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03 March 2009

Decline of Ortega's Nicaragua

from Washington Times by James Glassman

Nicaragua is a basket case, with GDP per capita barely above $1,000. The economy is propped up by loans from the International Monetary Fund, budget support from Europeans, oil from Mr. Chavez, and, surprisingly enough, significant help from U.S. taxpayers through the federal Millennium Challenge Corporation (MCC), whose funds are supposed to go to countries "based on their performance in governing justly, investing in their citizens, and encouraging economic freedom."

Nicaragua, which Freedom House rates only "partly free" with a "downward trend arrow," would hardly seem to meet these criteria. After the fall election, even the MCC threw up its bureaucratic hands and suspended the remaining $64 million of its grants to Nicaragua.

The president of the Nicaraguan-American Chamber of Commerce called the MCC cutoff a "nuclear bomb on the economy," but Ortega shrugged it off, saying that he can get more aid from Russia and Venezuela, perhaps overlooking that both those countries rely heavily on a commodity whose price has dropped by three-fourths in a year.

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