NICA TIMES FRIDAY FEBRUARY 17,2006

U.S. Economic Officer Highlights Opportunities, Challenges:

Investment Viewed as Key to Stability

By Tim Rogers
Nica Times Staff
trogers@ticotimes.net

GRANADA – As a country mired in image problems from the past and political problems in the here-and-now, Nicaragua needs private investment and economic development to drive political stability and progress, according to a top economic source at the U.S. Embassy.

Mark Cullinane, economic officer for U.S. Embassy in Managua, claims that Nicaragua is ripe with investment opportunities and the potential to compete in a globalized economy, despite the country's notoriously complicated political situation and partisan-controlled state institutions.

If the economy and investment markets continue to grow, some of the political stuff will work itself out or become less of a factor, Cullinane predicts.

“You can equate economic development and political stability,” he said. “If you have one, the other follows pretty quickly.”

Speaking to a group of 40 mostly U.S. expatriates at Granada 's Cocibolca Jockey Club on Monday evening, Cullinane painted a very even-toned picture of the opportunities, challenges and problems facing Nicaragua 's nascent economy.

Many macro-economic indicators offer encouraging signs of growth, he said.

Straight Talk: U.S. Embassy Economic Officer Mark Cullinane addresses expats. Tim Rogers | Nica Times

For example, Cullinane noted, Nicaragua 's exports to the United States grew by 19% from 2004 to 2005, totaling $858 million last year. And the pending implementation of the U.S.-Central American Free Trade Agreement (CAFTA) – possibly going into effect March 1 – will provide new opportunities for investment, job creation and export growth, he said.

But it's not all blue skies and smooth sailing; two of the darkest clouds lingering overhead are in the form of Nicaragua 's stormy international image and its troubled state institutions, namely an over-politicized judiciary and failing health and education services.

Cullinane said that despite the country's advances over the past two decades, there are still a lot of people – especially in the United States – stuck on the idea that Nicaragua is like “the Ukraine with palm trees.”

A more real problem is Nicaragua 's Sandinista-controlled judicial system – a product of the revolutionary government of the 1980s, when many of the current judges were appointed to life-time posts.

Cullinane claims that the court system is “not impartial and is subject to personal, political and financial influences.”

De-politicizing the Judicial Branch is vital to a maturation of the country's investment market, the U.S. economic officer said.

Cullinane likens current investors in Nicaragua to “cowboys” or individuals willing to take a risk. Major brand-name investors, he said, “are not willing to bite at Nicaragua right now.”

“Many of the big investors right now are equity investors, or people who can walk away,” Cullinane said. “Foreign Direct Investment doesn't walk away.”

In fact, the United States is fourth on the list of countries providing capital for Foreign Direct Investment here, spending roughly half of the $82 million that Salvadoran investors spent here last year, according to Cullinane.

Another concern is that of property security, he said.

Nicaragua is the only country in the world where the United States has a full-time consular officer working on property claims filed by U.S. citizens seeking reprisal for confiscations.

Not all property problems have to do with tricky titles.

Cullinane said that recently he has been working with a group of U.S. investors who hold a clean title to their land here but have had their property invaded by machete-wielding campesinos who “were put up to the task by someone behind the scenes who is trying to extort money.”

“This is not an unusual story,” Cullinane said. “But it can't continue if Nicaragua is to realize its potential.”

Two other challenges facing Nicaragua are poor infrastructure and a public school system from which a large percentage of children are excluded (NT, Feb. 10).

The good news, Cullinane said, is that things are changing: investment is creating jobs and new economic opportunities; a new arbitration court is being established that will offer an alternative, hopefully less-partisan means to resolve conflicts; CAFTA will provide new market access; and international cooperation and aid is being spent to improve schools, infrastructure and property security.