|Central American University - UCA
Number 99 | Octubre 1989
Two Voices from the Private Sector
Interviews with Gilberto Cuadra and Gladys Bolt
At the beginning of 1989, the Nicaraguan government launched both a new phase of the economic adjustment plan, an economic concertation, and an appeal to all sectors, particularly business and labor, to work together to help rebuild the war-torn Nicaraguan economy. In this issue envío invites two representatives of private enterprise to give their opinions of the concertation, the economic crisis, the agrarian reform and other subjects of heated national debate.
Gladys Bolt, a coffee grower and cattle rancher in Matagalpa, offers a critical perspective on economic policy, but stresses the ways in which the government has responded to her organization's specific demands. Bolt represents coffee growers at the national level for UNAG, the National Union of Farmers and Ranchers. UNAG is open to producers of all political viewpoints, describing itself as supportive of the revolution but not a Sandinista organization. Bolt is actively involved in making sure that the views of coffee growers are taken into account in government policy; she represents UNAG on the National Coffee Commission (CONCAFE) and participated in recent meetings between the government and agricultural producers as part of the concertation. Recently she traveled with other representatives of the private sector to a meeting in Stockholm where the government was soliciting aid from a number of European countries and international organizations. Their presence enhanced the government's credibility.
As an individual farmer and UNAG leader, Bolt concentrates on specific economic policies she wishes to influence. For example, in the past, eliminating fixed prices for agricultural products; at present, streamlining payments for the coffee harvest. She sees the war as the main cause of Nicaragua's economic troubles but criticizes government inefficiency and failure to provide incentives to production as contributing to the crisis. She would agree with COSEP's Gilberto Cuadra that the government needs to provide clear rules of the game for private producers and must be more careful to keep its word on agreements made with the private sector.
Gilberto Cuadra, president of the business umbrella organization COSEP (Superior Council of Private Enterprise), provides a highly critical look at economic policy. While Cuadra himself owns a nationwide construction company, COSEP’s most prominent affiliate association is UPANIC (Nicaraguan Union of Agricultural Producers), which includes many of the nation's largest rural capitalist producers. Cuadra's perspective is a free-market one, advocating minimal state intervention in the economy. He locates the source of all economic troubles in government policy, not in the war or the embargo, nor in the economic problems Nicaragua shares with the rest of Central America and much of the Third World: foreign debt, falling prices for principal exports, regional recession.
While Cuadra concurs that some kind of agrarian reform was necessary in Nicaragua, the reform he would advocate appears to be very limited. He is for "an agrarian reform by production," one that may even be "with fewer peasants," because as agriculture becomes increasingly mechanized, "it must, by necessity, reduce its labor force." He presumes these peasants will then be employed by services and industry, but offers no solution as to how this is to be promoted in this overwhelmingly agricultural nation.
Cuadra, like COSEP as a whole, sees no way in which the private sector can work with the current government. His critique is fundamentally political; as he says, there must be a "political concertation" before any economic agreements can be made. COSEP does in fact play more of a political than economic role in Nicaragua today, linked to the grouping of rightwing parties now known as UNO. UNO calls for a rollback rather than any kind of accommodation with the revolution. It is difficult to judge COSEP's influence in the private sector, since the organization does not release any estimates of membership figures.
Bolt, like the rest of UNAG's members, is willing to work within the framework of the revolution, but she is quick to point out that "we are frequently more critical of the government than the COSEP people are." Unlike Cuadra, however, she believes that her criticisms can have an effect on government policy. UNAG runs the gamut from small peasants and cooperative members to medium and even a few larger producers, claiming a total of 124,975 members in 1988.
A Brief Look at the Private Sector The Nicaraguan economy today is a mixed, not a state-owned economy. As is true of a number of other Latin American nations, the state controls banking and foreign trade, but it is responsible for only 39.5% of national industrial production, primarily from factories once controlled by Somoza. In this country where most wealth comes from agriculture, only 11.7% of arable land is state owned, with the rest, except for lands abandoned during the war, in private hands. The state agricultural sector decreased sharply from a high of 24% in 1984; this land was given away in individual and cooperative form to peasants without land, primarily in the 1985-87 period.
Current government policy is to consolidate this state sector at its present size, while not further affecting private holdings. Land reform to relieve land pressure, mounting once again because recession and state budget cuts have meant considerable layoffs, will come primarily from lands now abandoned because of the war (5.7% of arable land), underutilized cooperative land and, eventually, uncleared land on the agrarian frontier.
It is important to distinguish that "private sector" in Nicaragua does not mean primarily large private producers. Even before 1979, small and medium farmers in Nicaragua produced a greater percentage of Nicaragua's gross domestic product than those in neighboring Honduras, Guatemala and El Salvador. Since 1979, "latifundismo," defined here as ownership of more than 875 acres of land, has been reduced from 36.2% of arable land to only 6.4%—through confiscation of Somoza's land in 1979 and expropriation, largely with compensation, of lands since 1981. Only some 9% of the land is in private holdings of between 350 and 875 acres. Over 100,000 peasant families have received land in cooperative or individual form, or have received title to lands they previously worked without proof of ownership; they are a vast part of the private sector that has benefited greatly from the revolution.
A generally accepted estimate is that 60% of national agricultural production is currently generated by small and medium producers, the majority of whom are affiliated with UNAG. UNAG estimates that in the 1988-89 cycle, its members will be responsible for producing 52% of coffee, 43% of cotton, 45% of sorghum, 78% of non-irrigated rice and 90% of corn, beans and sesame. Eduardo Baumeister, an Argentine agricultural expert working in Nicaragua, points out that only today is the full importance of small and medium producers being recognized in this country, particularly their importance in production for export, not just domestic consumption. According to Baumeister, the larger producers affiliated with UPANIC are responsible for no more than 20% of national agricultural production.
In industry, thousands of small-scale shops provide 15% of national industrial production, concentrated in food, clothing and wood products.
The economic crisis has highlighted the importance of small and medium production. Able to fall back on more traditional methods that require fewer imported inputs, small and medium producers are proving more adaptable to the demands of austerity.
The volatile nature of the mixed economy The Nicaraguan mixed economy is a highly unusual experiment. While Latin American and advanced capitalist European nations have similar degrees of state and private involvement in the economy, the government in Nicaragua is allowing large capitalist producers to have economic space while they are excluded from the political power to which they are accustomed. This has proved to be a very difficult situation to maintain.
The government's attitude towards medium and large private producers has been cautious, even if it has not been able to inspire the kind of confidence these producers demand. For example, the agrarian reform law passed in 1981 was limited to holdings over 875 acres that were abandoned or idle. Only in 1986 was this law expanded to include all abandoned or idle holdings of any size, in order to satisfy increased demand for land.
In the last two years, however, it has barely been applied; according to vice minister of agriculture, Alonso Porras, expropriations dropped from 460 landowners affected in the peak year of 1986 to 150 in 1987 and 7 in 1988. There have only been 3 so far in 1989. All private producers benefited from extensive state help, ranging from low-interest credit to inputs sold at subsidized exchange rates, until the economic crisis forced the government to abandon these costly policies.
But none of this overcomes the basic conflict between a revolutionary government and large private enterprise. The government, with much of its base in urban and rural workers and the peasantry, is not willing or able to guarantee the degree of exploitation that would satisfy these producers, as economist John Weeks points out.* When the Rural Workers' Association (ATC) takes over farms to demand higher wages, for example, the government will not send in troops to force the farmhands back to work as would have happened under Somoza. Nor is the government willing to guarantee conditions for the degree of profitability these producers demand, even if private property itself is guaranteed. In industry, conflicts arise between the state and private sector over availability of scarce foreign exchange for the inputs upon which Nicaraguan industry depends. In agriculture, conflicts arise over distribution of credit, and the government must respond one way or another to peasants' demand for land. Moreover, in the Nicaraguan context the large producers are asked to sacrifice, along with everyone else, in the wartime economy and implementation of the austerity plan. Not believing in the system, these producers are naturally unwilling to sacrifice.
*John Weeks, "The Mixed Economy in Nicaragua: The Economic Battlefield," in Rose J. Spaulding, ed., The Political Economy of Revolutionary Nicaragua (Winchester, MA: George Allen & Unwin, 1987), pp.43-60.
Large producers and the Nicaraguan government thus entered early into a state of mutual distrust. As large private producers sent their profits abroad and did not reinvest, their lands could be affected by the agrarian reform law. The more lands were expropriated, the less these producers wanted to invest, starting a vicious circle.
An appeal to the private sector
The concertation represents an attempt to break this vicious circle. President Ortega announced the year's new economic measures with a newly conciliatory tone, calling on all sectors to help Nicaragua recover from the economic crisis. Shortly afterwards, Minister of Agriculture Jaime Wheelock declared that the agrarian reform had effectively ended. A round of meetings began between the government and the different sectors of private enterprise and labor.
This type of concertation has been tried out in various advanced capitalist as well as Latin American nations. Representatives of private enterprise, unions and government hammer out agreements on economic policy. As Eduardo Baumeister has pointed out, each sector makes compromises: the government agrees to carry out certain measures on taxes, tariffs, promotion of exports, credit and interest rates, but private enterprise also agrees to reach production goals and unions promise to reach a level of productivity. At no moment, however, does each sector give up its basic goals; these pacts are limited to economic policy and cover a specified period. It is not a political dialogue over the nature of the state. In Nicaragua, however, while other producers have been more receptive to the type of concertation the government is offering, producers affiliated to COSEP appear to believe the concertation should be precisely that type of political negotiation.
On April 20-21, the nation's agricultural producers, meeting with the government in the Olof Palme convention center, hammered out a series of specific agreements on credit, production incentives for export crops, forgiveness of part of farmers' debts, import taxes and payment for export harvests. The agreements essentially softened the effects of austerity on agricultural production in order to counteract the threat of recession.
In May, the government invited representatives of the private sector to join the Nicaraguan delegation to a meeting in Stockholm to obtain international aid. While growers like Gladys Bolt chose to attend, COSEP sent a letter to the Swedish government saying that aid to the Nicaraguan government would not be well used and thus should only be directed to the private sector. COSEP even censured one of its members, Juan Diego López, director of the FONDILAC milk company, for attending the Stockholm meeting.
As we explained in the last issue, it became clear in June that the government had given away more than it could afford, particularly in the agreement on payments for the coffee harvest. Backpedaling rapidly, the government froze final payments for the coffee harvest and devalued the córdoba sharply. Some coffee growers organized in COSEP then attempted to lead the nation's coffee growers in a massive walkout of CONCAFE—a move that would have effectively ended the concertation. Few coffee growers followed their lead, however. The government expropriated the lands of three COSEP coffee growers essentially as a political response to the threat of a capital strike raised by COSEP.
To Gilberto Cuadra and others in COSEP, there was no concertation to begin with, so this move simply confirmed their suspicions of government policy. To coffee grower Gladys Bolt, the actions of June represented a setback but not an end to the concertation. Let's hear what they have to say.
"We Always Manage To Get Something Done"
An Interview with Gladys Bolt
Bolt: I’m a coffee producer and I run a business in El Tuma. We're trying to be both a dairy farm and a beef ranch. Three years ago I started a general renovation program that concentrates on pastures, fences and conditions for the workers, mostly their houses. All this is only within the realm of what's possible, of course, because the cattle business hasn’t really been profitable during the last three years. The coffee farm is small. I've only just started working on it, because I lost one in the war.
The farm that my husband and I had was in the Matiguás region. There were two of them, one of coffee, the other of cattle. When the contras killed my husband [July, 1984], I sold the cattle ranch to some producers, then sold the coffee farm to another producer who paid me almost nothing. I had to leave the zone because it was dangerous. In April, the contras burned the cattle ranch. The year they killed my husband, they also killed four workers. They killed all four the same day. I had to leave.
envío: Why do you think you were targeted by the contras?
Bolt: This is still a real mystery to me. My husband had been a collaborator with the FSLN before the revolution. This was practically a safe house. He brought a number of kids up here to the farm so the National Guard wouldn't put them in prison. But he was never a Sandinista in any other way and he was never politically involved. He helped out the same way a lot of other people did, and if he had to criticize something, he criticized. But he was never a politician. There was not one justifiable reason to kill him. He was a good producer and he never lost his spirit even after all the things that happened to us. July 19 marked the fifth anniversary of his death.
The farm I'm working on now is nothing like the one I lost. envío: This year the government has launched an economic reconciliation campaign, “concertation,” with the agricultural producers. What does the concertation mean for you?
Bolt: It means that there's an understanding between the government and producers. It's something we've been requesting for a long time. In the midst of all these hard times, we're going through, we believe that as long as the government hears our criticisms and understands what we think isn't right, we'll survive. We have often talked about desk chair technicians and desk chair economists. Any package of economic measures may look very good in Managua, but in reality, out in the countryside, often they just don't work. That's why we want the government to hear us.
envío: And the government is hearing better now?
Bolt: Personally, I think they are, although there may still be breakdowns. I would say that there's still a lack of confidence between the producers and the government. All producers are not the same. When a few producers went and bought dollars [with córdobas issued by government credit agencies for reinvestment in next year's crop], the government blamed all of us. And that leads them to lose confidence in all of us and inhibits them from giving us what we need. By the same token, some producers suffer from lack of confidence in the government. The issue of land ownership has been the main problem since the triumph of the revolution. At meetings with the government, the first thing the majority of the producers say is that land ownership should be guaranteed.
Personally, I don't have a problem with it. But so many times I've heard producers say things like: "Why should I be investing [in my farm] if they're just going to take it from me?"
I believe I have to invest in the farm. I have to be constantly planting or repairing so the place can produce.
envío: How do you see the agrarian reform law, which can have a serious effect on a farm if the owner isn't running it well or isn’t investing in it? As an agricultural producer, do you think the law is clear and fair?
Bolt: There are two sides of the coin. You have to look at why so many producers are no longer good producers. For example, there have been cases of the ATC harassing certain producers. So then others start saying, if that happened to him it’ll happen to me. If they took so-and-so's land, they could take mine. So producers began to feel less secure about investing in their land.
I think that within the framework of the concertation, producers feel more secure about investing, and I know many who are investing much more. Personally, I feel fine. I've never felt this fear of them taking away my farm, and my husband never felt it either. He knew he was a good producer. And likewise, I know that within the limitations that exist, I'm doing everything I can to produce and make the farm productive.
envío: Up until now, have there been any advances in the concertation process?
Bolt: We had a meeting with the government April 21-23 at the Olof Palme [Convention Center in Managua]. I was there as a coffee grower. Some agreements were reached; others were not. For example, we said there should be an incentive for those who produce the most to stimulate our productivity. And the 25% above market value that the government promised us for everything above quota hasn’tt been paid yet. That's a good way to stimulate production. Most of us producers are not politicians. We're interested in a profit margin. So in order for Nicaragua to come out ahead and keep producing more, the producer has to have some kind of profit margin. This was one of the main problems earlier. The government was saying that all the coffee growers had plenty of money and they weren't even allowing us to cover our production costs. We've had to put up a hard fight to get the government to understand that there has to be some margin of profit. This year, with the coffee prices we've had, recognizing that many producers have done well—the government has to understand that these millions of córdobas go out as fast as they come in. The córdoba has lost value, and the government didn’tt comply with the compensation settlement.
I understand why they didn't comply, but it's been difficult for many producers to understand. Another thing was the 40% tax imposed immediately after the settlement. We had to ask for a meeting with Comandante Wheelock; if they had told us before maybe they could have explained, but instead they just issued a communiqué. I know that blows like this affect production. Afterward they explained the economic measures and the country’s economic situation. I understand it, but many producers don't see it like that; they see it only from their own point of view.
envío: Do you think the government's decision not to pay the settlement plus the expropriations of the three COSEP members damaged the producers' confidence severely enough to effectively destroy the concertation?
Bolt: I don't think it was destroyed. And we saw that when President Ortega came here three weeks ago for a De Cara al Pueblo. I heard confidence from the producers who were there and from those who weren't but heard President Ortega's statements later. They saw that the situation with the bank, which was fairly complicated, changed a little. The producers see that by talking with the government and proposing a few measures, we can get somewhere.
About the expropriations... that hurt people's confidence, personally, I don't like it. I've never liked the idea of taking from another producer. But, as I've always said, I support cooperatives, because I'm a member of UNAG. Of the three producers affected, I only knew Jaime Cuadra. He's a good producer and a very respected person here in this zone. It's true that they began playing politics at the UCAFENIC meeting. That meeting they had here was really bad, but they didn't say they wouldn't produce, which is one thing the government alleged. They were wrong in turning a meeting about production into a political meeting. Most of the producers went to that meeting with a lot of problems on their minds hoping to achieve something positive to present to the government and reach some solutions. The others took advantage of it and turned it into a political meeting. I agree totally with the government that that's how it happened. I'm not in total agreement with the expropriations.
The ATC has also taken over land here, demanding better salaries and other things. And the producers interpret these takeovers as government measures. So that hurts the government, too, and creates instability. Hopefully there won't be any more and they'll return these last ones.
envío: What do you think the government and the producers should do to move the concertation forward?
Bolt: One really important thing is that when we producers make an agreement with the government, they have to comply. When the government meets with us they have to know how much they're going to concede. What does it accomplish for them to say something and then not be able to carry it out? But also, I think the producers, for our part, must do everything we can to improve our farms so that we as Nicaraguans, as a country, can get ahead.
envío: Daniel Ortega said recently that some producers call for a capitalist state when what they really want is a paternalistic state because they want gifts and total guarantees from the government. Is this true?
Bolt: The Pesident is probably right about some producers. I don't think it should be that way; we have to make a great effort to move ahead. A paternalistic government doesn't benefit production because it doesn't motivate the producers. The government has been too paternalistic in some cases, maybe because of the war. Forgiving debts, for example, in 1983—but a lot of those conditions were the government's fault to begin with, when there were fixed prices for rice and beans and the producers were losing money. But that changed. We fought for a free market with no fixed prices.
envío: Today Nicaragua is suffering from a serious economic crisis. From your perspective, what are the main causes of this crisis?
Bolt: The main reason is the war. The war really started in 1983, but the insurrection in 1979 also damaged the economy. But I don't agree with the government that it's only the war. I think some of the government's measures have also provoked this crisis. For example, there's waste in almost every state business. I take good care of my own car, for instance, but it's not the same if it's not yours. Government workers aren't interested in taking care of their vehicles.
And also, fixing the prices of basic grains affected production. There was no incentive for the producer. It's been three years since that policy changed. There are still some little points, but I think the government's thinking has changed.
envío: Beginning in 1988 and even more this year, the government has been implementing a readjustment program—cutting the budget, restricting credit, eliminating subsidies—all with the idea of getting out of the crisis. What do you think of these measures? Are we heading down the right path?
Bolt: There have been tough measures, very tough. Some measures have been hard for us to understand. The big devaluations have affected producers a lot. They say the devaluations favor the agroexporters, but sometimes we don't see it that way. You sell your production at 6,000 córdobas to the dollar, and tomorrow, with the devaluation, it goes to 9,000.
But I think they're aiming to stop inflationHopefully we'll come out ahead. We producers can't look for an economic bonanza because the country just isn't in any condition for one. But we have to look for ways to stimulate production.
envío: You're responsible for coffee in UNAG. How do you feel about working with UNAG?
Bolt: I've been in UNAG since 1984, and I think it does more for producers than any other organization. We're often a lot more critical of the government than people in COSEP. But we criticize from the point of view of production. And the government is receptive. We feel equal. We criticize with a view towards improvement, not just to criticize.
The organization fulfills me; it makes me feel like I'm doing something. We always manage to get something done, something always changes and we make the government understand—maybe not right then at the moment, but they listen to us.
envío: As an UNAG producer, how are your relations with independent producers and producers affiliated with COSEP?
Bolt: I get along fine with them; I haven't had any problems. My relations with people from other organizations are as good as could be expected. They accept that I'm from UNAG, and I accept that they are from their organization. I have one way of thinking, they have another.
There’s one thing I differ with COSEP about. They say they are the private sector in Nicaragua. They are by no means the only representatives of private enterprise. We are private enterprise, and UNAG has more affiliates than COSEP. Then there are a lot of independent producers. The cooperatives are also private, owners of their own property. I don't understand why COSEP doesn't accept this, that we are also private enterprise.
"We're Not Talking About Concertation"
Interview with Gilberto Cuadra, President of COSEP
envío: There's a great deal of talk now about economic concertation, but it seems that the word means different things to different people. What does it mean for COSEP? Is there an economic concertation?
Cuadra: I don't think there’s any economic concertation, because concertation means that two or more groups agree to do something in common. Concertation would mean that each side makes concessions so that they move ahead together. I don't know that this kind of situation exists here in Nicaragua. I don't know what private sector the government or the private sector has conceded. The government is the only side talking about economic concertation. The private sector isn't talking about concertation.
envío: For the private sector represented in COSEP, what conditions are necessary in order to have a concertation? What has to happen?
Cuadra: Before there can be any economic concertation, there has to be a political one that would more or less clarify the general picture of things in Nicaragua. Economic concertation is a result of political concertation, because the word means that each side gives in on some things for the sake of a common goal. The only thing the private sector has to offer at this time is the possibility of investing will and effort, but these can't be invested if the government doesn't promote a sufficient climate of trust.
So there cannot be any economic concertation. It doesn't matter how much the government talks about reducing taxes and interest rates, selling inputs at lower prices, allowing the price of gasoline and diesel fuel to change, and giving assurances that private property will be respected. That is more or less what the government has been saying for some years now, but experience has shown that these words have not taken concrete form.
We can't be sure they will respect land rights, to take an example. In the western part of the country there have been many land invasions, affecting private producers as well as farms administered by MIDINRA.
envío: But we're talking about actions taken by peasant families, not necessarily about something promoted by the state.
Cuadra: But it is promoted by the state. If people invade property belonging to the state and MIDINRA authorities can't get it back, it's because there is some support [for the land invasion].
envío: The private producers always talk about the need to have very clear rules of the game so they can have the confidence to invest. What are the rules they want?
Cuadra: I think that one rule is that there be credibility that the government will deliver what it offers, which it hasn't done so far. For openers the government should say that we will analyze the situation where lands are being taken over and we will give them back. Where there are lands that have been confiscated unjustly, we'll analyze the situation and give them back unless there are peasant cooperatives on that land. And if there are peasant cooperatives there, we'll compensate the property owner. Those are clear rules of the game.
envío: Do you think it's possible to have a climate of confidence with this government, or is it necessary first to change the government?
Cuadra: We've had ten years of unfulfilled expectations. We'll see what the people say in the coming elections.
envío: Do you think it's possible to have a mixed economy?
Cuadra: Mixed economy is a very mixed word. The truth is that there is no mixed economy when the state wants to be a producer. In its eagerness to be a producer, it gives itself a monopoly on benefits that works against other producers; for instance, they pay taxes while the state does not. That's the start of monopoly and unfair competition. The state wants the best land, the best credit, the best technology.
envío: What should the state’s role in the economy be?
Cuadra: The role of the state should be a subsidiary one. This means that the state should come in when the private sector or the collective sectors, be they cooperatives or whatever, can't satisfy demand or provide the services.
envío: Toward the end of the seventies, COSEP also had its criticisms of the Somoza government. Can you describe for us COSEP's economic criticisms of the Somoza government?
Cuadra: Yes, there were criticisms of the Somoza government, because what we had here was a free-market economy with many juicy concessions to some government people or to the head of government himself. This became more the case after the  earthquake, when Somoza began wanting to start companies in which his only investment was to give concessions; that is, he didn't put anything in, he simply said I'll get such-and-such things for you. When Somoza started trying to take over the lands adjoining the Momotombo geothermal project and charge for the energy produced, that's when it became clear that Somoza was not in our economical interests. He was a producer without being an investor, something that can only happen through a juicy concession, which is not good for the economy. I say that because the producer who doesn't put anything in and only takes out doesn't pay his taxes. I mean, both workers and investors must pay taxes.
All this led to the first protests by the private sector; later they became political demands, because economic issues finally boil down to political demands.
envío: In COSEP's judgment, was there anything the Sandinista government did when it came to power that was good, that was necessary in economic terms? Part of the agrarian reform, for instance?
Cuadra: Look, the name "agrarian reform" was valid and necessary; that's part of the reason a revolution took place. But it’s harmful to the country when it’s an agrarian reform in an ideological sense and not in the sense of production. And that's what happened.
envío: And how would an agrarian reform for the sake of production be?
Cuadra: It would be one where you distribute land to people who want to work it; you give them all the technical assistance they need; you make sure the lands are suitable for the country's traditional crops; you provide irrigation where necessary and financing; and you give the person title to the property so he feels he’s the owner of the land. With all this, the peasant can't help but try to be a normal, efficient producer. The result is that there are products in the market.
But when you start grabbing up some cotton plantation and saying "let's give it out to some peasants," who in the first place don't know how to work this land, because cotton in Nicaragua has been one of the crops with the highest technology... and since the peasant isn't interested in technology and doesn't have the right equipment, he may plant corn or beans to eat. But it turns out that the lands aren't suitable for that, so the harvest is little or nothing. This peasant is now left with a debt, because you made him a loan. So this is not the right way.
If you're going to promote the production of basic grains, distribute lands where they can be grown. If you're going to promote cotton, distribute cotton lands, but also provide the whole infrastructure of equipment and technology for growing cotton.
envío: Even if you do all that, you still have to take the land from someone and thus run the risk of creating lack of confidence.
Cuadra: No, no. You tell the owner: these people need land, and I'm going to help them use it; you have lots of land, and I'm going to take it. But, I’ll give you a just compensation for it. Here there hasn’t been compensation for the land.
This government has pardoned the peasants’ debt at least three times because they haven't been able to produce enough or because weather conditions weren't favorable. So what do the peasants do? They takes up a different kind of work. They see a tree, cut it down, make firewood out of it and sell it in the city. They didn't bear any cost of planting the tree. And they continue to do this since they see that it’s successful. They didn't invest anything, only work. So what's happened? Vast amounts of woodlands have been invaded and deforested.
envío: And the big producers haven't deforested the land?
Cuadra: No. And those peasants who come to virgin land and cut down the trees for firewood aren’t farmers but rather exploiters of the forest. The result is erosion, congestion of the river basins, floods and problems in the cities. So what happens with these land invasions? The people devote themselves to cutting wood.
envío: What should be done then for peasants who don't have any land?
Cuadra: Those peasants had property. Once they deforested it, they moved on to another property. They're not interested in the land but in getting firewood.
envío: Then there's no land problem in Nicaragua?
Cuadra: No, none. How much land does the state have that was given to the peasants but which is again covered with vegetation since it’s not being cultivated? In general, the peasants cut wood rather than cultivating the land.
This kind of agrarian reform falls apart. It doesn't make sense. Instead of having more production, more basic grains to eat and more export products, we've been going backwards in this country. Instead of seeing more peasants in the rural areas, we see them going to the city. So we have a dual effect: fewer people working the land, fewer products to eat and more people in the city. That shows that the agrarian reform, if I were to grade it, is a failure. Agrarian reform is meant to change the owners; but if people are moving to the city instead of working in the fields, there's no change of owners but only concentrations of people in the cities.
Now if you create an agrarian reform for the sake of production, it may even turn out that there will be fewer peasants, because the growing tendency of civilization is that every day fewer people produce more food. For example, let's say that previously 20 people produced food for 100, now two or three or even fewer are required. You have to keep up with the times. In a small country with an economy as vulnerable as ours, you can't break this cycle of agriculture tending toward mechanization, toward more intensive use of technology, toward a situation where fewer people in the field are producing more efficiently for more people.
So, through education, you have to change the people in the city into people who can provide services to industry or to other secondary or tertiary sectors. But agriculture, by necessity, has to reduce its labor force. If you tend to go in the other direction, I believe you're going against history. The government should realize this—that those agrarian reform fantasies go against history and against the country, because the country that doesn't produce remains behind.
envío: What is your development project for Nicaragua, taking into account all the problems of a country with a vulnerable economy, few resources and a low level of industrial development?
Cuadra: But we're talking about two different periods. From 1950 to 1978 or 1979, Nicaragua had entered into a kind of self-propelled boom, with an annual growth rate never falling below 6%. The country was creating, in a deformed way in some respects, a growing middle class that has now disappeared, with a technology that was a little backward in the eyes of the great world powers but at times more advanced than that of other Central American countries. In cotton technology, we were perhaps one of the most advanced countries. All this was lost.
There is no doubt that peasants lived badly, but the tendency was for them to educate their sons so they would not be peasants but rather professionals or a technical person of some kind. The technician, in turn, had aspirations for his son to be what he was not. So, in this growing spiral of aspirations, from worker to peasant farmer to technician to professional, and from professional to something else, there was an upward social movement. Naturally, there was a downward movement for those who for one reason or another didn’t have the required capacity. They fell back by the force of their own gravity. But the general tendency was the upward movement. So the Nicaragua we were talking about before and the Nicaragua of today are very different things.
Undoubtedly we need foreign investment; without it we won't go forward. And it won't come if there's no confidence. Foreign investors won't come just because the government tells them, "I give you my assurance." Rather, they look into the country and find a lack of confidence. When investors come, it's because they want to get something out of it. There must be ways of getting it out. All these conditions are not there today, so the opportunity isn’t there. I repeat, what is needed is political concertation.
envío: You are speaking of the period from 1950 to 1978, which was an era of economic expansion for all of Central America. But the eighties have been a period of economic crisis for all of Central America, for all of Latin America, with the problem of the debt and the international prices for its products. Even Brazil and Argentina, for example, now have very high inflation levels. Don't all these things influence the Nicaraguan situation?
Cuadra: Let's not get into Brazil. Let's stick with what we know. Nicaragua is partly responsible for Central America's problem. The Central American common market, which was a slightly obsolete response but could be changed for the better, was destroyed by decision of the [Nicaraguan] government. In his first proclamations, Comandante Wheelock said the Central American common market should be brought to an end.
envío: It was already on the skids, with Honduras having pulled out.
Cuadra: No, no, no. The common market was still with us. We had $200 million worth of trade relations. What happened was that five countries, or really four, were in the common market; one pulled out and one only started consuming, saying, "Send me this or that and I'll pay you." But when the time comes it doesn't pay up, so a kind of cannibalism sets in. So in part all these problems begin with the deterioration of Nicaragua's national economy.
What's more, talking about the period before the revolution, Nicaragua was exporting about $260 per capita. With the recession, maybe we would not have improved on the $260. But we're not at $260, we're barely at $30-40 per capita. We've gone backwards....
envío: But all Latin American countries have suffered...
Cuadra: Costa Rica hasn't.
envío: If an opposition party wins the upcoming elections, what would COSEP's advice be to the new government?
Cuadra: Our advice would be to stimulate production. There has to be new cash, because one can't work with debts. That is, it has to be figured out how to keep the debts from interfering with new loans. The money needs to be administered carefully, keeping government as small as possible, with few public employees. Employment needs to be based in production, with savings that in the future can be put toward improvements in electricity, water, roads, modernizing education, better teacher training, looking towards the future.
envío: All of these suggestions require money. Where will the money come from to do all this?
Cuadra: To the degree that the government inspires confidence, people save money. This government doesn't inspire confidence, and that's why it only received $30 million in Stockholm.
envío: Not $50 million?
Cuadra: $30 million; $20 million is unclear. What does this show? That the government doesn't have the same credibility as before, when it could get as much as $9.7 billion.
envío: But why criticize this amount of money when COSEP itself sent a letter to the Swedish government asking them not to aid Nicaragua? It's true that you sent such a letter?
Cuadra: Do you want to see the letter? We think that all the aid that has been received has been wasted, badly administered, diverted. Because the country has debts, but the wealth isn't here. If they want to continue helping Nicaragua, fine, but there should be a government commitment to use the money in productive sectors and when possible with the private sector.
You've Already Had 150 Years"
Exchange Between former COSEP president Enrique Bolaños and Christian Base Communities in Managua
Bolaños: Our gross domestic product has been in the black since 1945. From 1960 to 1979, growth averaged 6%... with population growth at 3%. In terms of exports and imports, our exports were growing, as much as $650 million annually.... which is almost $270 per capita. Today we're at about $60 per capita.
The policy of these last ten years does not stimulate competition, efficiency or production. I invite anyone who knows Nicaragua to tell me what cotton grower, what coffee producer, what producer has failed, forcing the bank to foreclose on them. There is no foreclosure in Nicaragua.
We've also created a state structure beyond our capacity to support it, and we have to pay for it. Taxes have to pay for it, and daily there are fewer industries capable of paying taxes. So the Central Bank covers the costs by printing money.... It clearly results from poor administration. We're not talking of whether or not anyone meant to do it. We have seriously injured our country.
Base Community representative: I was just a child when my father, who was a carpenter, couldn't get work because he was in a union. That was in Somoza's time.... Compañero Bolaños said that exports per capita were $270.... I can remember times when we didn't eat, and we never had any $270. Who got the $270? The Somoza clique, the big landowners and businesspeople. It's very simple. Now, he talked about the economic situation superficially, all full of air. We're in a difficult situation. But why hasn't he spoken at all about the forces of the United States trying to destroy Nicaragua? In ten years, they haven't been able to destroy it. Here we are in 1989, and while they haven't destroyed us militarily, they suffocated our economy. Why, Mr. Bolaños? To create discontent. So people would turn against their own revolution.
I would ask Mr. Bolaños, why did they let so much time pass, more than 150 years, when the Conservatives and Liberals, the big businessmen, were in power? In all that time, they never developed an industry to produce products for export. Why didn't they do that? They had 150 years. And all they did was plant cotton, which brought in money for them, but not for the people. They planted more coffee, sold beef, gave gold to the United States. Here the people...died of tuberculosis, our inheritance. Why, if they had more than a century to make Nicaragua economically profitable, didn't they do it? The revolution, in ten years, can't correct what they couldn't do in 150 years, especially with a war to fight.
The export numbers say something important...but those earnings, where did they go? Not to my father, a worker. Not to the peasants either. And back then they didn't give peasants land, rather the landowners took land from them, using Somoza's army.