MANAGUA, Nicaragua (Reuters) -- European countries have warned
                   Nicaragua that recent changes in its constitution and electoral laws might
                   weaken democracy and jeopardize millions of dollars in international aid.

                   "There is great concern among donors about the content of the reforms," a
                   European diplomat told Reuters this week. "The international community feels
                   these reforms raise questions that go to the heart of democracy."

                   Human rights groups say the reforms that were approved in January by the
                   national assembly concentrate too much power in the hands of the two main
                   political parties.

                   Conceived by President Arnoldo Aleman's center-right Liberal Party and the
                   leftist Sandinista opposition, the changes made it harder for smaller parties to
                   register.

                   The reforms also turned key independent state agencies, such as the
                   comptroller and the electoral council, into politically influenced bodies
                   appointed by the ruling party and the Sandinistas.

                   And the changes could allow Aleman to hold elections for a constitutional
                   assembly in 2001 instead of the scheduled presidential elections to pick his
                   successor.

                   The existing constitution bars him from seeking re-election, and some critics
                   have said he may be seeking to retain power beyond the end of his five-year
                   term.

                   Some aid frozen

                   In a sign of growing concern, Sweden and the other Nordic countries last
                   week froze about $3 million in aid for a project to strengthen the independence
                   of the comptroller, citing political interference in the office.

                   Former Comptroller General Agustin Jarquin, who was investigating Aleman's
                   accumulation of wealth in office, was jailed on fraud charges in November
                   1999 but later released in a case that drew international protests.

                   He was replaced under the new law governing appointments to the office.

                   Nicaragua, the second-poorest nation in the Western Hemisphere after Haiti
                   with a crushing foreign debt of $6.3 billion, is heavily dependent on foreign aid.

                   European countries -- as a bloc the largest single donor to Nicaragua -- give
                   an estimated $200 million a year for projects that range from building schools
                   to strengthening the inefficient and corrupt justice system.

                   "There is a negative perception in our parliaments about how the aid is being
                   handled in Nicaragua so next time Nicaraguan aid is discussed there is going
                   to be a reduction of aid," said a European ambassador. "I have no doubt about
                   it."

                   Nicaraguan government representatives are scheduled to meet with
                   international donors in Washington in May.

                   Stability a goal

                   Proponents of the constitutional and electoral changes, including Sandinista
                   leader and ex-President Daniel Ortega, said they will bring stability and create
                   strong majorities.

                   More than 20 political parties participated in the 1996 presidential elections, in
                   which the Liberal Party and the Sandinistas together captured 90 percent of
                   the total vote.

                   Civic leaders and nongovernmental organizations accuse the leading parties of
                   shutting out political rivals.

                   "There is an attack against political pluralism in Nicaragua," said Gonzalo
                   Carrion of the Nicaraguan Centre for Human Rights. "Liberals and
                   Sandinistas have created a hidden agenda to exclude all democratic
                   alternatives."

                   Some European diplomats worry the reforms could threaten democratic
                   institutions in a country haunted by a recent past of dictatorship, revolutionary
                   upheaval and civil war.

                   "The donor countries want to see a gradual increase in the independence of
                   the state's democratic institutions. Our concern right now is whether these
                   reforms will strengthen or weaken democracy," a European ambassador told
                   Reuters.

                   Donor countries and international organizations have reminded Nicaragua that
                   good government and the consolidation of democracy are prerequisites for aid.

                   "It is absolutely essential to take steps in the direction of transparency and
                   good government," said David Atkinson, the Inter-American Development
                   Bank's representative in Managua.

                    Copyright 2000 Reuters.