U.S. warns Nicaragua aid may be in danger
The U.S. government has warned that aid and investment in Nicaragua could be threatened by a proposed property law that is part of a political struggle between this nation's president and Congress.

A statement posted late Wednesday on the U.S. Embassy Web site expressed "great concern" at the Congress-backed plan for a new property institute that will shift oversight of property disputes - hundreds of them involving U.S. citizens - away from the presidency.

"We are concerned at the possible negative impact on bilateral aid to Nicaragua," the U.S. government said. "Respect for property rights is the condition sine qua non for the promotion of investment and economic growth in Nicaragua."

U.S. law links aid for Nicaragua to progress in solving disputes involving U.S. citizens whose property was confiscated by the leftist Sandinista government of the 1980s. The state later sold some of those properties at cut-rate prices to Sandinista officials shortly before they left office, a process critics called "the piñata."

The Embassy said 768 cases remain unsolved and said it worried that the new system could set back efforts to win return of the properties or compensation.

The Embassy said new laws have already stalled court hearings on the property disputes and it said it worried that the measures "could come to subvert processes of the review of property titles."

Nicaragua's Congress voted Wednesday to create a new property institute, which is to be headed by a figure chosen by lawmakers, most of whom are bitterly opposed to President Enrique Bolaños.

Bolaños' office said the new law - which still must be approved by a second vote in Congress - would result in the dismissal of current property title suits.

ños has said the property institute "is the door to legalize the Sandinista piñata of the 80s."

Lawmakers argued that the measure in fact would help solve the disputes and would help give formal property titles to almost 1 million Nicaraguans.

The U.S. government granted $235.6 million to Nicaragua in 2003, the latest figures given on the U.S. Embassy Web site.