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  Number 157 | Agosto 1994
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Nicaragua

The Future Beckons from the Whirlwind's Eye

Property, privatizations, foreign debt, growth, economic policy, consensus – these are the great political and economic topics of the real country. All are interrelated, all are interwoven in a whirlwind. In the eye of the whirlwind the future awaits us.

Nitlápan-Envío team

June confirmed once again the preference of many Nicaraguan politicians and business leaders for froth over substance. They spent the month blowing political bubbles, making a great deal of ado about virtually nothing. All but a few continue to ignore the whirlwind of more essential issues raging around them, or else venture close to its outer edge, but only in the hope that it will make their particular bubble fly higher.

Acrimonious fights over the Military Code devolved into personal character assassinations around old issues thought to have been put to rest, and even triggered death threats. Presidential hopefuls jockeyed for media space, dabbled with alliances and did all the other silly things candidates do except announce their open intention to run in the 1996 elections. Except for Antonio Lacayo, that is; he made no bones about his desire to be the power on the throne rather than behind it. Then there was the march through Managua's streets that seemed scripted by a theater of the absurd dramatist. Promoted by Cardinal Obando and the bishops, the march promoted religious education in public schools, and protested abortion, family planning and, curiously, euthanasia, which is neither practiced in Nicaragua nor even much understood as a concept.

These and other political bubbles, blown by one side or another to call attention to itself, seem to have absorbed everyone's energies. Meanwhile the real problems, those of the real economy, are as weighty as ever in the national crisis.

Crops Fail and So Do the Lights

Some of these problems are there for anyone to see, but politicians are at a loss as to what alternative to propose. One example of this is the two months of "rainy season" with no rain in many zones, resulting in crop losses and an unexpected and draconian rationing of electrical energy.

In many drought stricken rural zones, particularly the already dry and economically devastated north, peasants have helplessly watched their tender shoots of corn and beans wither and then die for lack of rain. The poorest of them are left not only without this precious source of subsistence, but also with no means to buy seeds for the season's second planting.

The economic consequences of the drought are not limited to the countryside, however. At the end of June, the Nicaraguan Energy Institute (INE) decreed a strict rationing program across the country. In many cities, including the capital, homes, offices and factories suddenly had to cope with two four hour power outages a day. To make matters even more chaotic, the cut offs seldom conform to INE's published schedule.

The official reason for the rationing is the dangerously low level of Jinotega's Apanás reservoir, the country's most important hydroelectric source. Popular frustration and distrust of the government are such, however, that rumors of other reasons abound. One is that, encouraged by forecasts of a good rainy season, INE decided to drain and clean the reservoir before the rains came. A variant is that INE sold the excess electricity generated by draining the lake to Honduras, already suffering a severe energy shortage. It is also being said, on the other hand, that the rationing should have been initiated as early as January, at least for two hours, but that Lacayo did not agree to it for image reasons, trusting the predictions of an abundant rainy season. The government has neither confirmed nor denied any of these rumors.

The fact that a couple months of drought could bring economic activity to a halt and personal tempers to a boil illustrates how fragile both the social and economic fabrics are. It also shows the error of putting all the country's eggs in the basket of the huge hydroelectric projects the multilateral banks have financed in the region.

Given our tropical climate, by definition erratic, and above all given the massive deforestation caused by the desperate poor and the rapacious rich, rain is no longer a secure factor in any economic project. Provisions must be made. The old timers, who keep a stash of strategic food reserves, and the new breed of peasants, who are going back to diversified production, know all about this uncertainty and take what steps they can. It's our short sighted neoliberals who seem not to take it into account.

Rural Violence Far from Over

In other cases, politicians try to minimize the country's real issues and, where possible, even will them to disappear. The unending armed violence in the north of the country, which has taken a decidedly economic turn, is one such issue.

Armed actions by recontra groups hit a new peak in the rural north in June. According to army information, 18 armed bands are operating in the departments of Matagalpa and Jinotega, and another 24 are still in Estelí, Nueva Segovia and Madriz, home base of the now demobilized Northern Front 3 80.

To force the government to accede to their demands, the groups have put their emphasis on burning vehicles on the rural roads and highways, paralyzing traffic for weeks at a time in several zones. At least 12 vehicles were torched during June, some of them privately owned passenger and cargo trucks and some belonging to foreign institutions and businesses. Owner drivers in particular have expressed their unwillingness to continue putting their lives and vehicles on the line and are demanding protection and compensation from the government.

The two most high powered leaders are "Nortiel" and "El Charro." They champion the unmet demand of former Northern Front 3 80 leader "Chacal" to get Sandinistas in general and General Humberto Ortega in particular out of the army. The government has repeatedly refused any kind of dialogue with these groups, which it refers to as criminal rather than political bands. The army announced at the end of the month that its special forces will launch a major military operation against them in July.

These leaders do have a social base, however, made up less of ideological intransigents like themselves than of rural poor whose economic frustrations find no public expression in political circles. Lacking the means to include their demands among the national priorities, they turn to attention getting activities that mainly affect economic interests, targeting producers and productive infrastructure as well as transport. But this, in turn, further deteriorates the nation's economic climate, discouraging national and foreign investors, thus aggravating the very crisis that sparked their struggle.

A large part of the economically "active" population, today unemployed and with no opportunity to contribute to the national economic effort, is also trapped in and muddled by how to break out of this same vicious circle, but they are passive. While a number still live off of violence in today's Nicaragua, many more live off of peace, or foreign aid, or solidarity.

The violence cannot be justified, but, if it is to end, it must be understood. The willful blindness of the government and the traditional political forces daily pushes those with less to lose into becoming a destabilizing factor. National stability has no value to those whose daily lives are so destabilized.

The violence in the north is the turbulent expression of the silent majority's malaise. It will continue being so until the authorities take up the recommendations made in March by the United Nations representative in Nicaragua, to undertake an integral emergency program in the north.

A military operation would undoubtedly be cheaper, but the long years of war in these areas have shown that such a huge socioeconomic problem as rural poverty is not susceptible to a military solution. If it wasn't in the 1980s, when the army was much larger and more motivated, it cannot be expected to be now.

Aid Figures Come and Go

In still other cases, politicians try to manipulate real economic issues for image purposes. The most recent example of this is the government's triumphalist announcements about international aid gained in Nicaragua's June meeting with the Donor Countries' consultative group in Paris, using figures that have not been confirmed by the IMF offices in Washington. The kindest thing that can be said about those declarations is that the government used figures in a very confusing way.

To understand what may underlie the fact that various government officials used different figures for identical categories, it is necessary to know that foreign aid is usually classified as either "liquid" or "tied." The latter refers to funds that a country obtains to execute specific projects or credit lines that must be used for imports from the lender country. Once the overall amount of "tied" aid is defined, the amount actually dispersed depends on the execution capacity of the recipient country's government and NGOs. Due to execution failures, Nicaragua has only been able to absorb about half of what was initially conceded. The gap between these two amounts is one factor that permits such slippery statements and figures.

"Liquid" aid, in turn, refers to a cash disbursement not tied to specific projects or imports, which the country is theoretically free to use as it sees fit, such as the funds the Central Bank counts on to close its foreign exchange shortfalls. Another possible source of confusion grows out of the fact that a given aid amount may be both liquid in the sense that it is hard cash and tied in that it is earmarked for a specific use, for example the Central American Economic Investment Bank's recent cash loans for coffee and cattle. Nicaragua's Central Bank president declared that the liquid aid for 1994 would be $298 million, while the multilateral financial institutions use the figure of $218 million.

The Whirlwind

Meanwhile, a series of interdependent but sometime contradictory issues veer between the political froth and the economic substance. These issues go beyond any separate dominion over politics or economics, because they have to do with the totality of the country's huge problems.

The interlinked issues of property, privatizations, the foreign debt, the yearned for economic growth and the need for negotiated consensus and mutual understanding are closest to the center of Nicaragua's broad, changing, contradictory and dizzying circle of relations. There they whirl around, changing shape as they cross courses and bang against each other. The calm eye of this whirlwind is like a magnet pulling us all, because that is where the future awaits us.

Property and Privatization

One of the main interdependencies of the moment is the one between the property problem and the privatization policy. In the "Second International Conference on New or Restored Democracies," held in Managua at the beginning of July, Hans H. Helmut Boie, who directs the unified German government's Office of Property and Privatization, explained that his country has subordinated the property principle to that of economic reactivation, understood as investment and job creation.

This subordination has underpinned all the agrarian reforms in the 20th century that were made with economic criteria rather than ones of political compensation or social condescendence. This concept of property, which stresses the social good over individual rights, has even prevailed in such important economic powers as Germany and Japan. Unfortunately, we in Latin America are more influenced by Anglo Saxon legal formalities.

The principle to which the German delegate referred means that confiscated properties can only be justifiably returned to those who will put them to good economic use, those who will assume the commitment to create jobs and invest their own resources. It also means that it is aberrant to freeze resources for buying up assets or compensating people whose properties have come into the hands of others who are making them produce and are working in line with the society's number one objective: to use the nation's resources to produce wealth in the best way possible.

An even greater aberration is selling public assets those of society as a whole in order to compensate a few individuals. The Nicaraguan government considers that the anticipated $30 million income that could be generated by selling off part of TELCOR, the state telecommunications and postal service, could be used to redeem the bonds issued to compensate those confiscated by the Sandinista government. The government sent a bill regarding TELCOR's privatization to the National Assembly on June 20.

The TELCOR workers' union, on the other hand, insists that selling such profitable state patrimony will harm the country, and argues that TELCOR's growth level, with the most modern technologies, is unique in Latin America. In 1990, they claim, TELCOR covered 60% of the household demand for telephones; by the end of 1994 it will cover 80%. In addition, while only 9.5% of the telephone service was connected to digital centers in 1990, that figure will reach 93% by the end of 1994. In the past three years, TELCOR has generated over $26 million in profits.

Meanwhile, the intransigents represented by the Association of Confiscated Property Owners are not interested in bonds, whatever their current or future redemption value. They want their properties back pure and simple, independent of any other rightful claims on them for example by workers who paid off the mortgages old owners left behind. These intransigents are supported by the extreme right politicians and business interests in Nicaragua, and by friends such as Senator Jesse Helms in the United States.

Former President Jimmy Carter, in Managua in late June as President Clinton's emissary in yet another conference reflecting on democratic transition, moved beyond reflection to open advocacy by jumping into the middle of this and other property debates. "Nicaraguans have not been amenable to mutual sacrifice," he began, noting that "economic development also depends on sacrifice and mutual concessions." Knowing he was touching an UNO sore point, Carter added, "Like it or not, laws 85 and 86 cannot be repealed, but they must be applied with justice." Carter supported the privatization of TELCOR and the use of the money received to revalue the compensation bonds.

His proposal pleased those among the confiscated who have decided to cut their losses and accept the bonds, but are arguing for a shorter maturity period and higher interest rates. It did not appeal at all, however, to the intransigents, who angrily criticized Carter as a meddler and proposed that he be declared persona non grata.

On July 1, a legislative executive accord, which Ministry of the Presidency Antonio Lacayo baptized the "Carter law," was signed to revalue the compensation bonds by 3%. This unquestionably represents a cost to society, but it should be seen in relation to the benefits that stability brings to society. If that stability does not come because the intransigents continue mounting a more belligerent campaign than the government is counting on, the operation will not only be very costly for the nation, but will also have been in vain.

According to Nicaraguan Attorney General Carlos Hernández López, 4,648 property claims have been filed in his office in the past three years. To date, 154 have been returned to their former owners and another 1,684 claimants have been compensated with money, bonds, other properties or investment stocks.

Other US pressures are also being applied to this debate, through the Helms González amendment conditioning US aid to the return of properties confiscated from US citizens. But there are indications that the Nicaraguan government has already obtained sufficient guarantees that certain specific returns would be enough to lift this pressure. These guarantees seem linked to approval of the Military Code, and to the fact that the army is one of the major beneficiaries of the country's property changes.

With the signing of the bond accord, Lacayo optimistically "closed the book" on Nicaragua's property problem, discarding the need for any other law. Communal Movement activists argue that this measure alone will not in fact resolve the problem, since the judges and former property owners who reject the bonds are still on the warpath to recover their lost properties.

Privatization and the Foreign Debt

Another interdependency in the whirlwind of relationships enveloping Nicaragua is the one between privatization and the foreign debt. In many countries of the South, the "in" thing is to pay the foreign debt by privatizing public assets. Hidden behind repeated official speeches about private enterprise being more efficient than the state is the voracity of the giant transnationals, the only investors able to buy the few enterprises with a strong capital concentration in countries as impoverished as Nicaragua.

The situation would be very different if these few profitable state companies were privatized to a multitude of individual stockholders. But, given the scant incomes of most Nicaraguans, the shares would end up in very few hands even if they were put on the market. As it stands, they will end up in foreign hands.

Is private enterprise really more efficient? To answer that, one must first look at what makes companies in equal conditions of physical capital efficient: the technical training of their personnel and the effectiveness of their administrative, control and decision making methods. In TELCOR's case, the highly skilled personnel would not change if the company were privatized. As for administrative methods, managerial salaries or bonuses could be tied to the company's increased efficiency, as measured by the same activity or by user surveys. None of this has anything to do with whether the property is run as a private, public or cooperative enterprise.

In fact, selling off 40% of TELCOR for some $30 million if the National Assembly approves the legislation would be a bad deal for the nation, since that price is under what this company has cost the nation. Just in the past seven years, the Nicaraguan people's fixed investment in their telecommunications company has been nearly $100 million. TELCOR has transferred almost $7 million to the central government over the past three years, and its domestic and foreign financing needs in the whole 1987 93 period have been less than these transfers to the government and the loans conceded by the company. A rapid comparison with the rest of Central America also shows that the quality level reached by TELCOR's telecommunications service leaves Nicaraguans nothing for which to envy their neighbors.

Stripping this debate to its essence reveals neoliberalism's ideological baggage: privatization is an ideological principle, not an economic necessity. But opposition to this principle by progressive forces cannot be limited to defending salaries, job stability and other advantages for TELCOR's union and workers. It must center on the nation's interests as a whole. One important advance would be to fight for the break up of this and any other monopoly, with the goal of improving quality and reducing prices. Merely replacing a public monopoly with a private one, as will happen in the TELCOR case, will only benefit the new monopoly owners.

It may be too late to act in TELCOR's case. Its privatization is too interwoven with Mexico's expansive pardon of Nicaragua's debt in 1991. It is no coincidence that a Mexican company is among the potential purchasers of TELCOR.

Foreign Debt and Growth

This is yet another dramatic interdependency, although it remains habitually relegated to political considerations. Nicaragua's foreign debt is so burdensome that it stifles any development possibilities, no matter the stripe of the new government. The debt's magnitude threatens the country's very viability by pushing it into a vicious circle: the huger it grows, the more it reduces the possibility of national and foreign investment that would permit it to be serviced and eventually shrunk. The only good news is that the debt is so devastating it might just push us into seeking domestic consensus on a healthy solution, a coherent, realistic and non exclusionary economic development plan that could be presented to our international creditors. (See Nitlapán's article on the foreign debt in this issue for details of all these elements, including a renegotiation proposal.)
In October of this year, the bi yearly conference of the World Bank and International Monetary Fund will be held in Madrid, this time coinciding with the 50th anniversary of the Bretton Woods agreement that gave birth to these two institutions and the current international financial system as a whole. Many nongovernmental organizations, which have broad support in the European countries and in the United States, will celebrate a parallel event in Madrid under the motto, "50 Years Is Enough!" They want these lending institutions to shift their policies, particularly toward the poor countries.

Economic Growth Plan

A lesson can be learned from the foreign debt issue's invasion into national consciousness: the need to relate economic growth to a plan that would get us to the year 2000. It cannot be an unrealistic, voluntarist plan, but one with five fundamental objectives:
* The reduction of Nicaragua's imbalances with the rest of the world, from its technological dependence to the excessive consumption of imported goods in its family market basket.

* Export stimulation, but without doing special favors to the handful of businesses always first through the gate.

* A stress on investment over consumption, and not just foreign investment or big companies but the investment of labor and capital by all sectors.

* The promotion of complementarities between the public sector and the private sectors.

* An adjustment of the financial system, but to the needs of the broadest possible set of producers, not just those of the family consortiums linked to the banks and the businesses of a few individuals linked to the government.

It must be a non exclusionary plan, which means that it should not make the existing income distribution inequality even worse. This inequality is already the main factor blocking the country's potential economic development.

Defenders of the economic inequality between human beings justify their position by arguing that the elites have historically been a factor of intellectual, scientific and technological progress, and thus of economic progress. Although this is true in some cases, it is not by definition; it depends on the characteristics of the elites. When they only aspire to extract the nation's wealth to sustain their own imported, imitative life style and consumption patterns, without fostering investment, employment, the formation of national human capital and ecological consciousness in exchange, they turn into a factor of perdition for their country.

This viewpoint is shared by the current head of the World Bank's economic mission in China, and can be found in his recent report on structural adjustment in Africa, a process in which he directly participated. He follows a denunciation of the "vampire state" with a denunciation of elites. "The defenders of structural adjustment," he argues, "have been tricked by the vampire elites, who began to use foreign aid to maintain their own life style." This seems to be occurring among Nicaragua's traditional elites as well, and their life style and way of acting has also infected the new elites who emerged during the Sandinista government.

Genuine elites in this critical moment of history would be those who, with full awareness of a national project, would be disposed to promote the physical, ecological and human development of their country and its citizens precisely so as to maintain their own hegemony and enjoy its fruits.

Economic Plan and Consensus

There can be no hegemony where there is no social consensus. With respect to economic policy, this means that an economic program, if it is to be viable and realistic, must be rooted in a solid and participatory agreement between social groups. The government's principal role should be to promote this participation, not to serve an elite whose strong criticisms of the public sector hide the fact that, in its own way, it makes no distinctions between the public good and the private good, and uses the very state it criticizes for its own private and patrimonial interests.

The consensus that should be achieved in an open participatory process presupposes that the elites will accept an active role by other social sectors that are the bearers of development because they have physical assets or non material ones such as training. The elite should also accept that investment should be made in human capital, which does not simply mean sending their own children to US universities so they can come back with even more alienated models of thinking. It means accepting that massifying primary and technical education and health education is a requirement; it means understanding that this investment is not a condescending crumb to the poor, but a fundamental element in the construction of a viable national project that will permit them to secure their own hegemony in a country that is more human for them and their children, and also for everyone else.

Social Consensus and Property

There are still other interdependent relationships in the whirlwind of our reality. Achieving a minimum social consensus in a country as polarized as Nicaragua presupposes resolving the property problem. It can happen by accepting the changes that occurred during the revolution or by reversing them, but the "book must be closed" on the issue. This could possibly imply reversing the most symbolic cases of what is known as the "piñata," based on the principle that one kind of private ownership is no more legitimate than any other as long as the change in it has not implied a change in the social or technical relations of production.

If a big farm was confiscated and turned into a state farm of questionable profitability, for example, it should be parceled out among its workers or returned to its owners, a process that has already occurred in large measure. If this farm is sold to a third, it should be established that the money obtained by the state through this sale will be fed into a rural, technological or credit fund. If not, the money the new owner spent to buy the asset is dead capital for society.

If, on the other hand, the property was already parceled out among peasant families, or turned over to them in the form of a cooperative then later parceled, thus adjusting property relations to the real level of technical relations in agriculture, this fact should be respected because the new form of ownership benefits society more than the previous one.

If this same property was turned over to a new owner, this ownership is no more or less socially legitimate than the former. What will legitimize it is that the new owner make rational productive use of it, invest in it and create employment by it.

This is obviously an ideal economic scheme, into which nuances will have to be introduced based on the real political correlation of the forces in conflict. How many piñata cases will have to be reversed to buy political stability for the country? This can only be measured by dialogue and negotiation among the nation's most lucid forces, without ever losing sight of the ideal economic solution.

In the case of non productive properties, such as houses, the economic rule is not applicable and political judgment should prevail. With respect to urban rental property, the criterion is the same as for rural farms, because the fact that a large number of households have to pay rent takes away their purchasing power to demand other goods and thus stimulate productive activity. Another alternative would be to return these rental houses to a former owner who agrees to use the rent income in job generating investments.

Reflect and Decide

Nicaragua's principle organized political forces are obliged to grapple with this whirlwind of interrelated realities, because they are the most important issues on the country's agenda today. They are obliged to reflect on their essence, take positions and seek consensus about them. They are in fact already doing so, albeit silently and with apparent indifference. To some degree they are doing it in a backhanded manner, transferring open debate about these rock bottom issues into other, less essential but more spectacular or polarizing debates, such as about the military accord or abortion.

In the current political scene, the government is the only one really interested in going into the electoral campaign with an economy in ascent, even if just superficially. But the government, or to be more precise, the executive branch, only represents itself. The rest of the political class, faithfully reflecting a polarized society, still shows little interest in seeking answers to the great national problems. Fascinated by its own political bubble blowing, it is postponing the moment when it must collectively grapple with the search for negotiated political solutions and try to put in place a different economic plan. The most extreme sectors at both ends of the political spectrum are even coming to prefer the chaos, wagering that they can hook "something" in such a riled river.

An FSLN in Search of a Strategy

Having formally, but perhaps only temporarily, gotten around the pitfall of division in the party's Extraordinary Congress, the 15 men and women on the newly elected National Directorate have begun to redefine the FSLN's programmatic lines. Ever since the Congress ended on May 23, they have been virtually absent from the national scene. Then on June 21, they entered into a series of marathon, closed door meetings to discuss positions and strategies with respect to the country's problems.

There was no public discussion in the Congress itself of the content of any strategy or concrete plan proposal. The debates focused on refinements of or reforms to the statute and program hammered out in the First Congress in 1991. The results of these debates implicitly carried with them approval or rejection of one of the two currents that had published position papers in the month preceding the Congress. Personal charisma substituted for the debate of ideas; in this sense Sandinistas, too, fell into the idea being peddled in today's Nicaragua that change, stability or renewal depends on who gets elected.

At the close of its meetings, the FSLN Directorate said that its strategy is based on three points: winning the 1996 elections in order to undertake the economic changes the country needs, which cannot be done from the opposition; beginning work now to assure that electoral victory; and maintaining Sandinista unity.

One immediate issue that also had to be dealt with was the hammering out of details for the elections of new departmental and local party leaders around the country. Skeptics who have soured on the party in recent years will be watching this process closely to see how much space exists for candidates aligned with the current that ended up in the minority during the Congress, or for nonaligned candidates. Since the issue of internal democracy crosses current lines, these internal elections will be one of the last opportunities to rekindle the waning energies of former Sandinista supporters before the national presidential election campaign gathers speed.

Speculations on Scenarios and Strategies

The absence of more concrete declarations regarding the FSLN's orientation in the next few months leaves it open to speculation. Using as a framework the four possible scripts we postulated in envío several months ago, two speculative possibilities are considered below.

One is that the FSLN, under the influence of the Democratic Left current's radical ideas which obtained the majority in the Congress will seek to capitalize on the multiple manifestations, both armed and not, of grassroots discontent in the cities and rural areas. The objective would be to organize, strengthen and multiply them to destabilize the government's fragile scenario so as to regain lost sympathizers and gather electoral support.

In doing this, the FSLN would be wagering that stimulating the combative imagery of an important fraction of the population which has been slumbering for the past few years and adding a few more black clouds over Antonio Lacayo's favored scenario could gain the party important pre electoral and electoral advantages. This wager rests on the supposition that the government's hands would be tied due to an unwillingness on the army's part to collaborate with a repressive response. By breaking up the government's fragile scenario and making the repressive one not viable, the chaotic one could favor the FSLN. This, of course, would, as we have previously noted, depend on the strength of its main rival, the Liberals, who are also interested in and favored by chaos.

Whether or not such a chaotic scenario ended up favorable to the FSLN, it would be dangerous and costly to the country, and could well bring the combative population only the satisfaction of fighting an empty stomach.

An alternative speculation would be that the FSLN is betting on being able to pull together its network of grassroots supporters to organize the search for and implementation of local level economic solutions, in a relationship with its own direction and party intellectuals. In order to do what the government isn't doing at the local level, the FSLN would make use of its still extensive relationships with international cooperation.

Parallel to this, Sandinista entrepreneurs would take a more resolved attitude toward organizing to back microeconomic solutions in accord with the national interest, and particularly with the creation of jobs. Sandinista capital would come back into the country to finance peasant, associative and cooperative projects, as well as the worker owned properties (APT), all of which are demanding investment and support.

The Sandinistas would make all of this known in the media, so that society could appreciate the FSLN's change of strategy. All these little rivers would feed into its national project, and could be built on after the elections. In the near future, however, this plan would also evidently lighten up some of the clouds floating in the government's own sky.

Some Pros and Cons

Without taking a position on either of these two speculative strategies promoting chaos from below or economic and productive organization, also from below some points can be mentioned in favor and against each of them. With respect to the first strategy, one must wonder how the Sandinista entrepreneurs would respond to the chaotic scenario. One must also doubt the FSLN's capacity to organize and hegemonize grassroots protests, particularly in the countryside, given the extent of its historic divorce from the impoverished rural sectors and from the local farmers who are their natural leaders.

There are also pitfalls on the road to economic organization from below. What FSLN cadres are available to face such a challenge, which demands so much patience, talent, mystique and personal sacrifice? There is even the pitfall that openly supporting the peasant, farmer, artisan, cooperative and APT route could make the party appear too "socialist." Would everyone accept it?
In its desire to modernize its image, the Nicaraguan left runs the risk of confusing the grassroots productive sectors objectively the main potential actors of economic development with specters of outmoded and senile socialism, which should no longer be its preferential option for a "national project."
Meanwhile, parallel to its long strategy sessions, the National Directorate has been meeting with various sectors of the country, including the army, the government, APT worker owners, unions and even COSEP, the rightwing umbrella organization of big business associations. The next few months will tell how the FSLN has decided to try and harness the national whirlwind and where it intends to ride it.

A Government in Search of an Image

With the FSLN momentarily silenced, with the breathing space Carter opened up in the US stranglehold around the property issue, and with the relative absence of disorder in Managua, the government began to make some advances with its own scenario of continuity. The scenario is still fragile and uncertain, but its cloudy skies began to lift, thus encouraging the government's characteristic tendencies toward facileness. Taking advantage of this "calm," Antonio Lacayo is making an open pre electoral call, as broadly as possible, to parties or personalities he variously classifies as "moderate thinkers," "really democratic" and "of the political center," among whom he includes Sergio Ramírez.

Once again it appears that "Managua is Nicaragua." All the takeovers of roads and highways in the north, all the violence of desperation that is growing there, reverberates less than a small outburst in Managua and barely alters the scenario that favors the government, at least at the image level. On the economic level, however, the impact of what is happening in the north is unquestionably much more serious.

Except for the major drought and the resulting prolonged energy rationing, the government's fragile scenario appears to be consolidating, But the government runs a serious risk of consolidating only its image, not reality.

Will the drought and the energy rationing be the black cloud that rains, as it were, on Lacayo's economic parade? It could. But, in the meantime, positive economic signs are mounting. Coffee prices are on the upswing, partly due to the freeze in Brazil, and are already higher than any time in the past four years. Inflation remains under control; if the Consumer Price Index rate between January and May can hold, 1994 will end with a CPI that is 9% lower than the annual currency devaluation. To these encouraging indicators can be added the results of the Paris Conference and the government's subsequent success in negotiating the debt with Germany.

On July 7, in the last step of negotiations begun in 1991, the German government exonerated 70% of Nicaragua's $700 million back debt, 80% of which had been contracted by the Sandinista government with former East Germany. Although important, this success should not take steam away from an effort to seek a more radical and global solution to Nicaragua's foreign debt problem. This and other government successes in this period following the signing of the ESAF accord could lull the government into believing that its preferred scenario is not as fragile as it seemed earlier, that it is gaining strength and support. It would be very serious if this illusion made the government discard any thought of changing its economic strategy to include the grassroots strata.

This danger would be even greater if the government really got the supplementary aid in Paris that it claims. The government has so far shown a tremendous capacity to absorb the opium of aid without making the changes necessary to reduce the country's dependence on future international support. The greatest danger of all would be that the government's self satisfaction diminished its interest in taking up a more ambitious debt renegotiation strategy.

On the other hand, the agricultural and economic ministries are currently drawing up a five year plan. It is necessary to insist once more on the need to frame this plan within a realistic redefinition of expectations from abroad. If the country remains strapped into the ESAF accords, it will quickly realize that the new plan is not viable due to the cuts in foreign resources and debt payment commitments, which would lead the economic authorities to then discard the plan. It must also be recognized that a realistic and effective plan can only be achieved with the participation of the country's majority social sectors, the true actors of development. Without their participation, no plan will be anything more than a technocratic exercise.

The Moment's Big Challenges

For the next few months the national agenda will be full of dangers, although it will also bring some hopes. First among the latter is the possibility of stimulating a national mobilization that unifies civil society in general, private enterprise and the government around the foreign debt problem. The National Assembly can play a fundamental role in this, not only by promoting national consensus, but by supporting the renegotiation strategy among the parliaments of the Club of Paris nations.

It falls to the Assembly and its representatives to open this risky Pandora's box, which could contain a transcendental solution for the country. Just in 1994, there are two important meetings whose opportunities should not be lost: the one with the multilateral lending agencies in Madrid in October and the one with the Club of Paris in December.

Hopefully, Nicaragua can use these opportunities to show the international community how a nation determined to put its wounds behind it can undertake a productive reactivation effort from the countryside, using its great potential better with respect to its ecological balances and emphasizing the rebuilding of infrastructure and increased attention to health and education. With effort, Nicaragua can show itself to be a lucid nation that understands that only by acting in this way can it finally lay the foundation for its future development.

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