Caribbean & Central America - June 2013 (ISSN 1741-4458)

Concerns regarding the future of Venezuelan cooperation with Nicaragua following the death in March of President Daniel Ortega’s chief benefactor, Hugo Chávez (1999-2013), [RC-13-03] have yet to be dispelled. On 3 June Nicaragua’s influential private sector lobby, Cosep, reiterated its call for a formal bilateral free trade agreement (FTA), just one day after Chávez’s successor, Nicolás Maduro, paid a visit to Managua where he pledged to boost bilateral cooperation.

Cosep has been calling for a formal FTA since 2009 and its demands are not surprising given that Venezuela is Nicaragua’s second biggest trade partner after the US (with whom Nicaragua has an FTA via the Central American-Dominican Republic-US FTA). According to the latest figures from the Central American economic integration system (Sieca), Venezuela accounted for US$1.25bn of Nicaragua’s US$8.7bn worth of foreign trade last year, while the US accounted for US$1.85bn. Cosep’s calls add to long-standing concerns about the lack of transparency regarding bilateral cooperation which remains out of Nicaragua’s State budget. These fears are similarly not surprising given that Venezuelan cooperation accounted for 57% of Nicaragua’s total foreign cooperation in 2012, reaching US$765m, up 25% on 2011. Of this US$550.7m was petrol aid through Albanisa, the bi-national state oil company set up in 2007, 51% owned by Venezuela’s state firm, Pdvsa, and the remainder by Nicaragua’s Petronic.

Despite Maduro’s insistence that his visit signified a strengthening of relations, little emerged beyond deals spanning education, health, police cooperation and a partial agreement between the youth movements of Ortega’s Frente Sandinista de Liberación Nacional (FSLN) and Venezuela’s Partido Socialista Unido de Venezuela (PSUV). Indeed some local commentators attributed Maduro’s visit to Venezuelan concerns regarding the uses of Venezuela’s aid by the Ortega government. This speculation was fuelled by the announcement by Nicaragua’s comptroller general, Guillermo Argüello Poessy, that a “comprehensive audit” of Albanisa, whose Vice-President Francisco López doubles up as the FSLN’s treasurer, was underway. Opposition politicians like Eliseo Núñez Morales, of the Partido Liberal Independiente (PLI), also attributed the move to efforts by the Ortega government to balance its books ahead of the possible withdrawal of Venezuelan aid and the possibility that if this happens it may automatically be added to the public debt.