By Dave Graham
MANAGUA (Reuters) - Nicaragua's left-wing President Daniel Ortega has won over many critics at home with a successful drive to cut poverty and spur business-friendly policies in Central America's poorest country.
But his choice of friends abroad makes many Nicaraguans worry that the former guerrilla and Cold War icon is dragging down the country's reputation and unnecessarily antagonizing the United States and other Western countries.
Ortega took office for a second straight term last week after winning more than 60 percent support in a landslide election victory in November. It was by far his biggest share of the vote since the mid-1980s, when he led the Sandinista government during a civil war against U.S.-backed rebels.
Voted out of office in 1990, he spent 16 years in opposition before returning to power in 2006. At home, he has recast himself as a man of peace, replaced his Marxist rhetoric with Christian messages and worked well with farmers and business leaders who were once his most bitter critics.
But Ortega's foreign policy looks very similar to the Cold War years, when Nicaragua was allied with Russia and Cuba.
Now Ortega's closest ally is Venezuela's socialist President Hugo Chavez, who has used oil revenues to help bankroll Nicaragua's anti-poverty programs. Nicaragua remains close to Cuba and has strengthened its ties with anti-U.S. leaders like Iranian President Mahmoud Ahmadinejad.
When he stood to take the oath of office last week, Ortega was flanked on stage by Chavez and Ahmadinejad. He pilloried the U.S. "occupations" of Iraq and Afghanistan, lamented the death of former Libyan leader Muammar Gaddafi and paid his respects to former Iraqi leader Saddam Hussein.
Chavez's financial aid to Nicaragua has helped power it to faster economic growth and helped to cut poverty rates from around two-thirds of the population in 2005 to 57 percent now.
Analysts estimate that Venezuela provides as much as $500 million a year to Nicaragua, a huge sum for an economy which in dollar terms was worth about $6.5 billion in 2010.
Nicaraguans like the results, and openly express their gratitude. "There's more work, and wages have really gone up," said Jaime Valverde, a 22-year-old petrol pump attendant. "Things are so much better than before."
But some believe that Ortega is not really in charge.
"If Chavez says 'sit!' Ortega sits. If he says 'get up!' then Ortega gets up," said Esau Martinez, 26, a student from Nicaragua's Atlantic coast. "Ortega does what he's told."
"Chavez has too many interests here," said 30-year-old Managua resident Juan Carlos Reyes. "There's electricity. Water. Even building houses for the poor."
Iran has also promised significant investment but hasn't yet delivered. Following Ortega's 2006 election win, Ahmadinejad pledged to help fund a new $350 million ocean port, build houses and assist on a hydroelectric project.
The lack of progress has some wondering what Nicaragua gets out of its friendship with a government that has fanned global tensions by threatening to block the Strait of Hormuz - a crucial oil export route -- in retaliation for Western threats to impose new sanctions on Tehran for its nuclear program
"We're abandoning God for the Devil," said Larry Ferrey, a 38-year-old hotel worker in Managua.
Nicaraguan newspapers also noted that on his visit last week, Ahmadinejad did not answer Nicaragua's requests to write off debts to the Islamic Republic of over $160 million.
During his speech Tuesday, Ortega hailed Iran as a great civilization and urged Israel, which Ahmadinejad once said should be wiped off the map, to destroy its nuclear weapons, saying they were blocking peace in the Middle East.
That display came just days after the U.S. government said it was making it "absolutely clear to countries around the world that now is not the time to be deepening ties, not security ties, not economic ties, with Iran."
Ortega's finger-pointing at Washington and its allies has done little to curb widespread enthusiasm in Nicaragua for the United States, where tens of thousands of Nicaraguans live.
The CID Gallup polling firm said its research showed Nicaraguans were increasingly well disposed to the United States, despite Ortega's allegiances.
Latinobarometro, another pollster, said 65 percent of Nicaraguans viewed the United States positively and that U.S. President Barack Obama is as popular in Nicaragua as Chavez.
Another Latinobarometro poll showed that voters across Latin America ranked Ortega joint worst of 18 leaders in the Americas and Spain, down three places from the previous year.
The fact Washington froze much development aid to Nicaragua after accusing Ortega of voter fraud in local elections in 2008 has not had much impact on Nicaraguans' view of the United States, in part because non-government aid still flows.
Mauricio Toledo, 50, a former Sandinista fighter, said Ortega has isolated Nicaragua.
"Daniel Ortega has been a friend of Gaddafi. He's been a brother to (Saddam) Hussein. He's been a brother to all of these murderers," he said. "We don't need friends like that."
(Editing by Kieran Murray)