Envío Digital
Central American University - UCA  
  Number 112 | Noviembre 1990



Workers Redefine Privatization

Envío team

The National Workers' Front (FNT), the recently-formed umbrella organization of six pro-FSLN union federations, decided to initiate a period of escalating disobedience on October 1 to protest growing unemployment and hunger in Nicaragua. The decision was made in the FNT's first congress on September 22-23, following recognition by the over 200 union leaders attending that the UNO government has complied with no previous agreements without popular pressure.

The ultimate goal of the mobilization, the FNT declared, was to achieve a genuine social agreement and real stability in the country. FNT head Lucío Jiménez called the plan a warning of what people are capable of if the government does not listen to their demands.

Though the targets of protest include low wages and high prices, politically-motivated layoffs and threats to throw people out of squatter settlements, a particular focus of the FNT is the government's determination to divest itself of productive state enterprises. The FNT congress decided to form defense commissions in all threatened state corporations, take legal action to prevent their privatization and disobey the decisions of their government-appointed boards of directors.

Why privatize?

The buzz-word "privatization" includes 1) returning to their old owners those businesses a government-appointed commission decides were abusively confiscated by the Sandinista government and 2) selling a large number of others to private national or foreign investors. According to the Nicaraguan Public Administration Corporation (CORNAP), which oversees all state sector businesses, the 400 enterprises grouped into 24 corporations, or branches, generate more than a third of the nation's production.

UNO's desire to privatize has as many arguments as its coalition has factions. For some it is strictly ideological: the state by definition cannot be an efficient producer; only capitalists can. Needless to say, many of these capitalists are also UNO leaders. Technocrats in the Cabinet just as strictly say it is pragmatic: the state has no funds to invest in rebuilding the productive infrastructure after the war, so private capital is the only answer. A corollary argument to defend plans to sell businesses is that this will provide a one-time source of income to help balance the fiscal deficit and thus lower inflation.

While the government's general determination to privatize has come across loud and clear, the multiple, and sometimes contradictory reasons have thus far resulted in an undefined policy. The rightwing entrepreneurial umbrella organization COSEP will not rest until every profit-making activity is in private hands. La Prensa has suggested that the government might hold on to some profitable companies to finance development projects—an idea that begs the question of who could be persuaded to buy the moribund ones. There are also suggestions that the government may just sell additional shares to private investors in state-held companies. Would the utility companies—water, electricity and communications—be privatized, since they are only profitable when rates are unaffordably high? If so, would they be allowed to remain monopolies? Lauding the principle of competition, Minister of the Economy Silvio de Franco recently spoke against monopolies or oligopolies like the sugar and cooking oil industries.

Why not privatize?

The issue has both immediate and strategic merit for the Sandinista labor movement. The immediate concerns are that resentful former owners would be likely to fire anyone who smacked of Sandinismo, and that any investors could be expected to break collective bargaining agreements, signed with the previous government, which grant a number of hard-earned social benefits such as free lunches, transport to and from work, medical and dental care, subsidized commissaries and in some cases child-care centers.

The more strategic issues include the fact that these state-run businesses, known as the "Area of People's Property," provided the revolutionary state with an income base to extend social programs to an even larger sector of the poor, programs that the new neoliberal government is cutting wholesale. Private owners will also probably be even more focused—though perhaps no more desirous—than current state administrators in efforts to undercut the militant Sandinista unions that dominate these enterprises, in favor of docile pro-UNO ones. In addition, they would be unlikely to countenance worker production councils, worker access to financial records and other aspects that elevate workers' status in production. And finally, even if card-carrying Somocistas actually are excluded from the return or purchase of businesses, as the government has vowed, the memory of voracious capitalists and the flight of their profits out of the country is vivid in the minds of many. Sandinistas see the gains made in dismantling this class in the past 11 years as the basis for building a more just society; their opposition to its return is visceral.

For all of these reasons, Sandinistas view Decree 11-90, which paves the way for the return of nationalized businesses to their old owners, as the most dangerous piece of legislation the new government has pushed through so far. They have argued that the decree is illegal because it exceeded the executive branch's constitutional right to issue decrees while the National Assembly is in session; its annulment is a centerpiece of FSLN negotiations with the government. Workers, meanwhile, are fighting its implementation.

So privatize to us, then!

While the FNT originally opposed any divestment of the state sector, it has now taken a new tack: if you insist on privatization, then privatize to the workers. This message was contained in a September 13 pronouncement made by the FNT-affiliated unions of six factories known to be claimed by their previous owners.

La Prensa's March 24 "Society and Economy" page actually opens the door to such an idea. "Workers themselves, in associated forms, could gain ownership of some businesses," the Chamorro-owned paper suggests. "These policies express the desire to overcome and go beyond the nefarious Somocista model, in which high macroeconomic indicators were achieved but only benefited a few "

Just days after its congress, the FNT had to deal with the first serious bout of privatization. On September 25, the Confiscations Review Commission set up under Decree 11-90 handed down its first finding: 16 urban factories had been "unjustly and arbitrarily confiscated, violating human rights," and would be returned to their previous owners. Solicitor General Duilio Baltodano, who heads the commission, said that, among the 3,000 claims the commission has received, priority had been given to industrial factories "so their owners would contribute to promoting economic development and generate employment."

Workers immediately took over five of the factories, demanding that the companies be privatized to them. In extreme cases, according to Barricada, they will negotiate with the government for 51% of the shares, financing and raw material. Their justification in most cases is that, in the years since the factories were confiscated—usually for decapitalization—the workers paid off the former owners' bank debts and kept the factories afloat with voluntary labor and the innovative manufacture of spare parts for obsolete machinery.

A case in point is El Caracol, a packaged coffee and cereal drink company. Union leader Ronaldo Rodríguez claims that the factory's 135 workers have donated over 60,000 voluntary labor hours in the past 10 years, equivalent to over $650,000, paid off a $225,000 debt and in the last three years invested another $250,000. El Caracol workers contracted legal counsel to prepare a document verifying this information to the commission and, while they were at it, requested the Managua appellate court to declare Decree 11-90 unconstitutional. Not satisfied with legal measures, they also formed rotating 24-hour guards outside the factory, given the threat that scabs would be sent to oust them.

By October 6, El Caracol, the Bimbo bread factory, the Camas Luna bed factory, Grano de Oro coffee processing and Gallo y Villa hardware outlets were under workers' control but still cranking out their products. The same was true for the Prego soap factory and the 600-worker Intercasa metalworks, both in Granada. Workers say they are continuing to produce to show they are capable of managing the factories. The financial director of Prego told Barricada that production increased 36 times in the 1981-89 period, compared to 1976-80.

Not unanimous

Not all factories were ready to take this position. In Química Borden and the Coca Cola bottling company, for example, Sandinista union leaders said they could not go against the desire of the majority of the workers, who are tired of the shortages and sacrifice brought by the war years and are not anxious for a frontal fight with the new government. At Kikatex, the workers split down the middle on the issue of turning the textile factory over to its old owners. Workers in all nine non-occupied factories expressed willingness to at least hear the old owners' investment plans and labor policies before deciding on a course of action.

For various reasons, not all workers in the occupied factories support the takeover either. An unidentified worker with 15 years at El Caracol, quoted in La Prensa, longed for the old days when capitalists ran things and workers produced, calling the factory "a mere shadow of its former self." He told La Prensa that the majority of workers feel as he does, but a worker who supports the takeover told Barricada that 20 workers had been bribed with dollars to lobby in favor of returning the factory. The general manager of El Caracol also favors the privatization. When he let Magela Campos, one of the former owners, in to introduce herself to the workers and explain their "good intentions," the workers threw her, together with the manager and six workers who sided with him, out of the factory.

La Prensa has focused its coverage of the occupations almost exclusively on El Caracol. In an October 6 article, the paper insinuated that the pro-FSLN workers had hijacked containers of oatmeal and barley being driven up from Costa Rica. The next day Barricada noted that the shipment was in the factory yard, saved from an effort by Magela Campos, with the alleged complicity of Nicaraguan customs, to reroute it. Campos, to whom the raw materials are consigned, will not release them for unloading, however.

One reason La Prensa may have chosen El Caracol is that it has a new parallel union, reported to be linked to the pro-UNO Confederation of Trade Union Unity (CUS). Called the Independent Democratic Union, it issued a communiqué on October 3, claiming the support of the majority of workers, to "manifest our total support for the acts of justice issued by our President, especially Decree 11-90, referring to the return of unjustly confiscated properties." The document, cited extensively in La Prensa, laments "a small group of Sandinista workers who, manipulated by FNT leaders and agitator bands of Sovipe [a state construction company], took the factory with violent acts."

Whether or not Sovipe workers supported the Caracol takeover, they are unquestionably militant on the issue of privatization. Although Sovipe is not on the first list of 16 companies, one of its major former shareholders, Enrique "El Tiburón [the shark]" Pereira is back in Managua to push his case. On September 27, La Prensa reported that the Sovipe union had offered Pereira $300,000 from a "capitalist union" to buy him out, and speculated that the FSLN is behind the offer. Danilo Morales, the union's secretary general, promptly clarified that the offer was not to Pereira for his original 28% of the stock, but to the state for its entire 78%. He also denied the existence of any mysterious financiers. The workers have asked the state for 10 years to payoff the remaining 90% of the purchase price. In their petition to Minister of the Presidency Antonio Lacayo, they also submitted evidence of massive decapitalization attributed to Pereira, which they say resulted in the confiscation and thus disqualifies him from any claim.

In another separate case, that of the National Television System (SNTV), 150 workers from Channel 2 made public on September 23 a letter they, too, had sent to Lacayo. This one denounced a government decision to return 30% of Channel 2 to Octavio Sacasa, a former shareholder, and to rent the remaining 70% to him to administer. It would be the first break in the state monopoly of the only two functioning channels. According to the SNTV workers, Sacasa was compensated for his original shares by the Sandinista government, and the remainder belonged to Somocistas, so he is entitled to nothing. The workers, who fear he will fire them all, are demanding that, if he in fact is given 30%, they be given the remainder because they have sacrificed to keep the channel going all these years. They also took the opportunity to warn the government that if it does not pay its $200,000 bill with Channel 2 within two weeks for airing the interview program “Democracia en Marcha” and numerous vignettes of the President they will stop broadcasting them. The revolutionary workers thus gave the capitalist government a taste of its own medicine.

In early October, Octavio Sacasa began moving heavy new equipment into Channel 2. Workers told Barricada on October 10 that even SNTV director Carlos Briceño was upset with the contract, apparently signed without consulting him. Sacasa has reportedly made agreements in the United States to broadcast the World Series and obtain major films, effectively closing the US market to the remaining state channel. Ironically, Briceno is said to consider the private channel "unloyal competition."

Grounds for findings?

The Confiscations Review Commission has not made public its arguments for why the 16 factories were found to be unjustly confiscated. The first confiscations took place immediately after Somoza was toppled, and affected the vast Somoza family and National Guard holdings according to Decree 3, one of the first issued by the revolutionary government. UNO government officials have said that this decree will be respected. The next wave fell under Decree 38, affecting Somoza "adherents," and the next to a 1981 law subjecting business owners to confiscation if they decapitalized or aided the contras. In both of these cases, some argue, the terminology was sometimes abusively interpreted. The agrarian reform law also permitted confiscation if land was left idle or fell within a larger land bloc designated for reform; in most of those cases the affected owner was compensated or offered land elsewhere. In the current 16 cases, the workers charge the claimants with having decapitalized the factories, but have not accused any of being Somocistas.

On receiving the findings from commission head Duilio Baltodano, President Chamorro assured, to quote La Prensa's September 25 article, "that properties of the former Somocista government 'belong to the people, therefore they will not be returned.'" The reference is eye-catching. The Somocista government had no properties—the state was simply the tool for the private enrichment of the Somoza family and cronies. As the government teetered, they mortgaged their real estate to the hilt and sent the cash out of the country, thus bankrupting both the productive and financial institutions.

Whether the reference was one of doña Violeta's common Reagan-like slips or an intentional distinction made by La Prensa, it is a reminder that the definition of "Somocista" is yet to be fought out. After 13 days of running the factories, neither the government nor the review commission has publicly referred to the factory takeovers or met with the workers' representatives. The only comment has been by Edwin Krügger, Vice Minister of the Presidency and head of CORNAP, who spoke of the "passive resistance of some workers" to the returns. Someone, however, reportedly cut El Caracol's telephone line; and when union representatives from several of the occupied factories went to make salary withdrawals they discovered that the bank accounts, registered in the name of a branch of CORNAP, had been frozen.

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