Envío Digital
Central American University - UCA  
  Number 196 | Noviembre 1997



The Problem of Property And Property Owners

Once again the theme of property is at the center of a national hurricane. We offer here a few general sketches drawn from history, already known but useful to recall, in order to help understand better where the toughest knot of the property problem is today and where it can be tomorrow.

Ernesto Castillo Martínez

To speak of the property problem in Nicaragua, and of the problem of property owners, we are obliged to look to the immediate past. From that vantage point we can better understand the current situation, the most recent crisis and the latest accord.

Everything Begins to Change

During the Somoza period traditional property ownership forms changed. Individual owners modernized their tenure, creating stock companies that strengthened the family capital grouping and union of common interests to develop agroindustrial businesses that could generate profits: large cotton and coffee plantations, cotton gins, coffee processing plants, financing centers for small producers, trade corporations for the local and export markets. In the Pacific, especially in the northwest, working landowners—those from the indigenous community of Subtiava with titles going back to the Spanish Crown itself, those who as tenant farmers had possession of lands that they had worked for generations, and even small landowners with registered titles—were displaced to make way for large cotton plantations, forced to emigrate to zones like Nueva Guinea with the promise of an agrarian reform and no more instruments than their will to work the land and make a home for themselves, even if in the mountains.

These displacements took place after long and suffered resistance by the workers of those northwestern lands. They were militarily repressed by the National Guard with the complicity of the cotton growing pioneers.

Property owners also grouped together by industry: processing plants for milk, beef, lumber, flour, textiles. There was a shift away from satisfying traditional investment capital requirements through private loans, surplus money from production on large haciendas or urban property rentals, to the creation of banks and financing agencies that streamlined monetary investment by large landowners.

Urban property, concentrated in the hands of large real estate owners, fundamentally in Managua, was mainly in rentals. These large owners generally acquired their properties in mortgage defaults from debtors who wanted money to dabble in the modernization of agriculture, trade and industry.

There was a shift from these traditional landlords to companies that built tract housing in sectors where middle and high income families lived. The real estate business in poor neighborhoods, where peasant migration tended to settle, was characterized by "selling"—without title—to residents who, when unable to make the payments, were evicted and the process began over again. There was thus a chain of untitled "owners," making it impossible to register the properties in the Property Registry. For example, the "owner" of a lot in Ciudad Sandino, who paid on it for years and built a small house, could be evicted for missing just one payment and lose both land and house, which would then be resold, in the same conditions, to another buyer. These mechanisms generated huge incomes for the landlords, and allowed them never to lose the property.

Somocismo:Two Groups of Landowners

The December 1972 Managua earthquake sparked a boom in the real estate business. The Somozas acquired great tracts of land on the periphery of the devastated center city, where the new Managua would be built, and large construction agencies erected housing tracts. Thousands of people, unable to get loans to build or rebuild, were pushed out to marginal unplanned neighborhoods where they built their new houses without getting title to the land they were building on.

Meanwhile, the results of the so-called cotton boom strengthened the private banking system. The money from large plantation owners and urban landlords went from iron strongboxes and private stashes to the banks, which attracted savings that allowed them not only to grow financially, but to insert their shareholders in industry and in trade.

Two power blocs emerged among the property owners: that of traditional capital revolving around the Pellas family, and the new capital of technicians linked to the Somozas or protected by them to win spaces from the traditional sectors. The Banco de América and the Banco Nicara- güense were the emblematic symbols of the new organization of property in the country.

The consolidation of Somocista power, based on military might and unconditional support from the US government, allowed the Somoza family to move from being simple usurpers of others' goods to being large landowners, to move into this modernization of the private sector's ownership forms. Thus the Somoza family built up a series of property structures parallel to those of private initiative, which ranged from rice plantations and cattle ranches to cement, lumber, textiles and dairy and beef industries. Using the accessible funds from the state bank, the Somozas established adequate financial mechanisms to finance their own investment development. This allowed them to create major businesses that outstripped the abilities of traditional capital, such as shipping and air transport companies.

Alongside this process, military officers and functionaries of the Somocista regime became property owners, frequently of farms that were poorly exploited. In general, they were rented out to tenant farmers, who paid with a part of their production. Another modality they used to transform themselves into property owners was to buy rooming houses and other rental units in poor neighborhoods, which did not require investing in services or urban improvements.

On the Eve of Revolutionary Change

By 1979 all these effects had changed the ownership situation notably. The insurrectional outbreaks initiated by the FSLN and especially the increased scope of guerrilla actions after December 1974—when Somoza had to cave in to demands by the Sandinistas who took over the home of Chema Castillo during a Christmas party—revealed the regime's weaknesses to the Nicaraguan population. At the same time, some Catholic sectors, basing themselves on the gospel and documents of Vatican II and the meeting of Latin American bishops in Medellín, began to demand a more just distribution of wealth and to promote a Christian concept of the use of goods, that "social mortgage" that weighs on all property.

In those final days of Somocista power, the Somozas, their military officers and functionaries, as well as timorous Conservatives in the private sector, paralyzed practically all investments in the country. Nicaraguan capital began its flight toward foreign banks.

One sector of private capital, fundamentally that of young owners who found their expansion goals limited by the economic voracity of the Somocista regime and saw Nicaragua's insertion in the Central American Common Market paralyzed, decided to gamble on change. Faced with the impossibility of directly confronting Somoza, they literally put their money on those fighting Somocismo, even by violent means. High-level young executives of large capitalist groups like the Pellas family gave logistical and some direct support to the armed struggle led by the FSLN. No few teenagers of large capitalists even participated directly in Sandinista armed actions after having been actively involved in progressive Christian groups.

This sector of owners supported the efforts to overthrow the regime even though some of them knew, and others suspected, that the guerrilla movement was inspired by Marxist philosophy. They trusted and hoped that in Nicaragua property redistribution would not take place with brusque socialization measures. They mainly trusted, of course, that only the Somozas and their accomplices in crime and theft would be affected by revolutionary measures once Somoza was defeated. The Catholic Church authorities also believed this. Before July 19, 1979, Managua Archbishop Miguel Obando y Bravo accepted the role of intermediary to turn power over to the new Government Junta, which had already been accepted by the United States and enjoyed the backing of democratic Latin American Presidents like Carlos Andrés Pérez and Rodrigo Carazo.

FSLN: The Original Goal

In this context it was natural to think that, even though it fell to the guerrillas to fight militarily against Somoza, government responsibilities for reconstructing the country once power had been won would be turned over to those with political experience and administrative ability. The FSLN itself understood it this way, which explains the reunification of the purist Sandinista intellectuals (Proletariats) and those who fought with the traditional foco conception (GPP) with the sector led by Humberto and Daniel Ortega (Terceristas), which had decided to link up with these disgruntled sectors of the propertied bourgeoisie, not only to make the triumph viable but also to legitimize the revolution internationally.

An analysis of the government program of the Junta of National Reconstruction and of how the basic legal framework—the Fundamental Statutes and the Statute of Rights and Guarantees—was structured shows that nothing pointed to an immediate process to socialize property. The original goal, expressed in the well-known Decree 3, was to recover what the Somoza family and its military officers had accumulated through robbery and extorsion. Not until 34 decrees about other issues were declared did the confiscation extend to "Somocista allies," with the issuance of Decree 38 on August 8, 1979. That is to say, before Decree 38, the FSLN only planned to use the goods confiscated from the Somoza family and military officers involved in crimes to establish the initial basis of state property.

The Revolution Speeds Up

The National Guard's immediate and total disintegration changed the strategy of the FSLN, now united in a Joint Directorate, in reality headed by the Terceristas. The decision was made to speed up the process, since the ultimate goal was always to create a socialist society. The disappearance of the Guard left only the politicians in the Broad Opposition Front (FAO) and the business representatives primarily grouped around the National Democratic Movement (MDN) headed by Alfonso Robelo, a member of the governing junta, to share power with the Sandinistas.

Secure in its military control, the FSLN decided to broaden political control and modify the original structures of the Council of State to also guarantee legislative control. This in turn allowed them to accelerate the formation of state property through a series of measures.

Agrarian Reform Law. It now not only targeted the distribution of lands recovered from the Somocistas, but also the integration of other lands that were inefficiently exploited into this project. The idea of creating small individual landowners was never considered since doing so would slow down the movement toward socialist property; the plan was to establish large cooperatives. Since a conscious decision was made not to give out individual titles, the legal activity was geared to creating agrarian cooperatives and tribunals that could rapidly resolve land conflicts. These measures and decisions speeded up the shift of agrarian lands from private to state hands, into what was known as the Area of People's Property. One of the consequences was that so much land could not be efficiently attended so state money had to be targeted to subsidize production.

Regulation of Urban Property. This was initially done through the Illegal Properties Law (Decree 97 of September 22, 1979), the Law of Expropriation of Idle Urban Lands (Decree 895 of December 1981), and the Law of Expropriation of Idle Plots in Managua's Urban Center (Decree 903 of December 4, 1981). These shifted the control of old rooming houses and illegal lots to state hands. Urban property tenure and possession was regulated from that moment on by the Ministry of Housing and Human Settlements.

Individual Properties Were Not the Goal

These urban measures were aimed at assigning homes either to those who needed them because they were already living in them, or to combatants displaced from their original homes and in need of a place to live. But there was never any express decision to distribute them individually, much less to provide private property titles that would give those living in them the right to sell them.

Many of the large urban properties abandoned by military officers and Somocista functionaries were legislated for social functions: child development centers, schools, museums, etc. When the revolutionary changes began, the lack of houses for political leaders, military officials and functionaries of the new government led to the assigning of these types of luxury houses to the respective institution; the property always belonged to the state, not to the person inhabiting it.

This explains the general lack of individual property titles in both rural and urban areas. If the goal was to someday create a socialist society, the Sandinistas were not going to put obstacles in the way of developing that process by creating individual ownership. Rather, they had to build the basis to reach the ideal.

The War Disturbs More Property

Measures against business decapitalization and property abandonment. The acceleration of the revolutionary process beyond what had been expected produced fear in owners of businesses, farms and homes. Businesspeople stopped investing, and transferred out of the country all the wealth they could. Urban homeowners, since they could not find buyers, preferred to abandon their homes, leaving them empty or in the care of friends, relatives or employees.

The need to prevent the paralysis of businesses producing necessary goods led to legal regulations with streamlined measures to allow them to keep working. A business cannot act in local and international relations if it is not legally constituted.

COIP, the People's Industrial Corporation, was in charge of keeping national industry alive. Although the process of legally organizing a business is much more complicated than titling a house, this process took place rapidly in the majority of cases through shareholder transactions and the creation and fusion of corporations.

Measures in response to counterrevolutionary activities. The counterrevolutionary military activity took place in rural areas. In the cities, especially Managua, opposition to the revolution's measures was timid, though it gradually turned into more open protest as US support to the war increased its intensity.

The impossibility of identifying the precise origin of properties and agrarian property owners, and the unique aspects of the war led the army to take lands for military activities or to punish counterrevolutionary activities for years—the latter expressly condoned in law. Obviously, these measures affected the security not only of landowners, but of workers on those lands. Thus, lands for production ended up being battlegrounds and land appropriation measures had to do with military methods. In those years, the defense of lands assigned to peasants was not through land titles, but through guns.

Political measures affecting properties. As counterrevolutionary activity and the US policy of aggression increased, opposition to the Sandinista government by the private sector landowners remaining in the country also increased. The Supreme Council of Private Enterprise (COSEP) assumed leadership of the opposition with the support of Catholic Church authorities, and openly challenged the government by backing the US policy to put an end to the revolution. The FSLN's reaction was to directly affect this sector by confiscating their properties through presidential decrees on various anniversaries of the revolution or at other crucial moments. The main COSEP leaders were also jailed.

Ethics Predominated

While the war of aggression lasted, the majority of government functionaries and Sandinista leaders were neither landowners nor had they accumulated capital. If there were exceptions to this general norm—people who got wealthy by abusing their position—they were very few. In that period no one could conceive of leaders registering in their own name the house they lived in or business they administered. If a few people were able to do so, it was because of the lack of control over management of state goods due to the war and economic blockade.
In many cases great sums of money were earmarked for acquiring goods outside of Nicaragua or for the accumulation of reserves with no more guarantee than the morality of the person charged with carrying out such an operation. It is important to bear in mind that until shortly before the disintegration of the European socialist bloc, Nicaragua counted on economic solidarity from those countries, especially the then-Soviet Union and East German. That solidarity was also translated into the donation of considerable quantities of cash.

Was the Rule of Law Violated?

The questioning that has been made of the Sandinista government, above all after 1990, for sidestepping the law to apply measures affecting property is generally applied to all Sandinista actions, both those taken to reach power and those taken to defend the revolution. There is questioning of the creation of the Special Tribunals, establishment of norms for public order and security, foreign currency control, regulation of the domestic and export market, etc., etc.

But the FSLN never thought of taking power or exercising it by using the legal instruments in place during the Somocista era. Doing so would have meant giving up the armed struggle before coming to power, choosing to gain power through elections. This was not the case. The FSLN openly chose the violent overthrow and dismantling of the dictatorial apparatus through revolutionary means and not with traditional legal resources.

The major changes after 1979, especially those relating to property, were dictated by decree instead of ordinary legislation. The recovery of goods accumulated by the Somoza family would have been impossible through the ordinary justice system. The structuring of Somoza's capital in stock companies, the employment by them of figureheads and the slow and conservative nature of the system made it impossible to use the tribunals and ordinary laws to expropriate what had been stolen. That same nature made it impossible to apply the measures from the government program, which were originally supported by the majority of Nicaraguans including the non-Somocista private sector.

Because of all of this, today we are seeing heirs of the Somozas reclaiming properties that they argue were acquired legally, with titles linked not to the governing Somozas, but to stock companies and transactions according to the laws of that time period.

1990: An Unexpected World Change

Despite the internal deterioration of the Sandinista government, the drop in economic support from the Socialist bloc and the strengthening of US support for the counterrevolution, the FSLN's 1990 electoral defeat against the UNO coalition headed by Violeta de Chamorro surprised everyone. She, the politicians, the private sector and the US government itself suddenly faced an immediate situation that they had not contemplated: a new government.

Nor had the FSLN ever thought about the possibility of losing the elections. It saw those elections, under those conditions, as a necessary action to comply with the demands of democratization. Thus, it prepared for "the day after" in another way: after winning the elections, it would internally have to accept a reasonable coexistence with the political and economic sectors present in the country and would externally accept the impossibility of carrying out a socialist revolution. In turn, the United States would supposedly tolerate a moderated Sandinista government.

The electoral defeat found the FSLN without alternatives for conserving properties which before had belonged to Somocistas or to the private sector and now were in the power of the Sandinista government and the use of individual Sandinistas. Many of the properties—above all the last ones expropriated and given out—had no legally processed titles of any kind.

Most likely the FSLN leadership saw three options in terms of property:
1. Hand over not only the government structures but also the properties not duly legalized.

2. Organize and legalize FSLN capital.

3. Immediately benefit the party structures, government functionaries and militants, transferring available properties through emergency laws, and guarantee continuity in the beneficiaries' possession of untitled agrarian and urban reform properties.

The third option was chosen.

The Transition: Control Was Lost

The three months of transition between February and April 1990 were not enough to guarantee a complete adjudication and legalization of properties in state hands, under any form of domain or possession, to individuals that the government considered should not and could not risk being evicted from businesses and houses in their possession. The FSLN's decision at the time was also influenced by the consideration that, under the new rules of the game, economic power would play a predominant role in conserving political power from their position as opposition.

The unexpected defeat and the initial lack of control it generated propitiated the disorganization and abuses that took place within the framework of this policy of conserving properties. Within the FSLN it became clear almost immediately that in the new situation, not everyone was in the same situation regarding properties and means of subsistence. What at first had been goods (fleets of vehicles, for example) and properties accumulated to resolve needs imposed by the blockade and the war suddenly became capital, largely, of some political leaders and government functionaries.

Control was lost in the pressured process of distributing goods. This led to abuses that created new capitalist property owners, while the great mass of property users were unprotected since they had no access to the emergency measures by which properties were adjudicated and legalized to individuals.

There were no great problems with the large commercial and industrial enterprises, which already had a legal structure. The transfer of shares to existing corporations was organized, and new corporations were created and acquired some state enterprises. Where no legal corporation existed, the transfer was made to third parties as good faith figureheads, with the understanding that, when the FSLN party finances were reorganized, these goods would have new destinies.

Reality demonstrated that the emergency measures for conserving capital for the FSLN's political survival actually produced a new group of individual landowners and capitalists, including some sectors of rural and urban workers.

Chamorro Government: Negotiated Agreements

The Chamorro government's weakness facilitated a transition agreement referring to land tenure. The negotiations to guarantee workers' property had the effect of transferring the ownership and control of agricultural, industrial and commercial enterprises into the hands of newly formed corporate groups—under a lease with option to buy deal or the transfer and sale of shares—and later, the privatization of already formed enterprises.

Agricultural complexes, textile industries and others ended up becoming totally the property of new workers' organizations—as in the case of some sugar refineries and cattle ranches. In other enterprises like the Solka pharmaceutical company and in the banana sector, the workers ended up sharing ownership with the former owners and the state.

Today's reality demonstrates that these ownership groups are dominated by new large owners who, one way or another, managed to limit worker participation in the majority of cases to ceding their shares or trying to conserve their job. The exception to this is a small group of worker leaders who became individual property owners.

Laws 85 and 86 were an attempt to protect homes and lots occupied by individuals and social organizations, by establishing mechanisms for getting titles to these properties. To consider individual properties larger than 100 square meters of social interest, Laws 85 and 86 established payment mechanisms and some titling restrictions.

The Smallest Are the Most Unprotected

The Chamorro government's creation of the very complicated mechanism known as the Office of Territorial Ordering (OOT) generated a natural barrier to the users of small houses in the legalization process. This did not happen with the users of larger properties, because they had resources not only for the paperwork but also to pay in cash or in bonds the price fixed by the laws for definite acquisition. The same thing that happened with Laws 85 and 86 also happened with Law 88, the Law to Protect Agrarian Property. It has been very hard for a person possessing a small plot to get title and registration. And even when the title is obtained, many small owners cede their rights to new property owners who, without being rural workers, have managed to legalize their domain over both rural and urban properties.

In all of this long process of legalizing individual property previously in state hands, the small owners have been legally defenseless. Those who have managed to avoid legally mandated or forced evictions, or who avoid it through purchasing mechanisms, have only done so through self-defense organizing in small rural cooperatives, or with neighbors' support in urban neighborhoods.

There is no need to turn to statistics to confirm that evictions or the absorption of small properties by large property owners has only happened to occupants with scarce resources. It is enough to listen to the news and look at newspaper photos.

Law 209: The Final Step?

When it had not resolved the property conflict in its first five years, the Chamorro government reached an agreement to try to give stability to the new property situation. This was the formation of Law 209, the Law of Property Stability. This law led to an increase in the return of properties, fundamentally in rural areas, and also in the indemnification of those properties that cannot be returned.

Small property owners have once again been truly affected by these dispositions, because the new owners of urban houses or rural farms had the time and resources to legalize their situation, or at least make it very difficult if not impossible to lose their cases in court. Many of these large properties of new landowners are already registered in the name of good faith third parties.

In terms of the commercial enterprises that remained in the hands of new non-worker owners, many of them initially failed because of a lack of administrative capacity. These owners reoriented the capital to other types of activities with participation from traditional private sector business partners who had greater management experience.

The few enterprises that remained directly in workers' hands—as in the case of some supermarkets or transport cooperatives—ended up controlled by small groups of the new property owners. In more than a few cases, the base workers, who are shareholders or partners, have not even been able to maintain their jobs.

Alemán: Another turn of the Screw

In 1996, when Arnoldo Alemán's Liberal Alliance won the elections, the FSLN found itself in an even weaker situation than in 1990. The army and police have been moving forward in their professionalization process and the FSLN can only count on its own forces, now diminished because of internal divisions and the deterioration of its moral authority among the population, partly because of the open enrichment of some of its leaders.

The new large FSLN property owners are now accompanied in their businesses by functionaries of the former Chamorro government who used their government positions to get richer, above all through privileged access to privatization shares, purchasing land from cooperatives and forming businesses from government posts. Both groups must now confront a new sector claiming properties.

The promises made during Alemán's electoral campaign motivated some property owners linked to the former Somocista regime. Now, ex-National Guard members, ex-Somoza functionaries and some others are demanding massive return of their goods. In some cases they are making their demands from positions of power within the new administration, from ministers down to minor functionaries. The new large landowners are not affected by this avalanche of new demands; they have already legalized their property situation one way or another.

The Judicial Branch Goes into Action

The Alemán government has begun to compensate those making demands with generous indemnifications or by returning personal or business properties in the hands of the weakest owners—cooperatives and state enterprises with worker participation. Or, simply, it is paying salaries and benefits that allow them to recover their former landowner status by buying up properties from those who have a weak ownership status or who need money due to lack of jobs or credit.

Up until now, demands have been resolved essentially through administrative or informal mechanisms. The legal apparatus has been absent and is still inadequate because of its slowness and normative inability to guarantee a prompt and definitive solution to the conflicts brought before it. In general, small property owners are evicted without the opportunity to use all their rights to the property or their possession. In these evictions legal maneuvers are used that, one way or another, put the claiming party in the position of occupant.

1997: The Dispute Is Between Two Groups

The current problem lies in the dispute between two power groups. On one side are the large FSLN property owners. They have managed to stabilize the legal situation of the majority of their properties and, though individual owners, have become an economic power bloc which has the support of the bulk of small property owners who still see in the FSLN the only alternative to defend their interests. The other group is made up of two sectors: former property owners linked to Somocismo and those linked to the Alemán government. Both sectors, united in political power, are trying to form a new economic power group that can both resist the FSLN and displace the traditional private sector, always more passive about defending its interests.

The economic interests of these two groups make both require a clarification of the property situation. Insecurity and confrontation affect their economic growth goals. If secure property areas for each group are not defined, the businesses generated by their properties cannot be economically stable. For the FSLN, the key sectors to preserve are sugar production, banana commerce and transport. These bring considerable income to their new owners and also allow them to capitalize on the support of base workers who nominally consider themselves owners of these enterprises.

Economic Arrangement= Political Arrangement

Although the property problem affects the entire country's economy and one way or another affects all Nicaraguans, the biggest problem is only found between these two groups of owners defending their own interests. But even if they reach an agreement, the property problem will continue. Why? With property and credit increasingly concentrated in few hands, small homeowners in cities and cooperative members or individual peasants in the country will start selling their properties to the new owners to use the money from the sale for informal trade activities.

This explains why the property problem was discussed quietly and bilaterally, despite the effort being developed in the National Dialogue to identify the problems afflicting the country and propose joint solutions. A public discussion of the property issue could at best only legitimize an agreement between elites, by which the two groups of new owners seek to stabilize their own economic interests. This arrangement between two economic groups would also, logically, have a political component.

Who Suffers under the New Law?

Both Law 209, from December 1995, and the bill made public in early September titled Law About Reformed Urban and Agrarian Property have been called "final" laws. There is no such finality. Just as with Law 209, the new agreement between the FSLN and the Liberals can only be time-bound, because the problem will continue and intensify. Looking at some aspects of the new law can make this uncertain future more understandable.

Urban Peasants. The agrarian reform titles in urban areas of Managua and other cities are unprotected. Article 45 stipulates that agrarian reform titles distributed within Managua's urban limits as established in the 1982 Zoning Regulations will not be valid. These titles will be annulled and their property registry will be cancelled. In these cases the Agrarian Reform Institute (INRA) will reassign the occupants to other lands so they can continue their productive activity.

In Managua's case, the ones who suffer under this law will be those small farmers who have plots of land dedicated to basic grains, plantains and fruit trees. All of these plots, above all those located on both sides of the Masaya highway and the South and North highways, have acquired great value. But those who possess them and have worked them for years will not benefit from the property value increases. They will just be transferred to remote places, without adequate conditions for production or trade. This is a similar measure to the one taken in Somoza's times to displace thousands of peasants to the Nueva Guinea area.

Recently Settled Urban Poor. Article 93 of the new bill says that inhabitants of informal neighborhoods that have been settled since 1994, even if they have possession of their house, remain subject to decisions of the competent urban planning authorities about relocation, when the areas they occupy are affected by the city's urban development norms. To make the finality of this disposition even more clear, Article 96 expresses: "In all cases attempts will be made not to block, frustrate or slow down city development." Managua is plagued with small lots blocking that "development." The law offers no concrete alternatives except arbitrary relocation, leaving these evicted families to go where the wind blows them.

Administratively, this means that inhabitants of areas experiencing development investment in hotels, businesses or houses, will be evicted. Their few belongings will be moved in trucks to areas without basic public services such as water, electricity, transport, etc., and of course, they will not be compensated for the forced trade of their small lot in a valuable area for other lands not only far away but also of much less value.

The law is clear that the privileged zones of Managua will be cleaned out of poor people. No part of the law stipulates that the poor occupants will benefit from the difference in value between the lots they are forced off of and the ones they are taken to. Who will benefit from the high price these lots will bring when they are close to future shopping malls, hotels or luxury homes, where the well-off are bothered by living close to the marginalized and unemployed?
"Good Faith Third Parties." The last clause of Article 45 establishes that "in addition, good faith third party purchasers remain exempt." This disposition calms down the real estate speculators who, anticipating land value increases, bought land from small landowners/workers at very low prices, above all in the privileged zones of Managua. Areas like Altos de Santo Domingo, areas surrounding Las Colinas, the road to the Centroamerica school and the Masaya highway are already in the hands of "good faith third party buyers." None of these large buyers will be affected, just those fond of growing plantains or tending their little corn patch.

The guarantee that this law gives to those third party buyers and the legal formalization of the large buyers' rights will make property values shoot up in Managua. The evicted will be unable to buy lots that keep them linked in any way to the city. With a little more good judgment and a desire to truly protect the weakest—who, it is clear, will be evicted—a "major damage" clause could have been established in other legislation to allow those who were or will be victims of such third party good faith buyers to reclaim the damages caused them by being forced through need to sell their property at a price far below the real value. Nicaragua's legal framework, which sanctifies the principle of autonomy of will in contracts, prevents this, leaving those operations to the whim of free market laws.

Who Can Afford "Justice"?

The new aspects of the project tend to streamline the legal paperwork around property claims and establish mediation. The same thing is sought through the creation of special arbitration courts to resolve conflicts over dominion.

We all know that access to justice, despite the constitutional guarantee, is not the same for all Nicaraguans. It will be difficult, if not impossible, for small evicted individuals to take on the costs of the complicated paperwork to defend their rights. The only people who will actually participate in these processes will be the old large property owners who are demanding properties from the new, also large, property owners.

Some Special Beneficiaries

Article 19 of the new law addresses the problem of some businesses privatized in the 1990s. It states that enterprises that have sale contracts in private documents or rentals with the option to buy drawn up by CORNAP (National Corporation of the Public Sector) with former state workers, Army, Ministry of Government and/or Resistance veterans will receive the corresponding purchase documents. The payments are extended to 2002, and it is established that the new owners can pay the cost of up to half of the enterprise in indemnization bonds, at 50% of their face value.

For the FSLN, this disposition means legitimizing the property of its main businesses, currently controlled by Sandinista managers. For the government, it means being done once and for all with the claims of workers, such as sugar cane and banana workers, who at one point thought they would participate in the ownership of those enterprises.

The new law establishes a special disposition in Article 97. Houses acquired through Law 85 by the police and the army, both for institutional use and for active or retired members, will not be touched and the right to property acquired in this way will not be subject to any payment.

The Alemán government makes these two exceptions with a clear intention. It is trying to guarantee that the new Sandinista businesspeople act "responsibly" to protect their now legalized goods, while "teaching" the workers that in a market economy their function is limited to providing their labor in exchange for a salary. As for the members of the armed forces, the government wants to eliminate any possibility that they would support popular demands and to assure that their actions, subject to a civil authority, focus strictly on guaranteeing the current "rule of law."

The Problem will Continue

The property problem will not be resolved with approval of the law agreed to between the FSLN and the Liberal government. This accord was designed to resolve the contradictions between the two large new groups of economic power: the landowners and businesspeople who emerged after 1990 and the group working around President Alemán, disposed to create their own economic power from within the government. This is why traditional capitalist sectors like the Pellas, Mántica or Lacayo families did not participate in either these arrangements or in the National Dialogue discussions.

A moment will have to come when, in the consolidation of these two new landowner groups, they see their economic and even political interests as being allied. In the meantime, those who are suffering, who are displaced from their urban lots, evicted by law or by forced purchases, and without job possibilities, will take their own measures to defend their survival against any type of owner without distinguishing political stripe. The adjustment measures demanded by the international financial organizations will accelerate violence and social unrest and complicate the complicated national situation even more.

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Lavalas: A Fork in the Road

Envío a monthly magazine of analysis on Central America
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