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  Number 312 | Julio 2007
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Nicaragua

From Citizen-as-Ward to Citizen-as-Client With No Solutions in Sight

In the 1980s, the social benefits of the revolution gave us the status of citizen-as-ward, while in the 1990s, the privatization of those benefits gave us the new market-based status of citizen-as-client. This analytical look at 27 years of social policy ends with some projections about the future of Nicaragua’s citizen-poor with the FSLN’s return to power.

José Luis Rocha

Nicaragua’s four governments in the last 27 years have applied two openly contrasting economic models: one based loosely on a planned economy and the other, much more effectively, on a neoliberal economy. The social policy models linked to these economic models fostered two kinds of citizen: the citizen-as-ward and the citizen-as-client, respectively. What kind of citizen will emerge under the new FSLN government?

The Sandinista revolutionary model in the eighties was something of a mixture of the conservative corporate welfare state and the social democratic welfare state. The neoliberal model has tried to replicate various aspects of the liberal welfare state. The Sandinista project’s “social salary” was based on ideological hegemony and sought to achieve high levels of social investment, but its financial and social viability were undermined by the unfavorable context of war, the disordered management of public finances and the segmentation of the benefits. The model of the ensuing three governments, which is still firmly in place, has involved converting the state into a service sub-contractor and transferring the costs to families, something only possible on a large scale thanks to support from foreign cooperation and increased family income sent from relatives who have emigrated. Could the new Sandinista government alter this model without making other radical reforms?

Frozen nominal salaries,
guaranteed social salary

When the Sandinista National Liberation Front (FSLN) took power in July 1979, it assumed the task of building a new, more egalitarian order. The newly-created Planning Ministry based its proposals on the premise that the revolution had shattered the old economy. The promise of improving the situation of the poorest segments of the population had to be fulfilled, but how? The answer was to increase employment and more equitably redistribute the goods and services produced by the nation.

Improvement of the health and education services would be the cornerstone of the new structure of social benefits, and these benefits would come from the increase in employment. A corollary of this policy was the freezing of nominal salaries to curb inflation. Early on, these social benefits included subsidized food, transport and health and education services. The resulting social salary was the sum of the fixed component—the nominal salary in cash—and a growing component of greater access to improved public services.

To achieve the full employment objective, the state became a determinant source of work. The growth of the police and military apparatus, multiplication of state-owned agricultural and industrial production companies, control of domestic and foreign trade and nationalization of the banking system were the first steps in that direction. The conversion into public sector holdings of all enterprises owned by the Somoza family and their supporters gave the state a leading role as an economic actor and generator of jobs.

The FSLN proclaimed the establishment of a regime based on three pillars: political pluralism, a mixed economy and international nonalignment. Forced by circumstances and ideological options, the three pillars were only partially chiseled out. The mixed economy was conditioned by the weight of the state. With the confiscation of the goods of Somoza’s followers, 23% of the country’s best arable land passed into state hands, together with a great variety of agroindustrial companies.

The expansion of what was known as the Area of People’s Property (APP)—which included but was not limited to all public companies of an agricultural bent—ended up absorbing over 10% of the economically active population. In 1987, before the huge state payroll cuts forced on the government by the war, the 108,847 public sector employees plus the 78,000 APP workers, 10,000 police officers and 134,400 soldiers gave a total of 331,247 direct state employees (31% of the economically active population). We could also add to this group the cooperative and individual agrarian reform beneficiaries affiliated to Sandinista agricultural associations—over 160,000 people according to data from the Center for Agrarian Reform Research and Studies (CIERA). Their participation in the national economy was hijacked for better or for worse by the system of granting loans, the strict price controls imposed via the state monopoly on commercialization of agricultural products and inputs and the indispensable compensations that came in the form of systematic pardoning of debts or their payment in devalued córdobas.

In his critical analysis of the revolutionary experiment, Brizio Biondi-Norra recalls that the banks were nationalized; all credit and insurance operations were provided by state institutions; the import, export and domestic commercialization channels were assigned to state companies; and the Central Bank had exclusive control over all foreign currency. Directly and indirectly, the state accounted for over 47% of the economically active population, which gave the Sandinista government direct control over the income id and application of labor laws to a broad sector of the population.

A revolution in education

There were significant achievements in social welfare and human development: the health and education infrastructure more than doubled; a massive Literacy Crusade mobilized over 95,000 literacy volunteers, reducing the illiteracy rate from 50.3% to 13%; and the right to free social services was established in the Political Constitution of 1987. Everything was de-mercantilized.

The coverage of preschool education increased from 9,000 children in 1978 to 50,163 in 1983; enrollment in primary education rose from 396,640 to 564,996; and the annual increase in school enrollment in the rural sector—historically more marginalized with respect to educational coverage and other social services—averaged 14.3% during the revolution’s first four years. The gross primary and secondary schooling rates reached 98.6% and 34.5% respectively in 1988. Also established were adult popular education, which covered 166,208 people in 1983, and bilingual-bicultural education for the different ethnic groups of Nicaragua’s Caribbean coast region.

The number of teachers increased from 14,546 to 43,988 between 1978 and 1987. Some of those teachers were empirical and others were professionals or university and secondary school students providing a voluntary service. The revolution’s hegemony allowed it to generate a solidarity-based system of payment through services, implying that a large part of the social investment was not budgeted. In addition, the Constitution assigned 6% of the national budget to higher education. Cuba, the USSR, the German Democratic Republic (GDR), Bulgaria and Czechoslovakia offered full scholarships for thousands of Nicaraguan university students, considered the “strategic rearguard” of the Sandinista revolution. The USSR provided 300 scholarships a year, while Bulgaria and East Germany each ffered 50.

A revolution in health and social security

Social security peaked during the revolution. In 1978, the Somoza government’s last full year, the Nicaraguan Social Security Institute (INSS) insured 20.5% of the economically active population. Between 1980 and 1990 it covered an average of 26%, achieving an all-time record of 30.34% in 1984. In 1982 it diversified the benefits—food packets, bus fare coupons and discounts for the purchase of eyeglasses—and included a system for non-contributors in order to benefit the victims of war and chronic diseases, as well as orphans, elderly people with no families, people with disabilities and the poorest population.

Contributions to the Single National Health System (SNUS) were conceived as “joint liability support” rather than the purchase of an exclusive right. Unfortunately the INSS’s assets were depleted when the hospital infrastructure—in which most of its reserves had been invested—was transferred over to the Ministry of Health (MINSA) in 1982 without the INSS being paid what amounted to essential compensation. Over the years, pensions were eroded by accelerated inflation, as were workers’ salaries.

The SNUS was a project already being promoted by the Inter-American Development Bank (IDB) before the revolution, but it was only implemented with real volition in the eighties. The system included a network of popular pharmacies that sold medicines not provided by MINSA at low prices. In 1983 Nicaragua made a record level of investment in health—US$50 per capita—and reduced the mortality rates for the main infectious diseases.

Due to the US-financed war, however, that point also marked the start of a decline in investment and a slower reduction of the infectious disease rates, with even some higher outbreaks in tuberculosis, hemorrhagic conjunctivitis, chicken pox and scabies. But services remained free and the coverage continued to increase, especially in the rural sector. Over the decade as a whole, MINSA’s roster of doctors jumped from 1,349 to 2,095; of nurses from 808 to 2,092; and of nurses’ aides from 1,879 to 5,398. In addition, some 1,200 doctors were trained abroad.

Despite everything...

Some areas, particularly health and education, deteriorated by the end of the decade due to the redirecting of so many resources to the war effort, which already accounted for 40% of the national budget by 1984. The illiteracy rate climbed back up to 22% and the overall education coverage was estimated at 76% in 1989, leaving 145,000 children outside of the school system. Less than 80% of children finished their studies and some 180,000 repeated years and/or dropped out of school. The number of trained teachers finishing their studies each year dropped from 727 to 445 between 1985 and 1988, while consumption of medicines fell considerably due to an increase in the average price of a kilogram of medicine from $3.1 to $8.2 between 1986 and 1990.

Despite all the hardships, however, the model represented a real revolution in social benefits, with extended coverage, diversification and improvement of services including novelties such as special education and adult education, pensions for war victims, mass vaccinations and dengue and malaria prevention campaigns.

Galloping inflation leads to
a crisis in the experiment

In a context of war and falling international agricultural prices, such provision of employment and of health and education services was only possible through the continual printing of money not backed by production. The inflation this caused indirectly controlled salaries by determining their purchasing power. Between 1980 and 1984, the general inflation rate remained between 23% and 36% a year. But in 1985 it jumped to 220% and then on to 682% in 1986 and 911% in 1987. In 1988 it reached a world record of 14,316%, and in the following two years was over 4,700% and 7,400%, respectively, according to Central Bank figures.

The salary adjustments were never enough to maintain purchasing power. Although the average nominal salary tripled between 1980 and 1985, its purchasing power fell by over 80%. The consumer price index was 14 times higher in 1985 than in 1980, while real consumption was just 52% of its 1980 level. Between February and December 1988, alone, the average state salary dropped from covering 100% of the basic basket of 46 essential goods to covering only 13%.

The galloping inflation acted as an additional tax. Workers paid the costs of a system in which salaries did not represent even 7% of production costs. From 1980 to 1988, the real average salary plunged uncontrollably from 2,585 to 705 córdobas a month (approximately from $258 to $70), with a few short-lived adjustments. The Sandinista government decided to design a salary policy based on a system of minimum salaries indexed to a basket of goods required for minimum subsistence. Salaries were increased monthly in line with the inflation’s effect on the basket. But even so, the average salary was only 1,732.3 córdobas in 1990. The existence of a buoyant black market and a declining official market—which was what served as the basis for calculating salary adjustments—fatally compromised the effectiveness of this policy. Agricultural producers evaded the price controls, thus affecting part of the “social salary” for urban workers, which included cheap basic grains.

In the middle of the eighties, a state agricultural company administrator observed with unusual candor, “A worker in my company can buy one Coca-Cola with a week’s salary. If I double the salary he can buy two. Why would he want to work?” The “social salary,” which had been designed to discourage increases in the nominal salary in exchange for additional compensations such as subsidized food items and improved social services, deprived the administrators of monetary incentives as a managerial instrument, which led to relaxed labor discipline.

To compensate for their reduced purchasing power, workers reduced their working day at will, taking what came to be known as “historical vacations.” Their justification was that after decades of exploitation, the revolution had the obligation to free them from hard work. The subsequent drop in productivity produced scarcities and encouraged the creation of a market parallel to the state-controlled one.

No union initiative

There was no place in all this for traditional workers’ demands and claims. The Sandinista government didn’t touch the emblematic Labor Code promulgated by the administration of Anastasio Somoza García in 1944. The legislative novelty was rather the ratification in 1981 of 16 International Labor Organization agreements. The new 1987 Constitution recognized many rights—including the right to education, health care and organization—but its lack of grounding in specific new laws left the state—the main employer—with a wide margin of discretion. The day-to-day way the legislative instruments were applied was decided by macroeconomic circumstances and made possible by the FSLN’s hegemonic control. The slogan “National Directorate, give the order!” was symptomatic of the proposal to the workers: the leaders passed down the line to be followed and every sacrifice possible had to be made for the revolutionary project.

According to the Labor Ministry, the number of unions rose from 260 to 562 and the number of members from 12,818 to 38,746 between 1980 and 1990. There is probably under-recording here as the Association of Rural Workers (ATC) alone claimed 65,000 members in 1988. To these have to be added the professional guilds and producer associations, which exercised greater pressure in the limited negotiations that took place. The most important of these, the National Farmers and Ranchers Union (UNAG) representing small and medium producers, had 88,568 members in 1985. But neither unions nor these associations could do very much to define the course of labor policies. The militarism and top-down decision making that accompanied the war left their mark and molded a social movement co-opted by the state-party.

In any event, the war soon absorbed all efforts and postponed all demands. “No activity was spontaneously born from the unions’ own initiative,” says Onofre Guevara, one of the country’s veteran labor leaders, in his analysis of those times. All demands were subordinated to the guidelines issued by the top FSLN leadership and any protests had to be approved by the party. The unions in the state companies acted as a communication bridge between the FSLN-owner and the workers, with the lines of action passed down from above.

The unions and guilds were never able to get the owners—whether private or public—to incorporate seasonal workers as permanent workers. The few struggles allowed consisted of getting companies to pay the salaries of those mobilized for their two-year stint in the army. The limited number of opposition unions were stigmatized as being in cahoots with the owners and/or with counterrevolutionaries, although they continued waving the traditional union banners of improved salaries and other social benefits. Employer organizations such as the Union of Agricultural Producers of Nicaragua (UPANIC) or the Supreme Council of Private Enterprise (COSEP), a big-business umbrella organization of which UPANIC was a member, fanned discontent, backed strikes and built up an alliance with opposition parties that took them to power in the 1990 elections.

The collapse

The erosion of its fixed component and the waning of its growth component led to the collapse of the “social salary” model and with it the FSLN’s hegemony. The war and the deteriorating terms of international exchange were determining factors, but other elements, some which have been mentioned above, also played an important part.

To maintain the loyalty of its activists, the FSLN had to resort to political favoritism and construct a system of segmented benefits: credit and debt pardoning for Sandinista cooperatives and producers, scholarships for Sandinista Youth leaders, well-stocked dollar-only stores for high-ranking state employees and diplomats, and privileged medical services or access to specialized services in Cuba and the GDR for army officers and their relatives. The most conflictive benefit of all was price controls on rural produce and in-kind payment of a packet of rice, beans and sugar—known as the AFA—to the benefit of urban workers and the detriment of agricultural producers. This option only heightened the contradiction between the city and the countryside, where the ravages of war were far more dramatic. It effectively mortgaged agricultural development, imposing domestic prices that were inferior to international ones. The subsequent conflict was institutionally manifested in the struggle between the Ministry of Domestic Trade, which favored urban consumers, and the Ministry of Agrarian Reform, which championed agricultural producers. All of this only served to feed grassroots opposition to the government.

The market recovers with a brusk about-face

During the early 1990s, Nicaragua experienced a sudden about-face. Violeta Chamorro’s electoral victory in February 1990 created room in the government for a group of technocrats formed in US universities who saw the liberal welfare state and the neoliberalism of the Chicago school as theories to be applied and an ideal to be imitated. Some officials were paid directly by the multilateral finance institutions—the International Monetary Fund (IMF), World Bank and IDB—to apply their recipes with unconditional servility. Together with those businesspeople who trusted in the invisible hand of the market, they implemented a series of policies aimed at dismantling state controls, redistributing the fiscal burden, liberalizing credit and privatizing the APP and banking sector. Symptomatic of the will to clone the US system was the launching of the ephemeral córdoba oro—one córdoba equivalent to one dollar—which was eliminated almost as soon as it came into effect due to contradictions with the interests of the agro-exporting elites.

Liberalization—the elimination of state controls and trade barriers—was applied very early. In January 1991 a decree was approved deregulating trade, abolishing the decree that had established the state control of exports ten years earlier. Soon a number of old and many new export companies began operating. Another decree that same month lifted taxes from various export items and abolished progressive taxes on coffee exports, the September 1979 law creating the Coffee Fund and the 1982 coffee export tax. Bank liberalization meant the end of an era of preferential credit treatment for cooperatives regarding interest rates, amounts, payment periods, mass financing and debt write-offs.

The abrupt change from a relatively planned economy to a market one implied a substantial change in the social model as well and the new government endeavored to show that there would be a shift in public policies. Reduced labor regulation was automatically provided by the change from a regime involving the state provision of employment to one with a greater role for private enterprise.

The social programs—education and health—were decentralized as part of the search for greater efficiency. Their decentralization—understood only as the bureaucratic unburdening of the central level without any loss of decision-making power—as well as reduced coverage and minimal provision of medicines transferred costs from the public sector to individual families. The system of universality and joint liability passed away and the market came back to life. To compensate marginalized people, different social protection safety net models were implemented that targetted the most vulnerable groups.

The model that emerged and is still in force combines the laws of the market with old-style, but far more limited subsidies to demonstrably low-income groups with the aim of integrating them into the market. This model, designed by the Chamorro administration during the first half of the nineties, was backed mutatis mutandis by the following two administrations. The last National Development Plan, designed by the Bolaños government in 2005, bases its strategy on mapping zones with greater potential and zones that are to all intents and purposes damned. The proposal includes investment in clusters in the promising zones and charity programs in the poorest areas.

The reduction of military spending at the beginning of the decade left resources available for increased social spending, but pressure from the IMF to impose fiscal discipline led to a toughening up of the structural adjustment program. Social spending was slashed and foreign cooperation and family spending only partially compensated for it.

The pardoning of a large part of the foreign debt that was the prize for Nicaragua’s entry into the Highly-Indebted Poor Countries (HIPC) initiative was conceived to create a social bonus: increased social investment in poverty reduction by turning the pardoned debt servicing payments into social spending. But instead the government, with the IMF’s backing, opted to prioritize payment of the domestic debt generated by the compensation paid to those who had property confiscated during the eighties and by the bailing out of the financial system following the almost simultaneous collapse of four banks. This option effectively aborted the social bonus in its embryonic stage.

Labor legislation reforms
and the arrival of the maquilas

The 1944 Labor Code underwent a complete reform in 1996, which took shape during prolonged parliamentary debates. Most of the reforms increased and specified protection for workers, although some articles have proved to be a reversal of historical conquests. Two of the aspects most damaging to workers’ interests are the possibility of being dismissed for economic or technical reasons—which leaves a wide margin for interpretation and has been exploited by the maquila assembly plants for re-export—and the faculty of contracting workers with fixed-length contracts, with no minimum or maximum periods other than that the contracts can only be renewed twice. The reform limited severance compensation to one month’s salary for each of the first three years worked and 20 days salary for the following years, up to a maximum of five months’ salary. This is one of the lowest levels in Latin America.

The new Labor Code eliminated automatic deduction of union fees from workers’ salaries and allowed unions to be formed with a minimum of 20 employees, when previously the affiliation of 60% of a company’s employees was required. This facilitated the creation of what are known as “white unions,” which are inclined towards the owners’ interests and boycott the work of independent unions.

Two years before the Code’s reform, the legislative branch modified the labor regulations to limit the attributions of both the Labor Ministry and unions in resolving labor conflicts. The new regulations eliminated the possibility of the Labor Ministry issuing binding resolutions for demands of up to 5,000 córdobas without having to take the case to the labor courts. While the suppression of this power could mitigate discretion, it has the inconvenient effect of turning the ministry into a “friendly arbitrator” and of reducing labor claims given that most workers can’t assume the costs of the slow, bureaucratic judicial procedures. Distrust of the probity of the judges further discourages any attempts at legal challenges.

The re-establishment of the Free Trade Zone system in 1991 was a milestone of the new labor policy. Most of the maquilas in these zones are dedicated to textile and tobacco products (61% and 17%, respectively). Over the years, many companies have joined this system to benefit from its near-total tax exemptions. A more recent milestone was the approval of the Free Trade Agreement now known as CAFTA-DR between the Central American countries and the Dominican Republic on one side of the fence and the United States on the other. Ignoring agreements previously signed with the International Labor Organization (ILO), the countries involved promised to maintain certain standards such as the right to association, the right to organize and negotiate collectively, the prohibition of all forms of forced or obligatory labor, a minimum working age, elimination of the worst kinds of child labor and respect for the minimum wage, working hours, safety and occupational health.

Health reforms based on
decentralization and “modernization”

The health system reforms included a series of budgetary decentralization measures to encourage the development of Local Comprehensive Health Care Systems (SILAIS) organized by MINSA in each of the country’s departments. The public hospitals were left out of this new system since they were to function as companies that received some allocation of funds from MINSA. MINSA, the SILAISs and the hospitals signed management agreements in which the latter two, in return for receiving funds and technical assistance from the Ministry, had to comply with certain productivity, efficiency and user satisfaction goals.

This new system was designed to reward the most efficient, adjust the supply of services to the demand and reduce costs. Decentralization was an instrument to further those objectives and was limited in nature: the SILAISs and hospitals could not adjust the central policies in response to the local reality and all officials were selected by the Ministry’s highest authorities, which together with the Finance Ministry continued making the decisions related to acquisition of medicines and other medical supplies. The institution’s policy severely restricted provision of medicines in public hospitals, given the elevated costs of the brand-name medicines received from the providers with which MINSA had signed agreements. The SILAISs only got to administer 19% of the budget earmarked for primary health care, with a similar amount going to the hospitals. On the positive side, some studies have detected increased administrative transparency as a result of this decentralization.

A second series of reforms focused on health sector modernization. The plan included completing the legal framework, strengthening health care in 37 MINSA hospitals and modernizing social security and health care. The last of these reforms were the most visible. Modernizing health care implied a policy for training human resources and the definition of minimum payrolls. But in practice, this policy was limited to personnel reduction through a “voluntary retirement” program. Accelerating a process initiated years before, the December 1997 to February 1998 period alone saw 1,000 doctors—400 general practitioners and 600 specialists—programmed for retirement. The reform was aimed at consumer satisfaction and cost containment, but it substantially reduced the public sector’s health care capacity and increased private attention. With the intention of adjusting supply to demand, the modernization’s main achievement was to transfer costs to users and its main consequence was to turn health service beneficiaries into clients—or leave them bereft of effective health care if they couldn’t absorb the cost.

Reforms to social security:
Contributor-clients and aborted AFPs

The most important transformation of social security was the creation in 1993 of the Previsional Health Companies (EMPs). This amounted to a differentiated health care model for those insured through the INSS. Public and private sector hospitals and clinics operating as independent companies would sell their services to the INSS, which would transfer 8.5% of what it collected to the EMPs chosen by its contributors.

MINSA became the main hospital service supplier subcontracted by the INSS. In theory, this model was supposed to energize the economy by incorporating the private sector as a health service supplier. It was also supposed to be universal and equitable, as well as guaranteeing greater quality because the contributor-client could punish EMPs that didn’t function well and reward those that provided the best service by transferring their contributions from one to the other. Bad providers would be expelled from the market by the selective power of demand, at least in theory.

April 2000 saw the publication of the Pensions Savings System Law, reforming the insurance covering old-age, disability and death. The new law increased the old-age, disability and death contributions made by both employee and employer, abolished the last remnant of state support (0.25%), eliminated support for war victims, doubled the number of contributions required (from 15 to 30 years), calculated the total disability pension according to the average salary over the last ten years (it was previously based on the last five years) and proposed transferring the pensions of people under the age of 43 to specially created private companies to be known as Pension Fund Administrators (AFPs).

The reform involved three major changes: modification of the parameters, privatization and changing from a system of sharing out the total amount collected to one of individual capitalization. The INSS would gradually be reduced to a mere collector, a new state organization called the Superintendence of Pensions would supervise the functioning of the AFPs and the market would guarantee the best services as the pensioner-clients would seek out the AFPs that offered them the greatest returns on their contributions.

In November 2005, the National Assembly ruled to suspend implementation of the law creating the AFPs, “as it jeopardizes the country’s macroeconomic stability by creating an unsustainable state deficit that the proposed funding alternatives are not enough to cover; and it generates social inequality by obliging the population to assume transition costs that only benefit the formal labor sector.” Also abolished was the organic law for the Superintendence of Pensions, an organization that in its first two years of existence had spent over 64 million córdobas without having anything to supervise. It is calculated that 12 million euros were spent on advice, assessments, equipment and training seminars for this aborted institution.

Reforming education through “school autonomy”

An educational model was introduced in 1993 that promised decentralization and a leading role for parents but broke with the constitutionally-guaranteed idea of completely free education. The proposal was based on two forms of decentralization: school autonomy or co-management and municipal decentralization. The former conferred maximum authority for school administration on School Managerial Councils (CDCs), while the second granted administrative responsibility for all schools in a given municipality to Municipal Educational Councils (CEMs). The CDCs were chaired by a parent and included the school director, several teachers, various parents and one student with a voice but no vote. The CEMs included the participation of teachers, parents and the municipal government.

Seeking to reward performance and adjust supply to the demand, the Ministry of Education gave each school a financial allocation calculated according to its enrollment, dropout rate, student/teacher ratio, administrative personnel roster, average salaries and other administrative costs. The CDCs drew up and executed a budget consisting of ministry funds plus family contributions. A Departmental Educational Council (CED) functioned as a mediator with the ministry. In the Municipal Decentralization model, the ministry transferred the payroll to the CEMs, which acted as employers. The CEMs also had to negotiate additional resources in the form of family, municipal government and civil society contributions. Both the CDCs and the CEMs frequently ended up as fundraisers knocking on the doors of national and international NGOs.

Turning even the poorest into clients

The evidently marginalizing bias of these social policies and the growing gap between income and access to health and education services meant that the state—under pressure from the multilateral institutions and using their funds—resorted to social compensation programs for what it defined as the low-income population in order to “empower” them as clients and confer “market citizenship” on them.

One example was the Social Protection Network, an IDB-financed program “aimed at promoting the development of human, nutritional and health capital among rural families living in extreme poverty.” This program was to benefit 10,000 families over two stages. It didn’t upset the mercantilization, but rather subsidized supply and demand by transferring money to the families and educational and health centers to encourage demand and to improve supply in the areas of education and health. The transfers for the purchase of food and school equipment were conditioned by periodical medical controls and the children having to enroll at school and attend at least 85% of the classes.

The IDB estimated that the transfers increased consumption in the selected households by 21%. But an evaluation revealed that the beneficiaries’ improvement was only relative given the contraction of spending in the households included in the control group. In other words, the program did nothing more than somewhat mitigate the negative consequences of a long economic recession and redistribution of wealth in favor of the already-privileged sectors.

Times of unemployment

The transition in 1990 to the new model of social organization had an immediate impact through the slashing of the state’s bureaucratic apparatus. In 1990, even after the Sandinista government’s own drastic reduction in 1988, the central government employed approximately 18% of the economically active population. It still had 78,000 workers in productive companies, a total that was shrunk to 9,906 in 1991 and just 1,098 by 1995. There are currently just over 500.

Unfortunately, the much-vaunted “peace dividend” did not have as big an impact as calculated at the end of the war. The recovery of national private enterprise was not so vigorous and a large proportion of foreign investment came only to buy up existing companies and apply labor-replacing technologies. Job provision dropped dramatically as the economically active population grew by around 65,000 a year between 1991 and 2006. Between 1990 and 1993 alone the unemployment rate jumped from 7.6% to 17.8%, according to Central Bank statistics, and it has remained in double-digit figures ever since. Independent economists currently put unemployment at over 25% and underemployment at 50%. The new model implied a radical change in the absorption of the labor force. In 2005, 91.2% of employed people were working for private companies and only 8.6% for the state.

Times of minority opulence

Strictly following IMF guidelines, inflation has been largely controlled and the per-capita GDP rose from $720.90 to $850.30 between 1995 and 2005, although its distribution has become increasingly unequal. At the end of the eighties, 68% of Nicaraguans were living in poverty, a figure that rose to 74.8% in 1993 and 77.8% in 2001. During that same period, extreme poverty rose from 22.2% of the population to 42.6%. Between 1993 and 2001, the percentage of people with a less than average per-capita income rose from 71.5% to 74.6%, while the richest 10% increased its concentration of total income from 38.4% to 40.7%.

The appearance of a new labor species—top executives—has only increased the salary gap. The evolution of the salary of National Assembly representatives is an example of the salary inflation brought along by the change of models. A legislator who earned $50 a month during the eighties currently earns $5,000 net. In contrast, the government has fixed the agricultural minimum wage at 30 córdobas ($1.60) a day, which is barely enough to buy three liters of milk. The top private business executives and top state officials earn more than their Central American colleagues with similar posts, functions and training. And to top it all, the rising cost of living and salary stagnation during recent years have rewarded workers in very unequal ways. Between 1996 and 2006, the average real salary rose from 1,197 to 1,644 córdobas. But while salaries in the financial sector and for technicians and professionals rose in real terms by 42% and 18%, respectively, those of agricultural workers, manufacturing industry workers, unskilled laborers and service industry workers fell to 55%, 63.5%, 62% and 72% of their purchasing power.

The application of a regressive tax policy—15% value-added tax and a 30% income tax ceiling—means that for every $100 produced by Nicaragua, $17.60 go towards taxes, with $15.60 paid by the poorest and only $2 paid by the richest, as explained by Julio Francisco Baéz in the March 2006 edition of envío.

Times of “junk jobs”

The effects of the labor flexibility are noticeable. In 2005, the 422,800 unemployed and underemployed people represented 35.6% of the economically active population. The same year, 67.7% of the employed earned less than the cost of the basket of essential goods, 50.3% earned less than the cost of the essential food basket, 24.2% earned less than the legal minimum wage, only 1.3% belonged to a union organization, 63.3% had a verbal contract (69.7% in rural areas) and only 17.5% had a permanent contract.

The practices of subcontracting, contracting for services and contracting by commission have been increasing, while the number of hourly-paid teachers and daily-paid drivers is multiplying. In this way, bosses avoid having to pay social security, labor benefits and severance pay. Such modalities affect wage earners from all strata, but hit those with lower income particularly hard. They also affect INSS coverage; according to National Workers Front leaders, only 50,000 workers were insured with the Institute at the beginning of the nineties.

The informal sector is still the biggest source of jobs. The results of the National Institute of Statistics and Censuses’ 2005 employment survey revealed that the employment rate in the informal sector rose from 62.9% in 2000 to 63.4% in 2005. The same survey also showed that the number of unremunerated workers increased by an annual average of 4.6% in the same period. Women are more affected by the informalizing of the economy. From 1993 to 2001 the percentage of males in the economically active population working freelance or in unremunerated activities rose from 27.5% to 28.6% and the female percentage from 43.4% to 46.2%. Added to the informalization and growing flexibility is a growing outsourcing. Those working for commission often operate using their own means, although there are no statistics about this feature of labor conditions.

The Labor Ministry was characterized by a weak capacity for monitoring compliance with the labor regulations and by a vacuum of power and volition when it came to settling demands. In 2005 it made out 1,549 labor inspections, a meager amount considering that nearly 14,000 active employees were registered with the INSS that year. This results in a deficient application of the Labor Code, the Constitution and the ILO agreements signed by the Nicaraguan government. According to the Ministry’s inspections, the most frequent employer offenses relate to hygiene and work safety (39%), contracts (18%) and vacations (18%).

Even though Nicaragua ratified the ILO’s Convention on the Worst Forms of Child Labor in 2000, child labor is increasing. According to the United Nations Development Programme, the percentage of 6- to 15-year-olds who are working has risen from 5.6% in 1993 to 8.8% in 1998 and 9.2% in 2001. The National Agricultural Census (CENAGRO) of 2000 registered a total of 10,713 children under the age of 12 working on coffee farms, including members of the farm owner’s family and contracted workers. Of those children, 65% were boys and 35% girls.

The war’s absorption of a large part of the male labor force during the eighties—over 150,000 between the two bands—enabled female employment to expand, thus breaking the tradition of work as a male bastion. During the nineties, the new availability of female labor has been used as a mechanism to increase labor flexibility to women’s detriment. A study by Sonia Agurto at the end of the nineties revealed that women were paid an average 30% less than men in similar posts with similar or even lower schooling. In the public sector, salary inequality is a byproduct of job inequality.

Times of the maquilas

The economic sector whose growth and job generation is most applauded by government propaganda is the free trade zone maquila companies. The 14 companies that generated $37 million in 1994 increased to 84 by 2006 and they generated over $682 million. Their demand for labor jumped from 3,432 to 69,500 workers during the same period. The maquilas account for 3% of the economically active population and 3.8% of the employed population. But the total number of maquila employees represented 75% of the growth of the economically active population in 2005.

A study by maquila expert Jon Bilbao showed that the wages provide workers just enough to survive on, that there is no technology transfer and that an unhealthy working environment, work rate and prolonged working days are common in most of the companies.

Other studies have shown that wages are mainly based on production goals set too high for the state of the machinery, 14% of workers have no minimum wages, 90% work overtime to achieve their goals or because it is obligatory, 30% receive the ordinary rate for overtime, 10% receive no legally established social benefits such as a Christmas bonus and vacations, and only 3.8% belong to a union. There is no capacity to negotiate in response to the imposition of overtime and the failure to pay social benefits, holidays and sick leave. And finally, a 25% annual staff turnover generates extremely volatile INSS contributors, which financially benefits the Institute as such contributors pay in but never collect their pension since they never make the minimum number of required payments.

The end of the unions

With the exception of the teachers’ and health workers’ unions, union activity has been declining, with the number of unions and union members falling from 562 to 105 and 38,746 to 3,849, respectively, between 1990 and 2006. The quality of unionism has also deteriorated, not least because of the decline in numbers. The formation of “white” unions to back employer’s policies has become a common practice encouraged by the reformed Labor Code; party manipulation of workers’ demands, labor flexibility and unemployment have all had a demobilizing effect on workers; and the fluctuating number of affiliates reflects job volatility. Meanwhile, the performance of the few leaders to have represented workers in the National Assembly has been hugely disappointing. One particularly pathetic example was Natán Sevilla, a National Assembly legislator for three consecutive periods totaling 15 years. Supposedly representing the teachers’ union, he never proposed a single law to benefit its members.

A number of novel forms of social organization have emerged from this bleak panorama, including the María Elena Cuadra Movement for female maquila workers and unemployed women, whose denunciations have made a valuable contribution to national awareness.

Times of social insecurity

Social security coverage dropped to below the levels achieved even in the seventies due to the contraction of the state work supply, the increase of the informal sector and of work flexibility and the employers’ evasion of their obligations. During the first seven years of the 1990s coverage averaged 15.41% of the economically active population. It increased in subsequent periods but is still below the 20% of the start of the eighties.

The small recovery of recent years could prove ephemeral. It is explained partly by the 3% of the economically active population employed by the very volatile maquila sector and partly by other foreign investments of dubious stability. The INSS lacks statistics on the turnover of its contributors, but it is possible to get some idea by comparing the figures for active contributors and new contributors. The INSS registered 580,310 new contributors between 1994 and 2005, but the difference in the average number of contributors between 1993 and 2005 was only 172,699. The gap between these two variables has been widening year after year. Meanwhile, labor flexibility and the informalizing of labor are conspiring to allow employers to evade their obligations. The universities, for example, tend to have 70% of teachers paid by the number of hours they spend in class. In this context it is alarming that the system of optional insurance to which workers and the unemployed can contribute on their own initiative accounted for just 0.61% of total contributors in 2005.

INSS coverage demonstrates a persistent bias towards urban areas and the capital city of Managua, with cities concentrating 98% of new contributors. Managua has 25% of the country’s population, but accounts for 56.6% of all contributors. Access to quality services is also biased as it has been demonstrated that the EMPs provide contributors—who are mainly formally employed people—better health care than the national average. In other words, the insured citizen-clients have greater than average rights. The mercantilization of the system also implies the exclusion of non-contributors. The coverage of special cases has dropped briskly from 14,095 in 1986 to 6,446 in 2005. And although most EMPs are state owned, a system of salary incentives for profitability created a parallel private service to attend to the non-insured or people who are insured but prefer to pay for a shorter waiting period or attention from particular doctors.

Times of privatization

The health and education reforms have pushed the system towards dependence on foreign cooperation and a form of privatization disguised as autonomy and decentralization, as undisguised forms of privatization would be considered unconstitutional.

Between 1990 and 2005, the number of MINSA employees dropped slightly from 12,534 to 12,474. Factoring in population growth, however, that implied a reduction from 33 to 22 doctors, nurses and nursing auxiliaries per 10,000 inhabitants. In 1996, there were only 21 more beds in clinics and hospitals than in 2003, while from 1995 to 2003 the availability of beds per 10,000 inhabitants dropped from 11 to 9, of MINSA doctors from 8 to 4, of dentists from 0.8 to 0.5 and of professional nurses from 3.2 to 3. In 1993, 83% of the rural population had access to health services, a figure that had dropped to 73.8% by the end of 2001. In the new model, the state has prioritized citizens’ security over health, with the number of police officers per 10,000 inhabitants increasing from 11 to 13 between 1996 and 2001.

Meanwhile, prevention programs have been neglected. One example is the dengue control program, inaugurated in Nicaragua in response to the 1985 epidemic, with 17,483 reported cases and 9 deaths. At the end of the eighties, the program had 980 inspectors, who made house-to-house visits four times a year. The drastic budgetary reductions applied to certain programs during the nineties reduced the number of inspectors to just 324, which had a dramatic impact. While less than a thousand cases a year were reported between 1986 and 1990, the number rose to 4,137 after 1990, reaching 8,938 in 1993 and a record 18,674 in 1994. Experts calculate that every timely dollar invested in prevention would have saved a hundred dollars later on.

According to the UN’s Economic Council on Latin America and the Caribbean, public investment in health has ranged between 2.8% and 3% of the GDP from 1990 to 2003. Although the proportion of per-capita investment to total public spending fell from 15.6% to 13.7%, it rose from $21 to $24,, which is still half the level it was 20 years ago. Some experts, such as Jaime Espinosa, feel that the slight increase in per-capita investment is due to spending on medical instruments and medicines, which is higher now because they are bought from providers that prioritize the big equipment and pharmaceutical companies and don’t sell generic drugs. The “machinery and equipment” budgetary line rose from 0.8% to 25.6% of the MINSA budget between 1993 and 1998, as part of the hospital modernization process.

Times of dependence
on foreign cooperation

It is hard to financially measure the government’s genuine willingness to invest in health because the slight increase is not due to the government’s own will. To stop state investment from dropping, intervention was needed from foreign cooperation, which in certain years has contributed almost 50% of total MINSA spending, whether in support to the central level or to the SILAISs. Without foreign cooperation, per-capita public spending on health would be $15 rather than $24.

According to Sally O’Neill, the representative of Trocaire, an Irish NGO, Nicaragua received US$14.68 billion in bilateral cooperation donations from 1979 to 2003. “Measuring cooperation as a percentage of a country’s gross domestic product,” she stated, “Nicaragua is the country most favored by cooperation in all of Latin America. Foreign aid accounted for 28% of its GDP in 2003, which is the highest percentage on the continent. It only contributed 6% of the GDP in Honduras, which is the country closest to Nicaragua in both geography and poverty, while in El Salvador the proportion is 2% and in Mexico, Peru, Ecuador and the Southern Cone countries it doesn’t even reach 1%” (envío, July 2004).

In the 1980s, foreign aid was mainly invested in production, but from the 1990s to the present day it has served to compensate for the reduction in social investment. The Swedish government, one of Nicaragua’s most loyal benefactors, decided to prioritize support for the health sector in the nineties. For over eight years (1995-2003), MINSA received $286.5 million in foreign support, most of it (62%) in the form of donations. Such dependence has meant that MINSA has been unable to inject fresh resources into programs such as the health service modernization once their original resources are used up. As a result, the processes have been truncated, while monitoring processes have ground to a halt due to the resignation of officials trained and paid using foreign funds.

Times of family spending

There has been a metamorphosis of the weight of different financing sources in the total health investment. From the completely free system of the eighties, when the family contribution to health spending was 24.4%, the new model took us towards a system that increasingly depends on the pockets of Nicaraguan families. In 1996, public spending represented 45% of the total investment in health, with family investment accounting for 40% and foreign cooperation for the remaining 15%. By 2002, family investment had reached 61%, while public spending and foreign investment had dropped to 31.5% and 7.5%, respectively. Families are financing 52% of all health costs given that the population has turned to private health services due to the reduction in the availability of beds, medical personnel and financing for medicines in the public health services.

The situation is similar in education. Although per-capita public spending on education increased from $19 to $32 between 1990 and 2003, it is still the lowest in the region (the figures for Honduras, El Salvador and Guatemala are $70, $67 and $44, respectively). Public spending on education represented 6.2% of the GDP in 1986, right in the middle of the war. It dropped to 2.6% at the beginning of the nineties and rose again to 4.1% in 2003, which is still 3% below the figure for Honduras and the percentage established in the Millennium Development Goals.

The education reform of the nineties led to a system that promoted inequality due to its urban bias and the high dropout levels it encouraged among the poorest population. The final balance is one of exclusion: in 1983, during the wa;145,000 school-age Nicaraguan children and adolescents (24%) were excluded from the public education system, but 20 years later, 1.2 million (42%) of the 2.7 million school-age Nicaraguans were not in school. The reform’s economic and moralizing approach shifted the responsibility for the financing and contents of education to the family.

One indicator of the reduction in the state’s contribution is the drop from 31,609 teachers in the educational system in 1990 to 7,732 in 2006. “Voluntary contributions” from parents became essential, while annual spending per primary school student was just $39.50. Educator Juan Bautista Arrién calculated that family contributions added at least another $20 to the ministry’s current spending budget. In 1997, the contribution in some secondary schools represented “between 40% and 60% of the school’s monthly income.” Autonomy turned fundraising into one of the main activities of the new entities that were created. And as in the health sector, dependence on foreign cooperation increased.

The educational reform also included the weakening of the teaching profession. Agreements were ignored that had been signed in the eighties between the Education Ministry and ANDEN, the largest teachers’ union, which in 1990 represented over 60% of teachers. Between 1990 and 1995, four new unions were created and the Ministry negotiated a collective work agreement with them, sidelining ANDEN and thus stimulating union division. This new agreement included no policy for teacher promotion and no social, pedagogical or professional benefits.

Migration and remittances
have perpetuated the model

How was it possible to develop and consolidate the citizen-as-client model without greater social explosions? Only because of what could be considered a plebiscite against the model in the form of migration. Nicaraguans residing abroad, who in the seventies and eighties represented 3% of the population, currently represent 13%. Those migrants increase the purchasing power of almost 20% of the country’s families—over a million Nicaraguans—by sending home monthly remittances that in 2004 were the equivalent of 11% of the GDP and in 2002 were worth 127% of exports.

Migration plays a multiple role in perpetuating the model. It reduces the demand for services, diminishes the unemployment rate, regulates salaries—employers offer better pay to coffee pickers, for example, so they won’t migrate to the Costa Rican harvests. The money the emigrants send back home, in turn, allow greater family spending on health and education. In the citizen-as-client model, remittances act as unemployment insurance, risk mitigator, old-age pension, crop insurance and funding for education and health. They increase the purchasing power of demand in a model that measures demand by people’s purchasing capacity rather than their needs.

The remittances are acting as a social compensation mechanism. According to World Bank calculations, $600 million came into Nicaragua in the form of remittances in 2005, while the IDB estimated their value at $810 million a year earlier. Using the estimate that 19% of remittances are invested in education, those households receiving remittances spent between $154 million (IDB) and $114 million (World Bank) on education in one year.

A study by the Nicaraguan Civil Society Network for Migrations estimated that families spent 13% of their remittances on health. This amounts to $78 million if we use the more modest World Bank figures. In other words, family remittances account for approximately 24% of total health spending and 51% of total family health spending, which is significantly preventing further erosion in the health and education coverage. The model is being sustained by an expulsion-attraction mechanism in which migrants are expelled and remittances attracted.

Will everything change
with the FSLN’s return?

On its return to power after 17 years, the FSLN still has a packet of social promises. Continuing to argue that the only determining factors in the failure of its economic and social project of the 1980s were the blockade and the contra war, both of which were initiated and perpetuated by the United States, the Ortega government is promising a re-run of the social policies from the revolutionary period. But it is doing so without any tax reform, without restructuring the domestic debt and without dialoguing with the country’s main union and professional organizations, all of which will surely undermine the possibility of crystallizing its self-styled “social vocation.”

With the disappearance of the APP, the key interlocutor for a rural social policy will be the cooperative associations, the largest of which is the National Federation of Cooperatives (FENACOOP), representing over 41,000 peasant families. In the May issue of envío, FENACOOP president Sinforiano Cáceres said that the government has no agriculture policies, isn’t dialoguing, is putting out demagogic rhetoric, is co-opting union leaders, is fostering relationships based on political favoritism (particularly referring to the Venezuelan urea), has reduced seed allocations and is turning a blind eye to the different mafias speculating with land, trafficking lumber and commercializing urea.

The FSLN has opted not to dialogue and to reproduce its old policy of political patronage, conceding parliamentary seats and some minor state posts to the leaders of UNAG, ATC, ANDEN and FETSALUD, the four main labor and professional union federations linked to the Sandinista movement. But the individual unions in these federations are maintaining their demands independent of their leaders; the first few months of the Sandinista government have thus been punctuated by successive teacher and health worker strikes demanding the salary hikes promised during the election campaign.

The new government decreed the “de-privatization” of the health services, but the plans for the sector are still unknown and wages remain frozen. In education, school autonomy was abolished by decree, charges were prohibited in all state schools and the cashiers and administrators required by the old system were immediately dismissed. But this change does not guarantee greater quality. Abolishing school autonomy and the money it brought in without providing additional financing to take its place amounts to nothing more than a rhetorical exercise. Many costs assumed by the family—including transport, school gear and opportunity costs—are prohibitive in a country where 80% of the population is struggling to survive on less than two dollars a day. Meanwhile, family investment in the citizen-as-client model has meant minimum investment in infrastructure and in schools in bad physical condition that require an extra financial and organizational boost.

Migration won’t stop

A basic condition for improved education is an increase in teachers’ pay. But there’s a contradiction between the salary policy and educational investment, this time due to submission to the IMF rather than to any return to the “social salary.” Teachers will receive a $16-a-month pay rise this year, which can only be described as squalid. The $135 average monthly salary of Nicaraguan teachers is only 38.6% of the $350 received on average by their Central American counterparts.

The IMF included the freezing of the public sector payroll among its latest conditions as part of a strategy to avoid any demonstration effect among private companies, particularly the maquilas, thus maintaining Nicaragua’s low-wage comparative advantage. Those most hit by this salary policy will therefore continue migrating. Female Nicaraguan teachers can double their income by going to Costa Rica and working as housekeepers.

Health and education spending could be increased by renegotiating the domestic debt, which more than absorbed all resources that the HIPC initiative freed up precisely to increase public social spending and reduce the poverty level. But any such renegotiation would stir up problems with the bankers and other sectors of the traditional economic elite with which the FSLN has been forging ever closer commercial and family links for nearly three decades.

In March 2007, the new Sandinista-dominated INSS executive council proposed two measures that were branded as populist and sparked angry reactions from social security experts. The first was to eliminate the need to present one’s monthly INSS contribution payment receipt to receive services from the EMPs and, second, to set an 8% deduction from the INSS financial payments to EMPs for patients with illnesses they don’t cover. The first measure only encourages evasion and default because presenting one’s INSS slip guaranteed that employers were up to date with their contributions. In fact, the FSLN-led Managua municipal government is one of the main debtors in this respect. The second measure favors the biggest EMPs and could end up creating an oligopoly. In the previous system the deduction percentage was based on each EMP’s number of clients and the volume of their combined salaries. The current fixed ceiling rewards those EMPs with more contributors and higher salaries. Both measures jeopardize the fragile INSS finances.

A model that feeds off
migrants and remittances

The FSLN’s “social salary” model in the 1980s ideally sought to freeze wages while expanding the provision of free social benefits. The party’s ideological hegemony fueled a system partly sustained by a chain of joint liability services that made it impossible to monetarily quantify the revolutionary state’s total spending on health, education and other social services.

The inflation caused by the fiscal relaxation employed to maintain the model during a war economy that was also suffering deteriorated terms of trade distorted the supposedly controlled prices and undermined most Nicaraguans’ purchasing capacity. The cracks in the economic planning multiplied and the emergence of a vigorous parallel market and of social discontent undermined the model’s economic and social sustainability. The citizen-as-ward who was supposedly the designated beneficiary of the model ended up voting against the FSLN in 1990.

Following the FSLN’s electoral defeat that year, the new government decided on a Copernican economic and social policy shift. The decline in the provision of social services has been an indicator of a de facto privatization with different levels of intensity. The citizen appears as a client and a market actor more than a political actor with rights. The waning of unionization is an indicator of the extinction of the political citizen.

The reaction has been mass migration, which by reducing the populations lessens the pressure on public services and through the migrants’ remittances to their family back home increases purchasing power for the increasingly private social services, thus perpetuating the model. In other words, this parasitic model feeds off the very circumstances it generates. Migration is an undesired, unplanned and spontaneous effect of the public policies, but it is the key to explaining why the model thrust upon us has survived. And it will continue as long as remittances allow costs to be transferred to the families. There will be no changes as long as there are remittances and the government refuses to negotiate the domestic debt or design a progressive tax structure, which are the only possible alternatives domestic sources for increased social spending.

Arise ye wretched?

Rosy-colored billboards all across Nicaragua are proclaiming “Arise ye wretched of the earth!” in anticipation of the 28th anniversary of the revolution on July 19. For several weeks that line from the Internationale has been hammered home as a backdrop to all of President Daniel Ortega’s speeches. But the wretched are still at the bottom, or else completely outside, emigrating in search of earnings that will help provide a life for those left behind. Still on the bottom are the poor on whose bodies FSLN leaders climbed to their present heights and those who are half dead from the gradual murder practiced by the citizen-as-client model.

Those of us who enthusiastically witnessed the revolutionary triumph—as fascinated children, young protagonists, adult accomplices or perplexed elderly people—have 28 years more experience today. Perhaps we know 28 times more about our history and politics or are 28 times more toughened. Some are undoubtedly 28 times more corrupt. But only by being 28 times more naive could we swallow the FSLN’s fairy tale that it is thinking of resurrecting the welfare state, unless it means one based on political patronage and handouts, which means very selectively resuscitating some of the poor. The changes that would be required by the expansion of social spending to levels of mass satisfaction cannot be limited to programs like the government’s “Zero Hunger” program. Can Hugo Chávez’s rentier socialism make up the difference? If so, by how much and for how long?

With the FSLN now completing its first six months in office—it was already in power before it was elected—we won’t be celebrating this July 19 with lower fuel prices, or improved teacher salaries or an end, or even any orderliness, to the chaotic and ever longer power cuts. The most notable change to be celebrated is the new Councils of Citizens’ Power, which cannot inspire political citizenship no matter how much they try. With no motive for real optimism, people will flood the plaza with placards saying “Arise ye wretched of the earth!” and the FSLN leaders will shout out that and other slogans before returning to the mansions they took from the oligarchs in order to imitate their lives. Via the alienating effect in which an object takes over and molds the subject who believes he or she possesses it, these leaders’ luxury SUVs, haciendas, bulging bank accounts and condominiums have made them what they are today.

Could it be anything less than culpable ingenuousness to believe that they will reverse the course of today’s social policies? As long as the citizen-as-emigrant continues injecting remittances into the financially dehydrated citizen-as-client, the capacity to resist this unjust system could drag on. Remittances are the opium of the people. And the wretched of this earth called Nicaragua—transformed from citizens-as-wards into citizens-as-clients—will be fated to endure a hybrid of both systems for the coming five years, a mixture that could be termed neoliberal populist authoritarianism.


José Luis Rocha is a researcher for the Central American Jesuit Migrant Service (SJM) and a member of the envío editorial council.

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