Envío Digital
Central American University - UCA  
  Number 167 | Junio 1995



The Crisis Is Bordering On the Intolerable

An inordinate desire to avoid a “revolution of honesty” that would correct the abuses of the piñatas of the Sandinista and Chamorro governments is what explains the lack of will in the executive and its allies to resolve the present, now intolerable crisis.

Nitlápan-Envío team

The institutional crisis that peaked with the National Assembly's defiant promulgation of the constitutional reforms has reached new limits: the state is bordering on paralysis. The growing vacuum of power and legitimacy encourages chaos and conflict, threatening what remains of the country's stability. The government is fiddling while the population burns in the flames of galloping unemployment and new rate hikes for fuel and basic public utilities. The country's civil and juridical functioning is virtually annulled, justice is retarded, and people's expectations of reconciliation are eroding.

The government is gambling that things can be pushed even further, based on an evaluation that the neoliberal adjustment has sapped the population's ability to mobilize. While this may be true, the cost of this adventurous course is that the country's international image is in tatters, thus affecting the donor community's willingness to cooperate. This could reduce the country's already narrow economic margins in 1995.

The government's few achievements risk being overturned, leaving the country a breeding ground for even more authoritarian solutions. The lack of an institutional way out of the crisis is expressed at all levels: impunity and contempt mean the recurring failure of legal mechanisms; mutual deafness means the failure of bilateral "closed door" dialogues; all mediation efforts have collapsed and international pressure has so far been unable to affect the situation; even the Catholic Church's attempts at reconciliation get nowhere in this desert of intransigence.

The situation is simply intolerable. The Catholic bishops' Pastoral Message gave the National Assembly and the political forces supporting it a green light to try to mobilize the population to resolve the conflict. The reaction of the people and the business community will be pivotal to finding a way out of the crisis.

The questions we are trying to respond to today are: How could this crisis have lasted so long? Who benefits from it? Can constitutional order resist an institutional vacuum? Are we on the brink of a coup? What will be the posture of international cooperation, tired of the country's recurring institutional conflicts? Will the bishops' call and the National Assembly's actions in fact be able to mobilize the population?

The Month's Events at a Glance

The crisis is entering its fifth month. Bilateral talks between the executive and legislative branches collapsed, as did efforts by the United Nations Development Program and a group of five "friendly countries" to mediate a dialogue among all four branches of the state.

At the end of April the National Assembly elected five new justices to fill the two vacancies in the Supreme Court plus the three new seats established by the constitutional reforms. At the last minute it had to elect still another to replace Justice Rodolfo Robelo, who died of a heart attack in those same days. The Presidency at first refused to recognize any of those elected; the six sitting judges said nothing. A week later, on May 3, the President and the Court agreed to accept Rodolfo Sandino, the only one elected who was on a list submitted months earlier by President Chamorro to fill the vacancies.

In a series of tit for tat moves, the Assembly immediately began legal proceedings to unseat Supreme Court president Orlando Trejos for "compromising the independence of the judicial branch with this maneuver." Several legislators also spoke of unseating the President herself.

On May 8, the seven justices handed down a decision on the reforms. They determined that the promulgation of the reforms the legislative body published them in the mass media was not legal, and nullifies everything the National Assembly has done since based on those reforms. The Court did not, however, issue any finding against their content, and in fact established that the President should promulgate them though it set no time limit.

National Assembly president Luis Humberto Guzmán dismissed the decision as "just the opinion of a group of magistrates." Other legislators called it a "technical coup d'etat" by a judicial branch subordinated to the executive and announced that they will respond with a "civil constitutional counter coup," by summoning the population to defend the reformed Constitution. The day after the Court issued its verdict, the Assembly called on political parties and social organizations to join a Committee in Defense of Democracy and the Constitutional Reforms and began to draft a plan for grassroots mobilizations across the country.

Some analysts consider that the Court's decision opens the possibility of a negotiation between the two branches, albeit one in which the lack of a fixed deadline gives the executive the high card. The Assembly, however, is not without trump cards. It announced that, with the new power the reforms give it to impose, eliminate or reduce taxes, it will reduce the burdensome General Value Added Tax from 15% to 10%. In line with the reforms, 16 parties in the National Assembly further agreed not to recognize any economic or trade agreement, treaty, contract or accord established by the current government that has not been approved by the Assembly, even should any of these parties be elected in 1996. Their aim is to get the international community to pressure the executive to accept the reforms. Finally, the Assembly threw down its ace. It announced it would indefinitely delay debate on the bill to privatize TELCOR. The International Monetary Fund has threatened to withhold further disbursements agreed to in the Enhanced Structural Adjustment Facility (ESAF) agreement if TELCOR is not privatized by June.

Two Antagonistic Positions

As is evident, the scenario currently being played out is one of intransigence by both sides. For the executive branch, personified in Minister of the Presidency Antonio Lacayo, the reform prohibiting his candidacy in 1996 must go. Counter to appearances, his obsession is not based just on personal ambition; it has powerful social and economic backers. For its part, the National Assembly is so committed to the reformed Constitution that any discussion of it is out of the question.

No solution can come out of these antagonistic positions. Last month, the judicial branch got caught up in the crisis; this month it will snag the fourth branch, the Supreme Electoral Council (CSE), whose directors come up for re election. The CSE is responsible for preparing the November 1996 elections. Following the procedure established in the reforms, the National Assembly has initiated that election process, which could further aggravate the crisis. This and the TELCOR issue make May a pivotal month.

The main feature of this scenario is institutional and political chaos. But who wants chaos? Certainly not the population, which is fed up with conflict and wants an orderly solution to the instability. For the most part, it wants Violeta Chamorro to finish her mandate and assure a peaceful presidential succession. The army doesn't want instability either, least of all one that would involve it as an armed force. Even the signals coming from the US Embassy have been that the solution to the conflict must be "consensual" between the two branches.

Protagonists in the Drama

Six main collective actors have a role in this drama that could end in tragedy for the country. The first is the politicians, starting with the two main contenders: the executive and legislative branches. Neither can resolve the crisis alone, yet both seem incapable of negotiating a solution which can also be said of the other political actors. Most political parties are subsumed in the state's ideological apparatus, which is the only way they can be visible since they do not represent organized social forces within civil society. The main exception to this is Managua mayor Arnoldo Alemán, who could well have enough strength to tilt the scales of the crisis, but only when he considers it opportune to his own electoral interests.

The impasse can thus only be broken by actors not closely tied to the political parties and/or branches of the state. Who are they? What can be expected of them?
The armed forces make up a second actor. While legally subordinated to the executive, their relative autonomy and the weight of their own business interests means they will keep their distance from the conflict. They are interested in assuring a system of restricted democracy in which anti capitalist movements do not control the streets.

The third actor is the Catholic Church, which, given its moral presence in the conscience of the Catholic faithful, is playing a key role. Its unquestionable moral authority, recognized by Christians and non Christians alike, means that any sign from it can tip a good part of the scale in its direction.

A fourth set of actors is outside the country, and is divided in two subgroups: 1) the donor countries, particularly the United States and the European countries; and 2) the international financial institutions, especially the International Monetary Fund, the World Bank and the Interamerican Development Bank. Given that Nicaragua, and particularly the government, is extremely dependent on international cooperation, this group's "power of persuasion" is formidable. Although the dialogue promoted in March by the United Nations Development Program and "friendly countries" failed, the foreign aid cuts that have begun will have more influence than mediations and pretty words.

The fifth group is made up of the business class, divided among: 1) Somocistas and conservative, old traditional business leaders; 2) business "newcomers," mainly from the FSLN's upper echelons, who acquired their status through either the piñata or the privatizations; 3) business interests allied to power (specifically to Antonio Lacayo), who have been showered with advantageous privatizations, preferential loans and fiscal incentive packages; 5) the "unaligned," who make up the bulk of the business class and are beginning to resent the favors to Lacayo's friends; 5) business leaders linked to the anti oligarchic Liberal strain; and 6) those involved in Sergio Ramírez's Sandinista Renovation Movement. Even with all these divisions, the unaligned group, or "entrepreneurs without a party," could break the stalemate.

The sixth collective actor is the grassroots population, that motley mix of 1) urban and rural white collar and wage workers; 2) small and medium growers and business owners, artisan manufacturers, peasants and farmers, bankers and service providers; and 3) informal sector merchants and self employed workers of all kinds, including the transport collectives. Few of these sectors have solid and autonomous organizational expressions, and most are weakened by the economic crisis and the lack of government support for their activities. They are usually subsumed within either the political parties or state employment, are generally without a middle level stratum of professionals and intellectuals, and are devastated by the aftermath of the piñata or absorbed by conditioned international assistance and/or clientelist relations with the government.

And the Scenarios?

Three scenarios can be envisioned, the first of which we are witnessing now. If Lacayo's intransigence continues to be met with the Assembly's iron resistance, the executive could be moved to govern "by decree," even naming an ad hoc Supreme Electoral Council. This would put even the 1996 electoral process at risk, since such an Electoral Council would have no credibility. This "solution" would be a de facto coup, simply by refusing to recognize anything the National Assembly does. While it would take the country to the brink, it seems the most likely scenario through May and June.

Even though the reformist political class lacks the clout to impose the constitutional changes, the break with constitutional order implied by this scenario would have severe consequences for democratization and the foreign aid flow. The National Assembly would find its arm twisted until it agrees to discuss the content of the reforms and adjust to the executive's desires. This would also liquidate the Assembly alliance between the Sandinista renovators, the Social Christians and the Social Democrats, clearing the way for two major contenders in the next elections: Lacayo and Alemán.

The second scenario would kick into place if the Assembly still puts up such strong resistance to the executive's contempt for the reforms that it finally forces the executive to accept them.

There are three ways this might be achieved. One would be for the whole political class to unite behind the reforms, facilitated by the Catholic Church's moral support and international pressure. This assumes that the aid cut off would be forceful enough to make the executive back down.

The second would be by putting together a broad grassroots and business movement, in which democratic aspirations unite with demands for a change in the course of economic policy. In this case, not only would the executive back down, but the economic Cabinet and the current axis of power would shatter.

The third would be for the combined forces of external cooperation, the political class opposing the government and a representative part of business manage to effectively pressure the government, despite indifference at the grassroots level. The objective would be an agreement that clears the way for the 1996 elections without breaking the constitutional order. This implies that the powerful families backing Lacayo would cast him aside in exchange for an agreement by the next government not to alter the order established under Violeta Chamorro's mandate other than symbolically.

The final scenario would be to stick with the constitutional order by appealing to the people to break the tie with their vote. The National Assembly has already proposed a referendum. The executive's proposal is for constituent elections, which would dissolve the current National Assembly and let the popular vote decide who can be a presidential candidate in the next elections. The risk is that Alemán's Liberals could sweep the Assembly and throw out Lacayo, something many are trying hard to avoid. This scenario is not very probable because all the other political forces prefer to run out the clock against Alemán. The Lacayo forces are tempted by this scenario, but time is ticking faster against them than against the other contenders.

The people have little to gain in any scenario. The most desirable and perhaps only way to reactivate the economy and effectively reform the state is for the population to actively participate in the changes and put its seal on events. But this is very difficult, given how decimated the population is. Most likely, the business strata and politicians will reach an under the table agreement to change something, but nothing really important; that is, not end once and for all the pillage of the public treasury, which prevents the modernization of the state, and not change economic policy to put the economy on the road to reactivation and social inclusion.

Why Is Lacayo So Pigheaded?

The executive branch's argument for not recognizing the reforms is that they did not go through a process of consensus reaching with all branches of the state or with the population. The general perception is that behind this "democratizing" zeal lies Lacayo's boundless personal desire for high office, prevented by the reform that prohibits relatives of an incumbent President from running.

Does this fully explain Lacayo's unbridled determination to stay in power? There is certainly something of this in his megalomaniacal style, but concrete personal ambition is only one side of the coin. He is also motivated by the need to preserve what he has done during his mother in law's administration. He is propelled by the fear that a populist Liberal government could take office and reverse everything it finds not only the Sandinista "piñata" but the Chamorrista one, in which properties were virtually given away through the privatization.

Is this fear, shared by the current circles of power, well founded? Alemán could turn a blind eye to the actions of the current government officials, to avoid obstacles to his taking office. Alemán is no longer living up to the destabilizing image his adversaries attribute to him. He has had conversations with Sandinistas and the army, and floated the possibility of an "amnesty" to avoid the shake up many expect of him. If he continues on this flight pattern, the business world could sacrifice Lacayo to avoid an even more costly situation. But if the families allied to power do not trust Alemán's amnesty, or interpret that he won't be able to maintain things as well as they have been up to now, they will support Lacayo or a coalition that includes him.

The Key: The Two Piñatas

Many analysts see the main obstacle to the national reconciliation people long for as the refusal of both Sandinista higher ups to rectify their piñata, and Chamorro higher ups to rectify theirs. A true "revolution of honesty," such as the Chamorro government promised, would have to sweep out impunity and prosecute those implicated in the privatization abuses and other pillage of the state. This would obviously affect the prosperous negotiations of government cronies. Given the powerful interests at stake, this is where the line up of the political class becomes most polarized. In addition, whatever political force decides to go after the abuses of these two piñatas would hinder its own possibility of later engaging in corruption and plunder with impunity.

If this rectification were to happen, it would modernize the public sector and democracy would come out the winner. The whole country would win, because the system of impunity and privileges that is so offensive to the population would be eliminated. But the powerful families that control the country, together with the other piñateros across the political spectrum, are determined to preserve the status quo. This life or death issue for the oligarchy and the piñateros is behind the executive's unwillingness to make any concessions to resolve the institutional crisis.

The War Goes to Court

With such interests pushing it, the executive is irresponsibly gambling on the creation of an institutional vacuum in the hope of "renegotiating" not just specific aspects of the reforms, but the country's whole institutional scaffolding. Unperturbed by all of this, the National Assembly is implementing its legislative calendar step by step in conformity with the reformed Constitution.

Legal battles are not a very effective way to resolve a political, social and economic problem, and the credibility of the country's democratic process is taking the worst blows. The general frustration toward these power plays favors undemocratic solutions to the crisis.

The Nicaraguan bishops published an important Pastoral Message for Holy Week, assessing the country's political, economic, moral, social, family and even ecological crises. It strongly criticized government corruption and nepotism, and surprisingly exhorted the political forces promoting the constitutional reforms to "effectively demonstrate your leadership by calling on your base and the citizenry to demonstrate in a civic and organized way to resolve the crisis between the branches of the state."
This call has been picked up by very diverse groups but, as National Assembly representative Danilo Aguirre, a Sandinista renovator, recognized, reactivating civic struggle in Nicaragua will be "very difficult at the start." First of all, most of the population doesn't have a clue what is at the heart of the crisis. Second, it doesn't see what benefits it could get from the constitutional reforms, since the legislators' discourse has been abstract and rhetorical, and has not touched the population's social and economic agenda. The nexus between democratization and social improvements is not made comprehensible. Complicating matters even more, the legislators have strongly insisted on revising taxes, yet have not opposed the series of tax and other incentives the executive put together for agricultural and commercial businesses, since many are entrepreneurs who stand to benefit from them. This inconsistency undercuts their fight for the reforms, and puts them on the defensive. So much opportunism and confusion is sinking the country.

The Costs of Instability

Those who simplistically hold that this is a fight between those "on top," with no consequences for the people, overlook the costs of this crisis. The executive is trying to gain time, hoping to work things out from its privileged power position, but the legislature is giving it no space to win the legal way. The incalculable costs already racked up by juggling with the country's institutionality make the potential gains look paltry. And the highest costs are paid by the country as a whole, not by the executive and other segments of the supposed political class.

One cost is that Nicaragua's transition process, widely considered exemplary at the beginning, has turned into a scramble for power with no rules or principles. This is undermining any possibility of a democratic, modernizing and inclusionary system.

The country's deteriorated international image could cost a greater loss of national autonomy, already weakened by the ESAF accords. Since no clear governing capacity exists in the country, outside agents are tempted to step in and push the solution they consider "for the good of the nationals." But this arbitration and interference in the country's internal affairs will never be a good solution for Nicaragua.

The possibility of successfully renegotiating the foreign debt has also been seriously weakened. Nicaragua is beginning to be viewed with annoyance as a generally conflictive country, an undesirable subject for aid.

Another very likely cost could be a foreign aid freeze, an old idea that reemerged in a recent meeting of the "friendly countries." It is thought to be the only form of pressure that could shake off the political and personal interests getting in the way of national consensus. Governments providing bilateral aid are also becoming aware that they are feeding into the irresponsibility of the political leaders, because both government and opposition depend more on their financing than on contributions from the population. The donors have two options: cut the aid if the conflict continues, or condition it to severe scrutiny if the conflict is surmounted.
The greater restrictions on domestic liquidity caused by withdrawing foreign aid or even just nipping some disbursements in the bud will severely restrict imports and bring a spiral of greater cuts in public spending and increased utility rates. This will make the population's already desperate standard of living even more intolerable.

The crisis cannot drag on longer without damaging the already slight possibility of economic recovery and foreign resource flow in 1995. As things stand, it is illusory to think that economic activity will not hit major snags. If the shrinking financial margins disappear altogether, the beneficial effect on Nicaragua's economy of the rise in international prices for coffee and other products would be undermined.

Weak Society and Top Down State

Serious resistance to the executive's refusal to accept the constitutional reforms and to its idea that the country can go forward by presidential decree can be seen in the rejection by much of the political class, the Catholic Church's recent disapproval and pressures from the donor community. But the general population's position has yet to be felt.

The government's inability to respond to people's most urgent problems has not won it the support it needs to legitimize its project to stay in power. There is even a possibility that desperate, violent and fragmented sectors of the population will add to the chaos, destabilizing the country even more. But the executive is gambling that the crisis can be pushed to even greater extremes because the social movement has been effectively deactivated through the implementation of the structural adjustment over the past few years.

What is preventing a solution to the crisis is neither the executive's refusal to accept the reforms, nor the exhaustion of legal mechanisms. It is the absence of either a strong civil society or a modern, clearly established rule of law that could break the standoff between unbudging political elites.

The group in power has crystallized a closed political system that excludes not only the grassroots but even a sizable part of the business class. On top of that, the neoliberal adjustment has indeed excluded and atomized the grassroots movement, dragging many of its members into extreme poverty.

The neoliberal creed that the state should let the "free market" solve things removes the emotional burden from its effects. The market is abstract and impersonal, like a gale force wind: it does terrible damage, but is intangible. The crisis is suffered, but is not fought effectively, because there is no place to direct repudiation, such as against the economic Cabinet, the economic policy itself, or even the corruption and crimes of anyone in particular. The crisis shows that the political system, based on continual pillage of the public coffers, is not only exclusionary and undemocratic by nature, but is also ineffective for conflict resolution.

The top level, closed door meetings between the two government branches have been incredibly sterile. The population has lost all interest in these interminable dialogues of the deaf, because they are producing no known tangible results. One gets the feeling that two countries exist. One is hard and real and daily, in which the population suffers the stabilization and adjustment measures even to the point of starvation. The other is imaginary, racked with politicking, in which the various actors in the political class engage in verbal duels, oblivious to the needs of the people.

The citizenry, politically active up to 1992, has not lost interest in politics; the politicians have lost interest in the citizenry's concerns and needs. People are fed up with promises that do not fill their stomachs and no longer even create the hope that they ever will. The disgust with the confrontations on high creates a desperate desire for things to be put in order. The socially atomized population has urgent needs and fears new misfortunes even greater than the ones that already exist. Such a civic vacuum promotes authoritarian solutions.

Why the Demoralization?

How could a population so organized and militant in the 1980s be so passive now? Looking at the various social forces, one sees a severe organizational erosion and an absence of leadership able to remedy the situation. The generation that led the revolution in 1977 1979 is now between 35 and 50 years old. There has been a generational shift, while the leaders perennially at the head of the main social organizations are getting more conservative. The lack of any ongoing democratic change of leaders has allowed a corporative and conservative strata to establish itself in the organizations, which have also not fully shaken off their subordination to the FSLN.

With this legacy from the previous decade, the social organizations were poorly equipped for the new challenges presented by the neoliberal adjustment in the 1990s. Added to this, the piñata left a deep moral and ethical wound in the social movement. We are not speaking here of the piñata as defined by the right turning over small properties to those benefited by the agrarian and urban reform but rather the unbridled self enrichment of a small sector of Sandinistas and their periphery of influence, which reaches ranking officials in the current government.

The piñata triggered widespread ethical laxity, a "good guys finish last" morality. If the 1980s were premised on solidarity and altruism, these values were annihilated by hyperinflation, followed by the piñata, followed by the penury of the structural adjustment. The government's unwillingness to loosen the solid knot of interests among "piñateros" of all political stripes shows that the problem goes well beyond the FSLN, and is still a source of festering conflict. One consequence of this for the social movement was the disbanding of intellectual supporters. While some stayed involved, most were demoralized by the rapacity of a leadership they had learned to respect and support over years.

Another source of frustration has been the activities of the Sandinista affiliated unions. The unions were extremely politicized, run on the basis of "political directives" that often had little to do with their members' needs and agenda, Strikes and protests became discredited as a way to force negotiations because they were abused as the first, not last, recourse, no matter what the issue. This eventually trivialized public protest, particularly since its disorderly abuse reaped little or nothing.

In addition to these artificial struggles, the movement was eroded by the failure to do what was needed to win the really key struggle against public sector layoffs and to pull a clear social policy out of the government. Huge demonstrations in front of government buildings were organized at the beginning of the 1990s, while the political leaders lined up at the back door of the same buildings to negotiate agreements that undermined the protesters. Many of these major demonstrations traded credibility with the union base for unfulfilled government promises, as also happened with the expressions of rural rearmed groups between 1992 and 1994.

It was a bad deal, because if something serious is not written down and signed, with obligations on each side, it loses its seriousness. The government failed to comply in about 90% of the cases, but systematically coopted the leaders with paybacks or by solving their personal cases. When there weren't enough goodies to go around, the carrot was replaced with a fair amount of stick, to get the social movements in line.

No Longer Much Anger, Just a Lot of Apathy

The unions' agenda for confronting the government's economic policy, at least up to 1993, rested on the privatization process. Despite its importance, this was obviously not the pivotal problem for the bulk of the working population, which was facing job insecurity, low wages, unemployment. the government's capricious new taxes, rising food costs and no credits for small and medium urban and rural production. The union movement, disorganized, decimated by layoffs and with a leadership obsessed with guaranteeing its own participation in the privatization, was left without issues when that process ended, and without having attended the most important issues from the grassroots viewpoint. Finally, the government's inability to reactivate the economy, to say nothing of weakening it further through corruption and pillage, reduced civil society to its lowest expression.

In these conditions, the population's organizational clout has dropped from semi insurrectional rage in July 1990 to non mobilization throughout 1994. Any enthusiasm for replacing the union leaders with a new generation of social activists who could lead the struggle against neoliberalism has been sapped by poverty and the fight for survival, migration abroad, social atomization, crime, prostitution and drug addiction.

The economic reforms have reduced organized workers, the unemployed and underemployed, to small islands at a local level where, in the best of cases, they can keep alive the spirit of struggle while waiting for better times. For the most part, the population, drained of its health and strength, no longer expresses its frustration with reality in anger as much as in social anomie and political apathy.

The executive still has one hand free due to the weak grassroots pressure. The teachers' strike in March and April, which ended with minimal improvements for the sector, shows how weak the public sector union movement has become. The celebration on May 1, International Workers' Day, with divided events and no unitary plan of struggle for bread, work and a respectable wage, also shows the lack of vision of the isolated union leaders. None of this is surprising, since social movements rarely manage to hold on to their unity and identity in conditions of extended extreme poverty.

Who Can Tie the Executive's Hands?

The prevailing unemployment, with its attendant fragmentation and atomization, works as a political mechanism to facilitate the application of the economic reforms. But this would be more difficult if the political forces were to contribute their organizational experience and capacity, backing viable proposals that could pull the social forces together.

The serious weakening of the social forces' organized expressions lets the government apply the economic reforms at will. Nicaragua's ultra presidentialist system also encourages authoritarian tendencies and a temptation to remain in power. Thus, not only is economic policy an increasingly closed process, imposed with no consultation, but the government's political administration is so centralized that the democratic game, played out only in the media's "unrestricted freedom of expression," is a mere mask for the way power is really exercised.

The executive branch has become extremely autonomous. The greater or lesser subordination of the other three branches to its designs has also created a serious breach between the government and civil society. Since there is no real counterweight to the executive's actions by the other branches, the fragmented political parties or the weak grassroots representation, the executive has developed the habit of putting only its own seal on key events.

The process of reforming the Constitution was different. The new alliance in the National Assembly altered the relative weight of the executive branch, even though it refused to recognize the legal fruit of this alliance. This revealed the executive to be a wolf in sheep's clothing. Having reveled in the weakening of the social organizations, it has now turned against the political class itself.

This class, separated from the grassroots base, has little coercive power over the powerful presidency. That, plus the fiscal support and preferential loans to the businesses of the government's cronies in the absence of regulatory legal frameworks has allowed a scandalous plunder to occur.

Can the business class do something? As mentioned above, it is divided among Sandinista and pro Lacayo piñateros, nostalgic Somocistas, renovating Sandinistas, Conservatives, Liberals, and those without a party. The executive's tactic has been to penetrate the business chambers to put them at Lacayo's bidding, although this has not yet given solid results. There is growing resentment among business leaders about the "unfair competition" by colleagues linked to the government, particularly to the figure of Toño Lacayo.

Through all its actions, the executive has dissipated any sympathy for it. By refusing to respect constitutional law, to say nothing of its own promises, it is now paving the way for its mandate to be peacefully disobeyed by the population.

The instability could push an impoverished population into desperate and undesirable reactions. Such spontaneity could feed social chaos without contributing any constructive solution to the crisis. It would only radicalize it, with unsuspected consequences. Despite the justice of the population's demands and the calls to civil disobedience that are beginning to be heard (like refusing to pay the recent tax increases), there is thus a risk of a greater breakdown of constitutional order and of any remaining democratic mechanism for solving the population's problems. The government's own actions would be largely responsible.

To avoid this, the leadership of the worker and producer organizations should unite to promote a peaceful mobilization that can hope to obtain tangible and viable improvements in people's situation. If the social disintegration can reverses itself into a unitary movement of civil disobedience, it would have a quite different effect than a spontaneous outburst. But for this to happen, the social forces must come up with a serious, rigorous and viable proposal, to be debated and agreed to with the country's various political forces. This possibility, albeit remote, is possible if some power is returned to the population, without forgetting that reconciliation is still a key point on its agenda.

Lacayo's National project

Despite all the restrictions on the government, presidential minister Antonio Lacayo and a number of other government and legislative loyalists launched what was seen as Lacayo's electoral program on April 23 in Managua's largest convention center. The three hour event was transmitted live on the government TV channel and the hall was filled to overflowing with 2,800 invitees from different sectors. The most visible were government officials and their families.

All those attending carried noisemakers like those used in children's parties (matracas, in Spanish), which they twirled instead of applauding. While "Toño" Lacayo formally baptized the event as the presentation of a "National Project," it was immediately and disrespectfully dubbed the "Toño Matraca" Project by the media and much of the populace.

Lacayo did not officially put himself forward as a presidential candidate, but his attitude, the way he snapped orders without consultation, his central role in the event and the deference paid "Mr. Minister" by the other Cabinet members present left no doubt. This heterogeneous group will formally elect its candidates for the 1996 elections within four months.

Some optimistic analysts had hoped he would use the event to lay to rest his own presidential aspirations, thus making way for some arrangement between the branches. It would have been a masterful stroke. The event, however, was rife with messianism. The legislative body was not acknowledged while the executive was put forward as the "the green light." Lacayo's attack on the constitutional reforms and the arrogance of his proposals the "only possible road" show that he intends to let nothing stand in his way.

In the first scenario sketched out above, the institutional crisis would become so grave that the country's whole political structure, which has been changed by the reforms even if only on paper, would have to be renegotiated (scenario two). This could lead to the third scenario, in which the executive decides to take full charge, annulling the other branches of the state and calling elections for a Constituent Assembly, which would imply postponing the 1996 presidential elections and require the army's tactical support. The aftermath of this move would be a freeze on outside aid pending the reestablishment of constitutional order, as well as unpredictable domestic disturbances.

This "Fujimori" approach has its risks. The Peruvian President was prepared to sacrifice outside aid, since he was less vulnerable on that flank. And despite the structural adjustment also underway in his country, he had enough resources to implement works that tangibly benefited the population. Lacayo, in contrast, cannot survive without international aid and lacks the resources for populist politics.

Instead of appearing as a "peacemaker" who puts tire burning protesters and dilettante politicians in their place in favor of the country's reactivation, Lacayo's presidentialist ambitions are gaining fame as the country's main destabilizer. He has neither acceptable excuses to break the constitutional order nor the credentials to assume the role of savior afterward.

A variant on the second scenario is that, faced with the paralysis of the branches of the state, a new correlation of forces emerges within the National Assembly, one willing to negotiate the content of the reforms, leaving the presidency much of its current excess of power. This would be suicide for the legislative body, and particularly for the alliance of Sergio Ramírez's Sandinista renovators, the Christian Democratic Union and Alfredo César's segment of Social Democrats. Lacayo could run in the elections, basically against Arnoldo Alemán, counting on the levers of incumbency to significantly improve his position.

One option breaks with constitutional order totally and the other does so only partially. Both wrest credibility from democracy as an effective mechanism for resolving conflicts and an appropriate environment for pushing development. The possibilities of Lacayo being recognized as a great statesman in his role as the power behind the throne would go up in smoke. He would appear as Violeta Chamorro's charlatan and one more little dictator among many who have passed through Nicaragua's history.

Exemplariness and Realism

Neither Arnold Alemán's Liberals nor Daniel Ortega's Sandinistas appear as an organized force able to fill the vacuum of legitimacy. If both proclaim grassroots charisma and their capacity to fill plazas, why is neither one doing anything now? It would seem that their lack of realistic alternatives and of preparedness to assume clear, effective leadership calls into question the redeemer discourse of both forces.

The Managua mayor has expressed reservations about grassroots mobilizations to support the reforms. Alluding to the FSLN, Alemán warned that "in a country that has been without an adequate political culture, it is very dangerous to send people out into the street, because those who do not want democracy institutionalized could take advantage of it." He also announced that he would resign his position as mayor in September, as the constitutional reforms stipulate, to run for President on the Liberal ticket. Despite this support for the reforms, his willingness to appeal to the population to settle the dispute seems restricted. Like most of the other political parties, his has only been trained to compete in electoral races, with images that capture the population's votes for those who only want to do in the current government.

FSLN secretary general Daniel Ortega's declarations to the press on May 4, after weeks of absolute silence, indicate that the FSLN has also reconsidered its posture regarding the crisis and is being more critical of the discredited government. Ortega said clearly for the first time that his party "totally supports" the constitutional reforms. Five days later the FSLN proposed a national dialogue on three points: the economic policy, the constitutional reforms and a basic agreement before the 1996 electoral campaign begins.

The FSLN's opposition to the reforms up to now and its points of coincidence in practice with the executive have undercut its credibility and its ability to offer alternative proposals to the population. Polls show its top leaders with little popularity and the population seems disinterested in violent activities organized by it.

The FSLN has demonstrated an inability to develop more innovative and democratic party methods. This and the stigma of the piñata has weakened its economic proposal, published over a month ago to stimulate debate in the population. The document is more an assessment of problems than a contribution to credible and concrete solutions. Since it does not clearly address the FSLN's ethical political problems and closes its eyes to the need for party renovation, the proposal is formally economistic and covers up the real political problems. As happened with Lacayo, its "great projects" with no real handle to them no longer enthuse a skeptical population that needs to see to believe. Only exemplariness and realism would now have any effect on the population.

On May 1, the government announced yet another increase in fuel prices. A gallon of gas went from 15.50 to 16.27 córdobas (approximately a 10 cent increase, to $2.21 at the official exchange rate). Increases were also announced for water and electricity rates, ranging from a minimum of 5.5% for household consumption to a maximum of 13.5% for big business. The hike for the country's many small business hit almost 11%. The announcements caused general ill will and led various political forces to call on citizens not to pay the increased bills. Workers and collectives in both transport and production formed a National Coordinating Body for the Defense of Credit, Property and Life, which declared an incremental national work stoppage to repudiate the government's economic policy. The strike is supported by the FSLN, but got a lukewarm reception from various organized sectors and from the population as a whole. As of the date envío went to press, it had not accumulated much strength beyond cattle ranchers in the center of the country. Most taxis and busses, even those of the militant Parales Vallejos bus cooperative, were still running normally.

The People Want a Doer, Not Just a Talker

The current situation requires true alternative leadership, one that sparks enthusiasm among people and offers a real way out of their problems. This alternative obviously would not have the constitutional reforms as a focal point, though it should include them among its democratic demands. Any alternative implies effective distancing from the rapacious practices of the power groups, a resolution to the property problem and corruption so resources can be directed to job creation and social improvements. The number one task is to reestablish people's consumption levels, create jobs and support production. This requires genuine modernization of the public sector and minimization of the pillage, corruption and inefficiency. Is Alemán, with his promise that "Everything will be different," assuming that people's agenda?
Despite his party's inadequacy, Alemán is calculating on letting things get worse so he too can eventually find an opportunity to play the savior without anyone asking too much about what he thinks should be done in real and concrete terms. But Nicaraguans no longer expect a saint, or even a great leader. They would be satisfied with simply a meritorious one, a leader willing to roll up his or her sleeves and bring some progress to the country, sharing what little wealth there is with the population once in a while, but making no empty promises. It's not the greatest hope, but the "lesser of evils" from the perspective of a desperate population.

Politicians don't have things easy, because the unilateral action of any one group would be bitterly criticized by the others. On the other hand, reaching consensus for action is an arduous undertaking given the excess one of the few in the country of self appointed leaders of the people. If the difficult process of mobilizing the population against the institutional crisis is to gel, it will require the Church's moral and organizational authority, to avoid jabs by other politicians, each one trying to stand out more than the others. It will also require continual unity and a credible effort to convince the population that the politicians have changed, at least for purposes of this civic struggle, showing with their example that it is worth moving to achieve a better country.

Will the Reforms Prevail?

The coming months are crucial. It will not be easy to wrap up this restricted democratic transition. But having arrived at this institutional crisis, it is necessary to go beyond the reforms, not only overcoming the excessive presidentialism but also deepening the democratic process, shaking off an inefficient economic policy, a nepotistic and corrupt government, social insensitivity and the absence of a viable future as a nation.

The second scenario will tend to impose itself in the medium run. The reforms will probably prevail, pushed by a strong dose of outside pressure combined with domestic pressure from reformist politicians and the business class without a party, backed by the bishops. But it will only happen at the cost of enormous sacrifice for the country, once again the victim of a political clique with too much ambition for power. The damage will be done and the aftermath of this colossal and costly loss of time and resources will have to be dealt with for a long time to come. If we want all this to have any sense, we cannot close our eyes to reality, however disagreeable it may be. We must promote the concrete participation of society in the resolution of its concrete problems.

The option of joining forces without more of the disorder generated by the particular interests of the politicians is not the best road for a people battered by decades of interminable conflicts. Although the country seems like a bus in which the driver and his fare collector are embroiled in a fist fight, the most reasonable solution is not for the riders to get into their own row. They have to take over the wheel not only to keep the bus from going over the cliff, but also to get onto the right road. This is the challenge facing the population.

The social anomie goes hand in hand with the discrediting of the governors, who only appeal to the population when they need it and forget it when it needs them. The vacuum of legitimacy should be filled with concrete and tangible actions. The reformist legislators should turn the National Assembly into a People's Assembly, joining forces with the Catholic Church in a civic campaign to defend the constitutional reforms and improve the population's living standard.

Without abandoning their legal methods, the legislators need to promote people's participation in the conflict; it is not remotely enough to merely call on their civic conscience. People's lasting support would be won if the National Assembly could design a legislative agenda that incorporates their most serious demands.

But not even this would be enough. A credible and viable proposal must also be put forward that consistently addresses the population's interests, one that would be taken seriously by the financing agencies and by the executive itself once things are resolved in the country's favor. Such a proposal cannot be exclusionary: it cannot leave the executive out or demonize a negotiation with the IMF. Those who believe in chaos, violence and twisting the adversary's arm are not taking into account that the people do not aspire to eliminate anyone. They just want things set up so they aren't always the ones who pay the damage. It's time to get on with the "revolution of honor," so the house can be put in order with greater comfort and peaceful coexistence for its inhabitants. This program has to lead to a realistic renegotiation of the ESAF terms with the IMF, which also requires a united house.

As Guyana's recent and successful experience shows, civil society can negotiate with the IMF if it puts forward a technically rooted and credible proposal with broad official and popular support. In Nicaragua's case, this would imply getting past divisionism and irresponsibility, being better governors than those now in power: serving the citizenry, having a major sense of responsibility toward the current and future generations and putting the country's interests before personal ones.


International aid has the Nicaraguan government over a barrel, partly due to the foreign cooperants' fatigue and even annoyance
the with the institutional crisis and instability, and partly for structural adjustment reasons.

With respect to bilateral aid, the Austrian government has decided to suspend bilateral financing and concentrate its collaboration on representatives of civil society. The European Union has already frozen a US$3 million loan, given that its disbursement was not arranged with the National Assembly's knowledge, as the reformed Constitution mandates. Other donors have begun to respond to the prolongation of the institutional disarray by scratching Nicaragua off their priority list.

At the end of April, opinions in favor of freezing financing to Nicaragua until the institutional crisis is solved also began circulating in the corridors of the Interamerican Development Bank and World Bank in Washington. No one there is certain that the outcome will be a government with the authority to repay the loans.

The US has not yet given a clear signal about its financing plans, but in a visit to National Assembly president Luis Humberto Guzmán on May 4, US Ambassador John Maisto made the US political message clear: seek a negotiated, consensual solution to the instability. The Embassy has not, however, taken sides on what that solution should be. A small relief is that it does not accept a coup as an acceptable way out.

The government is also tied down by the conditions of the ESAF agreement signed with the International Monetary Fund. Although
Antonio Lacayo's active promotion of the ESAF conditions cannot be denied, the restrictions on him are severe and the ESAF terms have been considerably toughened for 1995.
The IMF mission that visited Nicaragua in March certified that the government was on the right path in 1994 but was "seriously
alarmed" at the loss of about US$50 million in international reserves during the January March 1995 period.

The mission attributes this loss partly to the fact that between November and December 1994 the commercial banks withdrew the surplus legal reserves they had deposited in the Central Bank, due to fear of an imminent devaluation and subsequent freezing of bank accounts.

Another reason was the monetarists' contradictory balance of payments logic. This logic requires that if more money is circulating in the economy it should either be backed by more hard currency deposited as reserves or greater domestic credit should be avoided. Following this logic, the government bought more córdobas with its foreign exchange reserves between January and March 1995 to get them out of circulation and keep the exchange rate stable.

Other reasons were payment of the increased petroleum bill and the failure the of National Development Bank (BANADES) to recover a 100 million córdobas in credits to "personalities" of the business and political strata. This loss was also covered by
foreign exchange reserves.
The IMF "recommended" establishing a program to increase the reserves by $28.6 million between April and May, which implies
greater credit restrictions and a hike in interest rates very bad news at the beginning of a planting cycle. The IMF also hardened its position on net credit to the government, freezing $12 million, of which $4 million are from the layoff program not implemented in 1994.

The situation could not be more critical. The IMF insists that there be no deviations from the agreed upon goals, or else ESAF and the flow of foreign resources on concessionary terms will be suspended. This would not be the end of the world if the executive had national consensus to develop a more flexible adjustment program with friendly countries, even without the IMF. But the battle of the branches has been the last straw for the international community.


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