A Rude Awakening for Americans in Nicaragua

(2 of 2)

Ortega's election has thrown a wild card into the real estate investment game. Some realtors claim property prices have already dipped 25% since he won the elections, but most expect the slide won't continue much beyond that. Of course, much depends on what happens next.

Ortega insists he's come a long way from the firebrand Marxist he was in the 1980s, and his campaign was focused on peace and reconciliation. He spent his first days as president-elect meeting with business leaders, bankers and foreign investors, asking for cooperation in building a new economic model focused on eradicating poverty in a system based on rewarding the risk of private capital.

Many investors seem willing to give Ortega the benefit of the doubt, not necessarily because they trust him, but because they are already here and it's easier to wait and see than to cut and run. "We believe that Mr. Ortega is serious about his commitment to promote foreign investment and tourism," said Pennsylvania native Mike Cobb, president of Gran Pacifica development, which promises to be the first Marriott beach resort in Nicaragua. Cobb says his project plans to "move ahead with all due speed" and "stick to the path we have established."

Other investors are echoing Cobb's guarded optimism. A group of 18 key investors in San Juan del Sur, Nicaragua's most important beach town, have written a letter to Ortega urging the president-elect to hold a special meeting with them as a sign of his commitment to tourism and investment on the coast. The group warned that the tourism sector is "very volatile to political perceptions," and claimed that some investors have already started to withdraw their money from the country.

But it's not only Ortega's plans that have Americans in Nicaragua worried. The Bush Administration worked hard to prevent Ortega from being elected, even threatening to cut aid to Nicaragua if he won the election, and some investors fear the consequences of any move by Washington to make life difficult for a Sandinista government. Says Chris Berry, owner of San Juan del Sur's landmark Pelican Eyes Piedras y Olas Resort, "Everyone here is more afraid of what the U.S. will do than they are of Ortega."