USAID CBJ FY 2002: Nicaragua

Summary: Nicaragua made measured progress in the political area through the year 2000, most notably in the November 2000 municipal elections which capped its ten-year record of free elections. But a firmly rooted and vibrant democracy requires more than just technically free elections. An agreement made in January 2000 between the two dominant political parties resulted in constitutional reforms that substantially weakened independence of the Supreme Court, Comptroller, and the Election Commission by politicizing them even further. The new election law severely limits political party participation and alliance formation. The justice sector continues to be the weakest link in Nicaragua's democracy; municipal governments have not gained autonomy; and civil society is still struggling to define its role vis a vis the government and political parties.

USAID's elections support activity under the good governance component aims to increase transparency and citizen participation in presidential elections through domestic and international monitoring of the elections process, voter education and mobilization activities, and critical technical assistance to the elections administration. Support for national elections, originally not planned as a major activity, has taken on such importance that USAID cut back all other democracy activities to free resources to meet this Mission Performance Plan priority. Other activities under the good governance component also support government efforts to promote accountability and ethics in the management of public finances through establishment of a modern governmental financial management system. The program helps to empower civil society organizations, increase autonomy for local governments, and protect human rights.

USAID's rule of law component continues to strengthen democracy by helping the government to modernize the administration of justice by supporting key reforms to ensure rule of law and due process and by strengthening judicial sector institutions.

Key Results: USAID expects to achieve key results in the democracy area by 2003: 1) increased public support for the political system; 2) passage of new codes essential to reform the judicial system; 3) 75% of households in USAID-assisted municipalities have access to basic services such as garbage collection, sewer and water by the year 2001 compared to 52% in 1996; 4) human rights violations by the State are reduced; and 5) citizen participation in local government decision-making; and 6) increased citizen participation in local government decision-making.

Performance and Prospects: Data to measure public support for the political system is only collected every two years and will be collected in 2001. The level of participation and openness in the national elections scheduled for November 2001 will also serve as an indicator of system support. Advances have been notable in legal reforms assisted by our program as evidenced by the number of new codes approved. The widespread infrastructure damage caused by Hurricane Mitch in late 1998 sharply decreased the number of households with access to basic services, setting back progress in this area. Active participation of citizens in a larger-than-expected number of public meetings at the municipal level indicates increased avenues for citizens to voice their concerns. A decrease in the number and severity of reported human rights violations from 550 in FY 1999 to 452 in FY 2000 is an encouraging trend. Nevertheless, the lack of political will and transparency in government institutions has hampered progress in other areas.

Election commission decisions have been based on political considerations that favor the two major parties and limit participation by smaller parties. Although observers agreed that the November 2000 municipal elections were generally free and fair from a technical perspective, changes in the electoral law, and the way the law has been interpreted, effectively limited participation of parties and specific candidates.

To encourage more honest and participatory national elections in November 2001, USAID will support international observers which may include the Organization of American States (OAS), the Carter Center, the International Republican Institute (IRI), and the National Democratic Institute (NDI). USAID will support an extensive observation effort by local NGOs, working with experienced organizations, to assure full geographic coverage. USAID plans to fund Nicaraguan NGOs in areas such as voter education and mobilization, public debates and forums on the major issues, civic education, and advocacy with political parties to include key issues in their party platforms. USAID will provide targeted assistance to the Supreme Elections Council (CSE) to address the principal technical difficulties that could threaten the legitimacy of the November national elections.

Progress in judicial reform has continued steadily. A new Organic Law for the Public Ministry was approved in October. This law creates an independent Prosecutor's Office and allows for criminal procedural reform. The National Assembly approved a new Criminal Code in an initial hearing, clearing the way for full review. Both the Sandinistas and Liberals have expressed support for passage of the two codes, and the codes may be passed this year. Thus USAID's target for passage of the code in 2000 was partially achieved.

The Administrative Litigation Code was passed in May 2000 and takes effect in May 2001. Although the target date for passage was 1999, its enactment remains significant as it removes the Executive Branch's de facto immunity from civil prosecution. The Public Defender's Office, established last year with technical assistance from USAID, began functioning satisfactorily long before the target date of 2001. Benefiting from lessons learned from reform efforts elsewhere, development and passage of these reformed codes has occurred more rapidly than in other Central American countries.

Another positive result for the democracy program this year was a reduction in the number of human rights violations committed by the government, from 550 in 1999 to 452 in 2000, as reported by the Nicaraguan Association for Human Rights (ANPDH). The number of serious violations reported has also decreased markedly. Nevertheless, strong annual fluctuations in data for this indicator suggest a need to consider replacing this indicator with one more closely linked to USAID-supported activities. Performance of the Office of the Human Rights Ombudsman, established in 1999 with GON and other donor funding, has been notable in reinforcing the rule of law.

The impact of Hurricane Mitch continues to be felt in municipalities' ability to provide basic services. Sixty-two percent of citizens in USAID-assisted municipalities now have access to basic services, below the target of 75% and below the 1998 level of 65%. USAID's municipal project budget system, already in use in its target communities, has been adopted by other donors and by the Nicaraguan Municipal Development Institute (INIFOM) for implementation nationwide, giving municipalities a modern way of managing fiscal resources, and a way of collecting comparable data throughout the country. However, essential legislation on decentralization has not been enacted. Two important laws that would increase municipal autonomy, the Law of Municipal Transfers and a Municipal Tax Code, have been blocked in the Assembly since 1997. Another important law -- the Municipal Civil Service Law, designed to raise the level of professionalism, sustainability and efficiency within the municipalities -- has not been passed. Without such a law, each election is apt to lead to the loss of experienced professional staff at all levels of government.

USAID, through its grant to the Nicaraguan Development Center (NDC), supported the creation of the Civil Consortium for Electoral Education, Analysis, and Observation, an alliance of civil society organizations, which organized nearly 4,800 observers during the November 2000 municipal elections, providing coverage to 56% of the nation's polling centers. The program has also established a competitive system for awarding subgrants to Nicaraguan NGOs. The program has shown NGOs the need for more professional management, and has motivated them to improve their capabilities and focus. Subgrants in civil society and human rights have strengthened NGOs that serve marginalized groups, including women, children, and the disabled.

Although performance of the SO has been strong in some areas, others had less success. Lack of political commitment led to substantial delays in program areas such as implementation of the integrated financial management system (SIGFA), decentralization, and resolution of property cases. Funding cuts have also affected this objective significantly, contributing to decisions to end USAID activities supporting the National Assembly and the Controller General's Office, and to scale back on rule of law activities.

Prospects for progress in the upcoming year are uncertain. The exclusionary effects of the January 2000 election law reforms, the principal political parties' internal processes for candidate selection, and the difficulty of smaller political parties forming effective alliances have prompted many Nicaraguans to complain about a lack of choices in the upcoming national elections. The outcome of the national elections, still highly uncertain, will affect the prospects for achievement of all USAID objectives.

In FY 2001, ESF which includes carryover funds will be used to increase transparency and participation in the presidential elections ($1,800,000) and to support legal code reform and strengthen the justice system ($995,000). DA ($1,950,000) will be used to promote good governance through increased accountability of public finance, and to empower civil society organizations, strengthen local governments, and protect human rights.

In FY 2002, USAID will use $1,500,000 ESF and $500,000 DA funds to support adoption of code reforms and strengthening the judicial system. $3,000,000 DA will be used to promote decentralization legislation, increase the autonomy of municipal governments, strengthen civil society NGOs, and protect human rights.

Possible Adjustments to Plans: USAID had to cut back its regular democracy program to support the process leading up to national elections in November, 2001. Specifically, support for modernization of the National Assembly ended in March 2001; support to the Controller General's Office and public awareness surveys has been cut; support to strengthening municipal decentralization was curtailed; and a contract to support code reform will end in January 2002 -- one year earlier than planned. Because of these cuts, USAID may not achieve the expected results associated with those areas.

Other Donor Programs: Spain, Sweden, and the United Nations are supporting improved court administration, training the national police, and strengthening the penal system. The Inter-American Development Bank (IDB) has approved a loan for a significant program in court administration, and the European Union (EU) and IDB continue to support courthouse construction. The World Bank and EU have funded complementary activities in the Public Registry of property. The Danes and Swedes have helped improve municipal administration in towns not covered by the USAID program, while the World Bank, IDB, and EU have financed construction and rehabilitation projects. The IDB and Taiwan have assisted the National Assembly. The World Bank, IDB, and USAID have been implementing a multi-donor effort to carry out financial management reform. USAID contributes to an IDB initiative aimed at government procurement reform. The Spanish and Japanese are expected to support national elections through material assistance to the Supreme Elections Council. Other bilateral donors have indicated they will support local observers.

Principal Contractors, Grantees or Agencies: U.S. organizations include: Cassals and Associates, the Planning Associates Development Collaborative (PADCO), Checchi & Company Consulting, Inc., Florida International University, Catholic Relief Service. Nicaraguan organizations include: Supreme Elections Council (CSE), Association of Nicaraguan Municipalities (AMUNIC), Courts, Public Defenders, Attorney General, Ministry of Finance (including the Office of Quantification of Claims and the Property Registry), the Nicaraguan Development Center, the Nicaraguan Association for Human Rights (ANPDH), the Permanent Commission on Human Rights (CPDH) and local NGOs.

Nicaragua 524-001

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	13,213	DA	5,270	DA	7,943	DA
	0	CSD	0	CSD	0	CSD
	7,743	ESF	3,785	ESF	3,958	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	3,157	DA	7,803	DA
	0	CSD	0	CSD
	855	ESF	2,176	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	16,370	DA	13,073	DA	3,297	DA
	0	CSD	0	CSD	0	CSD
	8,598	ESF	5,961	ESF	2,637	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds*	0	DA
	0	CSD
	383	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	1,950	DA
	0	CSD
	2,412	ESF*
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	1,950	DA
	0	CSD
	2,795	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	3,500	DA	5,680	DA	27,500	DA
	0	CSD	0	CSD	0	CSD
	1,500	ESF	3,207	ESF	16,100	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

Nicaragua

Activity Data Sheet

Nicaragua 524-001

U.S. Financing