Ortega's Encore

Jaime Morales was a wealthy Nicaraguan banker in the 1980s when Daniel Ortega stole his six-bedroom house. Ortega, who was then Nicaragua's President, called it a justified "confiscation" on behalf of the Marxist revolution that he and his Sandinista Front were leading. Morales became a leader of the U.S.-backed contra army that waged a civil war with the Sandinistas. That conflict killed 30,000 people and led to Ortega's ouster in a 1990 election--after which he paid Morales for the house.

It's a sign of either Ortega's maturation or his opportunism--or both--that when he recaptured Nicaragua's presidency in the Nov. 5 election, his running mate was none other than Morales. Ortega still wears that drowsy look of arrogant defiance, speaks in the same mumbling cadence and insists on driving his SUV himself to cultivate a populist image. But with Morales beside him in a Managua hotel ballroom, schmoozing local and foreign investors, Ortega sounds like a changed man. "We won't eradicate poverty by eradicating capital or alienating investors but by joining forces with them," he says. Ortega is playing to the audience, but even former rivals believe that his evolution from communist strongman to nascent capitalist may be genuine. Says Morales: "Daniel Ortega deserves a chance to vindicate himself."

That, of course, is exactly what some in Washington are afraid of. Ortega's turn-back-the-clock triumph has rekindled memories of Washington's cold war obsession with Nicaragua, which embroiled the U.S. in a bloody guerrilla campaign and nearly doomed the Reagan presidency. Although Nicaragua, a nation of 5.5 million, is one of the poorest countries in the western hemisphere, the prospect of an Ortega restoration prompted the Bush Administration to threaten to cut off more than $200 million in total aid to the country and moved cold warriors like former U.S. Marine Lieut. Colonel Oliver North to fly to Managua to campaign against him. The U.S. is concerned that Ortega will become another boisterously anti-American voice of Latin America's new left, which is led by Venezuelan President Hugo Chávez. When Secretary of State Condoleezza Rice met with her advisory committee on democracy promotion last week, Richard Soudriette, president of the Washington-based International Foundation for Election Systems, volunteered that he had just returned from Nicaragua. "Coming from Oklahoma," he told her, "where we're familiar with people who are born again, it appears that the future President, Daniel Ortega, is at least claiming that he has had a change of heart." Rice answered tersely, "We'll see."