Nicaragua's Ortega moves closer to Cold War allies

By Ivan Castro - Analysis

MANAGUA (Reuters) - Daniel Ortega, the former Marxist rebel who confronted Washington when he first ruled Nicaragua in the 1980s, is again forging links with former Cold War allies as his second presidency runs into trouble at home.

During his first stint in power -- 11 years as head of the leftist Sandinista government that took power in a 1979 revolution -- Ortega led the fight against U.S.-backed 'Contra' rebels while receiving support from the Soviet Union and Cuba.

Since returning to power in early 2007, this time at the ballot box, Ortega has again moved closer to Moscow.

He is the only leader outside of Russia to recognize Georgia's breakaway regions of South Ossetia and Abkhazia as independent states, backing Moscow's stance in the dispute.

In return, he has received aid from Russia, and he has also won generous development projects financed by sworn U.S. antagonists Venezuela and Iran.

Venezuelan President Hugo Chavez has helped Ortega's Nicaragua -- the poorest country in the Western Hemisphere after Haiti -- with oil, generators and loans and brought Nicaragua into a regional trade group that includes Cuba.

Analysts say Ortega, 63, has courted Russia and other anti-American governments to shore up foreign support for his troubled presidency. His approval ratings have plummeted as he comes under attack from opposition leaders and draws sharp criticism from Washington.

The U.S. government says it is reviewing a $175 million aid program to Nicaragua after rightist parties accused the Sandinistas of fraud when they won 105 of 146 municipal races in local elections last month.

Violence erupted for a week after the elections and the European Union also suspended $32 million in aid until the opposition's complaints are investigated.

"Our democracy is in grave danger. There are dictatorial tendencies taking away Nicaraguans' right to choose," said Carlos Tunnermann, a former ambassador who resigned from the Sandinista party, complaining of Ortega's leadership style.

Ortega says the United States is once again financing his opponents, and he recently revived demands that Washington pay war reparations for funding the Contras in the civil war of the 1980s, a conflict that killed some 30,000 people.

ANTI-U.S. FRIENDSHIPS

In the first years after the 1979 revolution, thousands of young teachers and nurses fanned out into rural areas in health care and literacy campaigns that won wide praise.

But the U.S.-funded Contra war and Washington's economic embargo against Nicaragua, combined with the Sandinistas' mismanagement, laid waste to the economy and Ortega was voted out of power in 1990.

He then lost two more presidential elections to right-wing opponents before bouncing back to power in the 2006 vote. He won by promising peace and reconciliation and moderating his more radical left-wing proposals while still championing policies to benefit the poor.