Since democratic elections were held in 1990, Nicaragua has adopted pro-market economic reforms, held free and fair elections, and worked toward building democratic institutions. Political Situation

On January 10, 2007, Sandinista leader and former President Daniel Ortega was inaugurated to a five-year presidential term. Foreign Relations

President Ortega is working with the United States and the IMF to boost the country's long-term prospects for economic development, but is also seeking aid from Iran and Venezuela to meet more immediate needs. U.S.-Nicaraguan Relations

Despite initial concerns about the impact of Ortega's November 2006 re-election on U.S.-Nicaraguan relations, the bilateral relationship, though tense at times, appears to be generally intact. His government is also implementing the CAFTA-DR. The FY2009 request includes increases in funds for security reform and combating transnational crime, democracy and civil society programs, and trade capacity building programs to help Nicaragua benefit from CAFTA-DR.

		Millennium Challenge Account (MCA)

In addition to traditional development assistance, Nicaragua benefits from its participation in the MCA, a presidential initiative that increases foreign assistance to countries below a certain income threshold that are pursuing policies to promote democracy, social development, and sustainable economic growth. As noted above, other assistance could be provided through the proposed MÃ©rida Initiative.
Nicaragua, the second poorest country in Latin America after Haiti, has had a difficult path to democracy, characterized by ongoing struggles between rival caudillos (strongmen), generations of dictatorial rule, and civil war. Since 1990, Nicaragua has been developing democratic institutions and a framework for economic development. Nonetheless, the country remains extremely poor and its institutions are weak. Former revolutionary Sandinista leader, Daniel Ortega, was inaugurated to a new five-year presidential term in January 2007 and appears to be governing generally democratically and implementing market-friendly economic policies. The United States, though concerned about Ortega's ties to Venezuela and Iran and his authoritarian tendencies, has remained actively engaged with the Ortega Administration. The two countries are working together to implement the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), control narcotics and crime, and promote economic development through the Millennium Challenge Account (MCA). Nicaragua is receiving some $28.6 million in U.S. assistance in FY2008 and could benefit from the proposed MÃ©rida Initiative for Mexico and Central America. This report may not be updated.