Potential Precedent-Setting: Board to Deliberate Nicaragua

November municipal elections have sparked a series of events that could affect the compact underway in Nicaragua. The Sandinista party – that of President Daniel Ortega – won elections in a majority of municipalities (including the capital); allegations of fraud by the opposition Liberal party were registered and led to an electoral recount by the government but without international observers. Others expressed concerns over violence, lack of police enforcement, and restricted access to polls for opposition supporters.MCC has taken action in response to these events – withholding disbursements and approvals “for any projects or activities not already contracted” by the implementing entity MCA-Nicaragua for the foreseeable future. It is highly likely that the Board will be asked to take action at its December 11th meeting.The Board has several options for dealing with Nicaragua according to MCC’s suspension policy:• MCC can continue the compact after a warning, as it did earlier this year with Armenia; however unlike Armenia, Nicaragua’s president is not newly elected nor has he stated an intention to investigate alleged political oppression of opposition members.• Suspension: this can be either partial or full suspension of assistance or eligibility for assistance. In this case, the MCC will notify the country of the reasons for suspension as well as the “measures or conditions required to resume eligibility or assistance” – which can have explicit timelines. The MCC has partially suspended compact assistance before – it suspended disbursements of the road component of Armenia’s compact, which the Armenian government then picked up on its own.• Termination: partial or full termination is an option here, which will cease implementation of either the majority of the compact or its entirety. Nicaragua is in the 3rd year of implementing its 5-year $175m compact, with almost $34m disbursed and $80m in compact obligations.If the Board decides to suspend or terminate the compact in Nicaragua it will set a precedent for the agency. Previous suspension/termination cases centered on eligibility; no assistance to a country with a signed compact has ever been terminated.Keep your eyes peeled for the post-meeting press release to see if and how the Board dealt with the Nicaraguan situation and check back with the MCA Monitor for further analysis of the FY2009 Selection Round outcomes.