Envío Digital
Central American University - UCA  
  Number 169 | Agosto 1995



Not Yet to the Root of the Crisis

With the waning of the institutional crisis, the country has taken an important step towards a greater balance of power and the democracy it needs, but the root of the crisis has still not been reached.

Nitlápan-Envío team

The institutional crisis has finally been resolved through an agreement between the executive staff and the National Assembly board. Even if the results were not all one may have hoped for, this is a positive outcome, in that it contributes to political stability and assures that foreign cooperation will continue. Given the deep mutual distrust between the two branches, even negotiating this limited accord was like pulling teeth.

Nicaragua's major political crises are so intense that they often end up being settled by third parties, and this one was no exception to that unwholesome tradition. External pressure finally forced both branches of government, particularly the executive, to temper their inflexible positions, permitting Cardinal Obando y Bravo to mediate an acceptable way out for both sides. Some argue, however, that the solution undercuts the very institutionality both sides claimed to be trying to safeguard.

In addition, five months with the two branches at loggerheads was long enough to seriously reduce the economy's potential for 1995. With the political seas now returned to relative calm, the other, more serious rocks on which the ship of state could founder have again surfaced. Those at the helm have a tough course ahead: resolve the property problem, safeguard the openness and content of the electoral process and generate broad consensus around a development program, on the basis of which the negotiation of the foreign debt and any change in economic policy must be built.

With the debris of the crisis now floating off, some cracks in the ship of state's hull also show up more clearly again. Those in most urgent need of repair are the move toward democracy and the standard of living of the Nicaraguan majority.

Do the accords contribute in any way to these major challenges facing the Violeta Chamorro government in its final months? Only indirectly. Reducing the political instability at least makes it possible to govern and reopens the flow of aid to a country extremely dependent on it. Signing the agreement also goes a long way toward safeguarding the electoral process, and with it, a peaceful change of government. The return to relative calm will help the state institutions get moving again after months without rudder or motor. And, finally, both branches of state now look better in the eyes of the international community. The majority of the population, on the other hand, fed up with these duels by politicians brandishing cardboard swords, is gazing upon the outcome with consummate indifference.

How the Framework Law Is Framed

The agreement between the branches is obviously a political solution more than a legal one. In the end, the shaky legal foundations gave the appearance of a pact without principles. The executive's mistrust, despite the guarantee provided by Cardinal Obando's presence, is at the heart of this law, which contains 32 articles. Of these, the following are among the most important:

* Application of the Law Against Nepotism, already drafted on the basis of the reforms with the aim of eradicating this vice, is deferred until January 1997. This allows Lacayo to remain in his position, together with many other relatives of the President who hold political or diplomatic posts.

* The National Assembly committed itself not to alter the ceiling on the budget bill presented by the executive. It also agreed to modify the definition of the categories "ordinary income" and "extraordinary income" in its Budget Law. Certain allocations, such as the 6% for higher education, are made on the basis of these categories.

* The National Assembly agreed to co legislate taxes with the executive, in which any bill initiated by either branch will be discussed by both until consensus is reached. The legislature conceded the faculties that the constitutional reforms granted it over fiscal and economic issues. It does, however, retain its new faculty to study and ratify any international treaties.

* The five Supreme Electoral Council magistrates, nine Supreme Court Justices and the Comptroller General will be elected by consensus between the two branches.

* Both branches agreed to draft an important package of bills by mutual accord, which includes key issues such as property, family patrimony, the agrarian reform (defining the terms idle, uncultivated or unproductive latifundio), the banking system, consumer protection and the like.

The Framework Law is, at the very least, too ambitious; it proposes to resolve "by consensus" and in little over a year what was not done in five years. Legally it is incongruent with the constitutional reforms themselves, limiting very important aspects of them and deferring them in time at least until 1997.

Winners and Losers

The National Assembly temporarily conceded its exclusive right to make and approve laws in exchange for the promulgation of the constitutional reforms. Among other things, these reforms guarantee some political and economic liberties that, in fact, were already guaranteed; they also eliminate the military draft, reduce from 72 to 48 hours the time in which a person accused of a crime can be held by the police before appearing before the judge for arraignment, and establish two rounds of voting if no presidential candidate wins at least 45%.

These and other advances cannot hide the fact that the skew of the negotiations obeyed the party interests of the legislative directors who sat at the negotiating table for all those long and tense sessions. Many saw it as a return to the style of "stabilizing deals" typical of the old pacts between the Liberal and Conservative parties.

The Framework Law puts the National Assembly, particularly the benches that make up its non Lacayoist "center," in the position of having to collaborate with the executive in actions that require legislation. It will thus share responsibility with the executive not only in the limited implementation of the reforms, but also in drafting laws that deal with very thorny issues.

The net losers in the outcome of the closed door negotiations were the Liberal and Conservative factions not represented on the Assembly's directive board and which thus were not participants. One clear winner was the presidency, which forced significant concessions out of the Assembly. Within the Assembly itself, the winner was the convergence of interests that today unite the Christian Democratic Union, Sergio Ramírez's Sandinistas Renovation Movement, Vice President Godoy's Independent Liberal Party (the only one not to join the new Liberal Alliance), the Conservative Popular Action and one or two free floating legislators. The main thing that those in this non Lacayo "center" grouping share with the executive is the goal of cutting the Liberals that support Managua mayor Arnoldo Aleman's candidacy off at the pass. This could be the key piece in the country's political jigsaw puzzle. The way the crisis was resolved laced with an electioneering spirit makes promoting the national unity needed to deal with the country's main challenges much harder. The solution itself also delays the opportunity to make real changes until the next government.

The "Will" Came From Outside

The fact that pressure from donors outside the country and the Catholic hierarchy inside was needed to untangle the conflict does not bode well for the ability of national institutions to manage conflicts within a democratic and legal framework. The first and most enduring cost of the conflict was the rupture of the incipient democratic institutionality. A precedent has been created: extra legal political deals, more than legal solutions, are still the real mechanism by which the political system operates. This further reduces the government's credibility, already on a decline for reasons ranging from its failure to fulfill minimal accords to its questionable administration of justice. The population's negative perception of the political class as a whole and of the government's actions undermines the democratic game and any conviction that things can be changed by peaceful civic means. Given the social apathy, however, this generates more political abstentionism than social violence.

The donors' pressure was decisive. At stake were not only additional funds for Nicaragua to buy back its commercial bank debt, but also a possible increase in foreign aid, to be debated in Paris on June 20 21. The biggest risk in Paris, however, was that the persistence of the institutional conflict as well as the government's failure to meet the IMF's conditions, would get Nicaragua red lined from the development aid list, leaving it eligible only for humanitarian aid. The two branches gritted their teeth and agreed to the "legal" mechanism just as the clock was running out. That was enough for the international community to ratify the foreign aid already promised, but nothing more.

The positive aspect of the Paris meeting, then, was that the international community still considers Nicaragua eligible for development aid, albeit with conditions. Future medium and long term economic and social development aid is now predicated on Nicaragua maintaining political stability and national unity. Both of these issues, as well as the failure to manage the crisis were reportedly main points on the Paris agenda.

Embroiled in the conflict, the executive had also let macroeconomic management slide, which meant that it arrived in Paris without having met all the goals agreed to with the IMF in March. The government had signed on the dotted line, knowing that several of these goals were very restrictive and hard to meet, so as to get the second disbursement from the IMF's Enhanced Structural Adjustment Facility (ESAF) before the Paris meeting, since that backing was key to being able to solicit additional funds. But since the government did not fulfill of the ESAF goals, it did not get the disbursement.

In Paris, the government also presented its draft of a "National Plan for Sustainable Development By the Year 2000" to the international community, on the basis of which it requested an additional $442 million for investment in social and productive infrastructure for the 1996 2000 period. The opposition has argued that the draft represents Lacayo's electoral platform more than a national plan, which is not wholly unreasonable. In its first term, with Violeta Chamorro at its head, the government ended the war and stabilized prices; in its second, with Antonio Lacayo openly taking the reins, it would achieve growth. COSEP president Ramiro Gurdián demands that the plan be discussed, "not to agree on the amount, but on the way it would be managed."
The government did not get the additional $442 million the finance minister claims the amount is "under negotiation" and the development plan was not taken seriously prior to discussion with all social and productive sectors in the country, which the government committed itself to do. (See "A Parade of Images in Paris" for further details on all these issues.)
What was reiterated in all of this is the economic program's extreme vulnerability and its total dependence on outside resources. Even more serious is that this push to get funding does not even favor production. Half of the $1.5 billion reaffirmed for the 1995 97 period will go directly to pay on the foreign debt, and much of the rest to close the balance of payments deficit and to pay for public investments, which the opposition fears will be manipulated on behalf of Antonio Lacayo's electoral campaign.

Since the institutional crisis also worsened the international tendency to take the reins, the ESAF criteria will now be even more restrictive. Many analysts agree that 1995 economic growth will be 2.5% at best, only half of what was forecast at the beginning of the year. They do not suggest that the crisis itself caused less growth, but that the neglect of macroeconomic management, the handling of the crisis politically without rooting it in economic rationality, the loss of time and of the opportunity with the foreign donors, and the uncertainty which discourages investment decisions, are all obstacles to efforts at growth.

Only Symptoms Were Treated

The general population has demonstrated no opposition to either the reforms or the understanding reached between the two branches. In the main, it no longer cares much what the politicians do or fail to do. It has learned to expect them only to make empty promises, not to resolve people's problems. During the crisis, pressure from society was virtually nil. Apart from its inherent seriousness, this means that the lessons of the crisis will be put to little use.

Many obstacles must still be overcome, and at any point could trip up the passage to the desired national unity and political stability so urgently needed to deal with the country's major challenges. First, the resolution of the crisis was not fully accepted by all political forces it elicited the FSLN's dismissal, for example, as an "accord between elites"; second, the pre-electoral atmosphere taints the possibility of an understanding between so many rival forces; and third, the real problem behind the scenes the property issue has not been resolved.

In sum, one of the most virulent symptoms of the crisis has been resolved, but not the crisis itself. Up to now, only the framework of relations between the executive and legislative branches and the framework that will guide the presidential candidacies for 1996 have been broached. Everything else is still to be resolved.

Lacayo's Strategy

The Framework Law could be interpreted as an "armistice" between the branches of state in order to guarantee the electoral process. The relative advantages in terms of resources and political capital with which each candidate, particularly an incumbent, enters the electoral contest is always a point of discord anywhere in the world, particularly in poor countries with a very unequal distribution of wealth and a lot at stake. Before the crisis, the state machinery and the discretionary power established in the 1987 Constitution gave the executive a lot of room to use domestic and foreign resources in its own favor. It has even permitted the current government to commit to programming with the IMF that goes beyond its own term. Despite all these resources, however, the Chamorro government's lack of social sensitivity has brought it, and particularly presidential minister Lacayo, to the lowest point of their popularity. Despite such evidence in virtually all polls, however, Lacayo retains his fame with the international organizations as the decided administrator of the "correct policy."
The strategy that the executive staff i.e. the campaign planning staff for Lacayo's National Project has been following to reverse this popularity drop is to create a "center" with a good international image and clout in the national business and middle classes. To this end, the executive has been putting together a tax and credit package and is seeking resources for housing programs and other public works.

The institutional crisis has made it hard for the executive to move these plans forward without resistance. Though it won just about all it wanted in the end, the loss of time, reduction of sources for resources and further destruction of its limited political capital were significant costs for that win.

The Two "Piñatas"

The two problems that will probably keep the political class busy for the next period are the property issue and the electoral process. With respect to property, the main tension is between those who want things left as they are, and those who want little left as it is. The first category is made up primarily of leaders of the current and past governments, bound in brotherhood by the hasty piñata of 1990 and the four year long one of the new government through privatization. Among the latter are those confiscated during the 1980s hardliners in this category brook no solution other than the return of their properties as well as a host of others who want more openness in the bidding on properties, punishment of abuses committed through the piñata and privatization, greater value for their indemnification bonds, and the resolution of still pending conflicts over land and/or deeds so de facto landholders can become eligible for credit.

Leaders and friends of the executive and the FSLN who benefitted from the abuses both of whom have considerable power and influence want the property problem resolved before the 1996 elections, given the risk that the government could change. At the same time, both would like to assure that the government not change, given the temptation or pressure a new government might feel to punish the illicit enrichment. The disgruntled group sees two ways to resolve the problem: forge a solid legislative alliance, like the one that pushed through the constitutional reforms, and/or win the 1996 elections.

The most desirable outcome, however, would be to assimilate the lessons of the crisis and begin a cycle of national understanding around a defined agenda. This would require openness and flexibility in government, cohesion in the political class and active participation by civil society. All these elements were absent from the institutional crisis and there are no signs that they will emerge now, in this new stage. Yet another recomposition of party alliances, with a still greater dose of political tension, is far more likely.

The political system could remain immune to the social agenda despite the constitutional reforms, and act according to party interests with no national vision. The way the crisis was resolved could significantly influence the future unfolding of events. The framework law reveals that possibilities of change under the current government are minimal and costly. The legislators were daring enough to challenge an omnipotent executive accustomed to submission by the other state branches. But even with a boldness bordering on excessive rigidity, they got only minimum results from an executive that met and raised their gamble on inflexibility. Most optimists counsel the legislature to accept its winnings, consolidate them and help them grow. For now, at least, one palpable result of the Assembly's tenacity has been to throw tacks on the road of Antonio Lacayo's presidential aspirations.

FSLN: The Executive's Strange Bedfellow

The FSLN's loss of political visibility within the National Assembly and thus in the recent negotiation spaces has led Sandinista leaders to opt for an aggressive tactic either real or apparent against the government as a whole, in a desperate attempt to get headlines. In the still ongoing "camp in" by about a thousand Sandinista farmworker shareholders in privatized state farms and in the occupation of the National Assembly by some 30 Sandinista farmers, the banner of a just demand was raised: a prompt resolution of the property problem. (See "Very Briefs" for details.)
The institutional crisis and its resolution clearly revealed the FSLN leadership's already commented upon alliance with Antonio Lacayo's governmental and electoral project. Henry Ruiz, who was promoted by Sergio Ramírez supporters before the 1994 Congress as a compromise unity candidate to head the party instead of Daniel Ortega and is still a member of the FSLN National Directorate, offered the following explanation in an interview for an MRS newspaper:
"The FSLN has become the main ally of the Antonio Lacayo government and of everything this neoliberal government signifies for this country. What are the causes? First, a lack of political ideas. In second place is a leadership fight. There is a fight within the party to assume new positions in the face of an enormous vacuum created because of the failure of the 1994 Congress. These contradictions don't allow coherence. Third is not knowing how to put an idea of its own, its own economic project, before the government's economic plan. The fourth aspect, the one I believe to be determinant, is that there is a new capital formation, in which economic interests outweigh Sandinismo's ancestral principles. The weight of these interests is determining how the whole party acts, and this is very serious, since it ends up manipulating the people at the base."

Alemán's Good and Bad Image

In these same months, Arnoldo Alemán's Constitutionalist Liberal Party (PLC) has been busy nailing down its alliance with the other Liberal forces and building its own social base in the soil already tilled by the Managua mayor. In conversations with the former Nicaraguan Resistance and with the Conservative National Party, the PLC has been gathering together grassroots sectors and diverse rightist groups under a populist umbrella.

Even beyond the resources that Mayor Alemán's office uses to strengthen his image of enterprising efficiency and the base building work done by his party, opinion polls show that Alemán has genuine grassroots backing. For at least the past year, he has been carving an image of himself as the politician most attentive and sensitive to people's needs, and also attracts the potential "punishment vote" against both the government and the FSLN.

But this "good image" reflected in the polls is precisely what gives Alemán a "bad image" among a national business class still fearful of any return of "ordinary people" to political life, and among international financiers who see in him a risk of falling back into the expansionist populism of the early 1980s.

After the crisis, it is clear that both the executive and the FSLN leadership are set on weakening the electoral advantage of Alemán's Liberals. They oppose, even satanize, the Liberals because they promise to punish the abuses of the piñata and the privatization and for their continual anti Sandinista, anti governmental and anti oligarchic discourse. Alemán's Liberals are preserving their autonomy from all those forces and refused to get sucked into the crisis.

The Legislative "Center"

The main benches in the National Assembly and a few others were an axis of support for the executive before the crisis. In particular, the Sandinista Renovation Movement (MRS) and the Christian Democratic Union (UDC), but also the Independent Liberal Party (PLI) and the Conservative Popular Action (APC), were the stabilizing counterweight of the executive's "centrist" policy.

In that kind of subordination, the decision making pole was always on the executive's side. Modifying that situation through the constitutional reforms was the first break with the executive since the reforms undercut both nepotism and the all encompassing presidential powers. Their challenge to the status quo forced a recasting of the candidacies and electoral alliances.

After the conflict, the accord did not leave the legislature as the triumphant force, but did leave it in a position of equivalence when jointly legislating with the executive. Some of the executive's discretionary powers have been reduced and the dominant alliance within the legislature has turned into a negotiating force with the executive. The solidness of an alliance between rivals all aspire to leadership of the political "center" will have to be proven in the debate over the conflictive property issue.

Property: The Root of the Crisis

A whole set of contradictory forces come together in the property issue, making the new equilibrium unstable. A small circle of people made wealthy under the shadow of the ultra presidency is at the nucleus of these forces. They are few, but their interests are great. The property issue is thus one of life or death for them, one that permits no debate.

The property problem does not really consist of throwing urban poor, peasants or former combatants from the army and the resistance off the small properties they now occupy through usufruct or legal assignment. Such actions would solve nothing, and could in fact raise the problem to the dimension of a civil war.

What is still pending is to put legal order into what has already been done: punish abuses and initiate or complete property legalization and titling. Only the hard line confiscated sector is against such steps. For those people, the only solution is to return their old properties to them. But they are a tiny minority albeit with the powerful backing of Senator Helms and the issue must be resolved in favor of the majority. It may be possible to compensate those whose productive properties were confiscated, but it is impossible for the country to return those properties. What is possible, in the case of abuse of non productive goods, is to return them as a good will gesture.

The most serious problem centers on the cases in which members of the Sandinista government or of the current one have been involved in illegal appropriation and corruption. They are allies of anyone who will put up strong resistance to any solution that sticks to the law and is politically above board, or who will negotiate an electoral alliance in exchange for certain concessions. If the government has steadily turned its back on this issue, it is because the issue cannot be resolved without touching the abuse cases, and thus itself being affected.

Only a solid legislative alliance could "resolve" this problem without major concessions. A few serious cases are holding the bulk of the rest hostage, thus affecting the climate of political stability and the investment potential. That should not be the case, particularly since the majority of the cases are easy to resolve legally. The road that must be taken is barely coming into view as the dust from the institutional crisis begins to clear. Those who saw the country at the edge of the abyss during that crisis were wrong. The true abyss is still ahead of us.


On July 4, President Chamorro published the constitutional reforms that the National Assembly had passed on February 1, triggering five months of unrelenting crisis between the legislative and executive branches. With their promulgation, most but not all of them went into effect.

The phase that led to this happy ending began almost exactly a month earlier, on June 5, when Cardinal Miguel Obando y Bravo, acting as witness, mediator and guarantor of any accord to emerge, sat down with delegations of both branches to hammer out some solution. The talks went on the entire month, with a brief respite for the government to attend an appointment with the donor countries' Consultative Group in Paris and the Cardinal to make a scheduled trip to the Vatican.

Both branches had agreed on about 80% of the over 70 reforms from the outset. The main stumbling blocks were the National Assembly's new attributes in designing and approving economic policy, its preponderant new role in electing the Comptroller General and the magistrates of the judicial and electoral branches, and, of course, the prohibition against relatives of the incumbent running for high office.

On the morning of June 15, just before the Cardinal departed for Rome, the two branches agreed to the drafting of what was termed a "framework law," which would express the political agreement and regulate the implementation of the most conflictive reforms. Consensus would have to be reached on the draft, after which it would have to be approved by the National Assembly by a 60% vote. In exchange, the President signed the whole package of approved reforms, unaltered, and placed them in "escrow" with the Cardinal, together with a pledge to promulgate them upon final approval of the framework law. This solution was reached after 8 heated sessions consuming a total of some 50 hours and steady,
concerted pres sure from donor governments. It was seen as a way around the executive's desire to "reform the re forms," which could only be legally done by going back through the whole constitutional process of approval in two consecutive legislative periods. The executive's initial proposal was for the framework law to have "constitutional rank," but that idea was quickly shot down by constitutional lawyers. In the end, it was defined simply as a "law of consensus" between the two branches.

The meetings resumed in the last week of June, and after more tense meetings, both sides signed the legislation on June 30. Despite expectations to the contrary on the part of some political analysts who have been seeing yet more shifts in the National Assembly's, dominant bloc, the draft was passed into law with even more than the required 60% a few days later.

The essence of the law is to either postpone application of the reforms that are unacceptable to the executive until the next government takes office in January 1997, or to interpret them through over 20 regulatory laws that the legislature must draft with executive approval. While National Assembly president Luis Humberto Guzmán stated that the negotiation had ended "honorably," he admitted that important concessions had been made to the executive.
Minister of the Presidency Antonio Lacayo declared that "this cushions the damage that the reforms could have done to the country," but added that he still felt himself a "hostage" to
the reforms.

At the conclusion of the Consultative Meeting in Paris on June 21, Lacayo had made a surprise announcement in his departing press conference. "In a few months," he said optimistically, "I will leave the government to work with all my strength in the political arena, and organize a new electoral option." Both before and since Paris, Lacayo has ceaselessy presided over pre campaign activities for that option, his "National Project." The framework law sidesteps the issue of his running for President as a relative of the incumbent by deferring it to the Supreme Court. Lacayo has announced that he will file suit to "see how I can throw off these chains."
As a result of the accord, the two branches elected five magistrates by consensus to head the Supreme Electoral Council
(CSE), which had fallen into an institutional vacuum since June 7, when the previous magistrates' term ended. Two of those, Mariano Fiallos Oyanguren and Rosa Marina Zelaya, were reelected, and Fiallos was reconfirmed as CSE president, a post he has held since the CSE's creation 14 years ago.
The three new magistrates are Alfonso Callejas, Braulio Lanuza and Roberto Vivas, the latter an adviser to Cardinal Obando. The new Supreme Court justices have not yet been chosen, and reaching consensus promises to be difficult for obvious reasons.


The crisis originated with the executive's refusal to recognize the constitutional reforms duly debated and approved by the legislature. That first break with institutional order was followed by a chain of maneuvers by both sides that only spread the legal vacuum over a wider area.

Neither willing, able or patient enough to try for pressure from civil society or international recognition of the legality of its actions, the National Assembly opted to apply pressure by publishing the reforms itself in February, in a questionable interpretation of constitutional stipulations on what constitutes the promulgation of a law. This opened the way for a risky game of mutual disqualification by the two branches.

The impasse forced the legislative branch to negotiate with the executive. It refused to negotiate any "reform of the reforms,"
as the executive insisted on, but was open to discussing their implementation. Meanwhile, it proceeded to draft secondary laws based on the reforms. That stand off lasted until the end of April, when the judicial branch was dragged into the crisis. The executive refused to recognize new Supreme Court justices elected according to one of the reforms, accepting only one who, by a stretch of legal imagination, it argued had been elected in accord with the 1987 Constitution. The Court then handed down
a finding that the reforms had been unconstitutionally promulgated.

The electoral branch was nearly dragged in as well in early June, but CSE president Fiallos refused, preferring to leave his institution without elected magistrates until the conflict over which version of the Constitution would govern their election was resolved. With the CSE's preparatory work for the elections stymied, the need to find a rapid solution became more pressing, even if only to maintain the formalities of a democratic representative game. At that point, the outside pressure became stronger. In the absence of a broad civic movement demanding a specific solution to the crisis, pressure from the donor countries and the moral authority of Cardinal Obando prevailed; both branches become more flexible in their "principled" positions.


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