. The corporation is based on the principle that aid is most effective when it “reinforces good governance,” and candidate countries are in part selected to receive assistance based on their ethical practices. Because corruption undermines every aspect of sustainable development, the MCC has a zero-tolerance policy when it comes to political dishonesty. The MCC stressed that it would not lift its restriction on aid to Nicaragua until President Ortega properly addressed the allegations of election fraud that tainted his country’s November 2008 municipal elections. The controversy has yet to be resolved. Hence, on June 10 – following a generous 90-day extension and a warning that aid was in jeopardy – the MCC decided to terminate all funding to Nicaragua. This was the first time an MCC compact had been canceled “due to bad governance.” Rodney Bent, deputy CEO for the Millennium Challenge Corporation said of the termination, “We want a clean government…we had to act.”

On the other hand, Reagan’s decision to cut Nicaraguan aid in 1981 was motivated by his perception that Nicaragua’s socialist policies and closeness to Cuba and the Soviet Union indicated the spread of communism in the “backyard” of the United States. Put eloquently by William Blum, author of Killing Hope: US Military and CIA Interventions Since World War II, the “American whale, yet again, felt threatened by a minnow in the Caribbean.” Reagan acted out of fear, while the Obama administration devised its strategy due to its moral obligation to uphold aid provision standards. However, it is growing increasingly likely that Washington’s current concerns regarding Nicaragua’s irresponsible actions will evolve to reflect those that persisted during the Reagan era and the Contra War. As time passes, Washington may come to “feel threatened by a minnow” once again.

Is History Repeating Itself?
During Reagan’s two terms in office, Nicaragua’s close ties to Cuba and the Soviet Union produced considerable apprehension in Washington. Today, Nicaragua’s growing ties to another worrisome country have caused similar concerns. Ironically, the Islamic Republic of Iran, which the Reagan administration once conspired with in its failed attempt to overthrow the Sandinistas, is now one of the Ortega government’s closest allies.

Until recently, Iran maintained only limited commercial ties with Nicaragua, but according to former U.S. Ambassador to Costa Rica Jaime Daremblum, “Iran may become one of the leading financiers of a port on the Atlantic side of Nicaragua,” which will cost an estimated $350 million. Todd Benson, an investigative reporter for the San Antonio Express-News, spent ten days in Nicaragua “trying to determine whether their [Iran’s] promises of massive economic development were real or merely excuses to set up a diplomatic mission where terrorist operatives could work so closely to the American and Mexican frontiers.” The only notable development Benson observed was the steady expansion of the Iranian embassy’s staff, as “no Iranian money or concrete planning had materialized.” The Iranian embassy – reportedly staffed with some 150 personnel – is one of the largest embassies in the region. But why does Iran need such a large diplomatic presence in Nicaragua? In an interview with Benson, former FBI Special Agent Jim Conway, who is now a counter terrorism consultant in Houston, observed:

What could Nicaragua’s poverty stricken government offer Iran and Hezbollah other than “access” and a base of operations in close proximity to the U.S.? We know that Iran has built a massive diplomatic mission in Managua, which could provide a huge blanket of “diplomatic cover” to Iran and embassy personnel. What are all of those Iranian “diplomats” doing in Nicaragua? Studying the banana industry?

Benson acquired a similar statement from Eduardo Enriquez, the editor of La Prensa, a right-of-center Nicaragua newspaper:

Only the most naïve believe there’ll be any economic development. The Iranians see this as a nice point to come and bother the Americans. The only thing we can offer them is a safe place where they can move the Revolutionary Guard around. There is nothing else here for the Iranians.

Benson’s piece was published in March 2009, but the U.S. government expressed little public concern over the matter until early May, when U.S. Secretary of State Hilary Clinton expressed distress over the “disturbing” growth of Iran’s influence in Latin America. “They are building very strong economic and political connections with a lot of these leaders. I don’t think that’s in our interest,” Clinton observed. She added that Washington is, specifically, “looking to figure out how to deal with Ortega…the Iranians are building a huge embassy in Managua. You can only imagine what it’s for.”

How will Obama respond?
While Ortega is undoubtedly experiencing a familiar situation in the wake of Washington’s recent decision to cut off aid, Obama is far removed from his Cold War predecessor who was responsible for one of the greatest political scandals in American history. At the Summit of Americas last April, Obama treated Washington’s former adversaries with respect, extending a hand to both Chávez and Ortega, and patiently sitting through the Nicaraguan President’s fifty minute speech in which he denounced capitalism and U.S. imperialism as the root of many hemispheric problems. Several right-wing activists even criticized President Obama for being “too soft” by remaining in the audience – instead of walking out – during Ortega’s tirade of harsh, anti-American remarks. Obama did not concede to his critics, and instead acknowledged the sins of America’s past and promised to avoid repeating these same mistakes.

The current situation in Nicaragua may conjure up a sense of déjà vu. However, less than six months into his first term, it would be premature to speculate that Obama’s foreign policy marque will bear a significant resemblance to that of Reagan’s, which was hellbent on overthrowing the Sandinista government. Obama’s recent aid cancellation was, in contrast, solely contingent on allegations of election fraud. If Ortega had been compliant and quickly resolved the mushrooming controversy, the MCC compact would have been reinstated in spite of any concerns regarding Iran’s influence in the country. That does not mean, however, that Obama will remain idle in the face of a growing threat: Washington has made an effort to keep a hand in domestic Nicaraguan affairs.

A Destabilization Plot
Last May, local Latin American news media reported that U.S. officials were discovered holding talks in Puerto Cabezas with leaders of the Liberal Constitutionalista (PLC) and Alianza Liberal Nicaragüense (ALN) parties as part of an alleged effort to bolster the separatist opposition movement in the country. Four weeks ago, the Sandinista-run mayoral office in Puerto Cabezas publicly accused the opposition of colluding with the CIA, who allegedly agitated a labor dispute between lobster divers and fishing companies in an attempt to destabilize the regional government. With relations between the U.S. and Nicaragua entering into a state of diplomatic vertigo after the recent aid termination, the CIA will likely continue its destabilization efforts in the country. High-ranking Sandinista officials have already lambasted the U.S. for intervening in Nicaragua’s domestic politics, but murmurs of a CIA intervention should come as no surprise, for such allegations existed prior to the Obama administration and are likely to persist long after Obama’s tenure in office. It is doubtful that they foreshadow a full blown shift toward Reagan-esque foreign policy. Though Obama’s people will continue to monitor the Iranian presence in Nicaragua, Obama is probably not the second coming of Reagan. However, Iran may indeed become a Soviet-like threat in neighboring Nicaragua.