Is ESAF's Career at an End?
In the last few months the government has with its own hands destroyed the image that it had forged of being a reconciler and seeker of accords. Now the valuable bridge of the structural adjustments, on which it had been walking with pride and security, has begun to tremble.
The International Monetary Fund mission that came to Nicaragua at the end of August, spending over two weeks here, was not on a routine visit. The results of this second IMF visit in 1995 were important and revealing, although little of what happened leaked to the public and government officials didn't even mention it.
Is the career of the IMF's Enhanced Structural Adjustment Facility over and the project the Chamorro government has been building since taking office bankrupt? With ESAF in crisis, Nicaragua is entering the last quarter of 1995 in even greater uncertainty than it experienced in 1990, if that is possible.
Some Totally Unrealistic GoalsIt is worth going briefly back over the road that brought us to this point. The IMF's first 1995 visit was in March, in the midst of the institutional crisis. Even though the government had not met the goals set in the ESAF agrement, the IMF proclaimed that it was "on track." This gave the government some breathing room, since that certificate of good behavior allowed it to meet with the Consultative Group of donor countries in Paris in mid June. The IMF also eased up on the ESAF target for public sector savings.
But that support and flexibility did not come free. In exchange, the government signed a series of agreements with the IMF that same month, aimed basically at recovering the reserves level the IMF required. At the same time, the IMF changed the definition of net international reserves by including short term debit payments in them. That modification alone doubled the amount of reserves the government would have to accumulate, which would mean restricting credit to the private sector even more.
Even though the new reserves goal was totally unrealistic, the government blinded itself to the predictable outcome: as the IMF confirmed during its September visit, the government could not meet the majority of its commitments. Not only did it fail to hit the main goals set in March, it even backslid.
This fact, which puts the country's flow of foreign financing linked to ESAF at grave risk, is no accident. As the current Mexican crisis has already shown, obstinate application of a completely unrealistic program leads to a country's economic breakdown, to say nothing of the loss of everything gained through the earlier monetary stabilization measures.
In Nicaragua's case, its total dependence on foreign cooperation makes what it obtained with those costly stabilization measures so fragile that the whole economic policy could collapse if the ESAF funds are cut off. At this point in 1995, even with the government's advances in renegotiating the foreign debt, specifically the commercial debt, we are far from its optimistic forecast at the start of the year. Many now suspect that the Mexican crisis could happen in Nicaragua too, on its own scale, demonstrating, among other things, the superficial way the IMF evaluates its programs.
The crisis is one of essence. With the fissures in ESAF, the oligarchic restoration that the Chamorro government is trying for has no assurance of continuity. It will be in even more trouble if Arnoldo Alemán's Liberals win the 1996 elections with their rightwing populism.
Transition to What?The Nicaraguan "transition," which has consumed all the Chamorro government's energies, has been plagued with setbacks. It was to be expected that the social and political polarization the new government inherited would make the process very conflictive. It was even more difficult since it was not only a transition to a new kind of government and economic model, but also to a new power arrangement that would finally displace both the grassroots sectors and productive business in favor of the oligarchy allied to transnational capital.
This transition got a head start with the 1988 shift in Sandinista economic policy. By then, grassroots organization and activity was already becoming separated from the apparatus of power and the centralized machinery for an undemocratic exercise of power had been put in place with the passage of a new Constitution the previous year. The Chamorro administration inherited that machinery, which functionally suited its own plans, and centralized it even more. With its highly concentrated executive power, it set out to push through the social and political changes needed to reestablish oligarchic dominion in Nicaragua.
In that sense, ESAF is not just a financial stabilization program. It was the sweetener that the dominant elite chose to attract a coalition of commercial and financial groups to guarantee the structural reforms needed to move the country toward a neoliberal style "market" society. If that sweetener is cut off, the panic that could overtake various factions of this recently amalgamated coalition could weaken the oligarchic push. Facing this new and poorly calculated crossroads, the Nicaraguan oligarchy could modify and even reverse the direction of its efforts to culminate the "transition." If this happens, the ESAF crisis would be equivalent to a new beginning, since the stabilizing elements have not yet gelled that would allow Nicaragua development with democracy.
The Governing ApprenticesThe Chamorro government's authoritarianism was only a repetition of the country's political tradition: changes made from state power without the citizenry's participation. The great transition still pending after so many convulsions and wars was to build democratic coexistence, reducing social conflict as much as possible without delegating responsibility for this process to either a paternalistic state or a totally deregulated and savage market. Such a transition would have allowed the majority of the population to substantially improve both its living standards and its political participation.
The FSLN lost the 1990 elections because it no longer represented that generalized aspiration for a better political and economic life. Blinded by its belief that it knew what was good for the people, the FSLN tried to impose a project that lacked sufficient consensus and was undermined by foreign aggression.
The Chamorro government lost little time in doing the same. Only eleven months after taking office, during which it played for consensus, dodging the reactive demonstrations of the right and the left, it issued new currency in March 1991 and signed on to the IMF's stabilization program. From that time forward, it has launched all such big initiatives alone, gambling that it will win.
The government's first stabilization program succeeded in eliminating hyperinflation, but that was not the main goal. Its successor, known as the "Lacayo Plan" for the leadership role played by the President's son in law and chief minister Antonio Lacayo, was laced with nationalist rhetoric and pretensions of originality, but it had an unquestionable lineage: it was yet another of the stabilization plans designed in Washington by the IMF and World Bank.
The government team of local technocrats, most of them engineers or business managers newly dabbling in economics and politics, simply applied the neoliberal recipe to the letter in Nicaragua. This required the governing apprentices to turn their backs on all the electoral promises UNO had made to reactivate the economy. The technocrats only wanted to stabilize it and apply the structural economic reforms aimed at restoring the dominion of the commercial and financial oligarchy displaced from power by Somoza.
The government chose that option even though it was conflictive and generated great instability the exact opposite of what the country needed. It was not interested in reversing the structural factors that have fed conflicts, insurrections and revolution in Nicaragua.
The technocrats' first challenge was to assure themselves that they had the "correct" plan, which the IMF certified with its approval. Their hardest challenge, however, was to hold on to power long enough to give continuity to the stabilization and economic reform they had initiated. Since that would surely require more than one presidential term, it implied building a solid coalition of potential electors. The obvious difficulty was that IMF designed adjustment plans have severe social costs for the poor, which in Nicaragua have been terrible and swift. Since the poor are not a serious part of the government's constituency, it used stabilization and economic reform not only as instruments to realign the power groups, but also as rhetoric to confront social resistance: "We inherited a country in bankruptcy." "We are in bad shape but getting better." "This is the only genuine road to get past the crisis." "After the sacrifice will come the recompense of growth and well being." Meanwhile, it did virtually nothing to cushion the costs to the poor.
A Three Step ProjectThis "only road" to adjustment, which the IMF has taken in over 30 countries of the South, has a long term strategic conception that is applied in the short and medium term according to an unvarying sequence. Step One: achieve price stabilization at any price, and assure that public sector income is greater than its spending. Step Two: proceed to the structural reform, a package consisting of commercial and economic openings, financial liberalization, market deregulation and the privatization of state enterprises. Step Three: recuperate investments and thus move from stabilization to growth.
From the Chamorro government's perspective, the first step was taken in 1991 92, the second in 1993 95 and the third in 1995 96 and however many more years it takes. The financial assistance "assured" through the ESAF accord was the honey coating to make the pill of the second step go down easier.
The symbol of the first stabilization plan was the overvalued "córdoba oro" (5 to a dollar), whose value was sustained by voluminous foreign cooperation. The government promised the citizenry that this new currency would not lose its value, that prices would remain stable and that the country's principal financial imbalances would be corrected.
The economic reforms, which began to be felt massively and intensively by 1993, really began to be applied in 1990. They have basically consisted of administrative measures applied mainly in the areas in which the public sector intervenes in the economy: the setting of fees, taxes and duties; privatization; the restructuring of the financial system and credit assignment. The achievements these measures allowed up to 1992 led people to feel that a good new foundation was being built: the currency had indeed stabilized, the country had regained its access to the traditional external finance channels, and grassroots resistance to the adjustment was, if not defeated, at least under control.
The FSLN leadership decisively influenced these achievements by tacitly supporting the government and mediating when its own protesting base threatened to get out of control. It did so because it considered the government to be a necessary "centrist" alternative to the threat of an intransigent right. The adjustment that the FSLN had itself been forced to initiate in 1988 had hardened Sandinista leaders to the population's real demands, making it easier for them to renounce the role of democratizing opposition offering a progressive alternative. Even though its support of the government eroded the FSLN, its organizational strength remained almost intact.
Capitalizing the Favored GroupsThe "success" period of the new oligarchic power was one of great social turbulence, with sporadic outbreaks by traditionally organized movements or spontaneous ones sparked by the crisis. The main protests, the bulk of which were by the Sandinista base, were dismantled by negotiations and the signing of accords that the government had neither intention nor capacity to fulfill.
In that period, the Chamorro government failed on the same point the Sandinistas had: real democratization of political life. If the Sandinistas had substituted a paternalistic state for democracy, the Chamorro Lacayo team did it with one given over to a predatory capitalism that excluded the majorities.
With the IMF's blessing, the government set about strengthening the economic and thereby political position of the financial and commercial groups. The technocrats gave the new private commercial banks preferential access to foreign cooperation via their intermediation of credit lines and they assured the commercial groupings to which some of the technocrats themselves even belonged access to juicy credits from the state development bank. They also quickly capitalized the groups (and themselves, it is strongly suspected) through their advance knowledge of government commercial and financial policy decisions and their lack of transparency in privatizing state companies.
Next the government and the commercial and financial oligarchy it favored needed to guarantee a stable flow of foreign resources and begin the investment process, so as to stabilize the economy and allow them to taste of the sweet fruit around the bitter seed of the adjustment. Although this goal was originally forecast for 1992, the government was unable to seriously undertake it until 1994. The plan, if everything went well, was to enter the 1996 electoral period with a stable currency, moderate economic reactivation, guaranteed foreign financing and a clearly established coalition of power which erstwhile Minister of the Presidency Antonio Lacayo dreamed of heading. Building political support through cooptation and bribery, Lacayo hoped to cobble together the political and organizational infrastructure that would guarantee him another presidential term (this time elected to it), thus giving him the additional years needed to completely restore the oligarchy. He expected little opposition from the Sandinistas, who seemed to fear his alternative less than both feared the anti Sandinista and anti oligarchic populism of Alemán's Liberal Alliance.
The Light at the End of the Tunnel has Gone OutESAF was the linchpin of this strategy. With it, Lacayo's incipient coalition was confident it could win in 1996 by demonstrating the first steps of economic reactivation and promising more if elected. Behind this confidence was the assessment that people don't care who governs, only who assures their well being.
But the executive legislative crisis that filled the first half of 1995 particularly the constitutional reforms has hobbled Lacayo's presidential candidacy, and the government's inability to meet the ESAF targets has seriously endangered the whole strategy. The foreign resources are not abundant enough to launch an attractive new economic policy in 1996. In fact, the country does not have enough resources of its own even to finance the elections themselves; they will have to be paid for by international donations earmarked explicitly for that purpose.
As the end of 1995 approaches, the forecast light at the end of the dark tunnel has gone out. In fact the government, despite its efforts, has slipped back down that tunnel to the situation it inherited in 1990, but in worse shape. It is no longer the new hero, heralding solutions of peace and stability to the post war chaos, and it has squandered the hopeful credibility with which it was first received. Most people no longer see the government as the solution, but as a large part of the problem.
In 1990, the government could claim that it was the victim of constant destabilizing blackmail by the Sandinistas. Between 1991 and late 1993, its tacit but evident alliance with the FSLN allowed it to present an image of stability. In the political arena despite ups and downs and much more in the economic one, those two years created an aura of success around Lacayo, which he wore with vain pride.
But the political system began to unravel by mid 1993, mainly due to the perennial fights to control the National Assembly. At the start of 1994, the FSLN Lacayo axis of Assembly representatives seemed to have finally won. Among other things, that permitted the approval of the new Military Code and the signing of ESAF. But by the end of that year, the FSLN split led to a new dominant alliance in the National Assembly, since those who went with Sergio Ramírez's Sandinista Renovation Movement (MRS) made up the bulk of the Sandinista bench. The basis of the new alliance was the opposition of all its members to both the executive and the "orthodox" FSLN.
That alliance generated a new democratizing and progressive legislative consensus in the sense that the constitutional reforms that had forged it, and which it finally pushed through, were a first step toward real change in the age old authoritarian political system. That first step, however, was quickly weakened by the fact that the alliance, the consensus and even the reforms themselves were shot through with presidential and personal ambitions, as well as simple power realignments.
The Costs of the Oligarchic RestorationThe effort to restore the oligarchy has been extremely costly for Nicaragua. Time has been lost that should have been used in reconstructing the nation and pulling it out of its most recent crisis. In historic terms, another opportunity has been wasted to provide the country with modern institutions to make it viable in today's world: the rule of law, mechanisms for the citizenry's participation, democratic governability and effective political pluralism. By gambling on a continuation of the authoritarian political system, the Chamorro government has not moved either the country or the economy forward; it has rather involuted them back toward the oligarchic and transnationalized scheme of the past. The government's own identity is no longer framed by its tired claims of reconciliation or its never arrived economic reactivation. It is now so identified with corruption, political intransigence, unemployment and poverty that these features overshadow any glimmer of success.
The neoliberal stabilization and adjustment have not been successful or efficient even in financial terms. In 1990 and 1991, Nicaragua was the second greatest recipient of per capita foreign aid in the world. Only Israel was ahead of it. Between 1991 and 1995, foreign cooperation has represented an average 29.9% of the annual Gross Domestic Product (10.2% tied to projects and the other 19.7% as liquid resources). Nonetheless, despite interest and amortization payments on the foreign debt that represent an average 12% of the annual GDP and absorb most of the country's liquid foreign aid, we still have the highest debt/GDP ratio in world history: for every dollar we produce, we owe six.
The foreign trade gap not only has not shrunk since 1990, it has expanded. More foreign cooperation has translated into more imports without reactivation. Today's foreign trade deficit is 42.5% of the annual GDP; in 1990 it was 32.2%.
Even the monetary stability is artificially maintained by foreign cooperation, since the córdoba cannot sustain its own value without economic reactivation. In 1993, the government began using a scheme of mini devaluations, euphemistically known as a sliding exchange rate. The mechanism has been applied with increasing frequency, which has significantly dollarized the pricing system, since the public considers the dollar a stable value. This creates a risk that productive enterprises will accumulate savings instead of making socially useful investments.
Horrendous Social ResultsIn social terms, the government's approach has been frightful. According to the UN Development Program's June 1994 poverty study, 74.8% of all Nicaraguan families live below the poverty line, 43.6% of them in extreme poverty or indigence. Overall unemployment (open or hidden) still hovers around 60% of the population able to work, and mainly affects women and youth.
Although there are glimmers of reactivation in some sectors such as forestry and fish and shellfish exports, both are extractive industries with minimal impact on the rest of the economy. Nor is the turn around of some traditional exports or increases in rum, beer, soft drinks, cooking oil and wood furniture enough to breathe life back into the economy. The export increases since 1994 have been mainly due to the rise in coffee prices, which benefits only that sector. The observable rule is that the only reactivating sectors are those enjoying investment or windfall prices. All others remain stagnant due to the lack of a development policy.
Given such a discouraging panorama, with no generalized or sustained reactivation, what makes the current government team think it can get reelected? The government's original image was that of moderate center, but that evaporated by mid 1995, largely due to the executive's intransigent and politically imprudent opposition to the constitutional reforms because they challenged its authoritarianism. By its own hands, the Chamorro administration destroyed in only a few months the image it had laboriously built over five years as conciliatory, harmony seeking and democratic.
By early 1995, its triumphalism already seemed unwarranted, but with the endorsement of the IMF and World Bank, Lacayo & Co. presented the stabilization and adjustment program not only as a good one, but even as a model to imitate. Only Mexico rivaled Nicaragua for its exemplary efforts to follow the "correct" road marked out in Washington. Everything was still going well, according to the official view, in March, when the first IMF mission of 1995 arrived to evaluate ESAF's first year and discovered that the adjusted balance of net international reserves was $53 million. While not even the unmet targets shook the IMF's faith in the program's course, its favoritism toward the Nicaraguan government did not prevent it from requiring that $92 million in international reserves be recovered to finish 1995 with a positive balance of $39 million.
Since the programmed cash aid disbursements through ESAF for April December 1995 totaled $157.3 million, putting $92 million in the reserves chest would leave the country only $65.3 million in accessible foreign currency for the whole nine month period. That would make the persistence of a huge gap in needed foreign resources unavoidable, since programmed payments on the foreign debt alone for that period were $215.4 million.
Despite all that, the government pledged its word to the IMF: it would meet the targets. According to the staged programming, the government was to accumulate $66.7 million in reserves by October, while paying over $160 million on the foreign debt at the same time. On top of the $51.6 million in cash aid disbursements in those months, the government would have to come up with another $182.6 million, equal to 41% of the export income expected for all of 1995. Obviously impossible.
By September, the month of the second IMF visit, the government was even deeper in the hole: the reserves had fallen to $107.7 million, with only an outstanding $10.4 million still expected. Could the mission have been surprised? To maintain the target set in March of ending 1995 with $39 million in reserves would now mean having to accumulate $146.7 million in just three months, while the still pending cash aid disbursements for that period only totaled $105.7 million. Another impossibility.
Bridge Plan or Shadow Plan? Since the March agreement was a dead letter for the government, the IMF faced the dilemma of annulling it, readjusting it or completely modifying it. It chose readjustment, but that presented another dilemma: instrumentalize it via a "bridge plan" or a "shadow plan." In the former the IMF provides additional support; in the latter it does not. The IMF opted for the bridge plan, but on condition that the government immediately fulfill a series of new conditionalities.
In the IMF's bridge plan, which the government again agreed to, the international reserves target for the end of 1995 was cut by $61.5 million, from $39 million to $22.5 million. But reducing September's $107.7 million to $22.5 million by December still means accumulating $85.2 million. Is this possible for a government that managed to de accumulate millions between March and September?
Three factors contributed to this de accumulation: the 1994 drought and its impact on energy generation, which upped the petroleum bill; the payments the government dutifully met on the foreign debt; and the disalignment in the public sector savings goal. Regarding this last factor, the bridge plan also loosened up the savings goal for the public sector, while tightening it for the private sector.
The IMF's New ConditionsIn exchange for the IMF's generous "flexibility," the government promised to give clear signs of rectification as early as October 10, in response to which the pending $105.7 million will be disbursed. These "clear signs" are actually a new set of conditionalities. One of the main ones is that the state's development bank (BANADES) must transfer $5.2 million a month to the Central Bank between October and December (a total of $15.3 million). Its National Investment Fund (FNI) must send the Central Bank $7 million in back payments and the Central Bank itself must place some $5.6 million in investment bonds. Finally, the condition most Nicaraguans felt almost immediately is that ENEL, the state energy company, must pay off its $53.3 million debt to the Central Bank. All this totals $81.2 million, and recovering it implies pulling in almost 50% of all the money circulating in the country as of mid September.
The government's commitment to these conditions has tremendous implications. Even with a huge effort, the government can probably accumulate only about half of what it agreed to, which would put the reserves level at roughly $ 67 million by the end of the year some $45 million short of the target. BANADES will have a tough time recovering enough outstanding loans at this time of year to return to the Central Bank the amount required of it. Harvest time is near for the part of the second planting not rotted by this season's excess rains, which creates a demand for new credits to hire workers to pick the crops. Until the farmers' crops are sold, getting money out of them is like trying to get blood from a stone.
Even if BANADES were able to make the entire transfer to the Central Bank, that would reduce its credit portfolio for next year to 37% of what was programmed for 1995, in turn half of what it loaned out in 1994. The unfair conditions already agreed to for restructuring BANADES made its board resist the government's new commitments. By leaving the bank with only 19% of its 1994 loan portfolio, the conditions amount to its undeclared closure.
In response to the IMF conditions, the government also announced an increase in electricity rates, thus far excluding household use. The rates for small and medium industry went up 15%, for farm irrigation 30% and for drinking water pumps 29% (which in turn will shoot household water rates up 8%). The increases unleashed general protest and calls for "civil disobedience" by refusing to pay the higher bills.
Why Agree to What You Can't Do? Let's suppose that BANADES manages to recover $10 million, despite the institutional cataclysm this implies, FNI pays all its back debt and the Central Bank even sells all its bonds even though the last auction of them was deserted. That adds up to $22 million, tops. Then let's assume that ENEL, by the rate hike or other means, recovers half of the target set for it, thus reaching a maximum of $48 million, under 60% of what was agreed to by the deadline. This would bring us to a new chapter in the chronicle of a foretold non compliance. The government would have deceived the IMF for the second time with what consequences?
What is the government thinking of by agreeing to something it cannot do? If it is betting that the IMF will be moved to come up with a more permissive plan, it is a very risky bet. The IMF has already been excessively supportive of the government and is unlikely to continue tolerating an uncorrected new incident. The government is now feeling the bite of its isolation. In its initial negotiations over ESAF and in the corrections since made to it, the government passively accepted the IMF's conditionalities. Why? That was its strategy, and it never sought enough internal consensus, legitimacy and credibility to negotiate an ESAF with the IMF that was more feasible and not so hard on the country, especially with respect to the foreign debt payment targets.
Now, caught in default, the government is being shamelessly irresponsible by agreeing to goals it knows it cannot meet. It is eluding the more correct response, which would be to renegotiate the program so as to leave some finances at the end of its term and gain a better position for the country in the new negotiations that have to be undertaken regarding the foreign debt and ESAF itself. Not only would this be best for the country, it would even be more favorable for the oligarchic coalition that aspires to reelection. In any case, no matter what the outcome of all this is, the ESAF crisis calls into question everything that the Chamorro government has done.
Has Anything Been Learned? The government may have acted this way because Lacayo left the government in early September to dedicate himself to the electoral plan he calls the National Project, the other ministers who want to run for office were preoccupied with their own plans, while those who thought of staying in office on the coattails of the Project's reelection are worried about the handwriting on the wall. The crisis of the project that united them reflected in the ESAF crisis takes the steam out of their stubbornness these past years. The political turbulence that this obstinacy unleashed in 1995 may have opened the eyes of the oligarchic coalition, showing it just how slim its electoral possibilities are. In a September CID Gallup poll, Lacayo pulled only 6% of those intending to vote.
It may also be that the government's irresponsible attitude toward ESAF was an intentional and anticipated attempt to cover up the mismanagement of the state. A chain of omissions, neglect and negligence could have produced the strange result that the oligarchic coalition, running to save itself, brought about its own fall.
Those who want to continue this government may have learned that they can't go into the race alone, particularly since the stabilization and reactivation and abundant state resources that they thought would precede them seem to have slipped through their fingers. Lacayo's candidacy is supposedly prohibited though he still ignores that fact and now outside of government he can show no successes in the adjustment program. In addition, many Nicaraguans seem to have understood that a better life requires real democracy, not just what the government has given them in the past five years: freedom to express without anyone to listen.
The Search for AlliancesIn these circumstances, the National Project (PRONAL) has begun to unravel. Given the coalition's uncertain future, Adolfo Jarquín's Social Democratic Party withdrew from it; there is speculation that it will ally with Alfonso Robelo's Social Democratic National Democratic Movement (MDN) and Sergio Ramírez's MRS. A remaining PRONAL ally seems to be the Supreme Council of Private Enterprise (COSEP), whose most recent internal elections ushered in a pragmatic board close to official policy, an expression of the government favors to commercial and financial leaders grouped under the COSEP umbrella. Although PRONAL rhetorically denies any possible alliances with the FSLN, in politics one never says never. It remains to be seen how such an alliance could be reconciled with the anti Sandinista position of a large part of big business, to say nothing of the anti government sentiment of the Sandinista base.
Come what may, the oligarchic coalition is obliged to seek alliances with other forces, although PRONAL does not admit to such a consideration. An alliance implies a concession to share power. Since its restoration strategy is not guaranteed, this will explain the next moves of this political force. The possibility of a humiliating electoral defeat could even cause PRONAL to opt for a "scorched earth" policy simply making it hard for any other winner to take or run the office. With its oligarchic restoration aborted, it could forge a resistance that would bring more instability to the country after the 1996 elections. This risky instability cannot be discarded, either because the new President wins by a narrow margin and cannot control the parliament and the municipal mayors, or because even with a comfortable margin, financial and commercial capital resists the new administration the same way big business resisted the Sandinista government in the 1980s: decapitalization, dollar flight, exile and economic boycott.
The feverish search for electoral alliances is still going on in other quarters, especially among the lesser political forces. Alemán's Constitutionalist Liberal Party (PLC) is still the front runner among those intending to vote. But the 35% the PLC got in the CID Gallup poll is still some distance away from the 45% needed to win the elections in the first round. Polls show an equally large sector of undecided (34%). Ever since the PLC launched Alemán's candidacy in July, the Liberal Alliance has taken a public stance of triumphalism that could blind it to the need to refine its proposals and commitments. Since the profile of the PLC in particular is very right wing, it will have trouble breaking into the moderate and centrist sectors. The only message that seems to be coming out of it is that it is going to win and put the Sandinistas and Lacayistas "in their place." This negative and confrontational message undermines Alemán's own efforts over the past year or so to curb his anti Sandinista vehemence and focus on his administrative efficiency and concern for upgrading the capital as mayor of Managua. The recent naming of Conservative cotton magnate and equally vehement anti Sandinista Enrique Bolaños as Alemán's campaign manager was an effort to broaden the Liberals' alliances and attract the business sector. At the announcement, both Bolaños and Alemán spoke of a "Project Nicaragua" in which "even the Frentistas fit." It is speculated that Bolaños, who lost out to Violeta Chamorro for the 1990 presidential candidacy, may later be named Alemán's vice presidential running mate.
In the poll, the FSLN pulled down 20% among those intending to vote, even though it is still seeking a candidate and a ticket that will move its profile beyond that stable percentage of already convinced Sandinistas. The FSLN is obliged to ally with other forces so it can at least go up against Alemán on relatively equal terms. Its emphasis on economic and social problems, without questioning the political dimension of the oligarchic restoration, makes the FSLN's Sandinistas susceptible to an alliance even with PRONAL. The parties that fought for the constitutional reforms do not seem to see the FSLN as a first option for an electoral alliance, since both it and the PRONAL leadership earlier rejected the constitutional reforms. It is precisely this association with the government, as well as the scars of the piñata that make the FSLN an uncomfortable ally.
On October 1, the Sandinista Assembly approved regulations for internal election primaries, which will select candidates for all elected positions in the 1996 race. No other party in Nicaragua has ever done this. The most novel aspect of the FSLN regulations is that the 320,000 registered party members are not the only ones who can vote for the pre candidates; so can any citizens who want to express their opinion in what will be called Sandinista Popular Voting Centers. These primaries will be held on February 4, 1996, and some 600,000 people are expected to participate.
For the moment, the MRS Sandinistas also appear to be an uncomfortable ally. Sergio Ramírez has repeatedly denied any alliance with the FSLN since that would be to "accept a contaminating bacteria." Proof of the difficulty the MRS is experiencing in making any other alliance is that several of the parties that joined it in supporting the constitutional reforms recently put forward a "Proposal to Nicaragua" that openly excluded the MRS. This grouping includes the Independent Liberal Party, Luis Humberto Guzmán's Christian Democratic Union, Alfredo César's Democratic National Party, the director of the news daily La Tribuna and other politicians, who presented themselves publicly as a "new political option" that "could make up an electoral alliance." According to César, this group could emerge in 1996 as "the new UNO." Also known as "New Faces," they propose not to return to the past (neither Sandinista nor Somocista) or to stay the same (Lacayo's project). Their exclusion of the MRS leaves this party to ally with the MDN and the Conservatives of Miriam Argüello's Conservative Popular Action (APC) party, which were also left out of this proposal.
At a total 5%, voter preference for any of the other 20 plus parties is far below the Liberals (34%), the FSLN (20%) and even PRONAL (6%), to say nothing of the 35% undecided who will only be attracted by a well designed electoral ticket and a democratic, persuasive and relevant platform. This could be achieved through real town hall forums, not just whistle stop stumping, in which civil society can realistically debate with the candidates about the most urgent issues that the next government must resolve. Nicaraguans expressed a clear majority opinion on at least one issue in the CID Gallup poll: 68% said it would be an error to elect a woman as President in 1996, given Violeta Chamorro's poor showing in that position and delegation of her responsibilities to a man, son in law Antonio Lacayo.
It is still premature to predict much and the electoral proposals are still so incipient that it is worrisome, given the magnitude of the problems that the next government will inherit. The foreign debt and the renegotiation of ESAF are among the first lines on an agenda of colossal urgencies.