A decade or so ago, there were few icons more powerful in the proxy struggles of the cold war. And few American enemies were more demonized than Ortega. The Sandinista rebels led by the then boyish Ortega toppled the brutal Somoza dictatorship in 1979. But when they set up a Marxist state, seizing farms and businesses, they found themselves locked in a bitter war against the U.S.-sponsored contra rebels for most of the next decade. In the 11 years since elections knocked Ortega out of power and, it seemed, into the dustbin of history, Latin America has undergone enormous change. Democratically elected regimes have replaced authoritarian ones. The language of free trade has taken the place of anti-imperialist rants. Yet there was 55-year-old Ortega last month, riding through the streets of the town of Chinandega, celebrating the 22d anniversary of his revolution, leading the polls to win back the presidency this November. Microphone in hand, he mourned the dead–not only the Sandinistas killed in “a war imposed by the North Americans,” but also the “poor campesinos who were not defending anything of their own, who were nothing more than slaves and servants of the rich.”

Back in 1988, when Ortega wore military fatigues to a regional summit on democracy, President Bush I excoriated him as “an animal at a garden party.” Now Bush II has reason to fear that Ortega will soon be haunting his own administration. The issue today is markets, not geopolitics. George W. Bush has vowed to turn Latin America into a giant free-trade zone. But Ortega and other resurgent socialists in the region could get in the way. While economic liberalization has brought growth and investment to Latin America, it has done little to alleviate poverty. Ortega has been a deft politician, and widespread disgust with corruption in the current regime has also helped his campaign. But economic inequality is his key theme–as well as that of other old leftists. Hugo Chavez continues to thrive in Venezuela. Alan Garcia nearly won the recent election in Peru. Luiz Inacio (Lula) da Silva is leading the polls in Brazil. And former guerrillas in El Salvador could also be returned to power.

Completing the sense of deja vu, three of Ortega’s former U.S. antagonists are back in government, too. John Negroponte, who was ambassador to Honduras in the 1980s and widely seen as a key American liaison to the contras, is now Bush’s nominee for U.N. ambassador; Elliott Abrams, the head of Inter-American Affairs in Ronald Reagan’s State Department, is a senior National Security Council staffer, and Otto Reich, who headed the now defunct Office of Public Diplomacy, which spread propaganda to generate public support for contra aid, is up for assistant secretary of State for Western Hemisphere Affairs.

Not surprisingly, this old cast of characters is reviving an old script. Lino Gutierrez, number two in the State Department’s Western Hemisphere division, traveled to Managua in June and delivered a warning to Ortega: “If those who now call themselves democrats had meant it, by now they would have returned properties confiscated illegally to their rightful owners. They would have renounced violence forever. They would have told human-rights violators that they no longer have a place in the political party. They would have adopted better role models than dictators and terrorists.” In an interview with NEWSWEEK, Ortega scoffed at such criticism: “It is totally out of the context of reality,” he said. “It is like us telling the Americans that in order to prove you are democrats and respect sovereignty, you have to return the territory that you took from Mexico.”

Ortega’s life as a rebel began in the 1960s, when he joined the Sandinista guerrilla movement. Growing up in poverty, under one of Latin America’s oldest dictatorships, he participated in some of the Sandinistas’ earliest urban attacks, including robbing a Bank of America branch. He later spent seven years in jail, where he wrote poems, including one called “I Never Saw Managua When Miniskirts Were in Fashion.” He got out in 1974, but friends say the imprisonment left a mark: Ortega usually avoids eye contact, rarely socializes and when he is not in front of a cheering crowd prefers to be alone. His most important companion is his wife, Rosario Murillo, whom he met in the late 1970s.

Some former guerrillas say it was precisely Ortega’s lack of charisma that led the Sandinistas to make him the face of the revolution; they believed he would present an image of moderation to the world. But Ortega never shied from bashing the United States. At the United Nations, he stirred hearty applause by declaring: “Let President Reagan recall that Rambo exists only in the movies,” prompting the U.S. delegation to walk out of the General Assembly. Such bravado disgusted the elder Bush. Still, in a sharp departure from Reagan’s policy of continuing the war at all costs, Bush decided to negotiate peace. Desperate for foreign legitimacy, Ortega agreed to hold elections in 1990. He was so sure he’d win that he invited in foreign observers, making it nearly impossible to challenge the results. When a U.S.-backed coalition emerged triumphant, Ortega conceded defeat.

But not without a dramatic exit. In his final months of power, he formalized thousands of property transfers and distributed houses and land to his top commanders. As the new government painted over revolutionary murals, Ortega struggled to resuscitate his political career. He retained a seat in Congress, but lost miserably in the 1996 presidential election. By then, the party leadership had splintered, but Ortega remained the undisputed king of grass-root Sandinistas. Few parties have been so inextricably linked to the identity of one man. The Sandinista headquarters is connected to the back of Ortega’s house, a sprawling mansion he seized from a relative of Somoza’s in 1979. “I don’t consider myself a politician,” Ortega said in the interview. “I have always considered myself a poet. To be a revolutionary, you have to be a poet, you have to dream.”

Those dreams seemed all but dead in 1998, when his stepdaughter, Zoilamerica Narvaez, publicly accused him of having raped and fondled her throughout the 1980s. In a recent interview with NEWSWEEK, she recounted: “He said he needed to do this to be the leader of the revolution and to feel emotionally well.” Narvaez said she didn’t reveal the abuse for years out of loyalty to the Sandinistas. Ortega denied the charges at the time–and again in his NEWSWEEK interview–claiming they were politically motivated, and the public shock soon fizzled. “The people are incapable of imagining Daniel Ortega abusing me,” says Narvaez, 33. “They see him as a man who works 15 hours a day, who has sacrificed… for the revolution, who wouldn’t have the time.”

There has never been a formal investigation, because Ortega refuses to give up the immunity he enjoys as a congressman. “I prefer to pay the political cost instead of hurting my family,” he said. His response was the breaking point for many high-level Sandinistas, including Vilma Nunez, a prominent human-rights leader. “Daniel Ortega has converted the Sandinistas into an antidemocratic party, from an instrument of the struggle of the people to a group of people seeking power for themselves,” she says.

Yet few Nicaraguans see the current regime as any better. The government of Arnoldo Aleman is so widely seen as corrupt that last year a member of Aleman’s own party introduced a measure to evaluate whether the president is mentally fit to govern. It accused Aleman of being an alcoholic and unable to control his weight, which legislators claimed had reached 380 pounds on his 5-foot-6 inch frame. Newspapers detail allegation after allegation: that Aleman used state funds to improve ranches he bought; that a large highway-repair contract after Hurricane Mitch went to a firm whose incorporators include his son-in-law; that he built a helicopter pad on his property with state money. In 1999 the comptroller general reported that Aleman had increased his personal wealth 900 percent in seven years in public office. Aleman has always denied wrongdoing, and official immunity protects him from investigation. But to Nicaraguans, the accusations are another indignation in a country where living standards have grown worse over the past decade. Half of all Nicaraguans survive on less than $1 a day. They are Ortega’s supporters.

For the poor, the days of the revolution may even stir a sort of nostalgia, a feeling that if conditions had been different, if the United States had not sponsored a war and an economic embargo, life would have improved. At first, most Nicaraguans welcomed Ortega’s rise to power. Even as the government jailed political opponents, it poured money into health clinics and literacy, distributed land and created a massive bureaucracy to provide jobs. Ortega financed it all by printing money, driving inflation as high as 33,000 percent. But, conveniently, he could blame Reagan. Today, Ortega drones on when he talks about his platform–a credit program for small farmers and vague promises to promote women’s rights, protect the environment, create jobs and improve education and health. But he comes alive when he invokes the past. At a recent rally, he blasted the neoliberal government, telling the crowd: “The people governing the country have tried to kill the conscience the revolution gave the poor!''

His detractors evoke the uglier aspects of Ortega’s rule, suggesting he would reinstate the draft, confiscate property and censor the press. “Lies! Lies!” Ortega tells political gatherings. Enrique Bolanos, the current vice president and Ortega’s rival for the presidency, argues that Ortega’s administration was worse than anything Aleman’s has been accused of. “The Sandinistas destroyed the production of the country. The talent that was here left,” says Bolanos, who himself had $9 million in property confiscated. He speaks proudly of economic growth under the current government: “Fewer than 15 countries in the world have achieved 6 percent growth in a year.” But such figures mean nothing to a farmer whose income keeps declining. And in a country where half the population is under 18, Bolanos is not helped by the fact that he is 73. Opponents have dubbed him “Bola de Anos,” a “bundle of years.”

The most recent polls show Ortega ahead by five points, the margin he needs to win in the first round. A third candidate, who stood little chance of winning, dropped out late last month. That decision is likely to put Ortega in a tie. It also leaves Nicaraguans with a grim choice: a candidate whose party has become synonymous with corruption and the failure of neoliberalism or a figure who recalls the darkest days of the past.

This is how both sides planned it. The Sandinistas held enough sway in Congress to force Aleman to negotiate a deal that Nicaraguans refer to with disgust as “el pacto.” By changing the electoral rules, it virtually ensures that politics will be a two-way competition. To some Ortega supporters, el pacto was a deal with the Devil. But it also helped secure a political future for a dying party. “Nicaragua is a democracy taken hostage,” says Sergio Ramirez, a prominent novelist who was vice president under Ortega and who broke away from the party in 1995.

Ortega has tried to court critics–and the Americans–by presenting himself as a changed man. He’s sought to win the support of local business leaders with talk of globalization and free trade. He drives a U.S.-made Jeep–and a Mercedes–and recently got his first American Express card. The Sandinistas have said they would grant independence to the Central Bank. And last year, for the first time, Ortega attended the U.S. Embassy’s Fourth of July party. Typically irreverent, he ignored the invitation’s call for formal wear and showed up in a collarless denim shirt.

The Americans are taking seriously the possibility of an Ortega return. But would he really try to meddle with the plans of another George Bush? Old leftists may still harbor dreams of utopia, but they long ago gave up the idea that they could redistribute property and defy the free market or the United States. Ortega is likely to be at worst another gadfly, if a very vocal one, inveighing against the excesses of globalization. In the interview with NEWSWEEK, he said, “We have not renounced our ideals, our dreams. We keep fighting for a just and free world. We keep defending the socialist ideals, not in a dogmatic way, but in line with the new reality.”

Ironically, the U.S. warning could strengthen Ortega’s candidacy. Washington has interfered in Nicaragua for so long that what is bad for the gringos could be perceived as good for Nicaragua. “The policy may boomerang,” says Thomas Walker, an expert on Nicaragua at the University of Ohio. “Many Nicaraguans may dislike U.S. meddling more than they dislike Ortega. That may be reflected in their vote.”

But what really matters is what people like Manuel Garcia Cruz think. The 37-year-old coffee farmer joined the contras in 1982 after the Ortega government kicked him off his land. His family later recovered the land, but this month they lost some of it again–this time to the bank when international coffee prices fell so low that Garcia could not pay his loans. “Two democratic governments have left us with nothing,” Garcia says. “We producers are doing worse than we were during the war.” After hearing Ortega speak, he commented: “Daniel is the only savior in Nicaragua.” With a wife, six children and elderly parents to support, Garcia is desperate enough to believe anything, and even to vote for a man he once tried to kill.

In a sense, Ortega helps pave the way for his own comeback. His government left the economy in such dire condition that it will take years more to repair the damage. The benefits of liberalization have yet to reach the masses, creating a popular discontent that Ortega–and others across Latin America–are mining to get back in power. The resurgence of the left is not likely to stop with Nicaragua and Venezuela. With economic gloom threatening the continent, Argentina and Brazil could also see the revolution reborn.

SOME OLD, FAMILIAR FACES

Two decades have passed since the United States sought to overthrow Daniel Ortega’s Sandinistas by secretly funneling profits from arms sales to Iran to the contra rebels in Nicaragua. But President George W. Bush has resurrected several leading figures from that era. The three most controversial:

A longtime diplomat who speaks five languages, Negroponte is having his confirmation stalled by Democrats in the U.S. Senate. Human-rights groups accuse him of overlooking abuses by the military regime in Honduras to ensure that the United States could continue to use the country as a staging ground for its war against the contras. Negroponte has denied knowledge of those abuses, but a CIA investigation found that the U.S. Embassy did not properly report human-rights abuses to Washington. Negroponte left government in 1997 to become an executive at publisher McGraw-Hill. He is likely to be confirmed, but only after divisive hearings dredge up the past.

Abrams’s post does not require Senate confirmation. He is best remembered for evading questions before a congressional committee looking into the 1986 shooting down of a contra supply plane and his attempts to solicit a $10 million contribution from the Sultan of Brunei for the contras. He pleaded guilty to two misdemeanors for withholding information from Congress but was pardoned by George Bush Sr. in 1992.

Reich’s office was accused of engaging in covert propaganda activities to generate public support for American aid to the contras. A Cuban-American beloved by anti-Castro forces, Reich faces opposition from liberal Democrats in Congress.