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Molotov cocktails and state-led violence: How Nicaragua is slipping into Venezuela-crisis territory

Key Points
  • The Central American nation of 6 million has been rocked by popular protests and state-level violence since mid-April.
  • Thursday night completed 24 hours of a nationwide worker strike in an attempt to push out longtime leader Daniel Ortega and his wife, Rosario Murillo.
  • Human rights groups say more than 150 people have been killed since April 18.
A protester fires a homemade mortar during clashes with riot police in a demonstration by engineering university students in Managua on May 28, 2018.
INTI OCON | AFP | Getty Images

For nearly two months now, Nicaragua has been coming apart at the seams.

The Central American nation of 6 million has been rocked by popular protests and state-level violence since mid-April, and on Thursday night completed 24 hours of a nationwide worker strike in an attempt to push out longtime leader Daniel Ortega and his wife, Rosario Murillo.

Human rights groups say more than 150 people have been killed since April 18, as peaceful protests initially meant to oppose social security reforms were met with beatings and civilian deaths at the hands of state security forces, subsequently spiraling into a much larger political movement.

The economic reform measure, which would have upped workers' social security contributions but cut pensions for retired workers, sparked such backlash that the government revoked it. But by that time public anger at the protester deaths was irreversible. The pension cut was aimed at stopping the widening deficit in a country already ranked the poorest in Central America and the second-poorest in the western hemisphere after Haiti.

DIANA ULLOA | AFP | Getty Images

The demonstrations, largely led by the youth and students, as well as pensioners, unions and religious leaders, have since escalated into a struggle that's seeing locals wield homemade mortars and Molotov cocktails against the live rounds of government forces and paramilitaries allied with the president.

Schools, universities and banks have shut their doors and locals are having trouble leaving the country and accessing money, according to residents. Time Magazine described the country as being in "full cardiac arrest," and many fear Nicaragua is on its way to becoming the next Venezuela.

Kidnappings and killings: 'They just take you'

"If I were to go out, just by walking in the streets, I run the danger of getting kidnapped. Even if you're not a part of it, if you're in the wrong place at the wrong time you can get killed," said Laura Fava, a 19-year-old student living in the capital Managua, speaking to CNBC via phone. Her school has been closed for six weeks and she describes hearing gunfire and the thud of homemade weapons from her house.

"It's really scary because people are being taken and they don't give you a reason — they just take you," Fava said.

Locals have built numerous barricades around cities, suburbs and highways as "shock groups" — paramilitary units supporting the government of President Ortega — confront demonstrators with deadly force. The Inter American Commission of Human Rights and Amnesty International have accused the Nicaraguan government of disproportionate use of force and condemned extrajudicial killings, arbitrary detention and torture of protesters.

Riot police clash with protesting engineering students in Managua on May 28, 2018.
INTI OCON | AFP | Getty Images

Activists decry indiscriminate police kidnappings and beatings, and the hashtag #SOSNicaragua on Twitter generates images, although unverified, of bloodied youth in hospital beds and streets and residents pleading for help. Pope Francis condemned the violence as early as April, but the situation has only worsened since.

Ortega's supporters, meanwhile, have staged counter-demonstrations, and the government and state media deny civilian killings while insisting that the protests are infiltrated by criminal gangs. Ortega and his unpopular wife, who serves as vice president, have called the police violence a "legitimate defense" against these groups. Ortega was democratically elected in 2006, but has since been accused of mounting repression and media censorship.


Violent response threatens economic progress

Seen by many as a revolutionary hero, Ortega also ran the country from 1979 to 1990 and led the Sandinista National Liberation Front in defiance of the Ronald Reagan administration during the Cold War. His leftist policies and close friendship with Venezuelan strongmen Hugo Chavez and Victor Maduro have kept him largely at odds with Washington — the U.S. House of Representatives in late 2017 passed a sanctions bill aimed at choking Nicaragua's international loan access, which critics said would trigger a humanitarian crisis in a nation where 30 percent of the population lives on less than $2 a day.

Still, pro-business reforms by Ortega have helped the economy grow by between 4 and 5 percent a year since 2011 and have garnered Nicaragua praise from the World Bank for its "disciplined macroeconomic policies."

Nicaragua´s President Daniel Ortega and wife Rosario Murillo during meeting to support Hugo Chavez at Miraflores Presidential Palace on January 10, 2013 in Caracas, Venezuela.
Gregorio Marrero | LatinContent | Getty Images

Tourism has grown more than 400 percent since 2005, and an increasing number of foreigners are buying property along the country's sun-washed beaches. The government has also pursued public-private partnerships alongside populist policies that have largely subsidized its country's poor. Now, that economic success is under threat.

"Nicaragua under Ortega had been promoting itself as the safest country in Central America with an effective police force and a stable place for business and investment," said James Bosworth, founder of Hxagon, a firm specializing in political risk investigations in emerging markets.

"All of the aspects to that reputation have been ruined by the Ortega government's repressive and violent response to the peaceful protests."

A 'peaceful exit'

Protestors are calling for the "peaceful exit" of the president and his wife and demanding early elections, and the military's neutral position thus far does not bode well for Ortega.

"Events appear to be moving inexorably toward Ortega's removal, whether voluntarily or by force, before the completion of his current term," said Christopher McKee, CEO of risk analysis firm PRS Group.

Friends and relatives of Jorge Carrion, 33, shot dead during protests against the government of President Daniel Ortega, carry his coffin during the funeral in the city of Masaya, 35 km from Managua on June 7, 2018.
INTI OCON | AFP | Getty Images

But an early exit could extend the instability — in the absence of a stable coalition to replace Ortega, a vacuum could allow the infiltration of state institutions by criminal gangs.

"Ortega's early removal from power carries an inherent risk of increased instability and violence in a region already troubled by an epidemic of both," McKee said, describing the possible spillover of instability from neighboring Honduras and Guatemala. "If Ortega goes, the center will not likely hold."

Meanwhile, the protesters have united in agreement that a transition back to democracy is essential. But many fear the ongoing repression, crippling of local institutions and disintegration of the rule of law is pushing Nicaragua closer to a crisis like that of Venezuela.

Venezuela-level crisis? 

"Ortega has refused to agree to an early exit. He hopes that he can follow the recent models of Venezuela and Honduras in successfully repressing the anti-government protests through violence and detentions of opposition activists," Bosworth said. Venezuela, suffering heavy state repression, gang violence, hyperinflation and a widespread food shortage, has been named one of the world's most urgent humanitarian crises.

A woman cries while demanding information about her imprisoned son, who was arrested for taking part in protests against President Ortega's government, outside 'El Chipote' prison in Managua on June 13, 2018.
INTI OCON | AFP | Getty Images

"We're not close to Venezuela yet, but if this goes on, we will eventually turn into that," Fava worried. "What the people want is that Ortega just leaves and that they stop the killings."

Protesters have been calling on international governments and organizations for help, expressing frustration via social media that the turmoil in their home is being largely ignored. But they become more defiant as the crackdown intensifies, with many writing on Twitter, "We are going to keep resisting until this government resigns."

In the absence of some sort of settlement, existence for many Nicaraguans remains a precarious, day-by-day struggle. "There is literally no authority in the cities — if you call the police, there is no one," Fava said. "You have to take care of yourself."