For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Republic of Nicaragua

Geography
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.

People
Nationality: Noun and adjective--Nicaraguan(s).
Population (2001 est.): 4.91 million.
Annual growth rate (2001 est.): 2.15%. Density--33 per sq. km.
Ethnic groups: Mestizo (mixed European and indigenous) 69%, white 17%, black (Jamaican origin) 9%, indigenous 5%.
Religion: Predominantly Roman Catholic, with rapidly growing percentage of Evangelical Protestants.
Languages: Spanish (official), English and indigenous languages on Caribbean coast.
Education: Years compulsory--none enforced (28% first graders eventually finish sixth grade). Literacy--75%.
Health: Life expectancy--62 yrs. Infant mortality rate--50/1,000.
Work force (1999): 1.7 million. Unemployed--20%; underemployed--36%.

Government
Type: Republic.
Independence: 1821.
Constitution: The 1987 Sandinista-era Constitution was changed in 1995 to provide for a more even distribution of power among the four branches of government and again in 2000 to increase the Supreme Court and the Controller General's Office and to make changes to the electoral laws.
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 Constitutionalist Party (PLC); Sandinista National Liberation Front (FSLN). Other political parties--Conservative Party (PC); National Resistance Party (PRN); Camino Cristiano. Regional parties in the Atlantic Coast include YATAMA and PMUC.
Suffrage: Universal at 16.

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.
Flag: Nicaragua flag

Economy
GDP (2001): $2.4 billion (PPP 12.3 billion).
Annual growth rate (2001 est.): 2.5%.
Per capita GDP (2001 est.): $470.
Inflation rate (2001 est.): 8%.
Natural resources: Arable land, livestock, fisheries, gold, timber. Agriculture (31% of GDP): Products--corn, coffee, sugar, meat, rice, beans, bananas.
Industry (23% of GDP): Types--processed food, beverages, textiles, petroleum, and metal products.
Services (45% of GDP): Types--commerce, construction, government, banking, transportation, and energy.
Trade (2001): Exports--$640 million (f.o.b.): 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--$1.7 billion (f.o.b. 2001): petroleum, agricultural supplies, manufactured goods. Suppliers--U.S. 32%, CACM 21%, Venezuela 11%, European Union 9%.

PEOPLE
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.

HISTORY
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 longstanding 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 9-month period in 1925-26, the United States maintained troops in Nicaragua from 1912 until 1933. From 1927 until 1933, U.S. Marines stationed in Nicaragua engaged in a running battle with rebel forces led by renegade liberal Gen. 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 Cmdr. Anastasio Somoza Garcia out-maneuvered 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 lowscale 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 7 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 Cmdr. Gen. Humberto Ortega was replaced, in accordance with a new military code enacted in 1994 by Gen. Joaquin Cuadra, who 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 also were judged free and fair by international observers and by the groundbreaking 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, which later consolidated into the Liberal Constitutionalist Party (PLC). Aleman made progress in liberalizing the economy and fulfilling his campaign promise of "works not words" by completing infrastructure projects such as highways, bridges, and wells (thanks in large part to foreign assistance received after Hurricane Mitch hit Nicaragua in October 1998). His administration was, however, tainted by charges of corruption that resulted in the resignation of several key officials in mid-2000.

In November 2000, Nicaragua held municipal elections. Aleman's PLC won a majority of the overall mayoral races, but the FSLN fared considerably better in larger urban areas, winning a significant number of departmental capitals, including Managua.

Presidential and legislative elections were held on November 4, 2001--the country's fourth free and fair elections since 1990. Enrique Bola�os of the PLC was elected to the Nicaraguan presidency, defeating the FSLN candidate Daniel Ortega, by 14 percentage points. The elections were characterized by international observers as free, fair and peaceful.

President Bola�os was inaugurated on January 10, 2002. During the campaign Bola�os promised to reinvigorate the economy, create jobs, fight corruption and support the war against terrorism.

GOVERNMENT AND POLITICAL CONDITIONS
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 5-year terms. The National Assembly consists of 90 deputies elected from party lists drawn at the department and national level, plus the outgoing president and the runner-up in the presidential race, for a total of 92. In the 2001 elections, the PLC and its allies won 52 seats, the FSLN won 37 seats, and the Conservative Party 1 seat. In addition, ex-president Aleman assumed a seat, as did runner-up Daniel Ortega. During the 2002 legislative term, Aleman will serve as President of the National Assembly.

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. In 2000, the number or Supreme Court Justices was increased to 16. Supreme Court justices are nominated by the political parties and elected to 5-year terms by the National Assembly.

Led by a council of seven magistrates, the Supreme Electoral Council (CSE) is the co-equal branch of government responsible for organizing and conducting elections, plebiscites, and referendums. The magistrates and their alternates are elected to 5-year terms by the National Assembly. Constitutional changes in 2000 expanded the number of CSE magistrates from five to seven and gave the PLC and the FSLN a freer hand to name party activists to the council, prompting allegations that both parties were politicizing electoral institutions and processes and excluding smaller political parties.

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 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
Though 35 political parties participated in the 1996 elections, under new, more restrictive electoral laws passed in 2000, only three parties participated in the 2001 national elections--the PLC, the FSLN and the PC. As a result of those elections, of the 92 seats in the National Assembly, 53 will be held by the PLC, 38 by the FSLN and 1 by the PC.

Principal Government Officials
President--Enrique Bola�os Geyer
Vice President--Jose Rizo Castellon
Foreign Affairs Minister--Norman Caldera
Finance Minister--Eduardo Montealegre
Trade Minister--Marcos Narvaez
Central Bank Director--Mario Alonso
Government Minister--Arturo Harding
Agriculture Minister--Jose Augusto Navarro
Defense Minister--Jose Adan Guerra
Construction and Transportation Minister--Pedro Solorzano
Health Minister--Lucia Salvo
Education Minister--Silvio De Franco
Attorney General--Oscar Herdocia
Labor Minister--Virgilio Guardian
Ambassador to the United States--Carlos Ulvert
Ambassador to the United Nations--(vacant)
Ambassador to the Organization of American States--(vacant)

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

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 more than 350 state enterprises, reducing inflation from 13,500% to 8%, and cutting the foreign debt in half. The economy began expanding in 1994 and grew 2.5% in 2001, with overall GDP reaching $2.44 million in 2001. In 2001, the global recession, combined with a series of bank failures, low coffee prices, and a drought, caused the economy to retract.

Nicaragua remains the second-poorest nation in the hemisphere with a per capita GDP of less than $500--below where it stood before the Sandinista takeover in 1979. Unemployment is officially around 11%, 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--as much as 25% of GDP in 2001.

One of the key engines of economic growth has been production for export. Exports were 640 million in 2001. Although traditional products such as coffee, meat, and sugar continued to lead the list of Nicaraguan exports, the fastest growth is now in nontraditional exports: maquila goods (apparel); gold; seafood; and new agricultural products such as peanuts, sesame, melons, and onions. Nicaragua also depends heavily on remittances from Nicaraguans living abroad.

Nicaragua is primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years. Foreign private capital inflows topped $300 million in 1999 but, due to economic and political uncertainty, fell to less than $100 million in 2001. Rapid expansion of the tourist industry has made it the nation's third-largest source of foreign exchange. Some 60,000 Americans visit Nicaragua yearly--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 faces a number of challenges in stimulating rapid economic growth. 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. This process was boosted in late 2000 when Nicaragua reached the decision point under the Heavily Indebted Poor Countries (HIPC) debt relief initiative. However, HIPC benefits will be delayed because Nicaragua subsequently fell "off track" from its IMF program. The country also has been grappling with a string of bank failures that began in August 2000. Moreover, Nicaragua continues to lose international reserves due to its growing fiscal deficits.

The U.S. is the country's largest trading partner by far--the source of 25% of Nicaragua's imports and the destination of about 60% 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 decisionmakers 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. U.S. businesses may access key embassy economic reports via the mission's Internet home page at http://www.usia.gov/posts/managua.html.

FOREIGN RELATIONS
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 one of the poorest in the Western Hemisphere. 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. Nicaragua has submitted two territorial disputes, one with Honduras and the other with Colombia, to the International Court at The Hague for resolution. Nicaragua and Costa Rica also dispute jurisdiction over the Rio San Juan, which delimits the boundary between the two countries. 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.

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 also is 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.-NICARAGUAN RELATIONS
U.S. policy aims to continue supporting 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 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 2001, the Secretary of State issued an eighth 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;
  • Developing a free market economy with respect for property and intellectual property rights;
  • Ensuring effective civilian control over defense and security policy;
  • Increasing the effectiveness of Nicaragua's efforts to combat transborder crimes, including narcotics trafficking, illegal alien smuggling, international terrorist and criminal organizations; and
  • Reforming the judicial system and implementing good governance.

Since 1990, the U.S. has provided $1.2 billion in assistance to Nicaragua. About $260 million of that was for debt relief, and another $450 million was for balance-of-payments support. The U.S. also provided $93 million in 1999, 2000, and 2001 as part of our overall response to Hurricane Mitch. Aside from funding for Mitch reconstruction, the levels of assistance have fallen incrementally to reflect the improvements in Nicaragua. FY 2000 assistance was $25 million and FY2001 amounted to approximately the same. This assistance was focused on promoting more citizen political participation, compromise, and government transparency; stimulating sustainable growth and income; and fostering better-educated and healthier families. In 2001, the U.S. provided a total of $6.2 million to the Supreme Electoral Council and to a wide range of NGO's to ensure free, fair and transparent elections.

Principal U.S. Officials
Ambassador--Oliver P. Garza
Deputy Chief of Mission--Paul J. Saxton
Economic/Commercial Counselor--Tim Stater
Political Counselor--Robin D. Meyer
Administrative Counselor--Robert Goldberg
Public Affairs Officer--Michael Stevens
Consul General--David Ramos
Regional Security Officer--Jim Schnaible
Defense Attache--Col. Fernandez
MILGROUP--Col. Wilkins
DEA--David Jenkins
USAID Mission Director--Marilyn Zak
Peace Corps Director--Susan Pezzullo

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.

Other contact information
U.S. Department of Commerce
International Trade Administration
Trade Information Center
14th and Constitution, NW
Washington, DC 20230
Tel: 1-800-USA-TRADE

American Chamber of Commerce in Nicaragua
Apartado Postal 202
Managua, Nicaragua
Tel: 505-2-67-30-99
Fax: 505-2-67-30-98

Caribbean/Latin American Action
1818 N Street, NW, Suite 310
Washington, DC 20036
Tel: 202-466-7464
Fax: 202-822-0075

[This is a mobile copy of Nicaragua (01/02)]