Envío Digital
 
Central American University - UCA  
  Number 375 | Octubre 2012

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Nicaragua

New clothes for the emperor... or is ALBA naked in Nicaragua?

President Chávez was reelected a third time. His ALBA project will thus carry on. What have this project’s results been in Nicaragua? 175 years ago Danish writer Hans Christian Andersen published “The Emperor’s New Clothes,” one of the world’s best-known classical tales. Its teaching is wise, its message profound. Its metaphors can also be applied to what’s happening with ALBA in Nicaragua.

Gloria María Carrión Fonseca

In a lively bustling city there lived an emperor who used to spend all his money on elegant clothes. Not even his soldiers or meetings of the Council held as much interest for him as his clothes. He had so many costumes that he changed his clothes several times a day. One day, two weavers arrived in the kingdom, insisting that only they had the ability to weave the most wonderful cloth with colors of unusual beauty. The emperor, excited, ordered all the conditions to be prepared so as to install the weavers in the best salon in his castle and he gave them a lot of money in advance so that they might make clothes for him from such splendid cloth...

So begins Hans Christian Andersen’s famous tale “The Emperor’s New Clothes.” Just as in Andersen’s fictional realm, there arrived in January 2007 in Managua, another cheerful bustling city, the President of the Republic, with an agreement that would be wonderful in every way and of great benefit to the whole country he was starting to rule that day. At the time it was called the Bolivarian Alternative for the Peoples of Our America (ALBA), but it has since been changed to Alliance.

Today, after several years of “weaving,” ALBA seems to have the invisible threads the two weavers in the Andersen tale used for the emperor’s new clothes. Little is known publicly about the details of how they were sewn together. Is ALBA naked in Nicaragua? Let’s get rid of the doubts. Let’s investigate the details of its development and what’s behind the facade of export figures, speeches, photos published in the media…

“With the most beautiful cloth ...”

The weavers prepare to make their clothes with the most beautiful cloth that no emperor has ever seen before...

ALBA came to Nicaragua on January 11 of that year, days after President Daniel Ortega’s inauguration, with a series of innovative proposals that would wipe out poverty and reduce the economic and social disparities that have afflicted the country for far too long now. Most grassroots movements, cooperatives and other organizations enthusiastically welcomed ALBA’s arrival. For many, this agreement represented a possible change of roles on the checkerboard of economic power or at least an important turning point in the neoliberal social and economic model being developed in the country since the beginning of the nineties.

The traditional private sector power groups, however, initially viewed ALBA with mistrust and skepticism. They saw in it a possible contradiction with the newly inaugurated Free Trade Agreement between the United States, Central America and the Dominican Republic (CAFTA-DR). The Nicaraguan business elite had many fears.

Those fears had their origin in ALBA’s very own genesis. On paper, ALBA emerged as a counterweight to the Free Trade Area of the Americas (FTAA) headed up by George W. Bush in 1994, an agreement that sought to turn the whole continent into a vast free trade area. The FTAA was very short-lived. On setting itself up as counterweight to this model, ALBA hit the bull’s eye.

It proposed something very different: a fair economic exchange that would attack all the disparities and asymmetries, all the structural, economic, social and productive deficiencies that the majority of international trade agreements, including CAFTA-DR and the newly signed Association Agreement between Central America and the European Union, barely noticed or ignored completely.

“Colorful clothes we had never seen before…”

ALBA proposes “cooperative advantages” instead of “comparative advantages.” For the economists who argue for a market economy—those “weavers” of agreements, each of the world’s countries should specialize in products for which it is comparatively at an advantage. According to them, countries should specialize in the goods they can produce more cheaply and efficiently.

The problem with that concept is that it completely ignores the power relationships and inequalities that have always dominated in the world. Selling coffee or bananas on the international market will never be the same as selling computers or cutting-edge technology. Very aware of this, the ALBA “weavers” put forward the notion of cooperative advantages. According to them, they are based on two fundamental ideas: solidarity in international relations and national sovereignty.

To put them into practice, ALBA proposes to create regional compensation funds. Distribution of these funds is based on economic and social objectives that have implementation periods and mechanisms for evaluation by ALBA members. To be a beneficiary of ALBA funds, an economy must be classified as “small.”

Current ALBA members (Venezuela, Cuba, Ecuador, Bolivia, Nicaragua, Antigua & Barbuda, Dominica, Saint Vincent & The Grenadines) created social and economic indicators for classifying as “small economies” in need of support to develop and/or strengthen their productive and competitive capacity.
According to the agreement, ALBA compensation funds would be used to decrease or eliminate internal inequalities and those between productive sectors, ensuring high levels of transparency and efficiency in the use of funds. That’s how ALBA’s own founding documents put it.

For Nicaragua it was something “wonderful,” considering that none of the free trade agreements we’ve signed with the United States, Europe, Mexico, Chile, Canada or Taiwan envisage lessening the asymmetries of our small economy relative to those large ones.

On paper, ALBA stipulates that the activities it finances will be developed and/or facilitated by a state version of transnational corporations, called “grand nationals.” The documents indicate that these companies must defend sovereignty by acting as a counterweight to the influence of transnational corporations in national and regional political decision-making, strengthening state control in relation to private management of the rules of the political-economic game, protecting public services against privatization; promoting technology transfer and local technological development, and hindering capital flight from the South to the North through repatriation of company profits.

ALBA was “new clothes” for our country; it would have a very positive effect in reducing inequalities and giving space to social actors who have been marginalized in the economy: small and medium-sized businesses, grassroots movements, cooperatives…

“They worked day and night…”

The weavers worked day and night making the emperor’s new clothes...

On April 29, 2007, during the Fifth ALBA Summit in Venezuela, President Ortega signed two agreements: the ALBA Energy Treaty with Venezuela, Cuba and Bolivia, which provides the general framework regulating energy cooperation among the ALBA member countries, and ALBA’s Petrocaribe Energy Agreement between Venezuela and Nicaragua, which regulates Venezuela’s sale of oil to Nicaragua and its financing conditions. They were “wonderful cloth” for Nicaragua’s development.

Nicaragua’s National Assembly ratified both agreements months later. Petrocaribe is currently one of the largest sources of cooperation for the countries of Central America and the Caribbean.

In a period of five years the resources derived from these two agreements increased nearly fivefold in Nicaragua, from US$138 million in 2007 to US$564 million in 2011. The latter amount is equivalent to all international cooperation Nicaragua received on average each year during the government of President Bolaños (2002-2006).

The Petrocaribe payment mechanism works like this: Nicaragua must pay 50% of the bill within 90 days with a 2% per annum interest rate. The other 50% must be paid off over 23 years, plus 2 years grace, also with a 2% per annum interest rate. With this agreement the country acquires a public debt on the long-term financing percentage.

“They manage to see the new clothes…”

The weavers decreed: Anyone who doesn’t manage to see the emperor’s new costumes is not worthy of the office he holds or is stupid...

On July 13, 2007, a Venezuela-Nicaragua joint venture called ALBA Nicaragua S.A. (ALBANISA) was born, with 51% of its shares belonging to Petroleum Products of Venezuela SA (PDVSA) and 49% to the state-owned Nicaraguan Petroleum Company (Petronic). It was set up to handle the oil coming in from Venezuela, but since its inception ALBANISA has become the centralized recipient of all Venezuelan cooperation.

ALBANISA sends the Venezuelan crude received by Nicaragua to the ESSO Standard Oil refinery in Nicaragua for refining, then sells the oil and its derivatives to both the power generating companies that run on oil (which are still the vast majority), and the network of service stations throughout the country. The profits from these sales finance ALBANISA.

Since the oil purchase is part of the production costs of these companies, they transfer the costs to users through the electricity rate or the fuel the population buys. Given that the oil sales, both wholesale and retail, are transacted at competitive world prices, a significant portion of this goes to the Nicaraguan government in taxes.

From the oil income, once operating and financial costs have been deducted, ALBANISA is responsible for transferring half of the 50% long-term finance to the ALBA Fund, which must use it for social projects and infrastructure works, among other things. ALBANISA transfers the other half to ALBA Caruna, formerly a small credit union and now the second important pillar in managing the hundreds of millions in ALBA and Petrocaribe resources. It directs these funds to the government’s social programs: Zero Usury, Zero Hunger, Streets for the People, Decent Housing, Operation Miracle… In 2011, ALBA Caruna’s general manager stated that the institution had about $100 million to finance the government’s programs.

ALBA Caruna also manages some of the vast resources the country receives through ALBA at favorable prices, among them imports of urea, which is the basic fertilizer for national agricultural production. It also negotiates the granting of loans from the Development Bank of Venezuela (BANDES) for agricultural, livestock and agribusiness credit at preferential rates.

In addition to this, several companies of a private nature, although formed with public money, have spun off from ALBANISA, building a powerful economic conglomerate: ALBA Food (ALBALINISA), sole broker of exports to Venezuela; ALBA Equipment, a construction equipment company; ALBA Security, which provides security and surveillance services to ALBANISA facilities; ALBA Generation, which handles power plants for electrical emergencies; ALBA Ports, apparently dedicated to towing, provisioning and maintaining the ships that come from Venezuela as well as paying the freight and landing charges of the crude oil and its derivatives; ALBA Deposits, responsible for the tanks into which the crude oil is unloaded and for distributing the oil to the refinery and generating plants; ALBA Wind, a wind energy company; ALBA Transport, which manages the distribution of fleets of donated collective transport buses; and ALBA Tecnosa, responsible for building housing in the Houses for the People of the Government Program.

Through ALBALINISA, ALBANISA is the only national body authorized to export the Nicaraguan agricultural products that receive a special price—a “fair price”—on the Venezuelan market in the ALBA framework. According to the Petrocaribe agreement, the importation of these products can be “credited” as payment against the oil bill. In other words, Nicaragua exports meat, dairy products, coffee, sugar and beans, among other products, to Venezuela in exchange for oil. It’s still not known for certain how much of Nicaragua’s oil import bill has been paid with this “barter.” Through ALBALINISA, ALBANISA decides on prices and export rules, thus becoming the only channel through which oil and its derivatives come into the country and key products for the country are exported to Venezuela.

What happened at the emperor’s council…?

Although these days ALBANISA controls the relationship between Nicaragua and Venezuela in the framework of ALBA and Petrocaribe, it was not always so. Even before Ortega won the 2006 presidential election, Petrocaribe was already working in Nicaragua, but not through the central government. Instead, grassroots social movements together with municipal governments and small and medium-sized producer cooperatives and associations played a big role in its decision-making. But as of 2007, the protagonism of these actors was permanently sidelined.

Weakening the role of these actors in the decision-making process marks a watershed in ALBA’s implementation in Nicaragua. According to key actors in the process, ALBA ceased being a tool of social and economic transformation at that moment and became an agreement that both deepened the alliance between the government and big national and transnational capital given the high degree of trans-nationalization of the Nicaraguan economy and simultaneously facilitated the rise of a new economic group closely linked to the FSLN.

What happened within the “Emperor’s council?” Let’s look at history. On April 24, 2006, an agreement was signed in Caracas between PDVSA and the Association of Municipalities of Nicaragua (AMUNIC). Historical FSLN militant Dionisio Marenco, at the time also the mayor of Managua, promoted and led the signing.

The relationship with ALBA at that time was direct, without intermediaries. Decisions were made by a Joint Commission made up of organizations, social movements and mayor’s offices. This commission established conventions, agreements, letters of intent and, in some cases, ad hoc projects.

The first consignment of Venezuelan fuel—18,000 barrels of diesel—arrived in the country the very day after the signing through ALBANIC, a company formed by PDV Caribbean a PDVSA subsidiary, and AMUNIC, whose president was Dionisio Marenco. It came in to the river port of El Rama, 300 km from Managua. September 22 of that same year an agreement was reached with the Economic and Social Development Bank of Venezuela (BANDES) to provide loans to the municipal governments that needed additional capital to form joint ventures with Venezuela.

ALBA continued to make progress in 2007, as President Ortega started his administration. Two ships full of urea entered Nicaragua, reducing prices for small farmers by almost 30%.

ALBA also brought Nicaragua health care projects such as “Operation Miracle” to resolve cataract problems and other eye diseases and the literacy program “Yes, I can.” The initial actors directly managed housing, agricultural production and education projects with public institutions in Venezuela that had cooperation agreements with Nicaragua.

A project was also established in those days between Venezuela’s Institute for the Development of Small and Medium Industries (INAPYMI) and a series of worker-owned Nicaraguan coffee companies such as Café El Caracol and Café El Mejor, among others, to renew their obsolete production machinery. Some 16,000 farmers benefited from this project. During that first stage projects to export black beans and produce rice, maize and sesame with cooperatives such as Del Campo R.L., Sifina, Nicaraocoop, Cecocafen and Caruna were also funded through the office BANDES opened in Nicaragua.

According to “internal sources at ALBA” who asked not to be identified, it might have been possible back then to begin to build a kind of alternative economy with a strong self-management component: “There were two meetings, including a second, more formal one in which a myriad of first- and second-tier organizations belonging to the Nicaraguan cooperative sector took part to identify how to supply the Venezuelan market. The federations were going to organize production chains. In the case of maize and beans, one organization would take charge of strengthening aspects of technical assistance, production training, soil and water conservation, creation of a new industry and primary product processing, right up to the export stage. One organization would specialize in beans, another in meat, another in rice... This was going to create a new kind of economic growth with actors in the cooperative social sector. And the main element of support was going to be that preferential price market with Venezuela.”

Very quickly, these plans would become history.

“They didn’t say anything out of fear...”


What beautiful clothes they are making for the emperor! But the weavers hadn’t made anything…; convinced that nobody would dare to say it out loud for fear of being unworthy of the office he occupied, they insisted that the emperor parade through the whole city showing off his new suit.

In 2008, the year after Ortega took office, ALBANISA replaced ALBANIC and set itself up as the only entity that could mediate the relationship with Venezuela. Today, according to internal sources at ALBA, the ALBANISA and Caruna leadership has no decision-making power over the fate of the funds: “The provision of loan funds ceased to be done through the Venezuelan institution (BANDES) and it was decided it should be Caruna, as the umbrella organization for the Venezuelan funds, but its leadership doesn’t decide what happens to these funds. There’s a Commission called the ALBA Caruna Credit Committee, headed by Francisco López, both ALBANISA’s vice president and the FSLN’s treasurer, or people he delegates. They are the ones who ultimately decide who will be granted credit or if ALBA funds will be given to them.”

ALBA Caruna manages some Petrocaribe resources, but with no clarity as to how they are distributed: “The funds don’t belong to ALBA Caruna. It only manages them and doesn’t even decide who to give them to. Nor are there any clear rules about the requirements for getting access to these funds. The ALBA Credit Committee decides who to finance.”

These internal sources at ALBA also confirm the party bias of Venezuelan cooperation: “The decision about who is given resources to collect and store the products is political. It isn’t, then, someone who fulfills a series of requirements who gets access. There’s a list of individuals, entrepreneurs, who can be ALBANISA suppliers. You have to go through an acceptance process as an ALBANISA supplier and there’s where another game comes is: if you’re returning a favor by letting such a person into this market or are charging a ‘commission’ to let them in ...”

“They clapped, but couldn’t see anything…”


The inhabitants of the lively bustling city admired and applauded the emperor’s new clothes. And, even though they couldn’t see them, they didn’t say anything for fear of looking foolish...

The internal sources at ALBA confirm that the agreement has favored Nicaragua’s business elite, which has tightened its links with the government: “Petrocaribe has played a key role in the alliance between the government and COSEP (Superior Council of Private Enterprise), because who’s exporting sugar to Venezuela? The Pellas Group. Who’s exporting meat? The big slaughterhouses. Not the peasants, but rather the big farmers who are being paid over market price. This is the ‘bone’ the government is throwing COSEP.”

According to these sources, the shift in implementing ALBA was due on the one hand to the FSLN’s need to maintain control over its own bases and prevent them becoming more “autonomous,” and on the other to the desire to strengthen the business group that today dominates the upper echelons of power in the FSLN: “There was a certain fear that economically empowering the self-managing movement could somehow split the FSLN’s social base by gaining autonomy. This has to do with an ideological change in the FSLN leadership. The idea of a leftist society that many grassroots organizations have in mind about how the productive apparatus should be transformed was seen as more radical and less appropriate for the state of the country’s historical development. It was believed that private enterprise, the local oligarchy, could modernize the country more easily than grassroots movements.”

Bayardo Arce, the President’s economic affairs adviser, claims that this shift was necessary to “close ranks” and centralize control over Venezuelan resources in response to the parliamentary opposition’s actions that year (2008). Faced with the “wheeling and dealing” of parliamentary negotiations, the FSLN leadership opted to take the reins of ALBA by centralizing decisions and implementing the contracts, pushing the municipal authorities and social movements to one side. Even so, Arce argues, the social movements still receive benefits: “Streets and houses for the people are built with the mayor’s offices and there are still credits for small farmers through their cooperatives.”

The internal sources at ALBA don’t seem to agree with Arce’s political reading. They think the shift was decided upon because of a belief that the social economy actors couldn’t lead a development process that would transform the country’s current productive structure: “The final decision on whether the alliance with the social movements was a process worth gambling on or would cause problems was made by Rosario Murillo. In the end, the argument won out that the social organizations are weak, have little management capacity and don’t handle money well and that their bases have a very low educational level. Since changing this is a long-term process, the alliance with the social movements was sacrificed and the government opted for the productive model COSEP offers.”

“Look clearly! He’s naked!”


Then, a girl stood apart from the group of admirers and said aloud: Look, look clearly, the emperor is naked!

It’s this that we should see clearly: ALBA “is naked” in Nicaragua… and that’s why the country’s economic elite have put their initial fears about ALBA behind them. This agreement now represents access for them to a tremendously lucrative captive market. In 2008, demand from the Venezuelan market already proved very important in helping big business face the world economic crisis. For the National Sugar Producers’ Commission, the industrial dairy processing plants such as Centrolac and Parmalat, the San Martín slaughterhouse and others, ALBA was their salvation and is now “the best suit” that has clothed Nicaragua.

The traditional private sector has been the largest and greatest winner of ALBA. The products most exported to Venezuela right now are meat; sugar; dairy products, especially those processed by the industrial plants; high quality unroasted coffee; and basic grains, especially black beans.

Venezuela has become the main market for Nicaraguan meat. In 2012 it absorbed 48.9% of total meat exports. The previous year, sugar exports accounted for US$32.07 million, making Venezuela the second biggest market for Nicaraguan sugar. Milk exports the year before that were valued at US$44 million, a 23.2% growth over 2009 and 94.7% over the 2006-2010 period. The Venezuelan market has been crucial in absorbing more than 44% of total exports of processed dairy products. Exports of top quality raw coffee to Venezuela accounted for US$37.56 billion in 2011. And exports of black beans increased to US$10.05 billion in 2011. In 2007 Nicaragua exported barely US$6 million worth of products to Venezuela. In 2011, with ALBA, the figure hit US$303 million.

And with the exception of black beans and other products produced by selected cooperatives, all the products enjoying preferential access to the Venezuelan market are in the hands of Nicaraguan big business. This powerful economic sector also benefits from the endless postponement of tax reform, which is as urgent in Nicaragua as other countries where people with less income pay proportionately more tax than the richest, who are privileged with significant exemptions. Adequate tax reform would put an end to these dispro-portionate benefits and to the current system’s other flaws and inequities.

ALBA funds at this time are covering a series of needs such as subsidizing public transport in Managua and the Solidarity Bonus (not wage increase) of about $30 a month for 160,000 low-income public employees. These public subsidies should be met by fairer tax collection on big business rather than by ALBA, which at the end of the day is a loan that future generations will be strapped with.

“Perplexed, everyone heard …”


The admirers of the emperor’s new clothes heard the girl’s words, perplexed...

ALBANISA and its network of spin-off companies are a conglomerate that is increasingly consolidating the corporate group linked to the FSLN and, in particular, to President Ortega’s family. Although in share terms ALBANISA is a public company, its administration and decision-making about funds obtained through Venezuela’s oil cooperation are handled in a discretionary manner with few public accountability mechanisms. In this sense, ALBANISA behaves like a private company.

For Bayardo Arce, all access to markets opened up by any commercial treaty, as well as periods and degrees of access, are discretionary for those signing the agreement. He thus sees ALBA’s discretional nature as a structural element of the agreement, given that Venezuela sets the exchange conditions under which these benefits are obtained. But, increasingly, a myriad of companies purchased by ALBANISA are directed or administered by individuals who don’t necessarily occupy a public post in the State, although they do maintain close links with the FSLN.

The fortune grows in
the emperor’s council…

One of the representative cases is Nicaragua’s National Petroleum Distribution Company (DNP), which has a network of more than 50 gas stations throughout the country and storage tanks with a capacity of up to 60 barrels. Until recently it was under the control of the Swiss multinational Glencore, as a result of a contract signed during Arnoldo Alemán’s administration (1997-2001) for US$50 million. At that time, then-Revenue Director General Byron Jerez, without having the authority, also leased the state-owned Petronic to Glencore for a ten-year period for US$700,000 a month plus a US$0.005 commission for every gallon sold under Petronic’s brand name, which was another $250,000-300,000 a year. Petronic became famous during the Alemán administration thanks to the credit notes drawn up by Byron Jerez payable to Petronic as an advance on taxes. That money ended up paying the Alemán family’s debts and the electoral campaigns of his party, the PLC, among other mismanage¬ment frauds and embezzlement.

In 2009 ALBA Caruna bought the DNP as part of the acquisitions of the mighty ALBANISA conglomerate. The purchase occurred just weeks before Energy Minister Emilio Rappaccioli and Attorney General Hernán Estrada announced that Petronic “would take back the reins of the lease the Alemán administration had ceded to the Swiss consortium Glencore.” President Ortega had said in 2007 that Petronic and the Nicaraguan State would negotiate with Glencore to recover the leased facilities, but that didn’t happen and the lease was apparently just left to run out

According to an investigation by Moses Martínez and Octavio Enríquez published in the daily newspaper La Prensa this year, titled “ALBA impact only on Ortega’s fortune,” President Ortega’s daughter-in-law manages the DNP, which generates US$21 million per month by selling fuel in the gas stations that belong to its distribution network.

According to this research, which included a review of official documents in Managua’s Public Registry, three additional companies were created as part of the DNP purchase: DNP International S.A., DNP International of Nicaragua S.A. and Nica Petrol S.A., which, among other tasks, are responsible for explorations to discover and exploit oil fields, as well as to purchase and import hydrocarbons.

“They continued perplexed as
they listened to the girl…”


Through the corresponding legal registration in La Gaceta Diario Oficial, Nica Petrol S.A. applied for authorization to use the Petrocaribe brand in 44 of the 45 commercial categories currently existing in Nicaragua. By attaining it, Nica Petrol S.A. will be able to sell anything from sewing thread to arms and ammunition, not to mention vehicles, surgical or scientific instruments, precious metals, footwear, beer… in short, virtually anything. With this authorization and subsequent production in this endless range of items, Nica Petrol’s economic power could reach huge monopoly dimensions in the future, given the national economy’s size.

The ALBANISA conglomerate also intends to expand its investment portfolio with the construction of flour mills, new industrial slaughterhouses and meat commercialization, among other companies. The “crown jewel” will be the “Bolivar’s Supreme Dream” refinery that, once built and fully on line, could process up to 150,000 barrels of oil a day. The complex would be rounded out with a pipeline and a petrochemical plant.

It is estimated that the ALBANISA conglomerate already has the capacity to generate 600 megawatts of electrical energy thanks to power plants donated by Taiwan and Venezuela. This power generation capacity supplies almost the entire national demand.

ALBANISA has also announced plans to build three deep water ports, two in Bilwi and Monkey Point on the Caribbean coast, and the third in Puerto Sandino. It is also preparing the conditions for implementing a mega-irrigation project of at least 5,000 hectares running from Chinandega to Rivas, with water pumped from the Cocibolca and Xolotán lakes. And it is exploring the installation of wind turbines in the isthmus of Rivas, in the southwest corner of the country, which would produce another 60 megawatts of power.

If all these investments come to fruition they would unquestionably have a major impact on the development of the country’s infrastructure, just as ALBA’s constituting documents propose. But it’s the way this agreement is being implemented in Nicaragua that generates deep “perplexity,” considering the objectives of social equity, environmental sustainability and transformation of unfair production and economic structures, those “wonderful clothes” that ALBA sets out in the documents.

“The people shouted: He’s naked!”


Emboldened by the voice of the little girl, the people began to shout: ¡Emperor, you’re naked!

ALBA represented and still represents a great opportunity for Nicaragua. The preferential access to oil, the opportunities offered by the Venezuelan market and the financial resources with the potential to be used for social and economic projects that would transform the harsh reality of most Nicaraguans are some of the most significant pillars of this agreement.

There’s no doubt that the FSLN government’s social projects—houses for the people, among others—have eased many families economically. But these are small achieve¬ments given the magnitude of the Venezuelan cooperation and its potential to generate structural economic and social transformations. It is thus imperative to point out that ALBA “is naked,” to scratch the surface and delve into the depths of how and for what purposes ALBA is being implemented in the country. You have to be daring, just like the little girl in the story, to say what no one dares to say, what no one wants to ask.

The shift in ALBA’s implementation, which pushed the social movements, local governments and cooperatives out of its decision-making framework marked a before and an after. The “cloth of wonderful colors” started disappearing…

This change of strategy was followed by two dynamics that “undressed” ALBA: the alliance between the govern¬ment and the traditional private sector was strengthened and a new and powerful economic group linked to the governing party emerged, grew and is being consolidated. Neither of these two dynamics figured in ALBA’s original proposal or in the goals that this initiative is pursuing on paper.

It’s necessary to open up the debate, to ask ourselves what’s really going on with ALBA and where we want the agreement to go. Public policy must build the country its inhabitants dream of, not just promote the interests of a few. Achieving this requires fostering critical thinking that enquires into, investigates and questions everything that underlies the speeches, whether from Venezuela or Nicaragua. A country without critical thinking is a country delivered over to the influence of a messianic power, without counterweights.

If we don’t ensure that the objectives originally proposed in ALBA—to reduce economic and social inequalities and transform the country’s productive structure—are respected, Nicaragua will have lost a historic opportunity to reverse years of economic, cultural and social backwardness.

Do we have time in this bustling country to keep the transformative potential of ALBA from disappearing and fading away like the exquisite clothes the emperor was going to wear in the Andersen tale?

This text is based on research conducted by Gloria Carrión Fonseca, titled “The Association Agreement with the European Union and ALBA: Political-Economic Dynamics in Nicaragua,” published by Nitlapán, Kepa (Finland) and envío.

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