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  Number 181 | Agosto 1996
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Nicaragua

Promises Coming and Going

Promises of the international community – to what extent do they condition the next government? Promises of the candidates – are they viable and realistic? The elections move into the final stretch.

Nitlápan-Envío team

In mid june, seven months before turning over the presidential sash to her succesor, President Violeta Chamorro traveled to Washington to make her farewell speech to a Donors' Community gathering. "I am here with you not only to thank you personally for your interest in and collaboration with my government and with the Nicaraguan people over these six years. I am especially here to ask for your uninterrupted support so that Nicaragua can continue enjoying the same attention that your countries have been providing during my period of transition. We will see you again soon. When I finish my work, I will be here again one day, knocking on your doors so you will continue helping Nicaragua. I ask God to bless you." She earned an effusive ovation for this speech, a shift from the earlier maternal style with which she had once warned the august donors: "Boys, if you abandon me, the ship will go down!"

The Donors' Community is made up of 17 countries and 16 international agencies, including the Interamerican Development Bank (IDB), whose headquarters hosted the June 17 18 meeting. President Chamorro's speech followed her delegation's presentation of the official evaluation of her six year administration. All told, the meeting's results were positive: the donors pledged $1.8 billion to Nicaragua for the three year period through 1998, of which only a tiny part came from the United States.

In its evaluation, the Nicaraguan government noted that the country has received just over $3.921 billion in foreign aid between 1990 and 1995, of which 31.1% has come from European countries and agencies. Of the total, 45.6% has been in the form of loans conditioned by structural adjustment agreements and the rest as donations. Breaking it down another way, 47.1% was in liquid funds, 80.6% of which was earmarked as payment on the foreign debt. The other 52.9% was tied to programs and projects, only 13.6% of which went to health and education. What the report does not mention is that this represents an average annual investment of $2.50 per person.

CSE Announcement Upstages Donor Pledges

News of this pledge did not get the same fanfare in the Nicaraguan media as on previous occasions, and most of the citizenry had little interest in the coverage it did get. As for the politicians, the bulk of whom are running for one of the more than two thousand offices up for election on October 20, their attention was glued either on the challenges being filed in the Supreme Electoral Council (CSE) against several presidential candidates or on their own calculations of how much campaign funding the CSE would assign their respective parties.

CSE president Rosa Marina Zelaya attended the donor's meeting to solicit the $6 million still needed to pay for the costly electoral process. National Assembly president Cairo Manuel López, however, declined to support her effort, since he already knew that the CSE would dissolve the alliance between Miriam Argüello's Conservative National Action (ANC), a fraction of his own party the Christian Democratic Union (UDC) and a new yet already defunct party called Arriba Nicaragua. Other UDC members had challenged the alliance because it was forged without taking UDC statutes into account. López also had information that the CSE intended to prohibit the alliance's presidential candidate, controversial banker Alvaro Robelo. "I'm not interested in interceding with the financial groups on behalf of an electoral process I don't trust," he testily explained.

Sure enough, the night of July 5, the CSE called a press conference┼broadcast live on one TV channel and several radio stations┼to announce its decision: based on the Constitution and the Electoral Law, the CSE annulled the alliance and prohibited Robelo's candidacy because he had given up his Nicaraguan citizenship in favor of Italy, his wife's country.

The candidacy of former FSLN military leader Edén Pastora was denied for the same reason: Pastora had become a Costa Rican citizen during the prerevolutionary struggle┼according to him to facilitate the receipt and transhipment of weapons to the FSLN inside Nicaragua.

These decisions, however, were overshadowed by the CSE's anxiously awaited announcement that it was also prohibiting Violeta Chamorro's son in law Antonio Lacayo from running as the presidential candidate of his party, the National Project (PRONAL), since he is a close relative of the incumbent. The CSE gave both PRONAL and Pastora's Democratic Action Party three days to present other candidates and granted the UDC and ANC the same period to come up with an alternative solution since it had indeed dissolved the alliance with Robelo. It also gave the National Resistance Party three days for its two warring leaders to sit down together and hammer out a compromise list of candidates for all offices, since each had presented a separate list. Should they fail to do so, which seemed likely, the CSE would decide which list to accept, based on law and the former contras' own party statutes.

While most media commentators gave the CSE high marks for its strict adherence to legal arguments, thus making a historic break with Nicaragua's traditional political wheeling and dealing, that sentiment was not shared by all the affected candidates.

Lacayo had preceded the CSE announcement with a desperate last minute battle to avoid prohibition. It combined an extremely costly media saturation campaign and an equally costly caravan tour of 45 municipalities from "border to border" between June 23 and 29. It even included a semantic offensive in which Lacayo tried to argue that the "and instead of "or in the constitutional article listing the prohibitions on who can run meant that none was meant to stand alone. Before this farcical controversy was laid to rest it had involved Nicaraguan members of the Royal Academy of Language. Nonetheless, after tenaciously ignoring the constitutional prohibition for well over a year, and even paralyzing government for the first six months of last year to openly fight it, Lacayo finally gave up with unexpected grace, acknowledging that he would "painfully" accept the CSE decision. Two days later, at a meeting in which PRONAL agreed to run businessman Benjamín Lanzas, Lacayo's running mate, as its presidential candidate, Lacayo could not resist referring to the legislators who had inserted the reform barring his candidacy as "cockroaches." Lacayo will run for the National Assembly in place of his wife Cristiana.

For his part, Pastora magnanimously announced that he would "pardon the magistrates for this vulgarity┼they have prohibited a hero." He added that he would consult his base, presumed to be largely former combatants loyal to him, about his next step and did not discard the possibility of going back into the mountains. Robelo, in turn, declared that the decision against him was a sign of electoral fraud and that he would take his claim to the Interamerican Human Rights Court and the International Court at The Hague.

In this turbulent electoral atmosphere, increasingly saturated with such heated charges, electoral promises also began to rain down as the over twenty unchallenged candidates shifted their campaigns into high gear a month before the August 2 official opening. Their national pledges are now getting more avid attention than the international ones.

Which of these electoral promises are really viable, possible or even realistic? What room for maneuver exists to put them into effect within the limits imposed by the new agreements with the international donors, with which any incoming government is already saddled? Though this is not the only question hovering over the electoral process, it is one of the weightiest.

The Nuts and Bolts that Make or Break Elections

Robelo's suggestion of fraud was not the first┼it was long preceded by Liberal Alliance front runner Arnoldo Alemán and his US champion Senator Jesse Helms┼and will surely not be the last. With over forty parties running alone or in alliances, and some fifty local petition associations seeking the vote for their municipal candidates, the electoral process is laced with uncertainties.

For some months, top level CSE officials have been spending a lot of their energy trying to get across to the politicians how important the various technical aspects are to guaranteeing open and honest elections. The majority of the legislators did not give these aspects their rightful due when rewriting the Electoral Law last year, and most still don't.

Two major technical steps┼ID verification and ad hoc registration┼were taken in June toward drawing up the voter rolls, backbone of any clean election.

ID Verification. Citizens in 119 of the 145 municipalities have had the opportunity since February to apply for the new legal identification card, one use of which is automatic voter registration. In early June special tables were set up in the municipal seats for 10 days so that those who applied could check that their name and personal data appear correctly on the CSE's new computerized lists, from which it will pull the local voter rolls, In the future, there will only be a permanent ID card office in each departmental seat.

The CSE does not yet have a final quantitative report, but has made some preliminary data available. It estimates that some 25% of those who requested ID cards did not return to verify the data. No figures are available on how many did check and did not find their names or found errors in their data, but at least at some tables checked by foreign and national observers, the volunteers in charge indicated that the percentage exceeded what the CSE had guesstimated.

The CSE staff is now correcting the errors and filling the holes, so that the cards, valid for 10 years, can be issued in time for the elections. Recognizing that not all cards can be prepared in time, the CSE will issue an interim document to the remaining applicants that will allow them to vote. The CSE is also calling on all those living in the 119 municipalities who, due to disinterest, inertia or unfamiliarity with this historic new system, have not yet even requested their ID card, since they will be unable to vote if they have not applied.

What does all this mean? Can the glitches be fixed in time? Will all the cards or supplementary documents be in registered voters' hands by October 20? Will abstentionism continue to rise, due even more to political indecision than to technical reasons?

Ad Hoc Registration. In the 26 rural municipalities in which the ID process did not occur┼due to the instability caused by the presence of armed groups, among other reasons┼local polling places were opened for the first two weekends in June to give citizens the opportunity to register to vote on a one time basis. That proved to be an insufficient amount of time in some areas, largely because the national census done in 1995 by the Nicaraguan Institute of Census and Statistics (INEC)--the first in 23 years-seriously underrepresented the population. An additional weekend was provided in areas where the lines had been too long to complete the hand done registration process.

According to the CSE, "Our expectations regarding order, tranquility, organization and the number of citizens registered were all greatly exceeded." In round numbers, the CSE estimates that some 348,000 residents of these zones registered to vote, in some cases despite threats from the armed bands. It is impossible to calculate how many did not register given the surprising discovery that the 1995 census did not correspond to reality. The margin of error in some of these 26 municipalities could reach 25%, and in a few could go as high as 75%. At the end of that census, the INEC director was accused of corruption, but, as in so many other similar cases, no light was ever shed on the accusation and no sanction was ever applied.

Did INEC also undercount the other municipalities? If so, by what margin of error? What can the CSE do about having made its calculations based on unreliable data? So far, Rosa Marina Zelaya has announced that the CSE has already had to increase its budget due to the new information. At the very least, it is increasing the number of polling tables by more than 800.

What consequences might these contradictory figures have on the electoral results, above all at the moment in which the losers are asked to accept them?

Fraud Isn't The Problem

"The problem isn't fraud," former CSE president Mariano Fiallos has insisted; "the problems are technical." Fiallos resigned as CSE president in February precisely because the growing multitude of technical, political, legal and even ethical problems in which he saw the electoral process becoming entangled at that time pushed him to do so.

The Electoral Law passed just before the close of the 1995 legislative session┼and never reformed this year despite the repeated pleas of Fiallos and Zelaya┼has forced the CSE to completely restructure. It has had to do away with its experienced regional heads and select brand new departmental ones, without being able to deviate from lists supplied by the political parties. On top of complaints by some parties that feel they were shortchanged in the selection process, and a strong effort by the CSE magistrates to both train the new personnel and indoctrinate them with a sense of professionalism and loyalty to the CSE despite the obvious politicization of the selection process, the CSE is also deluged by technical problems due to other changes and often ambiguities or even outright contradictions in the hastily drafted new law. Adding to its woes, it is working against time and against a tight budget, from which it must soon provide 15% to the parties for campaign spending┼without even yet knowing the final budget amount on which this percentage should be calculated.

The ID card idea, generally approved as a state project in 1989, has had very weak support from the Chamorro government since 1990 and has fallen victim to major setbacks due to the political disputes and incoherences of the past two years. Today, seeing all the delays, errors, shortcomings and actual holes, many are wondering if it would not be more realistic to humbly recognize them publicly and postpone the use of the ID cards for voting purposes until the next century. The alternative being bandied about is to call on all citizens to register on the four Sundays before election day, as was done with such good results in the 1984 and 1990 elections. This just might be the way to guarantee not only more accurate voter registration lists but also more massive participation.

One, Two, Many More "Charros"

Another area of uncertainty about the electoral process is fed by the activity of the rearmed groups that are still roaming extensive areas of the north and even central parts of the country. The majority of these bands operate in what the army has begun calling the "Golden Triangle," which covers the departments of Estelí, Nueva Segovia, Matagalpa and Jinotega.

The death of Ciriaco Palacios, alias "Charro," at the hands of the National Army during the first days of the ad hoc registration sparked hope that, without his leadership, a number of the bands under his sway would lose spirit and agree to disarm. This has indeed happened to a small degree, but lest it get out of hand two lesser leaders--"Pajarillo" and "Licenciado" --kidnapped 38 individuals on June 19, of whom 28 were CSE members, as they were traveling up the Río Coco with registration material for communities in the municipality of Wiwilí. The victims were held in the border area of Honduras for three days before mediation by the OAS International Support and Verification Commission (CIAV) and the Catholic Church's Peace Commission secured their unconditional release. The fact that the kidnappers did not hold out for any demands of their own led to suspicion that the action may have been planned to project Pajarillo, weaken the army's image after the successful operation against Charro, and strengthen the controversial CIAV OAS.

In those same days, a shaken and tearful teenager showed up in Managua. He had survived a massacre of his four family members by "Cadejo," one of Charro's subalterns, in the community of Kuskawás. The youth explained that Cadejo's men had yelled that "it doesn't matter that they've killed Charro because there are other Charros who won't let the elections be held." The murdered family was Sandinista.

Other massacres have surrounded this one with a macabre rhythm that hasn't let up for months. Around the time of the Kuskawás attack, 60 Miskito communities in an isolated stretch of the Río Coco were under constant threat by the rearmed groups, who were forcing them to sell their entire harvest to Honduran and Nicaraguan merchants in the area. The publication of this situation led to rumors that even Nobel Peace Prize winner and indigenous rights champion Rigoberta Menchú might visit to look into what was happening to the Miskitos.

Days later, National Army chief General Joaquín Cuadra confirmed that the rearmed groups in the north are receiving arms from Honduran military officers. He added that he did not believe that the armed forces in that country were institutionally involved in such activity.

The first month of military activity by the army against the rearmed bands (May 27 June 26), aimed at making the zones in which they operate safe for the electoral process, produced 15 clashes. Army figures are 12 rearmados dead (Charro among them), 12 wounded and 39 captured, while 25 surrendered and turned over their weapons. In that same period, the army learned of the murder of 10 civilians and the kidnapping of 11 others in addition to the CSE workers. The first two army members were killed in combat with the rearmed groups on July 6.

Armed Prosyletizing?

There are indications that the rearmed groups are engaging in ongoing armed prosyletizing in extensive zones of the north, demanding that the peasants vote for Alemán's Liberals. There are many anti Sandinista options on the ballot and significant confusion among voters, especially in the rural zones, which are again suffering high illiteracy rates. This dispersion of the anti Sandinista vote and the fact that many former contras attribute the bitter divisions in the Nicaraguan Resistance Party to Alemán may explain this form of coercion, which the FSLN has repeatedly denounced.

General Cuadra met with CSE authorities to assure them that his men will be present in the conflictive zones until the electoral process culminates and will continue to militarily engage the rearmed groups. He shrugged off the declarations of all Pajarillo types who seek to emulate Charro. "No group or force is capable of detaining the political will of Nicaraguans and that is what will guarantee the elections," declared Cuadra.

What consequences will this instability have when the parties' campaign mobilizations multiply in these difficult zones? What influence will it have on the rural population's participation, the electoral results and, above all, acceptance of these results by the losers?

In Washington, President Chamorro mentioned in her report that she would turn over a country "that has managed to advance significantly toward reconciliation and total pacification," but this is far from true. Insecurity has been mounting year after year in some rural zones of the Segovias, Matagalpa and Jinotega, which have not yet recovered from the war in the 1980s. In these areas, in which small and medium agricultural production predominate, producers fortunate enough to have the means to produce feel increasingly defenseless against the kidnapping and extortion. And those who now have neither credit nor expectations are opting for survival strategies, among which the most desperate is to join the ranks of the criminal bands.

This convulsion in the rural zones and the prediction of national electoral results with narrow differences among lead candidates in the first round lead pessimists to think that the period prior to a second round┼to which almost everyone is now resigned┼could be one of uncontrolled violence and the settling of accounts in some of these zones. That could also be the scenario in the period before the next government takes office, particularly if Alemán wins.

What's the Price Tag On the New Aid?

Although political and particularly electoral issues are absorbing most of the body politic's energies, the economic problems are the most debilitating since they still have the country in an anemic state. With Nicaragua now well into its scantily financed 1996 agricultural cycle, some very important issues are still pending for the months remaining to this government, and above all for the government that will succeed it.

In this context, what relationship, if any, do the tied or conditioned cooperation commitments that the international community made with the outgoing (and hence incoming) government have with the campaign commitments the candidates are making to win votes?

The $1.8 billion that will come to Nicaragua between now and 1998 is fundamentally to assure payment on the foreign debt, to expand credit slightly, or for housing and public investment projects. It represents a seal of approval on the Chamorro administration and a down payment on the electoral process and its results, which the donors hope will be "potable." In agreeing on this amount, the donors, "convinced that the new government will continue the transformations," are already positioning themselves for the medium run.

It would be incorrect to say that these financial commitments leave the next government with its hands totally tied. What was agreed to in June and what remains to be agreed to in the framework of the Enhanced Structural Adjustment Facility┼which expires in June 1997 and must be renegotiated for another three years┼is always negotiable. Nonetheless, designing, undertaking and, above all, achieving this renegotiation requires solid national unity. It requires little short of a sweeping victory.

Another very predictable reality, then, is that it will be very difficult for any new government to think it can come in and modify the terms of cooperation established thus far by the donors. A government with a renegotiation proposal could spend its first year bogged down in the business of trying to get more favorable terms for the country or for the hitherto excluded majorities, and this, in turn, could have a very eroding effect on its domestic popularity.

Promises of Credits and Jobs

Many of the promises that the candidates are making to potential voters┼particularly in the countryside┼have to do with substantial modifications to the spirit and the letter of the externally designed structural adjustment now being applied to Nicaragua. Among these promises are a broad based and very flexible restructuring of the overdue agrarian debts, a massive expansion of agricultural credit and even the return of subsidized credits.

Is any of this possible when the decision to privatize the state commercial bank (BANIC) is a done deal and the international financing institutions are determined to drastically reduce the state development bank (BANADES) and have already closed many of its rural branches, even as they contradictorily propose more credit for small and medium producers? How are we to square all of this? The issue of agricultural credit is unquestionably one of the hottest potatoes for any incoming government. Little of this or any other controversial agricultural problem is clear in the Liberal Alliance's platform, despite its resplendent title: "Diamond of Hope."

In the cities, the central promise of all candidates is massive job creation. The presidential candidate who has been the most concrete thus far is the Liberal Unity Party's Haroldo Montealegre, a banker who is promising 500,000 job posts in his five years in office if elected. More concretely yet, he states that he will create 200,000 jobs in the agricultural sector, 100,000 in manufacturing, especially for export, and another 100,000 each in construction and commerce tourism.

Unemployment is the problem that has been hitting Nicaraguans the hardest, according to all polls of any kind. In the electoral polls, what most of those surveyed hope from the next government is that it solve the unemployment problem. And hand in hand with the fear of many that "the war will return" if the FSLN is reelected is the inclination of many of these same people to support this return "because in those years we all had work."

Montealegre's promise of half a million jobs is in line with the government's estimates. The report President Chamorro took to Washington stated the following: "Considering the current open unemployment level of 18%, together with the demographic pressure and high growth of the labor force, the challenge that the Nicaraguan economy currently faces with respect to employment is significant. During the coming years, around 70,000 new work posts per year will have to be created, as well as over 200,000 posts to absorb the existing open unemployment."

The viability of the promise of massive job creation in so few years depends on a significant increase in the levels of foreign investment in industrial assembly plants (maquiladoras) and in tourism. It will also depend on the additional foreign aid that Nicaragua may get to lower interest rates and expand agricultural credit as well as considerably broadening the public investment program in productive and social infrastructure. The $64 million question to the promise of a half million jobs is what new element Montealegre┼or other candidates┼would offer to foreign investors and to international cooperation to get them to up their investment and aid levels.

New Tax Law

The electoral rhetoric of all candidates┼and even the specific promises of some of them┼also have to do with modifying the tax burden, which is increasingly onerous in a country with such high unemployment. This promise coexists with the government's commitment to the international financial institutions to approve a new tax law to create some order in the tax policy. During recent years, this policy has not only been chaotic, but has also been subject to the executive branch's discretionary application.

The promised tax law is arriving disguised under the name "Law for the Fostering of Stability, Investment and Employment." The frequent charge that the Chamorro administration has governed "by decree" is true. Since taking office in April 1990, the executive branch has issued 364 decrees. Far more significant is that 124 of them, a full third, were related to fiscal policy. The new tax law would be the first in a land sown with decrees. As a result of the consitutional reforms that went into effect in July 1995, it would also be the first time that the tax issue is decided by a shared accord between the legislative and executive branches.

Those Benefited and Those Jeopardized. This tax bill has been stagnating for eight months, precisely because neither the two branches nor civil society could reach any consensus. Now in its fifth version, of which the latest ones were the fruit of political negotiations, the bill has become a highly conflictive problem tarred, like all conflicts over the past two years, by the brush of electoral infighting.

As has been its style over the executive branch threatened that the country would lose $160 million in foreign aid, committed in exchange for the law, to say nothing of millions in lost tax collection opportunities if the Assembly did not pass the law before June 30┼the close of the fiscal year. According to the government, the $160 million, earmarked to finance the country's imports for the second half of 1996┼when export income drops to a trickle┼would be the only liquid foreign exchange coming into the country for the rest of the year. Less subtly, the executive branch menaced the legislators with not turning over the money in time for their party's electoral campaigns if the law is not approved. Despite all these threats and other pressures, the final deadline has passed and the law is still waiting.

With this new tax law the government hopes to increase tax collection, which is becoming increasingly necessary as foreign aid continues its inevitable decline. While the bill represents an attempt to reduce the tax level and increase the number of contributors, it could deliver the KO punch to small and medium national manufacturing by removing the exonerations that still protect it. For the same reason it would affect small investors in public transportation. It would also severely endanger municipal governments, since the reduction and even possibly elimination of municipal taxes would shrink their income by 50% to 70%.

With the elimination of municipal and other taxes, the law favors merchants. It also favors salaried workers by raising the wage floor on which their income taxes are deducted by 38%; only those earning over 40,000 córdobas (less than $5,000) a year would pay. By lowering taxes on commerce, consumers would also benefit, although the law's critics point out that this is not guaranteed or even spelled out clearly in the bill's text.

Some Holes in the Wider Net. The other element of the law's logic meriting examination is the casting of a wider tax net. Agricultural and industrial producers and merchants would be obliged to pay tax on their income, for which a presumptive profit tax of 1.6% of their assets would be charged. This explains the resistance of these sectors' associations to the law, particularly in the case of farmers and ranchers, who also question the fact that the tax calculation would take into account all of their land, whether or not it is in use. In fact, this would be the first time that those who maintain idle lands would be castigated.

The simple truth is that the great majority of businesses do not currently pay any profit tax, using the artifice of declaring that their companies are bankrupt. "This is a country of bankrupt businesses and wealthy businessmen," legislator Luis Humberto Guzmán once mused. According to finance minister Emilio Pereira, main promoter of the law, only 9 of every 100 córdobas of taxes collected come from profit tax, which means that the people are bearing a disproportionate tax burden.

The other way to increase the number of contributors is to eliminate tax exonerations, which is mainly aimed at reducing fiscal discretionality. But this reform is not evenly applied in the bill: tax exonerations to small industry and agricultural and agroindustrial cooperatives are eliminated, but those to the bond market are not.

International Approval and Domestic Discord. The law is complex and only enjoys the support of the commercial sector and big business represented by the Supreme Council of Private Enterprise (COSEP). It is generally felt that although the bill would put taxes in greater order, it would not┼as its name suggests┼foster investments, employment or even stability. The 39 legislators of the FSLN, the Sandinista Renovation Movement (MRS) and the other two Sandinista groupings in the National Assembly are among the most determined opponents of a hurried approval of the law without substantial modifications. The MRS and FSLN, both of which hope to win a significant number of municipal governments, are particularly concerned about the elimination of municipal taxes. The MRS' Dora María Téllez rejected the bill when she was chair of the Assembly's Economic Commission, though she strongly supported an earlier version that focused more on ordering the tax system. At the time she stated that "this government agrees very quickly with those abroad, but never tries to reach agreement on issues with those of us here at home."

The Last "Piñata"?

Chamorro administration officials are packing up their bags, but are they also packing up other things? They are attempting to sell not only the image that they will guarantee free, fair and open elections, but also the image that they will hand over power by taking the lead in an ordered transition that will contrast with the disorder of the Sandinista "piñata" in 1990.

Is the latter just image, or is it reality? There are signs that the executive branch, not very convinced that the electoral results will benefit the interests of its most illustrious members, could be deciding to give the privatizing "piñata" that has been so enriching in these years one more well aimed blow before leaving office.

Seeking to prevent this last minute fiesta, the environmental NGO coordinating body successfully lobbied the National Assembly on behalf of a bill to suspend the processing of requests for natural resource exploitation concessions. The legislators passed it in mid June and defined that the "natural resources" to which it refers are fish, aquaculture, forestry and mining resources and hydrocarbons. With the new law, the environmentalists and the legislative branch are also pushing for the government to put a priority on the regulatory laws on fishing, forestry and mining, in which the norms that foster transparency in the bidding for the exploitation of these resources should be established.

The executive, however, prefers to end its administration making use of the same discretionary powers it has enjoyed during its years in office. On July 3, the President vetoed the new law because "it limits the faculty of the executive branch to direct the country's economy." Atlantic Coast authorities also appear to oppose the law because they were not taken into account in drafting it and because "it could cause investors to stay away."

Alarm bells were also explicitly sounded by Alemán's Liberal Alliance. With the attitude of a sure election winner, it warned in a communique of the possibility of a "final piñata" of the national patrimony done in haste and without the desirable public information. The Liberals are referring to the sale of state assets or companies, the provision of telecommunications frequencies and of natural resource exploration and exploitation licenses. The Liberal Alliance's message "exhorts with the most elevated patriotic spirit that those currently responsible for the pertinent state areas prudently and responsibly analyze" the situation. It also asks that "the deciding and definitive faculty be reasonably deferred, transferring it to those who will be in charge after assuming leadership of the state on next January 10."

A Soap Opera Crisis

Since its inception the electoral process has been plagued by the uncertainty deriving from the constitutional prohibition affecting Antonio Lacayo's candidacy for PRONAL, the party he founded late last year. The Supreme Electoral Council finally bit the bullet on July 5 and made the decision no one else would touch, not even the Supreme Court of Justice.

Up to that moment, the crisis was played out in seemingly never ending installments, just like a soap opera. The political class followed each chapter with expectant passion while public opinion tuned in from time to time to whet its curiosity.

The debate, and the conflict, began at the end of 1994 due to the first round of passage of the constitutional reforms, which included an article aimed at putting an end to the creation of family dynasties in power┼an endemic evil in Nicaragua. The "blackmail" to which the CSE would dramatically refer as it took up its study of the challenge to Lacayo's candidacy began at the same time.

Antonio Lacayo, who in reality presided over the government until October 1995, when he selectively opted to obey one of the constitutional reforms by resigning his post to run, wanted to convert his presidential candidacy into the centerpiece of national life and into a race that seemed unstoppable. He tried to subordinate institutions, laws and individuals to this goal. He bought support, spoke of divorce, founded a new party, broke up other parties, traveled, made declarations inside and outside of Nicaragua highlighting his charisma and capacity, and spent millions in state funds for his propaganda in which he announced himself as exemplary father and husband as well as a successful business magnate and a young athlete. He kissed babies, hugged elderly people, and promised to tour the country on foot and go house to house. He even began this pilgrimage...until the Supreme Electoral Council, presided over by a woman, put a stop to it.

The final chapter to this installment plan crisis had two possible denouements. Either the CSE would be guided by the laws clearly on the books and apply the constitutional prohibition to Lacayo, or it would be guided by political considerations and, for reasons of "peace and stability," let him run based on a back room deal much like last year's "framework law," which jumped the gap of executive opposition to some constitutional reforms by simply postponing their implementation until the next government.

It is worth recalling that, at the time, Lacayo's obstinate determination to run and the equally obstinate determination of the legislators not to let him were both so great that not even the framework law negotiations could deal with the issue. The decision was left to the Supreme Court on a constitutionality suit filed by Lacayo's wife. The Court sidestepped that hot potato with no more than an acrid comment on the rarity of such a suit against the Constitution itself, then threw it to the CSE.

Lacayo is very influential, has accumulated a great deal of power and even at the last moment threatened a "crisis" if he was prohibited. Secure in his power, he probably never contemplated that the CSE would do what it did: unanimously opt on the side of the law and the "express prohibition of the Constitution," ruling Lacayo out of the presidential race due to his family relationship to the incumbent President.

It was not an easy decision. On June 25, before getting started on its study of the various official party challenges and the civilian commentaries filed against some 70 of the 32,000 candidates registered for elected posts at all levels, the CSE issued a declaration ratifying "its unbreakable decision to comply with the Political Constitution of the Republic, the Electoral Law, the [regulatory] laws regarding this material and its own Resolutions and see that they are complied with, totally independent of cajolery, threats, blackmail, sympathies or antipathies of any kind."

The situation was very tense. The day before the CSE issued its history making resolution, its president visited Cardinal Obando y Bravo. Everyone knew why. "I am certain," said Rosa Marina Zelaya, "that the sensibility and maturity, the tolerance, the effort to preserve the electoral process and the strengthening of democracy will superimpose themselves over any kind of personal or party interest." That same afternoon, the cardinal celebrated a mass in which he asked God to bestow prudence on all in such a transcendental moment for the country.

Who Stands to Benefit and Who Are the Losers?

The decision regarding Lacayo strategically strengthens the CSE itself and increases the electoral process' credibility with the citizenry. Politically it benefits the parties most like PRONAL, in particular Alfredo César's UNO 96 Alliance, which represents similar interests both in Nicaragua and with the international community. UNO 96 is gambling on the existence of a "center" similar to the one Lacayo claims to represent, one ready to firmly oppose Arnoldo Alemán and disposed to ally with the FSLN if ultimately necessary. César aspires to move up to third place in the polls now, trailing Alemán and Daniel Ortega. Others sharing that aspiration are Conservative Party candidate Noel Vidaurre, MRS candidate Sergio Ramírez and Liberal Unity Party candidate Haroldo Montealegre, although they have less possibilities of doing so.

The main losers, obviously, are the prohibited candidates and their newborn parties, although, with the exception of Robelo, they barely showed up in the polls. Even in his case, his "popularity" was mainly due to the money he spent and the banking/money laundering scandal he is implicated in, which gave him and Arriba Nicaragua, his party, coveted name recognition. After rising meteorically into third place in only a few months (actually fourth, if one counts those whose choice is abstention), that scandal left Robelo without a party, and the CSE ruling left him without both his candidacy and his new Nicaraguan Alliance.

It remains to be seen how much PRONAL has really lost with the change of Lacayo's candidacy from president to legislator. PRONAL and Arriba Nicaragua were, without a doubt, the biggest spenders among all the political groupings. They spent tremendous amounts just on their pre electoral campaigns, with the single objective of making their candidacies too unstoppable to challenge. Pastora's Democratic Action Party, on the other hand, is nothing without its now silver haired charismatic leader.

All the CSE decisions pulled the political rug out from under the FSLN, since the three prohibited candidates were potential FSLN partners in an anti Alemán alliance for the second round. Two of the three┼Lacayo and Pastora┼participated in meetings with eight other parties promoted by the MRS just before the final candidate registration in May to try to forge a "center" coalition. Lacayo's insistence at the time that he be the coalition's candidate┼he was not the only one to hold out for his own candidacy, but he was the most tenacious in doing so┼aborted the initiative. Even though he is now out of the picture, it's too late.

Given his experience at the helm of government, Lacayo was the guarantor that the economic policies applied in Nicaragua over the past six years, imposed and financed by the international community, would continue without variations. It had become obvious that he could not have won the election, but by competing he could have been a key piece in an alliance with the FSLN to ward off Alemán. Following that alliance would have come the continuity of that "long winded structural transformation" that was presented to the international community in Washington as both successful and in the bag for the next five years.

Who will take up the baton now? As the election campaign moves into high gear, some things are clear:

* Somewhat over half of the electorate has now decided. This decision is solidly centered around two options┼the Liberal Alliance and the FSLN-with roughly a 10 point sustained advantage for the Liberals. The 30 40% undecided voters are not necessarily looking for a "center," and it is far from clear whether they will end by jumping on the poll leader's bandwagon or disperse their vote among the other 20 odd options.

* A second round of voting for the presidential candidate seems almost inevitable. Polls are now beginning to ask voters about their intentions for that round. What will the FSLN's strategy be in that case? Even more crucial is the response by the powerful anti Alemán right to that dilemma. Who will set the rules of the game when the time rolls around for that alliance? And what will those rules be?

* In the legislative election, a National Assembly polarized between Liberals and Sandinistas can be visualized. What spaces will remain for the other forces and which concrete individuals will fill those spaces? The answer to those questions will determine how much equilibrium will exist to surmount the parliamentary confrontations, long institutional paralyses, buying and selling of votes, legislative indolence and other debilitating ills the National Assembly suffered from over the past six years.

* In the election for mayor of Managua, the competition seems as tense as in the presidential election, with the exception that in this case the tension ends with the first round. Many electors perceive the diverse options and what they imply more clearly in this election. A similar phenomenon is occurring in many other municipal campaigns, particularly favoring non party candidates in a number of cases. In this regard, an issue to watch in the actual voting is whether, with the intimidating number of ballots (6) and their awesome length (20 options at a minimum), voters will be able to make enough sense of things to vote across party lines, electing a petition association candidate for mayor who may appeal to them.

Many current and future political conjectures will be tripped up at the "moment of truth" when voters have this array of different colored ballots in front of them after having heard hundreds of candidates with different faces and varying emphases make nearly identical promises.

"This population is simple and it is impoverished," Cardinal Obando has often stated, "but it is very intelligent and it will know how to be elect; it will know how to be aware and how to punish at the moment of the vote." The final lap of the elections is a real challenge to that popular wisdom.

_______________________________________
* Yalagüina, Totogalpa, Palacagüina, Telpaneca, San Juan de Limay, Matiguás, Tuma La Dalia, Rancho Grande, Río Blanco, Wiwilí, El Cuá Bocay, Santa María de Pantasma, San Sebastián de Yalí, La Concordia, San Rafael del Norte, Waslala, Paiwas, Camoapa, Santo Domingo, Santo Tomás, Muy Muy, Villa Sandino, El Rama, Muelle de los Bueyes, Nueva Guinea and El Almendro.

2 The national media loosely uses the term rearmados to denote all armed bands, but peasants in the mountains of the north make a distinction between the bands of armed thieves that simply rob for a living and the groups of former combatants-- usually from the contra side┼who are mainly using violence to make their political opposition to the current government known. Some rearmados are reported to have openly stated that they will lay down their weapons only after the elections, and only if anti Sandinista Liberal candidate Arnoldo Alemán wins. As the top leader of these loosely organized groups, Charro had a genuine if reluctant social base, earned by protecting the defenseless peasants from the bandits as part of his goal to keep the army out and set himself up as the sole authority in the area.

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