In the process of expanding their influence, criminal groups often develop close ties with elites in an effort to gain protection and access to better resources. This facet of transnational organized crime, and the threats it poses to the security and economies of today’s societies, is an issue that requires the attention of both governments and academics.
Efforts to understand elites are not new and has been looked at through different lenses. For the purposes of this study, we define elites as specific groups of people with a privileged position that allows them to control, direct or greatly influence the dynamics of community life in political, social, cultural and/or economic terms.
Sometimes, the relationship between criminal groups and these elites is one of mutual benefit, in which both groups are able to further their own interests, as is often seen in Latin America, particularly in Mexico and Colombia where several well-known cases illustrate the extent of these ties.
*This report was a collaboration between InSight Crime and Expediente Abierto, and included the participation of numerous Nicaraguan journalists and investigators who, for security reasons, prefer anonymity. Javier Meléndez coordinated the investigation, writing and editing of the story. Additional editing and reporting by Steven Dudley and Hannah Stone. Read the other chapters in this investigation here.
In part, this is due to the geographic location of these countries. Both Mexico and Colombia are considered to be hubs for drug production and trafficking to the United States, the largest drug consumer in the world. Transnational criminal groups use the region as a transit corridor and to strengthen their own individual businesses. Both require the participation of elites who can protect these groups’ criminal activities, help them launder money, and provide them a layer of judicial protection.
Like other Central American nations, Nicaragua is not immune to the effects of organized criminal groups, which have sought to install and expand their power structures within the Central American country, either institutionally or informally. What level of influence do they have? How have they reached this point? What forms do the relationships between elites and organized crime take? These are some of the questions this study seeks to answer.
The study shows, for example, how criminal groups’ interests intertwine with those of the elites and state bureaucracies, how criminal groups exploit the absence of the state and institutional deficits, and how mutually beneficial ties are created under the vestige of personal friendship or via relatives. Moreover, it reveals that these relationships are not the result of chance encounters, but are instead premeditated, strategic actions made by both actors when taking advantage of the absence of state institutions and the opacity in public administration or regulatory agencies in the country. This absence creates space for a type of symbiotic relationship between elites and criminal groups.
Nicaraguan Elites and Power
In Nicaragua, there has been scant discussion on the role of the country’s elites with organized crime, even though elites are often thought of in the national political culture as being an important factor in explaining the country’s political processes and the corruption related to them. The most well-known investigations into the country’s elites during the last two decades have taken two major forms: studies about their political culture, or studies about the processes of their organization and formation.
This report allows us to identify different elites who because of their economic, political or social ties, have a clear interest in using the state’s resources to consolidate their power and potentially commit acts of corruption. Indeed, from 1979 to the present, different groups of elites in the country have competed to take hold of privileged government positions to expand their own interests. During this time period, there have been two key events: the Sandinista Revolution and the period of liberal governments that replaced it in 1990. In both cases, changes in the economic model and the country’s political project facilitated this type of competition between elites.
From Somoza to the Revolutionary Alliance
In its final years, the Somoza dictatorship – which held the presidency for over three decades in the 20th century – functioned like a family dynasty. It was backed by the power of the National Guard. The monopolistic control the Somozas and their associates held over the country’s political system and economic activities created a severe divide in Nicaraguan society, particularly within the country’s two most important economic groups: the traditional oligarchy linked to agricultural activities and property, and the industrial and commercial groups that sought greater global ties. These economic groups came together under the umbrella of the Superior Council of Private Enterprise (Consejo Superior de la Empresa Privada – COSEP). Their grievances were similar: They were not happy with how Somoza’s monopolies stagnated their own development and expansion.
Leaders of opposition parties – many of whom had ties to the two major economic groups, as well as to the middle-class intellectuals – were similarly unhappy with the status quo. None of these groups had positions in the state or a say in the political system. They were unified through organizations such as the Broad Opposition Front (Frente Amplio Opositor – FAO), which was composed of professionals, intellectuals and businessmen tied to private trade; the National Opposition Union (Unión Nacional Opositora – UNO), made up of political party leaders, some private businessman and media executives; and the Group of Twelve, made up of renowned intellectuals and writers – including Carlos Tünnermann, Sergio Ramírez, Arturo Cruz, Miguel d’Escoto, Fernando Cardenal, and Joaquín Cuadra Chamorro – who tried to differentiate themselves from other groups that had a more right-wing political orientation or connections to specific economic interests.
Between 1978 and 1979, the level of discontent led to the formation of a broad alliance between different civil society groups and guerrillas from the Sandinista National Liberation Front (Frente Sandinista de Liberación Nacional – FSLN), the insurgent coalition that was trying to overthrow the dictatorship. Apart from the economic groups and the political opposition, the alliance included members of Christian, worker, peasant, student and urban groups. It established itself as a broad opposition front and created representative mechanisms at the local and national levels, from the collective leadership in civil society and rebel groups all the way to the Junta of the National Reconstruction Government (Junta de Gobierno de Reconstrucción Nacional – JGRN), which was formed after the fall of the dictatorship.
Once the main objective was reached and the Somoza regime had been deposed in 1979, the revolution and the broad opposition front that formed around the FSLN faced major challenges, such as the reestablishment of government institutions, economic reconstruction following the civil war, and how to respond to the expectations of a diverse set of national and external actors with respect to the future of the country and democracy.
The alliance quickly fell apart when the FSLN leadership – under the presidency of Daniel Ortega – defined the process as socialist, took control of the government’s positions of power, and began to make decisions that adversely affected the interests of the big private companies and the landed oligarchy. These decisions included the expropriation of landholdings and companies, and the nationalization of key economic sectors such as the energy, mining and fuel sectors, among others.
The Sandinista regime had other problems as well. It was at war with United States-backed counterrevolutionary forces known as the Contras. The proxy army’s core was initially the former Somoza National Guard but later included peasants from war-torn areas.
The Contras – formed and maintained by the US Central Intelligence Agency (CIA) – operated mostly from the remote Honduran-Nicaraguan border area. They drained the Sandinistas of vital resources and waged an effective war of attrition on the hearts and minds of the Nicaraguans themselves. The prolonged war also radicalized the Sandinista leadership, giving voice and power to the most extreme parts of the party.
Despite these early splits and ongoing challenges, the Sandinistas and others eventually formed a political bloc integrated by the revolutionary leadership composed of people from the upper-middle class; the military establishment, intellectuals, and the so-called “patriotic” businessmen; and a part of the landed oligarchy that was connected to the revolutionary process. The political alliance also included civil society groups that had organized and actively participated in the revolutionary process. This bloc formed the core of the ruling coalition until the next rupture of power in 1990.
Political Transition: A New Ruling Elite?
The FSLN’s revolutionary project was upended in 1990 when the National Opposition Union (Unión Nacional Opositora – UNO) – which was composed of more than a dozen political opposition parties and groups, many of which had ties to the private business sector – defeated the ruling party at the polls and its candidate, Violeta Barrios de Chamorro, became president. UNO’s unexpected electoral victory opened a complex period in which three distinct sub-processes converged: the armed conflict with the Contras drew to a close, liberal democracy emerged, and the country’s economic model changed because of increased globalization. These were tumultuous transitions, occurring in the context of a renewed power struggle between different factions of the country’s capitalist and political classes.
During the first few years of what has been loosely termed the country’s democratic era, the power struggle led to schisms between the UNO and the FSLN, and amongst the parties themselves. According to Ángel Saldomando and David Close, these groups tried to create a “hegemonic pole” to lead the democratic transition process. At least three prominent factions within the UNO were said to represent large business interests: 1) the traditional oligarchy; 2) a new group of private businessmen; 3) political leaders. Similarly, another three factions could be identified in the FSLN: 1) a group tied to the political establishment and to businessmen within the party; 2) a group made up of intellectuals and militants; 3) and a group made up of the military high command.
All of these groups entered into a political scrum, creating what were often temporary alliances that would allow them to control key posts and accumulate wealth, primarily via the state, its resources, and the extensive property the government had acquired during the 1980s while the Sandinistas held power. It culminated in what was described as a power grab, which was thwarted due to a constitutional reform in 1995. Still, another upheaval ensued in 1996, when the Liberal Alliance coalition, headed by Arnoldo Alemán and his conservative Liberal Constitutionalist Party (Partido Liberal Constitucionalista – PLC), seized the presidency and removed the FSLN and the UNO from their positions.
The members making up the Liberal Alliance came from sectors linked to the traditional oligarchy: groups of so-called “neo-Somocistas” and businessmen. During Alemán’s presidency, part of this economic and political elite, including Alemán himself, set about to create a powerful economic establishment drawing from government institutions. To achieve this goal, the state privatized public services, accelerated restructuring of land tenure, and appropriated funds that had been received during the country’s reconstruction following Hurricane Mitch in 1998. Although this elite succeeded in displacing some factions vying for power, it could not so easily dispose of the political and economic elite of the FSLN. Headed by Daniel Ortega, this revolutionary elite was composed of the party’s political leadership and pro-Sandinista businessmen.
The Liberal Alliance and the FSLN began to negotiate in 1998, culminating in what became known as the Alemán-Ortega Pact one year later. While the terms of the pact were not publicized, it had several visible effects in the form of legal reforms such as those related to elections; those related to private property, especially that of the country’s large, traditional businessmen and the land acquired by the new Sandinista and Aleman-connected businessmen during the first five years of the 1990s; and those related to the privatization of public entities, particularly those in the communication, health and education sectors, which were distributed amongst the businessmen of both groups. This pact between political and economic elites held until 2007, when the FSLN leader Daniel Ortega returned to the presidency and broke it. During the next few years, the country underwent several political crises that put into full view the stark differences between these two groups of elites who, along with several other elite groups, continued to struggle for state power.
Between 2007 and 2018, Daniel Ortega, his family, and prominent pro-FSLN businessmen consolidated power by following two paths: a) constructing alliances to integrate certain groups into the national economy, such as large agro-exporters, foreign investors – primarily in the tourism and telecommunications sector – financial businessmen, and the military high command; b) “colonizing” state power so they controlled Congress, the Supreme Court, the electoral regulatory board, local municipal and regional governments, public administration systems and the country’s security institution. This ruling elite has strengthened its hand since 2007, and it has kept other competing factions of elites at bay either through private negotiation processes, the establishment of economic alliances, and the repression of political competition to prevent opposition groups from becoming an electoral threat.
They have also co-opted the security forces to ensure their project does not come under extraneous threat. During the social upheaval that began in April 2018, for example, they dispatched paramilitary, or what are termed “parapolice,” forces to support the repression alongside regular, uniformed police forces. The use of the parapolice is further evidence of their ability to turn their own security system into a type of underworld police. It is this underworld police that allows them to be the primary beneficiaries of criminal activity within Nicaragua’s borders.
The Military and State Bureaucracy
The degree of differentiation and complexity in a society’s functions can be seen as much by looking at the level of state development as by looking at its economic activities. As Max Weber and C. Wright Mills once asserted, groups within the state with a certain level of specialization will inevitably form state bureaucracies, which have power over the allocation of the state’s resources, including its political capital. Mills and Gaetano Mosca, who focused on the United States and Europe, argued that bureaucratic operators establish relations and ties with the political and economic elites until they themselves become elite. We call these actors bureaucratic elites.
In Nicaragua, the formation of the modern state bureaucracy began during the Somoza dictatorship when the government started specializing and professionalizing its personnel. This bureaucratic elite was soon joined by a top military class from the National Guard. The National Guard eventually became the institution with the greatest hold on the Somoza dynasty’s power but one that did not supersede Somoza’s own control of the state.
After the Sandinistas toppled the Somoza family in 1979, the state bureaucracy, including all of its personnel, was replaced. New bureaucratic hierarchies were thus created, giving strong discretionary influence to members of the FSLN who, while having some technical knowledge, were mainly chosen due to their closeness to the revolutionary hierarchy and their anti-Somoza credentials. Moreover, this new state bureaucracy developed ties with members of economic groups and well-known figures. Some of these allies included relatives and descendants of known Somoza affiliates who had never relinquished their power.
This new ruling elite was a mixture of the middle and upper class involved in the revolutionary process; “patriotic” businessmen; the old landed oligarchy allied to the revolution; and the military establishment that was formed following the FSLN’s replacement of the National Guard. The military’s importance came about, not only of its power over the use of state force, but also because of the civil war in which the US-backed Contras waged a low-intensity war against the Sandinista regime, mainly along the Honduras-Nicaragua border. During the 1980s, military leaders positioned themselves as privileged decision-makers in all spheres of government, from local to national levels. All other state authorities were subordinate to the military, especially in war zones.
As a result, it should come as no surprise that some of the most important political negotiations and decisions were led by the head of the army. Two examples stand out: the Sapoá negotiations for the disarmament of the Contras in 1989; and the Transition Protocol negotiations that facilitated the transfer of power in 1990. In both cases, the negotiations were led by General Humberto Ortega, the brother of Daniel Ortega and the head of the army at the time. But the power of the military establishment in Nicaragua was not limited to political or matters of security. The military also served business interests, overlooking a network of diverse companies. Even after the UNO’s surprise electoral victory in 1990, the military retained significant economic power.
With the arrival of the Chamorro government in 1990, a significant part of the state bureaucracy formed during the revolutionary period left the government and became more active in civil society groups, many as leaders in national and international non-governmental organizations. A few remained part of the state bureaucracy and, together with incoming public officials, merged to create a new bureaucratic elite forged via work, political and familial ties. The military’s continuity also assured the institutionalization of the military elite and its less public but equally powerful political influence.
One group of officials close to President Chamorro, including her son-in-law and presidential advisor Antonio Lacayo, aligned themselves with the military leadership headed by FSLN’s Humberto Ortega in an effort to establish hegemonic control of the political transition. However, they faced opposition. General Ortega was forced to retire from the military and was replaced by General Joaquín Cuadra, a descendent of one of the country’s oldest and most traditional oligarchies. Moreover, the arrival of Alemán’s Liberal Alliance resulted in an important rotation in state officials that meant that bureaucratic elites had to form new ties with the newly installed political leadership.
During Chamorro’s government, the bureaucratic elite that was part of the state included individuals from groups tied to the political opposition that remained in the country during the 1980s; private businessmen; the opposition Contra leadership that returned to the country in 1990, after that conflict had ended; and young professions educated outside the country. The military command was rejuvenated following the exit of Humberto Ortega with a new generation of officials who shared the political goals of the FSLN during its clandestine period. But the size of the military decreased sharply, leaving room for a new bureaucratic elite to emerge: the police.
Under normal circumstances, the police might not be considered elites, but the Nicaraguan police are an essential part of a bureaucratic elite that has become a central power broker in Nicaragua (and in other countries, as we have seen in our other country case studies). As with the other branches of Nicaragua’s elite, the police were born with the FSLN. Founded after the 1979 revolution as the Sandinista Police (Policia Sandinista – PS), they retained close ties with the party even after Ortega lost power in 1990, and despite its non-partisan name, the National Police (Policía Nacional – PN). When Ortega returned to power in 2007, he revived their partisan nature and has turned them into a repressive force, especially since political protests began in April 2018 and coronavirus in 2020.
It is a sad turn. From the middle of the 1990s, when the police began a process of professionalization and modernization until Daniel Ortega came back into the presidency, the police had won praise internationally for keeping violence down. This was widely attributed to their community-based approach to fighting crime. Then-Police Chief Aminta Granera was perhaps the best example of the bureaucratic elite that had emerged from the Nicaraguan security forces. Hailing from an old and well-to-do family, she became a revolutionary at a young age and following the overthrow of the Somoza dictatorship was part of the Sandinista government.
Granera remained in the police through the transitional period of the 1990s and as police chief, she had great personal influence in the country. In fact, she was consistently given the highest approval ratings of any public figure – a Gallup poll released in 2014, for example, gave her a 79 percent approval rating. Ortega got 78 percent in the same poll, but in earlier polls she far outpaced him. In a 2012 poll, for example, she received a 79 percent approval rating compared to 49 percent for him. She also had a high profile with the international community and was regularly invited to explain Nicaragua’s policing approach to the international community.
Ortega’s relationship with Granera was much more difficult to decipher, especially during his first administration after retaking the presidency in 2007. While he clearly depended on her to uphold the country’s international standing in security matters, relations between them were tense at times. A US diplomatic cable released by WikiLeaks suggested that Ortega was afraid that she might become a political rival, challenging him for power. It also quoted Granera describing Ortega to the US ambassador as “completely crazy,” and stating that “that the only thing keeping her safe from Ortega’s hostility was her continuing popularity and status as a high-profile public figure.”
However, under Granera’s command, the National Police has been subsumed by Ortega’s political interests. It has become, quite simply, a pro-FSLN force, violently repressing anti-government protests, and failing to investigate or stop attacks by government supporters, including what has become known as parapolice. Ortega has brought the police increasingly under his personal control, especially following a July 2014 decree that made the president the supreme commander of the police, allowing him to appoint and remove its leaders. At this point, there is simply no independent body to hold the police accountable.
Organized Crime in Nicaragua
Nicaragua experiences far less violence than its neighbors giving it the appearance of keeping organized crime and gang activity in complete check. However, organized crime still has a place in the country. The most prominent criminal organizations transport illicit drugs along the coastlines and through the main arteries of Nicaragua. They operate in remote areas, but as one of our case studies illustrates, they are also penetrating some of the government’s most important institutions in the capital city of Managua and elsewhere.
The job of these criminal groups is simply to provide a bridge between points for the movement of this illicit product. This requires infrastructure and logistical support over a large swath of territory. From commercial fishermen to gasoline service stations, law firms to hotels and other tourism-related businesses, from police to judges, the trade envelops numerous people from all social classes and ethnicities. In some instances, poor communities that simply scoop up the cargo dropped from airplanes or boats into the sea have become semi-dependent on its proceeds.
These transporters work closely with foreign-based criminal organizations, namely Colombian and Mexican criminal groups. Various police actions have illustrated the size and potency of these groups. In 2012 alone, the police dismantled 15 criminal organizations and seized eight tons of cocaine along with 13 million dollars. Among those arrested were 18 Mexican nationals who had passed themselves off as part of a Mexican television news channel. They were captured with $9.2 million and later prosecuted.
Traditionally, the Colombians were the most prominent foreigners, in part because of the proximity of the Colombian islands of San Andres and Providencia, which have long been used as a respite and transit point for illegal goods. But according to current and former government officials interviewed for this report, the Mexicans have also been operational for years and began picking up steam in the early 2000s.
“We started to see Mexicans take over from the Colombians in 2004, when they started working in the Caribbean,” one former naval officer explained to our researchers. “The Mexican narcos were much more aggressive. That is when the break occurred. The Colombian cartels had been hit hard, and they were losing a lot of the drugs that were picked up. The Colombians eventually pitched to the Mexicans that, ‘I will sell you the drugs in Colombia, and you guys get it to market.’”
Some of the money collected for moving this cocaine through Nicaragua washes through its economy, although it is not a money-laundering hub given its low socio-economic status (Nicaragua is the poorest country in Central America). Facing international pressure from organizations like the Financial Action Task Force (FATF), in 2012 the Nicaraguan government established a specialized group known as the Financial Analysis Unit (Unidad de Análisis Financiero – UAF) to investigate money laundering. But observers of the unit in Nicaragua said the UAF is used more to keep an eye on political opponents than to regulate illicit funds. The UAF works closely with the Bank Superintendence, which is run by a former security forces officer who was named to the post by President Ortega himself.
According to the 2017 FATF report, in spite of some improvements in recent years, Nicaragua does not have strong enough laws to control money laundering or illicit financing of terrorist groups. Of the more than 40 recommendations the FATF had previously given to the government, the FATF said the government had only achieved moderate success in implementing the most basic of reforms.
This could, in part, be explained by what appears to be top-down control of the underworld in Nicaragua alluded to earlier. Corruption, as our first case study shows, appears to reach the highest levels of the government. And as our second case study illustrates, illicit activities are intimately related to political power.
*This report was a collaboration between InSight Crime and Expediente Abierto, and included the participation of numerous Nicaraguan journalists and investigators who, for security reasons, prefer anonymity. Javier Meléndez coordinated the investigation, writing and editing of the story. Additional editing and reporting by Steven Dudley and Hannah Stone.