Envío Digital
Central American University - UCA  
  Number 212 | Marzo 1999



In the Vortex of Hurricane "Corruption"

The Office of Comptroller General has engaged in a struggle for government transparency and accountability that is reaching all the way to the President of the Republic. But such an unprecedented effort on behalf of the common good cannot bring overnight results; social passivity, a weak state and a caudillo custom of privilege conspire against it.

Nitlápan-Envío team

While Managua is beginning to forget the gaping wounds that hurricane Mitch's rushing waters opened in other parts of the country, the nation as a whole is being battered by a new and different kind of hurricane. This one's name is Corruption. A month of new attacks by President Arnoldo against the comptroller general, the media and society itself have served as a dramatic warning of the widespread devastation in store if Nicaragua's institutions and society do not take timely and effective measures to defend against its onslaught.

The stage for the President's regrettable conduct is the one bequeathed to us by Mitch: a country whose poorest citizens have seen their economy washed away from under them, drastically in need of foreign cooperation, and more open to monitoring by the international community than it has been for a long time.

A battle without precedent

The Office of Comptroller General of the Republic (CGR) has carried out many thorny audits in the more than two years of Alemán's Liberal government. But virtually all of those that uncover administrative irregularities or even crimes by top government officials end up simply dust-covered testimonials to the overwhelming odds against winning a battle in the much-needed war against corruption. The officials named take refuge behind the immunity their positions grant them. They not only remain in their posts, but are promoted and feel free to speak disparagingly, at times even crudely, of the CGR and of Comptroller General Agustín Jarquín himself.

But not all has been in vain. While the top levels of power enjoy immunity and impunity, awareness of what corruption does is growing in the rest of society, particularly among those too young to remember the Somoza period. A dawning realization of how much corruption at the top affects everyone, especially the country's increasingly impoverished majority, is challenging people's fatalism and sense of powerlessness. It is a nascent but promising consciousness.

This opens the way to rethinking President' Alemán's claim that the problem is just a personality clash between two individuals (Jarquín and Alemán) or a petty turf fight between two democratic institutions (the executive office and the comptroller's office). It is, in fact, a genuine battle for transparency that is taking place within the state itself and, as such, is unprecedented in the country's political history. By hitting so strongly at the bedrock of political culture, the CGR's effort will have very long-term results. Assuming those will be for the better, nothing ensures that the immediate results will be an improvement. Social passivity and the weakness of state institutions other than the comptroller's office all conspire against a positive outcome, as does President Alemán's determined opposition to altering his privilege.

The return of the big estates

Since well before Mitch's unexpected arrival, word was already out that President Alemán was buying up land in various parts of the country. Dozens of agricultural cooperatives provided to both army and contra veterans in the early 1990s, now in ruins for lack of credits and support, have been bought for a song, as have myriad small plots belonging to poor peasants who have no title to them. In its message to President Clinton, the National Union of Farmers and Ranchers (UNAG) put the number of cooperatives sold in this manner at upwards of a thousand.

President Alemán, his relatives and government cronies are not the only ones buying out the rural poor. Top and middle-level leaders of the FSLN and its allied organizations are in on the buying spree as well, as are Nicaragua's traditional big landowners and a number of capitalists from Central America and the United States who are close to the Alemán government.
"A genuine agrarian counter-reform is taking place with obscure capital coming from who knows where," charged UNAG vice president Alvaro Fiallos. According to him, "all credit policies favor foreign investors and large national capital." The result, Fiallos claims, is that a million hectares have already passed into the hands of "new latifundistas"—the Spanish term for owners (usually absentee) of giant estates. What we have in Nicaragua, in Fiallos' words, is "a political democracy dominated by an economic dictatorship," at the head of which "we see a rancher more than a President." It is an assessment that other data and the President's own declarations and reactions are confirming to the entire nation.

Legal confusion and abandonment

This concentration of land back into few hands is an expression of the voraciousness, opportunism and social insensitivity that characterize the neoliberal model being applied to countries such as ours. It is not an "illegal" operation in Nicaragua for the most part; it is backed by legal and institutional changes ushered in with the September 1998 approval of the Law of Executive Branch Organization. Some of these changes have gone unnoticed by the general public despite their dramatic implications for agrarian property.

Under the new law, the Ministry of Agriculture became the Agricultural and Forestry Ministry (MAG-FOR) and the Nicaraguan Agrarian Reform Institute (INRA) was phased out altogether. The jurisdiction for resolving land tenure conflicts was switched from those two institutions to the Ministry of the Treasury and Public Credit—previously the Ministry of Finances. A rural property office was then set up within the new treasury ministry, which is a sort of counterpart to the urban property ordering office (OOT) created by the Chamorro government.

Legally, MAG-FOR still has responsibility for "administering national rural lands, including the faculty to grant property titles, resolve land tenure conflicts and formulate rural land use, ownership and distribution policies within the framework of national agricultural development policies." Nonetheless, the law reorganizing the executive branch granted these very same faculties to the new office in the treasury ministry. The only policy responsibility not duplicated is that related to agricultural development. Furthermore, in dismantling INRA, the government left some of its faculties unassigned altogether, among them responsibility for resolving conflicts over indigenous lands. This is a curious omission to say the least, since the future of indigenous lands on the Atlantic Coast is at this very moment in limbo—or perhaps better said in the inferno of arbitrariness and racism. (On this subject, see "Plea from Prinzapolka" in this issue.)
The legal gaps and overlaps of responsibility are not even the worse aspects. Worse yet is that the new rural property office is limiting itself entirely to resolving compensation claims in favor of those confiscated in the 1980s. All tasks related to guaranteeing ownership and titles for peasants with precarious land tenure, whether they received their land through the agrarian reform or not, have been left aside. This leaves it quite clear that the reorganization and abandonment are being used to facilitate the re-concentration of land. In practice, government policy is: "Let's leave the market to sort things out, because we're in control there."
In addition to the innumerable unresolved property conflicts, another pending problem was the situation of indebted cooperatives. During the Chamorro government, when Alvaro Fiallos was head of INRA, there was constant pressure to resolve the burden of these debts. Now, the debt issue is no longer even taken into account. The only thing of interest is titling the cooperatives, because once a failing cooperative has its title it can be sold. And there is never a lack of eager buyers. Everything points to the same objective: land concentration. Among its other evils, this is the very opposite of the kind of territorial organization proposed by civil society to mitigate the vulnerability of the poor in various rural zones, particularly in the wake of Mitch. Even though the post-Mitch scenario cries out for a new agrarian reform, we are currently witnessing a massive rollback of the agrarian reforms of the 1980s and early 1990s.

World Bank project paralyzed

During the Chamorro government, the World Bank negotiated a project to support the establishment of a land tax registry linked to a rural property ownership registry, neither of which the country has at a national level. The project got underway under INRA's management, but the above-mentioned institutional changes have paralyzed it. From a legal standpoint, the World Bank signed an agreement with an institution that no longer exists. From the practical standpoint, there is not an inkling of political will in the new rural property office to implement even the project's already-defined components.

The World Bank views this with concern. According to its recent mission, the new reorganization of the state, which includes the jurisdictional change in rural property management, "helps generate a greater dispersion of regulatory power and institutional order by creating a rural titling office with faculties to title rural lands at a national level even though the role it would have in resolving land tenure conflicts or titling indigenous lands is unclear." In the World Bank's logic, the only way to have transparent and competitive agricultural markets is to create legal order, but the government is effectively telling them: "We aren't interested in ordering. We're only interested in appropriating."

Alemán is just carrying out his "duty to foster progress"

The context of a primitive political culture, the voracity of traditional and new capitalists linked to the government by affinity or pact, the President's authoritarian and untransparent leanings and this confusing new legal framework are all sucking the country smack into the vortex of this new hurricane.
At the end of January, the conservative daily newspaper La Prensa, which has made what appears to be a plausible shift toward professionalism and serious opposition, began reporting that the President was buying up hundreds of acres in the department of Rivas. Alemán admitted the purchase, lamenting that his new farm was not as large as the paper reported. Days later he not only reiterated his admission, but boasted of the deal he had made: he had bought bankrupt cooperatives at bargain basement prices. It was an incredible display not only of social insensitivity but also, in this case, of illegality since the controversial Property Law promoted by the President himself only a year ago prohibits the purchase of cooperative lands until five years after they are titled.

The leftist newspaper El Nuevo Diario—staunch opponent of anything that smacks of Somocismo—began reporting on purchases of other farms as well as on the water, electricity, roads, agrarian technology, and other "public works" that the state utilities were installing on and around the President's new farms. Alemán dismissed the presence of state vehicles on his land as a "coincidence" while the managers of the institutions implicated either denied the facts or said they were simply serving the President as they would "any other producer." It was also shown that a number of the President's new properties were close to zones where major investments are being made in tourist developments. Was this just "coincidence" too? Alemán countered that it is his "duty to foster progress."
When the new properties that Alemán and his four brothers were acquiring began to be identified, the President called a strange press conference in which he presented the tax declarations of his brother Alvaro, a doctor residing in the United States. The point of this bizarre display was to show that his brother was a professional endowed with enough capital to invest in Nicaragua and thus foster progress.

The scandal grew apace when it was learned that the director of the state's Rural Development Institute (IDR) is also administrator of the presidential family farms and that the deputy attorney general was personally processing the paperwork for the land purchases. This was taking State/President confusion to a whole new level. The growing volume of information supplied daily by the media confirmed the State/Farm reality. It was as if time were running backward, rapidly returning to the decades when Nicaragua was known throughout the world as the personal hacienda of a different family.

Playing hardball

Challenged daily by virtually all media, the President debuted a new propaganda method on February 8. He paid for almost an hour's air space on all the national TV channels to defend his right and that of his family "to acquire any goods within our means, just like any other Nicaraguan." He followed that with his own interpretation of events, calling them a "malevolent campaign" orchestrated by the media, the "microbe" parties (any other than the FSLN or his own Liberal party) and a sector of Sandinistas who, "accustomed to living in uncertainty and on the edge of violence," are turning their back on the dialogue between Alemán and FSLN general secretary Daniel Ortega.

His message fell on deaf ears. The information kept rolling in, thus keeping the rival interpretation in the public eye. With Daniel Ortega out of the country, FSLN leader and legislative representative Víctor Hugo Tinoco called on the comptroller's office to investigate the President's properties. The CGR took up the case.

When CGR officials began investigating a presidential property called La Chinampa, the one with the best infrastructure so far, President Alemán impulsively called Comptroller General Jarquín by phone, warning him that if he wanted "war" he would get it, because Alemán was ready to play "hardball." Jarquín publicly asked the President for an "explicit" explanation of these threatening metaphors and of the phone call's aggressive tone. He also reported the threats to the Nicaraguan Human Rights Center (CENIDH), which promptly requested protection for the comptroller from the Inter-American Human Rights Commission (CIDH). CIDH responded by requesting information from the government of Nicaragua and set in motion a process to establish the relevant measures. That put Nicaragua back in the international news again, this time thanks to the hurricane-force winds of an entrenched caudillo culture—by definition inclined toward corruption—in which the governing strongman believes himself to be above all laws and institutions and hence feels untouchable.

What was the President's explicit clarification regarding his metaphor? Upon returning from a quick visit to the United States, he exclaimed in an improvised political gathering at the airport, "We will not allow ourselves to be intimidated. It is inadmissible today, was yesterday and always will be to use totalitarian and abusive procedures that belong to the past." That was his assessment not of his own behavior but rather of the comptroller's right to audit public goods, and the message came through loud and clear: no one can touch me.

International responsibility or meddling?

Those in the international community who proclaim their support for democratic institutions in poor countries and countries "in transition" should take note of this case. It clearly demonstrates that the electoral democracy on which they insist so strongly is nowhere close to providing the answer. Nor can institutions be democratized with donated computer systems or "modernization" plans like the one that the Inter-American Development Bank (IDB) is currently financing in the Ministry of Health. This plan does not guarantee transparency, is generating unemployment and is promoting low-quality public health that is only for those who can afford nothing else.

Democracy and modernization should be geared to the nation's reality and needs. It is hypocritical for those in the international community who have no hesitation openly intervening to impose their economic policy designs on Nicaragua to simultaneously refuse in the name of "governability" and "non-interference" to take a stronger and more visible stance against corruption.

The President's personal patrimony

On February 25, the CGR released three probity declarations filed by Arnoldo Alemán at different moments: the first in 1990, when he was elected mayor of Managua; the second in 1995, when he resigned from that post as required by law to run as the presidential candidate of the now disintegrated Liberal Alliance; and the third in 1996, when he took office as President of the Republic. A comparison of the three demonstrates that Alemán's personal patrimony increased by 900% in those six years. In 1990 he held property valued at US$26,000. By 1995 it already amounted to $309,000 and by the following year had reached a million dollars. The CGR also reported the existence of a corporation, GENINSA, which is buying up land for the President and his family. The corporation is run by Eduardo Mena, who also just happens to be the director of the year-old Rural Development Institute.

The CGR gave the President a deadline by which to clear up the contradictions and fill the gaps in his probity declarations and to report on the purchase or sale of any goods since taking presidential office. It also announced that the investigation would continue, so as to determine if public institutions had been used to equip the presidential properties. The CGR later made clear that if the President refused to comply, an indictment process would be initiated.

On February 26, the President, who appeared to be on some kind of tranquilizer, responded to the CGR report. His entire family, ministerial Cabinet and other friends in high government office accompanied him. Contradicting the declarations he had made over the month, the President now insisted that he had not bought so much as a square inch of land since taking office, attributing the majority of his current extensive properties to an inheritance from his grandparents. He justified the increase of his patrimony to "capital gain" and placed the future of Comptroller General Jarquín "in Gods hands." He also made clear that he would provide the comptroller's office no further information, on the grounds that the Law of Integrity of Public Functionaries invoked by the CGR, which regulates a constitutional precept, has been repealed. It was a rather arbitrary judgment, since the law is in fact still on the books.

Days later President Alemán visited Cardinal Obando, turning over to him all the documentation on the Alemán family patrimony. The Cardinal appeared pleased rather than manipulated by the President's gesture.

The comptroller turned the CGR's report on the presidential patrimony over to the National Assembly as the first fruit of its series of investigations. A spokesperson for the Assembly's board, controlled by the Liberals, stated that the report would not be officially dealt with because it was "inconclusive" and lacked the "legal requisites." That response was not too surprising, but the public was more than a little perplexed to hear several FSLN legislators support that position—including Victor Hugo Tinoco, who had requested the investigation in the first place. It is a measure of the strange times in which Nicaragua is living that the FSLN has yet again sidestepped its role of responsible opposition, while leaders of other, smaller parties are the ones demanding that the President be stripped of his immunity and removed from office.

"Deeds that constitute criminal acts"

On March 9, CENIDH issued a document arguing that the CGR report meets all the necessary legal requisites. The human rights organization also detailed a series of acts committed by President Alemán, taken from the CGR report, which CENIDH believes constitute "criminal deeds." According to CENIDH, they "conclusively prove that the President of the Republic and top officials of his government obtained concessions and personal profit from state entities with unfair advantage." The President's criminal acts, according to the Penal Code, are fraudulent conveyance, fraud and embezzlement. Crimes such as illicit enrichment, influence peddling and money laundering have not yet been included as crimes in Nicaraguan penal legislation.
CENIDH also pointed out that the President violated Nicaragua's Constitution, which establishes that public officials may not obtain any concession from the state. In the face of what CENIDH terms "these shameful acts of corruption," it urged the comptroller's office to immediately initiate the indictment process and issue a resolution and called on the National Assembly legislators to "carry out their duty once they receive that resolution."

In the name of harmony and image

The President's regrettable exhibition and the exemplary way in which the comptroller general and his team have come out in defense of transparency—and thus of Nicaragua's poorest—have generated more than just political and judicial controversy. They have also unleashed a tense ideological battle, whose results will only be seen over time.

Many arguments and counter-arguments have been brandished. Alemán insists on feeding public opinion with the idea that this is nothing more than a personal conflict between him and Jarquín, motivated by the comptroller's failure to become mayor in 1990, when Alemán was chosen instead. Now, according to Alemán, he aspires to the presidency, and is doing all this to ensure he gets it.

The nation's political culture, excessively centered on individuals to the expense of political projects, laws or institutions, is fertile ground for this fallacy. The truth is that this is a genuine, fundamental and several-pronged crisis. It is based on the need to start exercising control over public officials, the fact that the state institution with the right and duty to perform this task is the Office of Comptroller General and that, for the first time in national history, this entity is determined to do it. Meanwhile the other public officials, starting with the one at the very top, are stubbornly resisting being subjected to any controls.

Various economic, political, religious and social sectors, not to mention the media, have insistently urged that President Alemán and Comptroller Jarquín sit down and reach some understanding that will put an end to this conflict, since it only serves to further damage this already battered country. National political culture, accustomed to under-the-table deals, pacts and other tradeoffs that ignore laws and institutions, encourages this approach. Invoking harmony to get around a crisis is just as damaging as the crisis itself, since the most important thing here is to find a way to make government officials accept their responsibility for the common good and not just for their own pockets. Sooner or later this has to happen, and now seems to be the perfect time. It is a moment not for harmony but for accepting the historic challenge that lies at the heart of this conflict.

Many representatives of economic power as well as of other, more symbolic powers such as religion and political parties also argue that a way must be found of ending the conflict between the presidency and the office of comptroller because it is damaging the country's "image."
The new postmodern culture being peddled universally—which the Nicaraguan elite has uncritically bought into—sets the stage for this way of thinking, because it is so desperately and insidiously centered on images. What should interest the majority of Nicaraguans is the national reality, not the national image on international TV screens. The only way to resolve poverty, unemployment and backwardness is with realities, not images. In any case, as the comptroller general sagely noted, Nicaragua's repeatedly tarnished image would benefit greatly if the world could see that a state institution has consciously embraced the struggle for transparency in public administration.

Which investors are being scared off?

Yet another argument repeated daily is that this conflict must be put behind us because it is frightening off foreign investors. Those peddling the half-truth dogma that investors will develop this country have an even tougher time trying to come up with a convincing sales pitch in this context. Nothing scares off a serious investor more than institutionalized corruption, judicial insecurity and the absence of game rules in either the market or the economy. Or, to be more exact, the existence of a single rule of the game: the one handed down arbitrarily by the government that happens to be in office at any given moment. The only kind of investors who would back off if there were transparency are those who have poured into Nicaragua in the past two years to buy up all the land they can and take advantage of other opportunities provided by their direct links with the man in office.

A study by the US firm PRSGroup puts Nicaragua among the 25 countries in the world with the greatest short- and long-term investment risks. It is in the company of Albania, Pakistan, Turkey and the Congo Republic, among others. Neighboring El Salvador, in contrast, is listed as one of the 25 countries offering the best investment possibilities. Corruption and political polarization are among the elements cited as deterrents to investment in Nicaragua. Despite the appearance of ostentatious commercial construction in Managua, the country attracted only US$133 million in 1998, mostly from the United States.

Yet another unfortunate argument is repeated in the few media loyal to the President: Previous governments also robbed, and they stole even more, so what's the big deal? Or else they lament with a powerless sigh that corruption has always existed in Nicaragua and is always very difficult to prove.

The population's distrust of politicians, which has become virtually generalized in these times, is grist for the mill of this fatalism. And fatalism leads to passivity, which, together with the logic that we are all sinners or pigs at bottom, means that everything is tolerated. This puts a halt to any possibility that the struggle against corruption will be taken up not only by a state institution but also by society as a whole.

Draw attention away from the budget

The price of this struggle is high, since most of the "hardballs" are aimed at the comptroller general's head. The unfounded accusations fabricated by the attorney general in October 1998, before Mitch, could land Jarquín in the courts facing a long list of "crimes." But since that hardball wasn't enough to frighten the comptroller, Alemán himself announced just before the CGR made his patrimony documents public, that he would add another to those formulated by the attorney general—who, it should be added, answers directly to the President. Alemán tried to present a 1.3 million-córdoba loan from the Social Security Institute's pension fund in September 1996 to cover contributions of CGR employees accumulated during the previous administration as if it were a personal loan that Jarquín had supposedly demanded from the sacred funds of poor pensioners for his own benefit. The CGR was not the only state institution to make use of this inter-institutional mechanism, but was uniquely singled out for it.

Arguments come and go. Low blows, high blows, apocryphal documents with official seals, threats, media leaks... Anything goes. Alemán's ultimate objective is to force the comptroller general out of office, discrediting him as much as possible on the way. In the current context of a government-FSLN pact, the only stone in their shoe is the comptroller's office and its indefatigable chief.

Jarquín recognizes that there are other secondary motives in the personal and institutional abuse being thrown at him. He told envío that the President's campaign right now is also partly to divert attention away from the 1999 budget debate, the main issue involving questions of transparency during this quarter of the year. The budget bill submitted to the National Assembly in October should have been approved by the end of last year, but was not even debated due to Mitch, in the knowledge that it would have to be rethought in light of the hurricane damage.

The executive has now presented the redrafted budget, ignoring the CGR's comments on the first version. The CGR had asked for an explanation of the 724 million córdobas (around US$7 million) of "incidentals" earmarked for the Presidency and 647 million córdobas destined for Nicaragua's Central Bank to cover "economic policy." In 1997, the Central Bank received 546 million córdobas under this same category, and in 1998 a billion. Jarquín told envío that he has been unable to learn what those earlier amounts were used for, but that the executive is using its "incidentals" to set up "a kind of petty cash fund, which in reality is anything but petty."
The comptroller views it as even more serious that the budget does not reflect the income transfers sent annually by state companies to the executive coffers. The CGR calculates that these transfers will amount to some 200 million córdobas for 1999. "In that realm the discretion is total," says Jarquín. "The executive manages a whole under-the-table economy with these funds."

The "bad image" goes to Stockholm

Alemán interprets the news reporting on his lack of probity as a "malevolent campaign." In a display of either wild bombast or serious paranoia, he claims that it has three objectives: prevent the pardoning of the foreign debt, stop the "works of progress" and development his government is engaged in, and create a stumbling block for his talks with the FSLN.

As for the first point, there is no relationship whatsoever between the Nicaraguan government's "bad image" and our country's eventual entrance into the HIPC (Highly Indebted Poor Countries) initiative designed by the International Monetary Fund to partially pardon and/or renegotiate their foreign debts. The government's lack of credibility, on the other hand, could affect government-to-government (bilateral) foreign cooperation, since the counterpart government's transparency is fundamental to bilateral financing sources. This is particularly true for the donor countries in the European Union, which made up the bulk of the Special Consultative Group on Central America created to deal with the initial Mitch emergency. It is perhaps truest of all for the government of Sweden, which is hosting the regular meeting of the Paris Club countries' Consultative Group in Stockholm in May. At that meeting the total amount of cooperation pledged by the wealthy nations for hurricane relief and reconstruction will be allocated to each Central American country based on a review of their concrete proposals.

Nicaragua will probably come away from the Stockholm meeting with close to what was predicted and may get even more, despite the government's bad image and the even worse reality it reflects. Whatever the final amount, it will be limited by conditions that also depend on reality rather than image. Alemán's government will be subject to less questioning about its lack of transparency than about its proven inefficiency. Normally neither bilateral nor multilateral cooperation agencies like to give more help than they believe the recipient government can execute. The donor countries already know from experience that Nicaragua's current government can only execute about 70% of what it projects. This percentage is based on the figures for projects in 1997 and 1998, valued at around $400 million.

That means that 30% of the aid never got out of the pipeline in those two years due to inefficiency. Aid is lost not only to corruption, but also to incapacity, managerial ineptitude and lack of professionalism. Furthermore, the structural adjustments have accentuated the regulatory side of the state's role, weakening its entire operational capacity, as Mitch's passage demonstrated. This is not only tragic but also ironic: Costa Rica could theoretically receive more aid in Stockholm than Nicaragua simply because it has more capacity to present and execute projects, even though the hurricane did less damage and left fewer people homeless there.

A flimsy foreign debt strategy

Not only is there no reason for Nicaragua's entry into the HIPC initiative to be affected by the State/Farm scandals, there is even space for the government to argue for total cancellation of the foreign debt rather than just 80% of the part owed to the Paris Club countries. The German government, for example, is advocating the pardon of all debts for both Honduras and Nicaragua, and HIPC has also come under strong fire from various sources in Europe. Nonetheless, the Alemán government insists on nothing more than the 80% in the HIPC proposal, which it presents as the equivalent of reaching the Promised Land.

Why isn't the government going further if it could do so? Because the first and foremost point of its economic strategy is to stay on good terms with the IMF and other multilateral agencies, which resolutely oppose canceling any country's total debt to avoid setting a "bad example" for the others. It is a pretty flimsy strategy to prefer staying on the multilaterals' good side on the premise that the bilateral agencies will help no matter what. But the government would not dream of risking the multilaterals' enmity by publicly supporting the initiatives of some bilaterals on its own behalf.

On the "right road"?

Alemán's second argument is that the supposed campaign against his turning Nicaragua into a private hacienda is aimed at halting the "development" promoted by his government. But the citizenry's incipient recognition of the relationship between corruption and economic development is not about stopping development. (In fact, it is questionable whether the fancy shopping malls and franchise fast-food establishments springing up strictly in Managua even qualify as development.) Where this recognition is heading is toward the conviction that the best development model is one that includes controls and transparency, and leads to opinions like this: "The only useful electoral program in Nicaragua is the promise not to steal."
The economy is still in crisis. Is it because of corruption or neoliberal dogmatism? If one subtracts from the economy the hundreds of millions of dollars that the 700,000 Nicaraguan emigrants send home to their families each year and the similar sum that is laundered in Nicaragua, the economic model appears to be a failure. It is clear that the only systems preventing an even greater crisis are the "invisible" ones of remittances and drug trafficking.

The forecasts of the Central American Bank of Economic Integration (BCIE) are somewhat alarming. In 1999 Nicaragua's imports will continue growing while exports keep on falling, resulting in a trade gap of over a billion dollars (it was US$555.2 million in 1997 and US $866.5 million in 1998). The projections of other economic indicators are just as discouraging, and family economy indicators are even more so.

Despite all this, the government's economic spokesperson, Central Bank president Noel Ramírez, keeps ordering costly media campaigns to sell the idea that "we're on the right road." Among his multicolored charts, tables, circles and arrows is the statement that the Liberal government created 157,000 new jobs in its first two years. According to the government's own figures, there are half a million economically active people who cannot find work in Nicaragua. These hopelessly unemployed can be forgiven for wondering where those jobs are, but Ramírez does not mean that they have been truly created in towns, cities or peasant districts. They are an academic exercise in calculus done in the bank's own offices: if we have x million people employed with y gross domestic product (GDP) in 1997, then a 4% GDP growth in 1998 (the official figure) will provide 70,000 more jobs. The mathematical construct is just that simple. Alemán triumphantly forecast a 7% growth for 1999, ergo the generation of 125,000 more new jobs, a prefabricated figure that expresses nothing so much as the fragile base on which official optimism is perched.

Two "rabbits" in a hole

The President's third point was that the "malevolent campaign" against his government, himself and his family was aimed at scuttling the dialogue with the FSLN. Alemán has two versions of this "dialogue"—which a large percentage of the Sandinista base disparagingly recognizes as a pact. One version is elegant and the other crude. The elegant version is the one he included in his televised message: "These talks are aimed at providing the country with governability and at no time have they been exclusionary or geared to seeking personal privileges, much less my presidential reelection."
He divulged the crasser version in a radio interview when relating what he had told Daniel Ortega in Caracas, where they were both attending the inauguration of President Hugo Chávez. Alemán claims to have told Ortega that Nicaragua only has space "for two major forces." Nicaraguan political life, he added, "is like a hole with room for only one rabbit. One goes out and another goes in, but it's not like the two rabbits are living together. As the Chinese proverb says: `there's no room for more than one tiger on the same hill.'"

How do you control a comptroller?

In the vortex of the hurricane whipped up by presidential corruption, the positions of the FSLN sector promoting the pact have been by turns ambiguous, contradictory and opportunist.

Ortega's claims to support the comptroller general are at best ambiguous. He argues that "the important thing in this conflict is to establish mechanisms that ensure these kinds of situations are not repeated because they would affect Nicaragua's image." One might be tempted to view his newfound concern about image as refreshing, since he heads a party whose image suffered seriously from not dealing with its "piñata" corruption scandal. But more to the point, no one should know better than this erstwhile revolutionary that insofar as this is the first time a struggle against corruption has been waged from inside the state, it constitutes a true revolution, and no revolution is without conflict, crisis and tensions.
FSLN legislator Víctor Hugo Tinoco's position was clearly contradictory in first requesting the CGR to investigate the presidential properties then making a "political decision" to turn his back on the CGR report when it came to the National Assembly. By backing the Liberals' argument that the report was "inconclusive," Tinoco undermined the report's merit and contributed to getting it shelved.

On top of all this, there is no kinder word than opportunist when the very sector of the FSLN supporting the pact calls on people to demonstrate in the streets "against neoliberalism and in support of the comptroller general" during President Clinton's visit.

The Ortega-Alemán pact has deeply divided Sandinistas. And the more the President and his government are so justly challenged, the more profoundly this pact is questioned. Everything indicates that neutralizing Comptroller General Jarquín is one element of the pact. But it is not an easy task for those in the FSLN who favor the pact. They know perfectly well the political costs of openly disqualifying the comptroller, or of Sandinista legislators voting in favor of his facing trial or being forced out of office. This explains why they seem to favor another formula proposed by Alemán, a collegial auditing structure known colloquially in Nicaragua as "controlling the comptroller." The idea is to surround his office with other comptrollers—both Liberal and Sandinista—in a new design that Sandinista legislators in the Assembly could more comfortably approve to provide the needed legality. But this would imply reforming the Constitution, and there is no indication that the various constitutional reforms being discussed have achieved consensus at top party levels on either side. For now, both Liberals and Sandinistas have agreed to suspend all discussions on constitutional reforms until after the Stockholm meeting.

Divisions and initiatives in the FSLN

The crisis within Sandinismo has grown much more serious in the past month, partially as a consequence of the mounting evidence of corruption in government and the FSLN's failure to actively oppose it. On a more internal level, the crisis was further fueled by the results of March's elections for posts in the FSLN departmental structure in Managua, in which all manner of pressures and irregularities were employed to ensure victory by Ortega supporters. According to one analyst, "A stage of Sandinismo has closed and Daniel Ortega definitively lost the opportunity and the possibility of heading the changes that the FSLN needs." At the same time, though, new opportunities have opened up. Voices and initiatives from various angles of Sandinismo have been merging in a call to organize against "Danielismo" from within party structures or from outside, to disobey elected authorities and to actively strengthen the current divisions to make it possible further down the road to begin building the solid unity that the FSLN currently lacks.

The pact to which a powerful sector of the FSLN is pledged conspires against these strategies. So do the capacity within the FSLN structures to wage a "dirty war" on behalf of their leaders and the continuing efforts of Daniel Ortega himself to manipulate and monopolize the FSLN's historical symbolic power in his own favor.

Stockholm: Who controls the aid?

The regular Consultative Group of the Paris Club countries held its annual meeting in Geneva in April 1998. At that time, recalled Agustín Jarquín in his meeting with envío, "the international community put the need for governability on the agenda for Nicaragua, including transparent public administration, decentralizing and strengthening municipal government, and the participation of civil society in this concept." Will the government pass the test when it comes before the Consultative Group in Stockholm this May?
With no clear legal framework, but with initial financial support from the IDB, President Alemán announced on March 10 that he had President Clinton's endorsement to set up a commission to supervise the aid that Nicaragua will receive in Stockholm and to make recommendations on how best to use it. This three-person commission, nominally of the "private sector" but elected by the President himself, will work for three to five years and one of its declared objectives is to "generate national and international confidence." All indications suggest, however, that its undeclared objective is to prepare the way for replacing Agustín Jarquín as comptroller general. Will the rest of the international community take the bait?
Jarquín was recently elected president of the umbrella organization of Central American and Caribbean governmental auditing agencies. In that role, he has designed a project aimed at creating mechanisms to increase these agencies' auditing capacity and ensure transparency in the use of international aid to their countries. He will be presenting that project himself in Stockholm. How will the international community receive it?

NGOs do their own social audit

This institutional initiative from the Office of Comptroller General in favor of transparency is currently being complemented by a major effort on the part of the over 300 Nicaraguan nongovernmental organizations that formed the Emergency Relief and Reconstruction Coalition following Mitch. Not only are they working to present projects for authentic reconstruction in Stockholm, but by then they will have also completed the first phase of what they are calling a "social audit." It is based on a survey of 10,000 families and 150 leaders and mayors from as many communities and neighborhoods in 80 municipalities affected by Mitch. This extensive sample is being interviewed about the damage they suffered, the aid they received or did not receive, the needs they still have, their living conditions prior to the hurricane and their level of participation in the reconstruction projects. The first results show that government aid was not only viewed as insufficient, but also dried up very quickly. The most tragic part is that it did not arrive in the first, desperate days after the emergency.

It is evident that social control over public goods and the struggle for transparency and against corruption are becoming central themes on the national agenda and in public consciousness. This is enormous progress, but the major challenge to us all is to help it advance further.

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