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President's Central America Trip: Nicaragua

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Area: 130,688 sq. km. (50,446 sq. mi.); slightly larger than New York State.
Cities: Capital--Managua (pop. 1 million). Other cities--Leon, Granada, Jinotega, Matagalpa, Chinandega, Masaya.
Terrain: Extensive Atlantic coastal plains rising to central interior mountains; narrow Pacific coastal plain interrupted by volcanoes.
Climate: Tropical in lowlands, cooler in highlands.


Nationality: Noun and adjective--Nicaraguan(s).
Population: 4.48 million.
Annual growth rate (1995): 2.9. Density: 33 per sq. km.
Ethnic groups: Mestizo (mixed European and indigenous) 69%, white 17%, black (Jamaican origin) 9%, indigenous 5%.
Religion: Roman Catholic 85%.
Languages: Spanish (official), English and indigenous languages on Caribbean coast.
Education: Years compulsory--none enforced (28% 1st graders eventually finish 6th grade). Literacy--75%.
Health: Life expectancy--62 yrs. Infant mortality rate--50/1,000.
Work force (1996): 1.7 million. Unemployed--16%. Underemployed--36%.


Type: Republic.
Independence: 1821.
Constitution: The 1995 reforms to the 1987 Sandinista-era Constitution provide for a more even distribution of power among the four branches of government.
Branches: Executive--president and vice president. Legislative--National Assembly (unicameral). Judicial--Supreme Court; subordinate appeals, district and local courts; separate labor and administrative tribunals. Electoral--Supreme Electoral Council, responsible for organizing and holding elections.
Administrative subdivisions: 15 departments and two autonomous regions on the Atlantic coast; 145 municipalities.
Major political parties: Liberal Alliance (AL), Sandinista National Liberation Front (FSLN).
Suffrage: Universal at 16.


GDP (1996): $2.3 billion.
Annual growth rate (1997): 5.0%.
Per capita GDP: $452.
Inflation rate: 12%.
Natural resources: Arable land, livestock, fisheries, gold, timber.
Agriculture (35% of GDP): Products--corn, coffee, sugar, meat, rice, beans, bananas.
Industry (20% of GDP): Types--processed food, beverages, textiles, petroleum, and metal products.
Services (45% of GDP): Types--commerce, construction, government, banking, transportation, and energy.
Trade (1996): Exports--$671 million (FOB): coffee, seafood, beef, sugar, industrial goods, gold, bananas, sesame. Markets--U.S. 43%, European Union 33%, Central American Common Market (CACM) 17%, Mexico 2%. Imports--$1,024 million (FOB): petroleum, agricultural supplies, manufactured goods. Suppliers--U.S. 32%, CACM 21%, Venezuela 11%, European Union 9%.
Exchange rate (1997): Nicaraguan cordobas 9.470=U.S. $1.


Most Nicaraguans have both European and Indian ancestry, and the culture of the country reflects the Ibero-European and Indian heritage of its people. Only the Indians of the eastern half of the country remain ethnically distinct and retain tribal customs and languages. A large black minority (of Jamaican origin) is concentrated on the Caribbean coast. In the mid-1980s, the central government divided the eastern half of the country--the former department of Zelaya--into two autonomous regions and granted the people of the region limited self-rule. The 1995 constitutional reform guaranteed the integrity of the regions' several unique cultures, and gave the inhabitants a say in the use of the area's natural resources. Roman Catholicism is the major religion, but Evangelical Protestant groups have grown recently, and there are strong Anglican and Moravian communities on the Caribbean coast. Most Nicaraguans live in the Pacific lowlands and the adjacent interior highlands. The population is 54% urban.

Historical Highlights

Nicaragua takes its name from Nicarao, chief of the indigenous tribe then living around present-day Lake Nicaragua. In 1524, Hernandez de Cordoba founded the first Spanish permanent settlements in the region, including two of Nicaragua's two principal towns: Granada on Lake Nicaragua and Leon east of Lake Managua. Nicaragua gained independence from Spain in 1821, briefly becoming a part of the Mexican Empire and then a member of a federation of independent Central American provinces. In 1838, Nicaragua became an independent republic.

Much of Nicaragua's politics since independence has been characterized by the rivalry between the Liberal elite of Leon and the Conservative elite of Granada, which often spilled into civil war. Initially invited by the Liberals in 1855 to join their struggle against the Conservatives, an American named William Walker and his "filibusters" seized the presidency in 1856. The Liberals and Conservatives united to drive him out of office in 1857, after which a period of three decades of Conservative rule ensued.

Taking advantage of divisions within the Conservative ranks, Jose Santos Zelaya led a Liberal revolt that brought him to power in 1893. Zelaya ended the long-standing dispute with Britain over the Atlantic Coast in 1894, and reincorporated that region into Nicaragua. However, due to differences over an isthmian canal and concessions to Americans in Nicaragua as well as a concern for what was perceived as Nicaragua's destabilizing influence in the region, in 1909 the United States provided political support to Conservative-led forces rebelling against President Zelaya and intervened militarily to protect American lives and property. Zelaya resigned later that year. With the exception of a nine-month period in 1925-26, the United States maintained troops in Nicaragua from 1912 until 1933. From 1927-1933, U.S. marines stationed in Nicaragua engaged in a running battle with rebel forces led by renegade Liberal general Augusto Sandino, who rejected a 1927 negotiated agreement brokered by the United States to end the latest round of fighting between Liberals and Conservatives.

After the departure of U.S. troops, National Guard Commander Anastasio Somoza Garcia outmaneuvered his political opponents, including Sandino, who was assassinated by National Guard officers, and took over the presidency in 1936. Somoza, and two sons who succeeded him, maintained close ties with the U.S. The Somoza dynasty ended in 1979 with a massive uprising led by the Sandinista National Liberation Front (FSLN), which since the early 1960s had conducted a low-scale guerrilla war against the Somoza regime.

The FSLN established an authoritarian dictatorship soon after taking power. U.S.-Nicaraguan relations deteriorated rapidly as the regime nationalized many private industries, confiscated private property, supported Central American guerrilla movements, and maintained links to international terrorists. The United States suspended aid to Nicaragua in 1981. The Reagan Administration provided assistance to the Nicaraguan Resistance and in 1985 imposed an embargo on U.S.-Nicaraguan trade.

In response to both domestic and international pressure, the Sandinista regime entered into negotiations with the Nicaraguan Resistance and agreed to nationwide elections in February 1990. In these elections, which were proclaimed free and fair by international observers, Nicaraguan voters elected as their president the candidate of the National Opposition Union, Violeta Barrios de Chamorro.

During President Chamorro's nearly seven years in office, her government achieved major progress toward consolidating democratic institutions, advancing national reconciliation, stabilizing the economy, privatizing state-owned enterprises, and reducing human rights violations. In February 1995, Sandinista Popular Army Commander General Humberto Ortega was replaced, in accordance with a new Military Code enacted in 1994, by General Joaquin Cuadra, who has espoused a policy of greater professionalism in the renamed Army of Nicaragua. A new police organization law, passed by the National Assembly and signed into law in August 1996, further codified both civilian control of the police and the professionalization of that law enforcement agency.

The October 20, 1996 presidential, legislative, and mayoral elections were also judged free and fair by international observers and by the ground-breaking national electoral observer group "Etica y Transparencia" (Ethics and Transparency) despite a number of irregularities, due largely to logistical difficulties and a baroquely complicated electoral law. This time Nicaraguans elected former-Managua Mayor Arnoldo Aleman, leader of the center-right Liberal Alliance. More than 76% of Nicaragua's 2.4 million eligible voters participated in the elections. The first transfer of power in recent Nicaraguan history from one democratically elected president to another took place on January 10, 1997, when the Aleman government was inaugurated.


Nicaragua is a constitutional democracy with executive, legislative, judicial, and electoral branches of government. In 1995, the executive and legislative branches negotiated a reform of the 1987 Sandinista constitution which gave impressive new powers and independence to the legislature--the National Assembly--including permitting the Assembly to override a presidential veto with a simple majority vote and eliminating the president's ability to pocket veto a bill. Both the president and the members of the unicameral National Assembly are elected to concurrent five-year terms. The National Assembly consists of 90 deputies elected from party lists drawn at the department and national level, plus the defeated presidential candidates who obtained a minimal quotient of votes. In the 1996 elections, the Liberal Alliance won a plurality of 42 seats, the FSLN won 36 seats, and nine other political parties and alliances won the remaining 15 seats.

The Supreme Court supervises the functioning of the still largely ineffective and overburdened judicial system. As part of the 1995 constitutional reforms, the independence of the Supreme Court was strengthened by increasing the number of magistrates from 9 to 12. Supreme Court justices are elected to seven-year terms by the National Assembly.

Led by a council of five magistrates, the Supreme Electoral Council is the co-equal branch of government responsible for organizing and conducting elections, plebiscites and referendums. The magistrates and their alternates are elected to five-year terms by the National Assembly.

Freedom of speech is a right guaranteed by the Nicaraguan constitution and vigorously exercised by its people. Diverse viewpoints are freely and openly discussed in the media and in academia. There is no state censorship in Nicaragua.

Other constitutional freedoms include peaceful assembly and association, freedom of religion, and freedom of movement within the country, as well as foreign travel, emigration, and repatriation. The government also permits domestic and international human rights monitors to operate freely in Nicaragua. The constitution prohibits discrimination based on birth, nationality, political belief, race, gender, language, religion, opinion, national origin, economic condition, or social condition. All public and private sector workers, except the military and the police, are entitled to form and join unions of their own choosing, and they exercise this right extensively. Nearly half of Nicaragua's work force, including agricultural workers, is unionized. Workers have the right to strike. Collective bargaining is becoming more common in the private sector.

Political Parties

In all, Nicaragua's 35 political parties participated in the 1996 elections, independently or as part of one of five electoral coalitions. With nearly 52% of the vote, the Liberal Alliance, a coalition of five political parties and sectors of another two, won the presidency, a plurality in the national legislature and a large majority of the mayoral races. The FSLN ended in second place with 38%.

Most other parties fared poorly. A new political party, the Nicaraguan Christian Path, ended a distant third with 4% of the vote and four seats in the 93-member National Assembly. The traditional alternative to the Liberals, the National Conservative Party, ended in fourth place with slightly over 2% of the vote and three seats in the National Assembly. The remaining 24 parties and alliances together obtained less than 5% of the vote. Seven of these smaller parties control eight seats in the National Assembly. Only two of 145 mayors belong to third parties.

According to Nicaraguan law, those political parties that did not win at least one seat in the National Legislature automatically lose their legal status and must repay government campaign financing. There are 19 parties represented in the National Assembly independently or as part of an alliance.

Principal Government Officials

President--Arnoldo Aleman
Vice President--Enrique Bolanos
Foreign Affairs Minister--Emilio Alvarez Montalvan
Finance Minister--Esteban Duque Estrada
Economy Minister--Noel Sacasa
Central Bank Minister--Noel Ramirez
Government Minister--Jose Antonio Alvarado
Agriculture Minister--Mario De Franco
Defense Minister--Jaime Cuadra
Construction and Transportation Minister--Edgard Quintana
Health Minister--Carlos Quinonez
Education Minister--Humberto Belli
Attorney General--Julio Centeno
Labor Minister--Wilfredo Navarro
Ambassador to the United States--Francisco Aguirre
Ambassador to the United Nations--Enrique Paguaga
Ambassador to the Organization of American States--Felipe Rodriguez

Nicaragua maintains an embassy in the United States at 1627 New Hampshire Avenue, NW, Washington, DC 20009 (tel. 202-387-4371).

Top of Page ECONOMY

Nicaragua began free market reforms in 1991 after 12 years of economic free-fall under the Sandinista regime. Despite some setbacks, it has made dramatic progress: privatizing 351 state enterprises, reducing inflation from 13,500% to 12%, and cutting the foreign debt in half. The economy began expanding in 1994 and grew a strong 4.5% in 1996 (its best performance since 1977). As a result, GDP reached $1.969 billion.

Despite this growing economy, Nicaragua remains the second-poorest nation in the hemisphere with a per capita GDP of $438 (below where it stood before the Sandinista take-over in 1979). Unemployment, while falling, is 16% and another 36% are underemployed. Nicaragua suffers from persistent trade and budget deficits and a high debt service burden, leaving it highly dependent on foreign assistance (22% of GDP in 1996).

One of the key engines of economic growth has been production for export. Exports rose to $671 million in 1996, up 27% from 1995. Although traditional products such as coffee, meat, and sugar continued to lead the list of Nicaraguan exports, during 1996 the fastest growth came in non-traditional exports: maquila goods (apparel), bananas, gold, seafood, and new agricultural products such as sesame, melons, and onions.

Nicaragua is primarily an agricultural country, but construction, mining, fisheries, and general commerce have also been expanding strongly during the last few years. Foreign private capital inflows saw a net increase in 1996, totaling an estimated $215 million. The private banking sector continues to expand and now holds 70% of the nation's deposit base.

Rapid expansion of the tourist industry has made it the nation's third-largest source of foreign exchange. Some 51,000 Americans visited Nicaragua in 1996 (primarily business people, tourists, and those visiting relatives). An estimated 5,300 U.S. citizens reside in the country. The U.S. Embassy's consular section provides a full range of consular services, from passport replacement and veteran's assistance to prison visitation and repatriation assistance.

Nicaragua now appears poised for rapid economic growth. However, long-term success at attracting investment, creating jobs, and reducing poverty depend on its ability to comply with an International Monetary Fund (IMF) program, resolve the thousands of Sandinista-era property confiscation cases, and open its economy to foreign trade.

The U.S. is the country's largest trading partner by far--the source of 32% of Nicaragua's imports and the destination of 42% of its exports. About 25 wholly or partly owned subsidiaries of U.S. companies operate in Nicaragua. The largest of those investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, mining, franchising, and the distribution of imported consumer, manufacturing, and agricultural goods.

The U.S. embassy's Economic/Commercial Section advances American economic and business interests by: briefing U.S. firms on opportunities and stumbling blocks to trade and investment in Nicaragua; encouraging key Nicaraguan decision makers to work with American firms; helping to resolve problems that affect U.S. commercial interests; and working to change local economic and trade ground rules in order to afford U.S. firms a level playing field on which to compete. The Economic/Commercial Section counseled 112 U.S. and 148 Nicaraguan firms in 1996 on trade and investment opportunities. U.S. businesses may access key Embassy economic reports via the Mission's Internet home page at http://www.usia.gov/posts/managua.html.



The 1990 election victory of President Violeta Chamorro placed Nicaragua in the ranks of Latin American democracies. Nicaragua pursues an independent foreign policy. President Chamorro was instrumental in obtaining considerable international assistance for her government's efforts to improve living conditions for Nicaraguans (the country is the second-poorest in the Western Hemisphere after Haiti). Her administration also negotiated substantial reductions in the country's foreign debt burden. A participant of the Central American Security Commission (CASC), Nicaragua also has taken a leading role in pressing for regional demilitarization and peaceful settlement of disputes within states in the region.

The Aleman administration has expressed a commitment to follow the major tenets of its predecessor's foreign policy, to promote Central American political and economic integration, and to resolve outstanding boundary disputes peacefully. At the 1994 Summit of the Americas, Nicaragua joined six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA, to promote sustainable economic development in the region.

In Costa Rica in May 1997, President Aleman met with President Clinton, his Central American counterparts, and the president of the Dominican Republic to celebrate the remarkable democratic transformation in the region and reaffirm support for strengthening democracy, good governance and promoting prosperity through economic integration, free trade, and investment. The leaders also expressed their commitment to the continued development of just and equitable societies and responsible environmental policies as an integral element of sustainable development.

Nicaragua belongs to the UN and several specialized and related agencies, including the World Bank, the International Monetary Fund (IMF), World Trade Organization (WTO), UN Educational, Scientific, and Cultural Organization (UNESCO), World Health Organization (WHO), Food and Agriculture Organization (FAO), International Labor Organization (ILO), and the UN Human Rights Commission (UNHRC). Nicaragua is also a member of the Organization of American States (OAS), the Non-aligned Movement (NAM), International Atomic Energy Commission (IAEA), the Inter-American Development Bank (IDB), the Central American Common Market (CACM), and the Central America Bank for Economic Integration (CABEI).


U.S. policy is to support the consolidation of the democratic process initiated in Nicaragua with the 1990 election of President Chamorro. The U.S. has promoted national reconciliation, encouraging Nicaraguans to resolve their problems through dialogue and compromise. It recognizes as legitimate all political forces that abide by the democratic process and eschew violence. U.S. assistance is focused on strengthening democratic institutions, stimulating sustainable economic growth, and supporting the health and basic education sectors.

The resolution of U.S. citizen claims arising from Sandinista-era confiscations and expropriations still figure prominently in our bilateral policy concerns. Section 527 of the Foreign Relations Authorization Act (1994) prohibits certain U.S. assistance and support for a government of a country that has confiscated U.S. citizen property, unless the government has taken certain remedial steps. In July 1997, the Secretary of State issued a fourth annual national interest waiver of the Section 527 prohibition because of Nicaragua's record in resolving U.S. citizen claims as well as its overall progress in implementing political and economic reforms.

Other key U.S. policy goals for Nicaragua are:

  • Improving respect for human rights, and resolving outstanding high-profile human rights cases;
  • Development of a free market economy with respect for property and intellectual property rights;
  • Ensuring effective civilian control over defense and security policy;
  • Increased effectiveness of Nicaragua's efforts to combat narcotics trafficking, illegal alien smuggling, international terrorist and criminal organizations; and
  • Reforming the judicial system.

Since 1990, the U.S. has provided $1.2 billion in assistance to Nicaragua. Approximately $260 million of that was for debt relief and another $450 million was for balance-of-payments support. The levels of assistance have fallen incrementally to reflect the improvements in Nicaragua, and FY 1997 assistance is estimated at approximately $25 million. This assistance is focused on promoting more citizen political participation, compromise, and government transparency; stimulating sustainable growth and income; and fostering better educated, healthier, and smaller families.

Principal U.S. Officials

Ambassador--Lino Gutierrez
Deputy Chief of Mission--Frederick Becker
Economic/Commercial Counselor--Sandra Dembski
Political Counselor--Kevin Whitaker
Public Affairs Counselor--Elizabeth Whitaker
Defense Attache--Col. Richard Driver
Consul General--Robert Blohm
Chief USAID Mission--George Carner
Peace Corps Director--Howard Lyon

The U.S. Embassy in Nicaragua is located at Kilometer 4.5, Carretera Sur, Managua (tel. country code 505, phone 266-6010). Letters mailed in the U.S. should be addressed to American Embassy Managua, APO AA 34021. Internet: http://www.usia.gov/posts/managua.html.

This information is courtesy of the U.S. Department of State, March 1998

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President's Central America Trip: Nicaragua

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