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US may punish Nicaragua's Daniel Ortega with $64 million aid cut

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Bent and the MCC team, including a Nicaraguan staff that's working with more than 5,000 small producers in the northern Pacific agricultural region, can only shake their heads at Ortega's willingness to blow off aid to the second poorest country in the hemisphere. The situation, according to one MCC insider in Nicaragua who refused to be named, is like a "family gathering getting ruined when the drunken uncle shows up."

Nicaragua is not the only country to have trouble complying with the MCC's basic democratic eligibility criteria. There are 14 "threshold" countries that don't quite qualify for MCC programs, but are receiving smaller assistance packages aimed at working toward specific areas of compliance so they can eventually apply for a full MCC grant.

But with the exception of Madagascar, which recently had its MCC program canceled following a coup, Nicaragua is one of the few countries moving away from eligibility criteria, rather than working toward it.

"In the case of Nicaragua, where you see really a huge variation from the norm of good governance, we say 'Hold the phone, is this a partner who we can do good stuff with?' " says Bent.

Europeans also considering canceling funds

There could be much more at stake for Nicaragua than just $64 million in MCC development aid. Nicaragua's Budget Support Group, a group of nine European donor countries plus Canada, last year suspended about $70 million in aid over similar concerns about last year's mayoral elections, in which the Sandinistas are accused of stealing some 40 municipal races.

The European donors have been similarly frustrated by attempts to discuss last year's elections with Sandinista officials and will be watching closely as the MCC makes its precedent-setting decision.

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