Chipping away at democracy in Nicaragua and Panama

Nicaragua and Panama have sustained economic growth and poverty reduction – but both have suffered from corruption.

Nicaragua is one of the poorest nations in the Western Hemisphere - however, economic growth and pro-poor policies under the Sandinistas have begun to make a dent in the country's poverty rate [EPA]

While overseeing sustained economic growth and relatively low crime rates, governments on the left in Nicaragua and the right in Panama have slowly chipped away at democracy. Recent conditions in these two Central American countries sound somewhat comparable. There is more crime than there used to be, but both are still relatively safe. 

Both have experienced several years of strong economic growth and poverty reduction, but both have been undermined by quite a bit of government corruption. Governments have attacked opposition parties and the media leading to an erosion of democracy in the country. 

Finally, Daniel Ortega and the Supreme Court of Justice disregarded the country’s constitutional ban on re-election in Nicaragua, while critics are concerned that Ricardo Martinelli and the Supreme Court will do the same in Panama. The democratic breakdown in Panama has not been quite as severe as that of Nicaragua, but it does have the potential to become so in the next two years. 


Nicaragua is one of the poorest nations in the Western Hemisphere. However, economic growth and pro-poor policies under the Sandinistas have begun to make a dent in the country’s poverty rate. 

 Nicaragua fends off Latin America drug trade

According to government statistics, the country’s gross domestic product (GDP) per capita has increased by 30 per cent, to $1,582, since the Sandinistas returned to government in 2006. The country’s presidential secretary for national policy recently said that extreme poverty (daily income below $1.25) has fallen from 11.2 per cent to 5.5 per cent in the last five years, perhaps driven in part by the country’s Zero Hunger programme.

With murder rates reaching epidemic levels in Honduras, El Salvador, Guatemala and Belize, Central America is one of the world’s most dangerous regions. Nicaragua, fortunately, has so far avoided the violence that has plagued its northern neighbours due to what many believe is related to the institutionalisation of the country’s police and military forces first begun during Sandinista rule in the 1980s.

Crime has inched up in recent years, yet the country’s murder rate of 14 per 100,000 (2011) still compares favourably to those of its neighbours. The percentage of Nicaraguans that responded to having been a victim of crime in recent months also compares favourably.

According to a recent CID-Gallup poll, 19 per cent of Nicaraguans report having been robbed or assaulted in the past four months, compared to 21 per cent of Costa Ricans, 22 per cent of Panamanians, 28 per cent of Salvadorans, 29 per cent of Guatemalans and 33 per cent of Hondurans.

Unfortunately, while the economy continues to grow and the crime rate remains low, Daniel Ortega and the Sandinista government have overseen the dismantling of the country’s democratic institutions.

Ortega was elected president with 38 per cent of the vote in 2006. He and the remaining Sandinistas have since undermined the independence of the country’s courts, politicised the Supreme Electoral Council (CSE), limited opportunities for opposition political parties, and attacked independent media.

Ortega used a questionable ruling from the Supreme Court of Justice on the constitutionality of a consecutive second term and a third presidential term overall, to run for and win re-election in 2011. After the questionable decision on the constitutionality of his candidacy, Ortega defeated Fabio Gadea of the Independent Liberal Party-Nicaraguan Unity in Hope (PLI-UNE) coalition 62 per cent to 31 per cent.

There is widespread agreement that the majority of voters supported him, but campaign and election-day irregularities called into question the size of his victory. Observers believe that Sandinista fraud also helped pick up a few extra congressional seats. These additional seats gave the governing party a supermajority in the congress and enough seats to pass ordinary legislation, change the constitution and call for a constituent assembly without the other political parties. 

Failed transparency and disputed outcomes of local elections in November 2012, once again called into question whether Nicaragua met the minimum standards by which democracy is met.

Roberto Courtney, the director of Ethics & Transparency in Nicaragua, estimated that election fraud occurred in 70 of the country’s municipalities, over 35,000 Nicaraguans were denied the right to vote on election day and one in five voters appeared on voting registries in municipalities in places other than where they resided.

The US State Department issued a statement expressing its “concern[ed] that the municipal elections conducted Sunday, November 4, in Nicaragua failed to demonstrate a degree of transparency that would assure Nicaraguans and the international community that the process faithfully reflected the will of the Nicaraguan people”.

James (“Boz”) Bosworth also gives a powerful firsthand account of election-day fraud in “How Teustepe was won – Election fraud in Nicaragua“.

While Nicaragua has clearly failed to hold free and fair elections and has suffered numerous setbacks to the rule of law, Panama has not quite fallen so far. 


Panama’s economy has grown faster than all others in Latin America in recent years. Its growth has averaged nearly 9 per cent per year for the last six years and it is expected to grow quite strongly for at least the next five years. The country’s strong economic growth has helped it to cut extreme poverty from 18 per cent to 10 per cent and to begin to reduce income inequality in one of the region’s most unequal societies. 

People & Power
Panama: Village of the damned

While Panama has seen its murder rate double since 2006, it remains low compared to its neighbours. According to the CID-Gallup poll referenced earlier, 22 per cent of all Panamanians report having been a victim of crime during the last four months. At the same time that the economy is heading in the right direction and that crime seems to be under control, the political system appears headed in the wrong direction. 

Supermarket magnate Ricardo Martinelli of the business-oriented Democratic Change (CD) party won the 2009 presidency as part of the Alliance for Change coalition with the Panamenista Party (PP). Martinelli and the CD’s alliance with the PP collapsed in August 2011 when the president announced plans to hold a referendum on a number of electoral reforms, including the abolishment of a ban on the immediate reelection of the president. 

The country’s vice president, Juan Carlos Varela of the PP, led the opposition to the electoral reforms. Martinelli dismissed Varela from his position as foreign minister. Varela stayed on as vice president, though, as Martinelli did not have the power to remove him as vice president. 

Martinelli called on Varela to resign in May of this year. Varela instead accused the president of taking a $30m bribe during the awarding of a $250m contract to buy radar equipment and helicopters from Italy. He also criticised the president for concentrating power in the executive branch. President Martinelli responded by denying the accusations and suing the vice president for $30m in damages

According to The Economist, President Martinelli is “also accused of pushing around the National Assembly, which obediently passed (and then speedily repealed) the law to sell the Colon land”. The government’s decision to sell state-owned land in a duty-free zone of Colon led to several days of violent protests in Colon and in Panama City, the capital. 

Unfortunately, after appealing for calm, President Martinelli dismissed the protesters and said that “agitators” and “small-minded interests” were to blame for the protests. Colon’s duty-free zone employs approximately 30,000 people. The government argued that selling the land could raise $2bn over the next two decades, several times more than it would receive if it simply continued to lease the land. 

Protesters, on the other hand, feared that the sale would cost jobs and income. Three people were killed, six injured and over 200 arrested in violent clashes between the protesters and government security forces before Martinelli eventually asked congress to repeal the law (See BBC and AP). The deadly clash between protesters and government forces was not the first this year. 

Opposition parties and some members of civil society also accuse the president of packing the country’s Supreme Court so that it can overturn the ban on presidential re-election and pave the way for Martinelli in 2014’s presidential election. President Martinelli has denied the accusations and has not taken concrete steps in that direction. But given concerns over how decisions regarding the constitutionality of presidential re-election in Honduras and Nicaragua have played out, the region should be keep a watchful eye.

Mike Allison is associate professor in the Political Science department at the University of Scranton in Pennsylvania.