On Wednesday, January 10, Managua’s Plaza la Fe was the site of the kind of gathering Nicaragua has not seen since the 1980s, as tens of thousands of people converged to celebrate the inauguration of Daniel Ortega, the 61-year-old former Sandinista comandante and perennial presidential candidate who had returned to power after sixteen years in the political wilderness.

As the ceremony began, a recording of a fiery speech Ortega delivered during the height of Nicaragua’s war against the contras blared from the PA system, stirring the crowd to life. Then Ortega emerged, flanked by the lions of the Latin American left, Venezuelan President Hugo Chávez and Bolivian President Evo Morales. The lines in Ortega’s face have deepened since he guided Nicaragua through its war against contra insurgents, and his signature black mustache is dyed now, but the scene staged at the plaza was enough to evoke nostalgia for his revolutionary heyday.

Ortega’s prominence on the pantheon of the Latin American left was affirmed by Chávez. Fresh from his own inauguration hours earlier, during which he effusively pledged “socialismo o muerte!” Chávez lionized Ortega by lifting a page from Bertolt Brecht. “Men who spend their whole lives fighting for justice are indispensable,” Chávez boomed. As he flailed his arms to emphasize his stentorian rhetorical volleys, young men in the crowd reached for their digital cameras, eager to snap a shot of this political rock star in action.

Chávez was followed by the more subdued Morales, ex-leader of Bolivia’s insurgent coca farmers’ movement and his country’s first indigenous president. With his voice barely rising above the chants from the crowd of “Evo! Evo!” Morales pledged that he, Chávez and Ortega would nationalize their countries’ industries and bring death to American imperialism.

As Morales left the podium, the socialist folk group Quilapayun’s anthem, “El Pueblo Unido Jamás Será Vencido,” an ode to martyred socialist Chilean president Salvador Allende, sounded from the speakers by the stage. Fireworks exploded above the plaza while groups of adolescents formed human pyramids to hoist red and black flags toward the sky. “The people united will never be defeated,” the crowd chanted again and again.

Finally, Ortega stepped to the microphone, launching into a call-and-response chant against savage capitalism. Then, in an excruciatingly long speech that drove more than half the crowd from the plaza, he laid out his agenda, vowing to block privatization of Nicaragua’s water, increase access to electricity for the country’s poor and heighten economic cooperation with fellow left-leaning Latin American governments. He also took a dig at the right-wing Liberal Constitutional Party (PLC), which has ruled the country since his defeat in 1990. “Our agenda is unfinished,” Ortega declared. “When we left the illiteracy rate was 13 percent. Today it is 35 percent.”

The populist tenor of Ortega’s inauguration ceremony presented a stark contrast to the strategy that propelled his campaign. On the campaign trail, Ortega worked assiduously to reassure the Nicaraguan public that the exhausting conflicts that accompanied his first presidency will not re-emerge. In stump speeches and campaign ads he repeated the word “reconciliacion” like a mantra, pledging no more land seizures, clashes with the church or blood-soaked battles with The Empire. Ortega’s theme song, played over and over on pro-Sandinista radio stations during his campaign, was a hip-hop version of John Lennon’s “Give Peace a Chance,” with a lilting chorus highlighted by the line “Todos reunidos con reconciliación”–we all unite with reconciliation.

To ratify his image makeover, Ortega selected as his vice president Jaime Morales Carazo, a former contra leader whose home he had once seized. The Vatican’s most important figure in Nicaragua, Cardinal Miguel Obando y Bravo, a fervent opponent of Ortega during the 1980s, has become one of his closest allies. With an eye on the $175 million Millennium Challenge grant for Nicaragua, approved before the election by the Bush Administration, Ortega has toned down his anti-American rhetoric. The day before his inauguration, he held court with Bush Administration Health and Human Services Secretary Michael Leavitt and US Ambassador Paul Trivelli, a hated figure in Nicaragua who has openly demonized Ortega. The new Daniel Ortega is a uniter, not a divider.

Though Ortega’s brand of reconciliation helped usher the Sandinistas back into Nicaragua’s presidential palace, his will to power may have sapped Sandinismo of its revolutionary soul. It’s hard to know what the Sandinistas stand for anymore, Francisco Chamorro, assistant editor of the Nicaraguan daily Nuevo Diario and nephew of former Nicaraguan president Violetta Chamorro, told me. “They are a giant coalition now that is full of Liberals [members of the PLC], contras, everybody. And the whole party is based around Daniel Ortega and his family.”

Ortega’s dark pact with the right-wing PLC has dashed the idealism inspired by the original Sandinistas. In 1998, after his stepdaughter accused him of molesting her since the age of 11 (Ortega denied the charges while using his power in the National Assembly to block subsequent investigations), he sought protection from then-President Arnaldo Aleman, who was in the process of looting the treasury of $100 million. The two caudillos entered into “el Pacto,” agreeing to grant each other immunity from criminal prosecution while lowering the percentage of the vote necessary to win a presidential election in the first round from 45 percent to 35 percent.

Thanks to this measure, Ortega was able to win the presidency last year with a smaller percentage of the votes than he received during his unsuccessful campaigns in 1990 and 2001. Yet with such a small share of the vote, Ortega must rely on his right-wing allies to pass any legislation through the National Assembly.

Those who have criticized Ortega’s cynical methods from within the party have been forced out. Herty Lewites, a member of the original Sandinista junta and the former mayor of Managua, was ejected from the Sandinista National Liberation Front by Ortega when he announced his intention run against Ortega for party leadership. Lewites formed the Movement for Sandinista Renovation (MSR), a party comprising dissident Sandinistas alienated by Ortega’s machinations. Lewites was lagging behind Ortega in the presidential race when he suffered a heart attack and died July 2, virtually insuring a united left-wing front behind Ortega.

Ortega’s newfound Catholicism was an essential component in his electoral victory–and another factor in the dilution of Sandinismo. Just days before the election, under pressure from Cardinal Obando and the Vatican’s local antiabortion surrogates, who staged massive marches through Managua, Ortega endorsed a proposed ban on “therapeutic abortions,” or abortions to save the life of the mother. A week after this loophole (established by Nicaragua’s government more than a century ago) was closed by the government of then-President Enrique Bolanos, a pregnant 18-year-old woman named Jazmina Bojorge checked into a Managua hospital with a fever and abdominal pain. Two days later, after being refused an abortion, she and her fetus were dead.

Edmundo Jarquín, a left-of-center economist who replaced Lewites as the MSR’s candidate, was the only candidate who opposed the abortion ban. Jarquín took a strong stand for women’s rights, airing commercials pledging to mandate harsh penalties for domestic abusers. Yet he did not share Lewites’s street credibility and garnered only 6.3 percent of the vote.

The right, meanwhile, split over Aleman’s pact with Ortega. Eduardo Montealegre, a conservative with all the charisma of a bespectacled banker, broke from the PLC and ran as an insurgent against Nicaragua’s corrupt caudillo system. Despite support from the US National Endowment for Democracy and hysterical warnings from the Bush Administration against an Ortega victory, Montealegre could not convince PLC candidate José Rizo, who pledged to keep Aleman out of jail, to drop out of the race. At the height of the campaign, Rizo gained a boost of confidence when, in a bizarre stunt, Oliver North was airdropped into the Nicaraguan countryside to campaign beside him for a day.

Ortega, for his part, refused to debate his opponents and rejected all interview requests. Instead he stumped through the countryside with his wife, radical poet Rosario Murillo, Nicaragua’s most powerful woman. Though they often traveled in a top-of-the-line Mercedes, Ortega and Murillo claimed to be on a “pilgrimage” for the people. With the right divided and the dissident left moribund, Ortega’s path to victory seemed inevitable.

A desperate US Ambassador Trivelli entered the fray with his best impersonation of Marlon Brando in The Ugly American. Trivelli took to the local media, demanding in an almost satirically gringofied accent that Aleman be jailed. While the State Department warned that Ortega’s victory could bring US sanctions against Nicaragua, Trivelli attacked Rizo as the tool of Aleman. “We have a saying in English,” Trivelli said of Rizo. “If it walks like a duck, and it talks like a duck, then it’s probably a duck.”

Trivelli apparently was unaware that in Nicaragua, the word for “duck” is also derogatory slang for “homosexual.”

Despite his pact with the right and all his personal flaws, Ortega is still revered by many regular Nicaraguans. I challenged several grassroots Sandinista supporters in barrios across the country to defend Ortega against the charge that he molested his stepdaughter. The response of Marvin Aguilar, a 42-year-old Managuan taxi driver and self-described “Sandinista for life,” was typical. “If he did it, where is the video?” Aguilar said of the allegations. “Where is the evidence? Anyway, these charges were all invented by the Liberals, and what the hell have they done for the people? Nothing.”

Aguilar has a point. In sixteen years, Nicaragua’s US-friendly Liberal government has focused almost exclusively on macroeconomics at the expense of the basic needs of Nicaragua’s desperately poor. It is easy to see why. Many of the most prominent Liberal party bosses live in a separate universe from the rest of their countrymen, in a series of tiny pleasure islands off the coast of Laguna Managua, a freshwater lake abutting the bustling colonial city of Granada.

Out on the lake, the dusty barrios that pulse all day to blaring reggaeton rhythms and fill with the acrid stench of burning trash by night, drift away in the distance. A group of white-skinned teenagers zoomed by on water skis, waving as they passed the million-dollar McMansion of the owner of Flor de Caña, a Nicaraguan rum company. Violetta Chamorro’s house, which forms a bridge over two isletas, is particularly tasteful. A family of monkeys swung from trees nearby. If you were a member of the Nicaraguan elite, you’d be home now.

Back on shore and just north of Granada lies one of the crowning achievements of Nicaragua’s Liberals, the Zona Franca, a gigantic “free-trade zone” filled with textile maquilas where unions are strictly outlawed. Last year, according to the Nicaraguan daily La Prensa, the Zona exported a record $1 billion in textiles.

I passed through the Zona last May in a rented car, driving as I approached over several bridges donated by Japan in exchange for whaling rights off Nicaragua’s pristine coastline. Dozens of women stood along the highway, seeking to hitch a ride home. I pulled over and two young women gingerly clambered into my back seat. They were so small their legs barely touched the car’s floor.

I asked them about their jobs. They told me they stitch jeans for twelve hours a day. A Chinese woman perpetually watches over them to make sure they do not talk to one another. They get a ten-minute break each day to eat. I turned around to ask them about their political views and found them both asleep, exhausted from another day at the Zona. Forty-five minutes later I dropped them off at a small town along the roadside.

On the Pacific coastline south of Granada is another area Nicaragua’s Liberals point to as an economic boon, the beach town of San Juan del Sur. During the past decade, foreign investors have flocked to San Juan, buying up land and erecting beachfront restaurants and hillside mansions. High above the town is Pelican Eyes, a resort hotel that rents luxury suites for upwards of $110 a night.

At a bar looking out over San Juan’s marina, I talked to Kenerlyn Marin, a savvy and outgoing 20-year-old from the Sandinista stronghold of Barrio San Francisco in nearby Rivas who works part-time in San Juan. Like many young Nicaraguans I met in town, she is caught between two worlds, hungry to enjoy the good life of the cheles, or white people, but loyal to her barrio, where electricity and water are only occasionally available. With glee, she described to me the reaction of some of her foreign friends to Ortega’s victory.

“These surfers and all the guys from Pelican Eyes were sitting around the TV watching the election returns like it was the end of the world,” Marin said. “Every night these cheles get drunk, but when Daniel [Ortega] won, they just sat there, sober, saying, ‘Oh shit, he’s going to take everything we have.’ Me, I was drinking my beer and saying in my head, ‘Viva Daniel!'”

Like Aguilar, Marin would have none of the charges against Ortega. “No offense,” she began, “but you cheles see how poor we are. I don’t understand why you guys always say we shouldn’t have Daniel as president.”

Yet the kinder, gentler Ortega is unlikely to fulfill the nightmare scenario of San Juan’s foreign business community. Ortega’s government is currently working hand-in-hand with Chris Berry, the American owner of Pelican Eyes, as he seeks to resolve a land dispute with a relative of revolutionary godfather Augusto Sandino. “Our investors met with Daniel Ortega after the election, and he wasn’t the Danny Ortega of the 1980s, that’s for sure,” Timothy Thomas, a Nicaragua-based broker for the real estate giant ReMax told the Latin Business Chronicle.

On the other hand, Ortega’s partnership with left-leaning Latin American governments is likely to bring immediate benefits to Nicaragua’s poor. The day after his inauguration, inside Managua’s Ruben Dario Theatre, Ortega joined Chávez, Morales and Cuban Vice President Jose Ramon Machado Ventura to sign Alternativa Bolivariana para la América, or ALBA, Chávez’s project for Latin American economic integration (a representative from Brazil’s nominally leftist government was pointedly absent from the signing ceremony).

As part of the deal, Chávez has pledged to grant Nicaragua $30 million in gifts and low-interest loans, 100,000 barrels of oil on “preferential terms” to ease the country’s transportation crisis and dozens of electricity plants and health cooperatives. Hundreds of Cuban doctors are likely to find their way into Nicaragua’s impoverished countryside by the summer.

Even some of Ortega’s harshest critics are willing to concede that his government could benefit Nicaragua. Among them is Sergio Ramírez, an original Sandinista junta member and renowned author ejected from the party by Ortega for his dissident views. Writing in the webmag Open Democracy, Ramirez commented, “If there is one thing that Ortega cannot be accused of lacking, it is pragmatism…. It could even be called a populist pragmatism.”

On the afternoon of Ortega’s inauguration, I visited Managua’s La Plaza de Armas, where Chamorro symbolically buried Nicaragua’s civil conflict and christened the era of Liberal government. The plaza was empty except for four barefoot young boys squatting behind a bush. I walked toward them and found them sniffing a Gerber jar full of glue. A police car buzzed by and the boys burst from the bushes, glassy-eyed but strangely joyous. One of them waved a vintage tennis racket as he scampered by. According to my tattered guidebook, Managua has only two tennis courts.

Unlike their grandparents and perhaps their parents, these four boys have been raised in an era of peace. But Liberal government has also denied them the hope Nicaragua’s revolution once inspired. In a country content with the stability of the past sixteen years but still hungry for social change, Daniel Ortega, a deeply flawed, complicated figure, has been granted a rare second chance.