October 29, 2018
Thank you AmCham for inviting me to speak here today. This is my last day as U.S. Ambassador to Nicaragua and I leave tomorrow.
Three years ago I began my assignment with a speech to the members of AmCham focusing on US efforts to help build a prosperous, secure, and democratic Nicaragua, so I feel it is appropriate to finish my time as Ambassador the same way. I have always tried to speak frankly and clearly, and I will do so again today. I appreciate the opportunity to share my parting thoughts with this group.
In March I gave a speech about the “Way to 2030” where I said that the future of Nicaragua was uncertain because of a lack of rule of law, a lack of democracy, and the choice of certain international partners. When I raised these issues before April, the business community frequently told me that they could accept sacrificing some fundamental rights because Nicaragua was not at war and did not have the violence of the countries to the north.
Business leaders in Nicaragua valued stability over sustainability. They believed economic growth would ultimately bring opportunities. But when I traveled around Nicaragua and met with small farmers, young entrepreneurs building new businesses, students, women leaders, indigenous communities and so many others I heard something different. These Nicaraguans yearned for a fair country with economic opportunities for everyone. Where corruption and political cronyism do not limit opportunities to only a few. It is now clear that the vast majority of Nicaraguans will no longer accept corruption by government officials and private businesses and that they have no confidence in government institutions. They want a country that protects their rights under the law and they want free, fair, and transparent elections. What they understand is that prosperity, security, and democracy can only work well when they work together.
Democracy, good governance, and rule of law are the foundation that allows for prosperity and security. In March, I also spoke about the challenges brought about by the Fourth Industrial Revolution and how the decision to focus on investment based on the low cost of labor will be unsustainable in a future with automation demanding higher skilled workers and lower energy costs.
I wish I could be here talking to you about how to prepare Nicaragua’s incredible young people to lead the transformation the country needs to be competitive in the economy of the future. But instead, many of these highly talented young people have been forced into exile, jailed, or killed by their own government. Nicaragua is once again losing an entire generation as many seek better and safer futures in other countries.
Universities in Nicaragua have been turned into propaganda machines rather than platforms to prepare for the future. The medical system has been used as a weapon of war instead of as a way to build a healthy population ready for future opportunities. The police force now terrorizes rather than protects and has lost all credibility in the eyes of the people. Businesses have closed, lands have been seized, and the economic forecast is that 10 years of steady growth has given way to a large contraction.
2018 has been a tumultuous year. Contrary to what the government propaganda wants you to believe, Nicaragua has not returned to normality. Ortega’s decisions have already cost $500 million of Nicaragua’s wealth that could have been used to build houses, start new businesses, treat the sick, or educate youth. 350,000 Nicaraguans have lost their jobs and an additional five percent of the population has fallen into poverty since April. Nicaragua’s tourism industry has been set back. No amount of propaganda on state controlled media will change these facts. There will not be a return to business as usual without transformative change to restore free elections, the separation of powers, the rule of law, and the protection of the human rights of its citizens.
Unfortunately, I see no signs that President Ortega or Vice President Murillo are willing to consider a negotiated solution. This means that the international community is very likely to continue implementing even stronger measures against the government. In March I predicted the NICA Act would be approved because of the lack of democracy, corruption, and the regime’s close relationship with Russia and Venezuela. The U.S. Congress has recognized the killing of protesters, the gross violations of human rights, and Ortega’s failure to credibly participate in the National Dialogue.
In response, the Senate strengthened and expanded the legislation. Once the US elections are over early in November, I would expect to see final Congressional movement on this legislation.
In March I also said the maneuvers to preserve the immunity of Roberto Rivas in the face of the Global Magnitsky Act reaffirmed that rule of law and institutionality in Nicaragua are weak. The Trump Administration has now designated three additional Nicaraguan officials under the Global Magnitsky Act for human rights abuses and corruption.
Through these sanctions, the United States is demonstrating that it will hold officials who authorize violence and abuses responsible for their actions. As the White House said in July, these are a start, not an end, of potential sanctions.
On October 4, the Financial Crimes Enforcement Network, or FinCEN in English, issued an advisory to alert U.S. financial institutions of the risk that proceeds of political corruption from Nicaragua may enter or traverse the U.S. financial system.
The Under Secretary of the Treasury for Terrorism and Financial Intelligence noted that “FinCEN’s advisory is part of this Administration’s ongoing campaign to hold individuals who engage in human rights abuses and corruption in Nicaragua to account.”
There are two notable items in this advisory. First, that this is an ongoing campaign. And secondly, that there is a focus on all individuals who engage in corruption, not just public officials. Anyone engaging or benefitting from corruption can be targeted. Again, this is a start, not an end.
The United States is also revoking visas of Nicaraguan officials and their families, including municipal authorities, when those officials have been responsible for police violence against protestors, when they have supported pro-government para-police violence, or when they have prevented victims from receiving medical care.
By law, we cannot publish names of individuals, but we are looking not only at government officials but also at those outside of the government who have benefitted from, facilitated, or participated in the corruption.
The OAS and the United Nations have quickly engaged on the crisis in Nicaragua and it is obvious that there is no support for the brutal regime outside of a handful of countries. Additional international engagement and pressure is likely in the future.
All of this would be concerning for any country, but it is especially alarming when these actions are coming from your largest trading partner. Our economies are linked, our people are linked, and as we have seen by the events of the last six months, our desire to live in a democratic country with rule of law are linked.
Instead of committing to sound measures that could restore confidence and allow Nicaraguans to work towards a prosperous future, the Ortega regime is working only to protect its own. Tools like the UAF, emergency credit restructuring, and new roles for public companies are being used to repress political enemies.
When faced with troubling indicators of a weakened economy, President Ortega’s regime chose to hide the information. When he could have negotiated a political solution to the crisis, Ortega instead chose to target the private sector as “economic terrorists” with no role in Nicaragua’s future. The regime is acting as though it can replace the private sector with state-owned enterprises. A country with Nicaragua’s history knows that way leads to disaster.
Nicaragua is also putting its access to multilateral financing at risk. The United States and other regional partners are rightly concerned about the Ortega regime’s entrenched corruption, disregard for fiscal transparency, and the potential misuse of loans. No international institution wants to see its money finance violence and repression. Many loans have already been suspended or slowed. Without a political resolution to the crisis, Nicaragua may give up all future multilateral financing indefinitely, with harsh consequences.
In 2017, multilateral institutions funded 24 percent of the Nicaraguan government’s budget and provided 60 percent of all external aid destined for non-governmental recipients – an amount that totaled $770 million.
When current and potential investors ask the Embassy for advice today, our response is that Nicaragua lacks the democratic institutions necessary for sustainable economic growth. Very weak public institutions, deficiencies in the rule of law and administration of justice, and extensive executive control have significantly exacerbated existing challenges for those currently doing business in Nicaragua.
Investors need to be aware of the physical, financial, and reputational risks of doing business in Nicaragua and they should exercise extreme caution. With Nicaraguans facing sanctions, investors will also need to exercise due diligence to avoid engaging in prohibited trade or financial transactions.
Let me touch more on the issue of reputational risk. In the global economy of today, companies cannot afford to take on reputational risk. I have already seen campaigns in the United States asking companies why they are buying products from Nicaragua. These campaigns are similar to the campaigns on African “blood diamonds.” Companies can buy the same textiles, coffee, or meat from other countries that do not put their reputation at risk. This problem with reputation will not change with the current government in power.
Also, the government’s decision to label peaceful protestors as “terrorists, assassins, and coup-mongers” will cause businesses and business owners major problems. Most insurance policies have a terrorism exclusion, dramatically raising the cost of doing business in Nicaragua. Nicaraguan travelers will be subject to extra scrutiny in order to identify terrorists and assassins. Anyone who has lived through the last six months knows there are no non-state terrorist groups in Nicaragua but people outside of the region who do not follow the situation carefully will take these words seriously.
Finally, the travel advice we share with the public will not change anytime soon. The threat of tourists and travelers being charged with terrorism or terrorist financing is just too great. The travel advisories from the US government and from other governments must include all threats, not just physical threats.
I have talked a lot about the challenges facing the country, but the United States understands that the solution to Nicaragua’s ongoing crisis can only come from Nicaraguans, starting with the President. A successful negotiation only requires two parties willing to negotiate in good faith and until now there has only been one group willing to negotiate. It is not the structure of the process that is the problem, but rather the lack of a good faith on the part of the government. The people of Nicaragua will need to be persistent and patient, because there is no quick solution. New leadership alone will not solve Nicaragua’s problems.
I will repeat what I said before. Nicaragua’s economic and political problems will endure until Nicaraguans embrace democracy and rule of law as a form of government. And that is a fundamental change.
The people of Nicaragua want rules of the game that are free and fair.
Too often in the past, elites have set rules that disregard the interests of the rest of the population. One could argue that in the past, the United States was also part of the problem. This time is different for us all. The White House has said that “The United States stands with the people of Nicaragua, including members of the Sandinista party, who are calling for democratic reforms and an end to the violence.”
For my three years in Nicaragua we have been willing to work with members of the Sandinista party and we remain willing to work with those seeking democratic reform. All of you are the real key to building the future Nicaragua, but it needs to be different than the historical cycles of the past. The Caudillo model needs to end now and power and opportunity need to be shared with everyone. That may sound scary to some of you, but it will be the key to building a sustainable future for the country.
I have met many talented women in Nicaragua and they should be given equal opportunities to participate in the new Nicaragua. The youth of Nicaragua have shown through their valiant efforts these last six months that they are dedicated to the future of the country and want democracy and rule of law for everyone. The mothers, aunts, sisters, grandmothers, and other family members of the many people who have lost their lives will continue to call for justice for their relatives.
Public institutions should balance the diverse interests of a society, not be captured by a few of them. Nicaraguans deserve democracy, real rule of law, and the real respect of those they elect to serve them.
As I wrap up both my time in Nicaragua and this speech, let me focus on the Nicaragua that I grew to love during my time here. What I will always remember is the people.
When I first arrived, the Embassy held a Facebook contest to ask people where I should visit and we received thousands of suggestions for trips all over the country. Everyone was so proud of Nicaragua and their communities. Some suggested visiting famous places like Leon and Granada. Others, said to visit places like the Masaya Volcano, to see the natural beauty of the country.
Whether enjoying a day on an island near Granada, driving through the mountains near Matagalpa and Jinotega to learn about coffee production, attending EXPICA to learn about the cattle business, or traveling to Bluefields or Puerto Cabezas to experience the Caribbean culture, the diversity of the country was amazing.
I remember visiting the grave in Boaco of US Army PFC Roger Suarez with his family each year to honor his sacrifice to making the world a better place. I enjoyed collecting trash with Nicaraguan students to help protect the beautiful beaches along the Pacific.
I learned from a student from the Caribbean coast who pointed out that his part of the country is not represented by the slogan “the land of lakes and volcanoes.” Amazing women entrepreneurs taught me about the challenges of starting businesses without access to financing.
I remember a mother from a rural community who had to go against the advice of her family to allow her daughter to travel to the United States so she could expand her life experience. The people of Waspam showed me the beauty of the border with Honduras when our military worked with the Nicaraguan military to provide medical care.
I saw the ongoing effects of deforestation due to logging in remote parts of the country. The family members who lost their mothers, sisters, or daughters to violence against women showed such strength and dignity in the face of such tragedy.
I was thrilled to celebrate the gold medal of the men’s wheelchair basketball team and the success of the women’s team. I had visited their informal games many times on the weekends and they and their families always took the time to patiently explain the rules of the game. They are all winners.
I learned that Nicaraguans present the poetry of Ruben Dario like no one else. The best were students in very rural communities who really had a profound understanding of the meaning behind the words.
I also appreciated the friendship of all of the AmCham members during my time in Nicaragua. You opened your homes and businesses to me and made me and my husband feel very welcome. Thank you very much and I am sure you will provide the same welcome to the new Ambassador, Kevin Sullivan.
While I could go on and on, I think it is appropriate that I conclude by saying that like you I worry about the many who have been arrested so unfairly and the many who have been forced to leave their families and flee the country. I also mourn the many lives lost these last few months. I never met them personally but I felt the loss of each one of them. They represent the best of the Nicaragua I love and will be sad to leave.
I offer my personal condolences to their families and friends and hope that they have a chance to grieve in peace. I am saddened by the loss of life and difficulties that I have witnessed in these past six months, but I am encouraged by the Nicaraguan people’s spirit that I have seen repeatedly during my three years here.
I am hopeful that their commitment and desire, your commitment and desire, to build a more secure, prosperous, and democratic Nicaragua will prevail. As Secretary of State Pompeo said, “I look forward to your beautiful country’s return to peace, liberty, and democracy.”