TOLA—The government’s recent stake to a 20-manzana lot of prime beachfront property allegedly owned by Punta Teonoste eco-hotel has been an unwelcome reminder of how Nicaragua’s long shadow from the past continues to obscure the path forward.
Like a man walking in the desert, sometimes it’s hard to tell whether Nicaragua’s shadow is following or leading. But shadows can also be orienting, if Nicaragua is wise enough to pay attention to the signs and adjust course accordingly.
The Punta Teonoste dispute—which the hotel’s owners initially decried as a “clear-cut confiscation” by the government, then softened to “a misunderstanding” after starting negotiations with Sandinista officials—is just the “punta” of the iceberg when it comes to property issues in Nicaragua.
The way the Punta Teonoste conflict gets resolved in the coming days will be an interesting acid test to determine how much rule of law and due process exist in Nicaragua.
A resolution based on legal and technical determinations could be a positive step forward for the country’s wobbly judicial security. But a murky backroom deal based on arm-twisting, secret agendas and fear would further cloud Nicaragua’s investment climate and reinforce the perception of increasing lawlessness and insecurity.
“We have to send a clear message that these types of cases must be resolved by law, and not in an informal way,” said Lucy Valenti, president of the National Tourism Chamber.
Valenti’s plea for “Option 1: Rule of Law” came during a Feb. 22 board meeting of COSEP, the country’s main association of business chambers, which held its weekly meeting at Punta Teonoste last Wednesday as a show of solidarity with the hotel’s owners.
Valenti notes that Punta Teonoste is resolving its case thanks to the collective muscle of COSEP, which has criticized the government’s actions and lobbied loudly on behalf of the hotel. But Valenti asks, “What will happen to the numerous other cases? They can’t all come to COSEP.”
Felix Gaos, a Spanish-U.S. citizen, has the same question. Gaos traveled to Punta Teonoste last Wednesday in attempt to seek Cosep’s help in his own property dispute, which he says has cost him six years, nearly $600,000 and more a few grey hairs.
Gaos claims the government is attempting to confiscate 7.5 manzanas (13 acres) of prime beachfront property in Tola, which he and his U.S. business partner bought in 2006 for $350,000.
Gaos claims the Prosecutors’ Office took advantage of a legal conflict that he and his partner have with another buyer to intervene in the dispute and give the land a third party, who Gaos says doesn’t appear in any of the title history.
“Once the state got involved, it gave the land to someone who doesn’t even exist in any of the records. The situation keeps getting worse,” an exasperated Gaos told The Nicaragua Dispatch. “Now the land is full of people with machetes. It’s a mess in there.”
Gaos says the situation has become so convoluted, he’s not clear who he’s even fighting against anymore. Nicaragua’s busted judicial system only makes the matter more maddening, he says.
“The whole thing is like pissing into the wind—that’s what I’m doing. But I can’t afford to give up,” Gaos said.
Foreigners are not the only ones with land problems in Nicaragua. Last year alone, the Nicaragua Center for Human Rights (Cenidh) received more than 100 land complaints of all types. They said that number represented a spike from previous years.
Government insists it respects private property
Nicaragua’s land mess started in the 1980s, when the revolution’s initial efforts to redistribute the Somoza dynasty’s land to poor farmers got corrupted by government greed and political power.
The Sandinista government became confiscation-happy and snatched thousands of properties, including most of Tola. Some of the land was given to cooperatives as part of the government’s Agrarian Reform efforts, while other properties were rapaciously divvied up as the spoils of power by Sandinista mucky-mucks who rolled up their sleeves and got on their knees for a two-fisted land grab known appropriately as “La Piñata.”
Prosecutor General Hernán Estrada insists the Sandinista government is behaving itself with more decorum these days. The top attorney rejects claims that the government is again confiscating lands and insists the Ortega administration has full respect for private property rights.
“In the first place, here there is unrestricted respect for private property,” Estrada told the government’s media arm.
Estrada insists the government is only measuring property lines to determine proper dimensions and put order to the cadastral clutter in accordance with the Coastal Law and the Water Law. He said the Sandinista government is trying to “resolve the property issue” left over from the past—a promise President Ortega made when he returned to power democratically in 2007.
Since the 1990s, the Nicaraguan government has paid more than $200 million in indemnifications for properties confiscated in the 1980s. Estrada says there are still about 426 pending property claims, involving 201 individuals. He says the government is still working to resolve those claims and insists the U.S. waiver is not at risk.
Due to past confiscations of U.S. citizen properties in Nicaragua, the U.S. government must extend a waiver each year for the Nicaraguan government to be eligible to receive continued U.S. aid. The Embassy last week released a statement to The Nicaragua Dispatch saying it “remains concerned over respect for private property rights in Nicaragua.”
A week after sounding the alarm bells by accusing the Sandinista government of trying to confiscate 20 manzanas (34.5 acres) of their family’s land adjacent to their $2 million eco-resort, the Bühler family, owners of Punta Teonoste and other tourism investments in Managua, now says there is “white smoke” in their private negotiations with the government.
Without offering details about what his family is actually negotiating with the government, resort owner Walter Bühler, a Swiss-Nicaraguan dual citizen, announced Feb. 22 that talks are advancing in a positive manner. A resolution of sorts is expected this week.
“There are advances, we’ve had a couple meetings now and that is positive for everyone. We are working on an agreement,” Bühler said. “This government has demonstrated on many occasions that it is a government of dialogue, a government that tries to retain investment in the country. So we are confident that these talks will develop properly. We are very satisfied with the way the Prosecutors’ Office has been handling this case.”
Bühler’s gentle appraisal of the situation marks 180-degree turnaround from his comments last week, when he told The Nicaragua Dispatch, “This is a land invasion, plain and simple. The government entered by force and snatched the land like delinquents.”
Since then, the Swiss Embassy has gotten involved on a diplomatic level and the Bühler’s have put together a team of lawyers to help them negotiate a settlement with the Sandinistas, who want to give the land to former guerrilla leader Edén Pastora.
Pastora further muddied the situation over the weekend in a bizarre interview with La Prensa, where the former rebel seemed to contradict himself every other sentence, first saying the land was offered to him by the Prosecutors’ Office and he has a right to it, then saying he doesn’t care about the land and doesn’t feel he has any claim to it.
Bühler says he hasn’t been able to “identify any motives” behind the government’s move on the property, but says “We think was that this there was a confusion or error, which would be acceptable.”
Estrada, however, has hinted that economic considerations might also be influencing the situation.
“How is it possible that an entire valuable beach with its own ecosystem, which has construction on only five manzanas of land occupied by the hotel and the cabanas while the rest is vacant, is registered (as having been bought) for only 50 thousand córdobas (about $10,000 at the exchange rate of the time) by people who call themselves investors?” Estrada demanded.
Will negotiations make the situation better or worse?
Walter Bühler Sr. says all his family wants is “a happy ending and a good arrangement.”
“The important thing is that there are satisfactory results for both sides—a consensual agreement to avoid conflict,” Bühler.
While the Bühler family has every right to negotiate a settlement with the government, the private sector would be wise to take a broader assessment of the situation and demand more transparency and rule of law from the government.
Otherwise, Teonoste could become a dangerous precedent for knife-point negotiations. Even if the Bühler family is able to negotiate its own “happy ending,” it could be an unhappy beginning for other investors.
After all, there is a lot more coastline—and fence lines—that still need to be surveyed by the government.