Envío Digital
Central American University - UCA  
  Number 174 | Enero 1996



When Democracy Becomes A Synonym for Anarchy

The country has been “feudalized”. All dynamics are fragmentary and all logics are short-term. The power groups are taking stock of their forces.

Nitlápan-Envío team

With the Christmas season and the even more widely celebrated Feast of the Immaculate Conception upon us, government activity is winding down. A new eruption of the Cerro Negro volcano added both tragedy and spectacle to the ringing out of the old year. All this, coupled with the worries of many about how they will survive another year and of the few more fortunate ones about how they will pay for the season's extraordinary expenses, is drawing attention away from Nicaragua's national problems.

National problems, however, abound and are serious. They include the falling international coffee prices, protests against the privatization of the state telecommunications system (TELCOR), producers' complaints about "Plan Pay," the Central Bank's drastic reduction of money in circulation, a price hike for milk, university demonstrations demanding 6% of next year's budget, the budget itself, the consequences of the finally approved Property Stability Law, and the results of the government's meeting with donor countries to lay out its National Sustainable Development Plan. The season's bustle merely masks the morass in which the government is wallowing as it prepares to enter its last year in office.

The ongoing definition of electoral alliances and presidential candidates for the 1996 national elections absorbed all the energy of the political class over the past few months. It has even affected the economic management of the politicians in government, most specifically reflected in their poor handling of the Enhanced Structural Adjustment Facility. ESAF was reprogrammed twice in a very short lapse of time, leading to a further shrinking of credits and more financial restrictions. The government's mismanagement even puts successes such as the renegotiation of the foreign debt and inflationary control at risk. Although the government is trying to sell the image that, despite everything, ESAF will end successfully, things are in order and the electoral process is on track, the basis of the conflicts and instability characterizing 1995 have been neither resolved nor forgotten.

The Ghost of Pedrarias

Government mismanagement and institutional disintegration only grew during 1995. The foundation of the flimsy institutional scaffolding built by the Chamorro government has been undermined by a no holds barred struggle to define and continue the oligarchic project overseen by the international financial institutions. The profoundly undemocratic and anti national nature of this project is revealed with growing clarity through the government's extremist response to any demand for change or a realignment of power quotas. It has become customary for all such challenges to be resolved as minimally as possible and only once the country has been driven to the very edge of the abyss.

This intransigence permits no strategic vision, even though such vision is indispensable to consolidating democracy. It is a method that feeds on the most backward and authoritarian political traditions of the national culture. The ghost of Commander Pedrarias Dávila, wielder of noose and knife, who gained absolute power to promote absolute corruption, haunts the political imagination inspiring all those who have laid waste to Nicaragua right up to present times.

This negative political tradition, the irreducible discord among power groups and the sporadic grassroots resistance that occasionally erupts into a major upheaval have historically contributed to the weakness of the institutional order, the pillage by the dominant groups and the intervention of international forces to get the country back on course. It is no different today. This year saw two huge institutional crises, both rife with strikes, protests, property evictions and daily violence.

The current political system's inability to resolve these crises led external actors to intervene once again, but they managed only to avoid uncontrollable ungovernability. The larger and more essential problems were not dealt with, to the detriment of the very basis of governability. The democratic process is increasingly deligitimized by the ever present temptation to break with it; corruption is rampant, with the meteoric amassing of personal fortunes; there are no clear rules of the game; laws and the judicial order in general are adhered to only in discretionary fashion. A human hierarchy has been clearly established: first class citizens with access to the benefits of the economic policy who act with impunity; second class citizens who have a hard time even surviving on their salaries; and third class citizens who are barred from any opportunities whatsoever.

A Feudalized Country

Democracy is being delegitimized in Nicaragua because it increasingly seems to be just a synonym for anarchy. Democratic governability requires a basic set of rules of the game that political actors have agreed upon, respect and practice. With no such rules in Nicaragua, the oligarchic political style strips all virtue from the democratic game, turning it into an anarchy that is merely cloaked by the intervention of certain elitist actors such as the Catholic Church or US Embassy. This "democracy" paradoxically favors authoritarianism because it feeds the longing of many Nicaraguans for an authority figure who can impose order on the chaos with a stern hand.

Nicaragua's political system is completely "feudalized." There is no center of political gravity that regulates practices and jurisdictions. All dynamics are fragmentary and all logics are myopic. Taken together, these dynamics and logics could lead to disaster. An extreme form of unrestricted "political market" has been built, very much in accord with the dogmas professed by the government technocrats.

The situation has been getting worse ever since the National Assembly "rebelled" at the start of 1995, challenging the executive branch's constitutionally excessive domain. That rebellion broke down the presidentialism, but could not replace it with a more cohesive system. The country did not move from total presidentialism to a balance of executive and legislative power, as would have been desirable. The executive put a stop to that to safeguard both the continuity of its oligarchic project and the leadership of President Chamorro's son in law, Antonio Lacayo. One of the results is that the government is now a mere shadow, and is getting paler with every day that brings the elections nearer. Another is that both organized economic groups and international forces now have an increasingly effective role in executive decision making.

Fear Sparks an Unacceptable Proposal

Pressure from international cooperation combined with Cardinal Obando y Bravo's mediation of the crisis of power that filled the first half of 1995 led to the Framework Law, which saved the country from falling into the abyss. But other crises continued to surface, get fused together, and thus bog down. In the legislative debate, the property issue got linked to the privatization of TELCOR and both ended up linked to approval of the 1996 budget, thus tangling even ESAF's future and the 1996 elections in the chain.

In such a rarified atmosphere, fears that everything the government has done might be reversed by a new administration triggered private contemplations of a "non electoral" solution to the problems. The main fear, of course, was that the fortunes amassed through the two "piñatas" carried out since 1990 the illegitimate distribution of valuable properties to a handful of Sandinistas and the later privatization of state enterprises at give away prices might be called into question.

"Maneuvers or conspiracies, surrounded by disinformation and rumors, are being stitched together to try to scuttle, defer or alter the elections," warned Arnoldo Alemán at the end of November. It was not the first time the former mayor of Managua has sounded this alert. Alemán resigned his post in September to run for President and, as the front runner in all polls, would be the most affected by any such eventuality.

What the US Wants in Nicaragua

As 1995 draws to a close, pressure exerted publicly by US Ambassador to Nicaragua John Maisto and more quietly by other international donors appears to have closed off this avenue and forced all the politicians back onto the established one. Ambassador Maisto was unequivocal in laying out his government's position: "All aid to Nicaragua would be cut if there were no elections."

US foreign policy would view any break with the formal democratic order in Nicaragua as a dangerous precedent for the tense democratization processes in Central America. Such interruptions invite intervention by the armies of these countries and would rend the fragile fabric being woven by their modernizing oligarchies. If Nicaragua were to be the first failed "democratic transition" in Central America, it would also be an admission that Clinton's foreign policy had failed as well, that it was too wishy washy to impose its will in the best Republican style.

As long as Nicaragua's conflicts do not challenge the postwar "order" established in Central America, the United States will tolerate all the anti democratic features of Nicaragua's oligarchic presidentialism. It is of no consequence that democracy in Nicaragua only functions formally, is not transparent, is restricted and anarchic; it is even of no consequence that the country is falling apart. All that matters is that the facade that everything is on track not fall away. If Nicaragua's elections take place in 1996 and the Chamorro government more or less skillfully fakes its fulfillment of ESAF, that will be more than enough to earn White House approval.

In short, the Clinton administration is not particularly interested in our country; it just wants problems to be resolved without a lot of noise, particularly in its own election year. What Clinton definitely does not want is for the property issue to go on giving US Senator Jesse Helms grist for his mill, which is why he gave the Carter Center the green light to push for a final resolution of that issue. From the US administration's perspective, any law able to put an end to the property problem must satisfy all involved parties and be paid for with state assets. The farmland, lots and houses that the law would assure to the grassroots sectors have always been present in legislative debate and public opinion, but the bottom line is that the final resolution was designed to give the abusers of the two piñatas what they wanted. The only ones dissatisfied are those who were confiscated; they will be compensated with US Treasury Bonds.

The Property TELCOR Solution

With any sleight of hand that could make the elections disappear ruled out, the property law and the law to privatize TELCOR were finally approved. After the long, consecutive and very tense floor debates in October, the enormous barriers erected against both bills quietly crumbled in November in a matter of days, making way for the passage of both laws. That, in turn, makes way for approval of a new electoral law and the 1996 budget. All of that was, is and will continue to be interrelated.

A communiqué issued by the Sandinista Renovation Movement (MRS) justified that linkage as follows: "The MRS accepted from the outset that to make possible an effective Property Stability Law, one that would bring security to all, a law was also needed that would allow the state to sell, under transparent proceedings and with all the controls of the case, part of the assets of TELCOR. In no other way could the bonds issued to unjustly confiscated individuals have guaranteed value. From the beginning, the MRS was clear that one thing could not happen without the other."

Despite this fusion, which was even set out in the findings of the legislative commission charged with studying these laws, not everyone in either the MRS or in society agreed that TELCOR should be privatized in the way it will be: by simply selling the majority of its shares to a transnational corporation. The TELCOR union, a sector of big business and even Nicaragua's private banking system supported a counterproposal: joint investment, bid on by various private companies.

Access by the private sector to TELCOR stocks, on the commitment that it make investments in this top of the line business, would have allowed greater investor participation through more transparent and non discretionary access procedures. But that counterproposal, detailed in last month's envío, was not even brought up for discussion. In the law that was approved, the sale of TELCOR, scheduled for mid 1996, will be controlled by the executive branch, thus favoring the company that gains monopoly access to the purchase of the telecommunications system, the only profitable state enterprise and only modern technology that Nicaragua has.

Delicate Coordination Work

The sectors most interested in clearing up the electoral horizon promoted the rapid approval of the two laws at the end of November despite the array of opposition, which encompassed all political stripes and their various nuances. Throughout the operation, the National Assembly board maintained delicate coordination with Minister of Finances Emilio Pereira, who acted on behalf of the executive.

The discourse of Chamorro's ministers regarding the property bill during the debate was virtually identical to that of the FSLN and MRS legislators who have always been united on this topic. Some speculate that the executive's position was softened by its interest in the earnings expected from the future sale of TELCOR, but the community of interests created by the two piñatas alone would be enough to unite Sandinista leaders with top government functionaries and technocrats and with family members and associates of former Minister of the Presidency Antonio Lacayo.

Although it is being proclaimed that the two laws will restore security to rural and urban property, government confiscations initiated the very day after the laws were promulgated refute that. What was given with one hand is being taken away with the other. The evictions are being ordered through what is called "Plan Pay," and aim at recovering the debts of producers with BANADES, the decapitalized state development bank. The measure, imposed by the International Monetary Fund and World Bank to "clean up" BANADES, will legally embargo the properties of some 15,000 small and medium producers with debt arrears of three years or more, and will affect well over a million acres of land. The National Union of Farmers and Ranchers (UNAG), which has demanded a restructuring of those debts, strongly denounced the plan. "If the nation has no capacity to pay, its citizens hardly do," charged UNAG leaders.

The problem is structural. What stability can there be if the grave cash deficit caused by the government's failure to comply with ESAF and by ESAF's own unrealistic rigidity so restrict domestic credit that many owners have been forced into bankruptcy and the sale of their lands? Land is steadily being concentrated back into few hands; evictions not yet forced by the market will now be forced by law.

Despite Everything...

Even at the cost of privatizing TELCOR, leaving the highly questionable privatizations intact and seriously disappointing those confiscated by the revolution, the new property law is an undeniable advance for those benefited by the agrarian reform laws of the 1980s and 90s and by the urban transformations of the 80s. In total, almost 30% of the population 122,000 rural families and 108,000 urban families now have greater security for their small holdings.

Even the government has recognized that the problem of the confiscated is minimal: only some 6,000 cases, of which almost half have already been resolved. The abuses are also a relative minority: at tops they represent 20% of the urban cases and 30% of the rural ones. It is very unlikely that these abuses will be resolved during what remains of the Chamorro administration, with the exception of cases that become pawns in political negotiation and those in which the individuals involved are willing to reach some agreement. The remainder, certainly the majority, will await the next government.

The executive traded the property law for the TELCOR law. Among other things, this allows the government to quickly get its hands on the funds still in the ESAF pipeline for 1995. The government is banking on that $80 odd million plus the money it has been pulling out of circulation for the past two months to meet the various financial targets the IMF set in September, when it reprogrammed ESAF for the second time this year. It took some trickery, but the government's earlier deviations from the key goals will not be so abysmal that the "appearance" of efficiently fulfilling ESAF cannot be preserved even if ESAF is now sunk.

What is evident, despite any such appearance, is the government's need to realistically renegotiate ESAF for 1996, unless it wants to go through the same thing next year. But will it do that in an election year?

Lacayo: A Candidate or Not?

As with the Framework Law, the promulgation of the property and TELCOR laws do not imply any reconciliation between the executive and legislative branches. The well known differences remain and others will come up along the way. Even with the two laws safely signed, the election of the Comptroller General is still pending, and awaits the decisive mediation of Cardinal Obando. According to the Framework Law, the new Comptroller must be elected by the consensus of the two branches. President Chamorro has repeatedly insisted on one single candidate for the job: Arturo Harding, the current Comptroller. In a straw poll of the National Assembly on November 16, Harding only got 14 of the 56 votes needed to elect.

And with the speedy approval of the Electoral Law, a majority of legislators put their last hobble on Antonio Lacayo's presidential aspirations. The new law states that the Supreme Electoral Council cannot register any candidate for high public office who is otherwise restricted by the recent constitutional reforms. Those restrictions include relatives of an incumbent President, anyone who has led a coup, anyone who has renounced Nicaraguan citizenship, and any state, municipal or religious official who has not resigned his or her post in the time established prior to the elections.

The National Assembly thus dumped the final responsibility for settling the conflict over Lacayo's presidential candidacy in the electoral branch's lap. Only a few days before that hobble was slipped into place, Lacayo said in a televised interview that he was not restricted from being President. "The restrictions," he claimed, "are a Chinese tale of Sergio Ramírez with people from the National Assembly who want to politically assassinate Antonio Lacayo."

If the Supreme Court decides in favor of a suit filed by Lacayo's wife Cristiana, daughter of President Chamorro, arguing that her constitutional rights are affected by the restrictions, the Electoral Council will face the dilemma of accepting or rejecting Lacayo's registration as a presidential candidate. If it accepts, the opposition could allege that the electoral process is rotten to the core, which would taint the elections with the presumption that a fraud is being prepared. If it rejects, the legislature's position in its confrontation with the executive will be strengthened, but the CSE, which has managed to stay aloof of the bickering between the branches so far, will have defied the judicial branch.

Could either decision definitively resolve a conflict in which both sides have thus far been utterly unbending? It is hard to imagine how, when both continually proclaim themselves the winner and losing gracefully is a concept whose time has come and gone. Either decision could further polarize the electoral atmosphere and give way to an instability that could last well into the next government.

An Ancestral Conflict

Nicaragua's current political system, with its roots solidly in the cultural and social traditions of Latin America's oligarchy, is demonstrating its inability to effect a real democratic transition or to modernize society and the economy in the new globalized world. Since modernization efforts in a democratic system touch the state's institutionality and its effectiveness in governing and in implementing legitimate policies, the essence of Nicaragua's political struggle has been the fight between presidentialism and greater political opening. While the oligarchy has clearly and strongly defended the former, those defending the latter are a dispersed bunch who have not managed to propose either a strong parliament or broader and more direct participation by the populace.

The quarrel is ancestral, going all the way back to the conflict between colonial authorities loyal to the Crown and the locally born who wanted to throw off the Crown's yoke. From there it has come up through the conflict between Conservatives and Liberals, the one between empire and nation that sparked the peasant uprising led by Sandino, between Somocistas and Sandinistas and, finally today, between those who want to restore commercial and financial oligarchic power and those who want to truly democratize society and politics.

Today's attempt to restore the oligarchy is not, however, about a return to the pre Somoza past. It is an attempt by the new groups of capital to take hold of the state apparatus as a way to safeguard their interests. First Somoza and then the FSLN usurped this privileged oligarchic space.

The FSLN, however, did not displace the business and commercial oligarchy and give greater space to the medium and grassroots sectors of society that were on the rise at the beginning of the revolution. It placed distinguished members of Nicaragua's oligarchic families who had politically opposed Somocismo in top positions in the government, the army and the party. From there, they neutralized the grassroots fervor over time. That explains why some of these families survived the revolutionary tide of the 1980s without a scratch. Even the relatives who did not get involved with Sandinismo basked in the shadow of those who did, then later became top leaders of the Chamorro government.

The Power Groups

The IMF and World Bank endorses the project to recover oligarchic power in Nicaragua. Since the pressure of their policies favors the new capital growing out of the two piñatas, the application of the traditional scheme of power excludes not only the poor, but also many medium sized productive and commercial businesses.

Unlike in Nicaragua, the oligarchy never lost power in other Central American countries, El Salvador and Guatemala in particular. To continue holding on to it, the oligarchy, responding to the designs of the IMF and World Bank, succeeded in transmuting itself. In Nicaragua, the oligarchy is back in direct power after a long separation from it, and it has come back with a voracious appetite for getting rich quick.

The dominant business groups the MIL group of Manuel Ignacio Lacayo; the OCALSA group, also of the Lacayo family; the Terán group housed in banking and trade; and, of course, the Pellas and Mántica groups, which constitute the most consolidated capital in the country have benefited greatly from the current government's economic policy. These families are joined by some Sandinista leaders and top leaders of the current government, with their new capital acquired through the two privatizations of the early 1990s.

If social status and blood ties unite all the big name families, their relationship with these new capitalists is through the economic and financial ties woven since the 1980s. The soulless and heartless alliance this has created, whose only passion is based on the power of money, is numerically small but economically very powerful. This alliance is what gives the Chamorro government its only stability.

Fear of Alemán

The greatest interest of these groups is to conserve their privileged access to decision making on economic policy. In the current model, these groups are beyond grassroots control and beyond the mandate given in the 1990 elections. They are indifferent to the requirements of genuine democracy.

That leads to the danger these groups see in the potential victory of Alemán's Liberal Alliance, since its political base is made up of those grassroots and middle sectors who find no room in today's economic model. An Alemán government, while still of the right, would develop an economic policy of "left like populism," which would give these excluded sectors more room. Such a reversal would be too disastrous for the currently dominant groups to tolerate. They would far sooner break with the institutional order and damage the democratic consolidation process than allow any real change in the ancestral oligarchic political system being crystallized again today.

These are the conflicting interests that form the backdrop to the war of positions now underway in Nicaragua's political system. They are also why we are coming to the end of 1995 and close to the end of the Chamorro Lacayo administration without achieving an effective political depolarization, without reactivating the economy, with greater levels of poverty and unemployment, with a pillaged state and with a population decimated by taxes that are never redistributed back to it in the form of social benefits.

Two Coalitions?

The National Assembly, which could have played an important role at this national crossroads, limited itself to an upper echelon game with the executive branch. It saddled itself with a Framework Law that obliges nearly impossible consensus with the executive, but changes nothing in the political system.

Having reached this point, the electoral race is shaping up as a battle between two huge coalitions without relevant centers. On one side will be Alemán's Liberals, backed by middle and grassroots sectors, the former Nicaraguan Resistance and some strata of old capital represented by fawning Conservatives. On the other will be the new capital of all political stripes, under whose umbrella can be found backers of Lacayo's National Project, Sandinista "piñateros," traditional Conservatives and the most transnationalized private banking sector and business associations. In the end, its ticket will probably not be headed by either a Sandinista or a Lacayista.

In this landscape, the most powerful oligarchic groups both fear Alemán and disparage all piñateros be they Sandinista or Lacayista and are simply waiting to work with whatever government comes to power this time around. Meanwhile, they are trying to consolidate themselves to the core, so they can defend themselves against what they fear or disparage in both groups.

The time for electoral definitions is drawing near. The speed of the events that have filled the last weeks of the year could seem like a snail's pace compared to what may be awaiting us in the first months of 1996.



The privatization of Telcor:
On November 20, the National Assembly gave general approval to the bill to privatize TELCOR by 45 votes to 31. The yes vote was under half of the full 92 member Assembly. The next day, the majority of TELCOR workers went on strike to protest the new law, paralyzing administrative services, mail handling and repairs. Two days later, workers from ENEL, the state electricity utility, joined the strike, charging that plans
were afoot to privatize ENEL in January 1996.

On November 27, after heated debate of each article, the same 45 legislators passed the TELCOR bill in its final form. By no accident, the property bill, which has been strongly opposed by those confiscated and by some other sectors of the right, was also approved in its final form that same day. In response, the TELCOR workers expanded their strike and asked President Chamorro to veto the TELCOR law. Some of the legislators who had voted against it backed that request and compared what had happened in the Assembly to the 1914 Chamorro Bryan Treaty, which "sold" Nicaragua to US interests.

President Chamorro signed both the TELCOR bill and the property stability bill into law on November 30, in a formal ceremony attended by top figures from the Catholic hierarchy and the armed forces, as well as the diplomatic corps and the media. Ambassador Maisto congratulated the country for these "achievements" and called them "signs of maturity," while warning in the next breath that his government will now begin to monitor the fulfillment of the two laws.

The TELCOR and ENEL workers called off their strike on December 2, and joined diverse sectors of civil society in launching an initiative to collect "a million [signatures] for the nation." The petition demands repeal of the law and the holding of a plebiscite over TELCOR's future.

Electoral Law:
With those two laws out of the way, the electoral law was passed on December 5 after endless and costly delays resulting in part from a decision by the findings committee to draft a whole new law rather than reform the old one. Among other things, the new law allows absentee balloting by Nicaraguans living abroad, subject to the economic possibilities of the Supreme Electoral Council (CSE). CSE president Mariano Fiallos declared that his institution will organize the absentee balloting if it can get an adequate budget. The 1996 budget bill only assigned the CSE 50% of what it requires even to prepare for the elections inside Nicaragua.

The Law to Stabilize Property:
* The Office of Territorial Ordering (OOT) and the National Confiscation Review Commission will substitute for the Judicial Branch in resolving conflicts over property.

* Those confiscated will receive indemnification bonds if 40% of the TELCOR stock is sold. The bonds will reach a value not greater than US$.40 each.

* Individuals who appropriated houses of no larger than 100 square meters of construction, even when these houses are in residential neighborhoods (Ciudad Jardín, Las Brisas, Linda Vista and even Colonial Los Robles), will pay no taxes for them.

* Agrarian Reform titles provided within the urban limits of the city of Managua will have no validity. (A motion was rejected that would apply a similar disposition to all the departments of the country.)
* Resolutions issued by the Attorney General's Office on Property and the National Confiscation Review Commission for purposes of indemnification, and by the office of Indemnification Quantification, will have the character of public documents, with the same value that the Civil Procedures Code establishes.

* The state will return to their claimants the properties they are claiming when they present sufficient evidence in the judgment of the National Confiscation Review Commission accrediting them as subjects for the return. If a return is not possible, the state will indemnify the affected properties with bonds.

* The OOT will, for a period of 90 working days starting the day the law goes into effect, receive any requests to review the acquisitions carried out under the protection of Laws 85 and 86 that have not yet been presented.

* The acquisitions based on Law 85 of houses up to 100 square meters of construction are tax exempt.

* Houses with a construction area greater than 100 square meters, up to 150, will pay a tax with 4.5% annual interest on the balance, in periodic quotas. Houses of 150 200 square meters of construction will pay tax in periodic quotas over a period of no more than 10 years at 4.5% on the outstanding balance.

The Law to Privatize TELCOR
* 51% plus one share will be privatized according to the following distribution: 40% plus one share to the foreign investor and 11% to the workers.

* $240 million is expected to be obtained from the sale of 40% (TELCOR is unofficially valued at $600 million).

* 80% of the funds obtained through the sale will be earmarked for the redemption of bonds to the confiscated and 20% for housing projects, save $1.5 million earmarked for the construction of a new building for the national Assembly.

* This brief interpretive synthesis of the most substantive and perhaps most controversial aspects of these two laws was prepared and published by the rightwing daily La Prensa, which actively opposed both of them.


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