The prospect of a peaceful political transition in the politically polarized country were considered so shaky that international observers were called in for the October 1996 elections, as they had been in 1990. Although the results were later contested, and some irregularities found, the elections proceeded peacefully and without incident. With 80% of the electorate voting, Arnoldo Alemán, the conservative former mayor of Managua, and leader of the Liberal Constitutionalist Party (PLC) defeated Sandinista leader Daniel Ortega in Nicaragua’s first peaceful transition of power in 100 years. The Liberal Party took 41 of the 93 seats in the Chamber of Deputies, while the Sandinistas took 38; the remaining seats were won by leftist and conservative groups.
President Arnoldo Alemán Lacayo and Vice President Enrique Bolanos Geyer were inaugurated into office on 10 January 1997. Though the elections were plagued with allegations of corruption, Alemán began his term in office positively. His close ties with right-wing groups and American entrepreneurs helped establish Nicaragua’s market economy, and he worked hard to instill strict economic reforms focused on economic growth. Throughout Alemán’s term, the GDP steadily increased. Until 1998, Alemán’s efforts paid off—reforms were reaping some success, even amidst the muddied waters the legacy of civil war and years of financial mismanagement had left behind. Then came Hurricane Mitch in 1998, devastating Nicaragua and neighboring Honduras and leaving Nicaragua, already the poorest country in Central America, with $1 billion worth of damage. Worst hit was the agricultural sector, which the country depends on for the majority of its exports. By 1999, Alemán was forced to deal with a trade deficit approaching $900 million. However, despite the destruction caused by Hurricane Mitch, Nicaragua’s economy continued to grow slightly. Aid and debt relief contributed to this and thus helped stabilize the economy, but the hand of President Alemán and his commitment to free market reforms and economic growth no doubt played a role as well.
Alemán increased talks with the Sandinistas during his term and the two parties indeed found common ground in one area: scandal allegations. In 1998, Daniel Ortega, the Sandinista former president, faced accusations from his stepdaughter of sexual abuse dating back to her childhood. Meanwhile, Alemán faced charges that the presidential plane he had been using was actually reported stolen in the United States and that it had been used throughout Central America and Colombia to carry cocaine. Both Ortega and Alemán denied all charges against them. Alemán also faced border disputes during his term: in March 2000, Nicaragua coupled with Costa Rica to continue an ongoing battle over its border with Honduras, each claiming sovereignty over the Gulf of Fonseca. Other challenges during Alemán’s presidency were land reform and the land distribution process (favoring Sandinistas and their supporters), as well as growing poverty and migration issues.
In the 2001 presidential election, Enrique Bolaños easily won with 56.3% of the vote. Daniel Ortega, the Sandinista leader, came second with 42.3%. Surprising supporters and observers, Bolaños quickly moved to support a judicial corruption investigation against Bolaños. Although the investigation, which has also involved an inquiry by the National Assembly, has progressed slowly, Bolaños’s move has signaled his commitment to put an end to the widespread corruption that has characterized Nicaraguan politics for decades. Although the economy has expanded slowly, at no more than 3% annual growth since Bolaños took office, and one out of every two Nicaraguans live in poverty, democratic institutions have consolidated. President Bolaños will leave office in 2006 with a country with stronger democratic institutions than when he was inaugurated in 2001.
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