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Chávez plays oil card in Nicaragua

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Venezuela's populist president Hugo Chávez has been accused of using his country's oil wealth to help elect like-minded leaders in Bolivia, Peru, Mexico, and Nicaragua. But there's been little evidence, until now.

A cooperation agreement signed last week between Nicaragua's Sandinista leader - and longtime US nemesis - Daniel Ortega and Mr. Chávez is being touted by many here as an initiative to sell oil to Nicaragua on credit, allowing the country to invest more in poverty-fighting projects. Critics call it a blatant attempt to buy the Nov. 5 presidential election for Mr. Ortega.

"Central America is important for Chávez because the rest of his influence is concentrated in the Andean countries [of South America]," says Michael Shifter, vice president for the Washington-based Inter-American Dialogue. Mr. Shifter says Chávez is clearly on a mission to challenge US influence in the region, but that he also appears genuinely concerned with helping the poor - two traits that don't necessarily contradict one another. "This shows a larger ambition, and he is focusing his resources on Nicaragua and calculating that Ortega has a chance to win [elections in November]."

In the past few years, Chávez has made high-profile deals to sell discounted oil to Central American and Caribbean nations, and even to poor citizens in US states such as New York and Massachusetts.

But the deal struck between Chávez and Ortega comes during a grinding energy crisis, and before a pivotal election that could see another leftist leader come to power in the region. In the past year, energy shortages here have led to power-rationing blackouts and transportation strikes. Under the agreement, Venezuela will accept 60 percent of payment within 90 days of shipment, while the remaining 40 percent will be paid off over 25 years at 1 percent interest, including a two-year grace period.

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