Envío Digital
Central American University - UCA  
  Number 117 | Abril 1991


Central America

Nicaragua: Political Maturity and Economic Immaturity

Jesuit of Latin America

Nicaragua is the only Central American country in which demilitarization and the democratization of society have advanced very far. In 1990, both grassroots Sandinista supporters and the extreme Right debated economic policy and the new government's administration in the streets and in the National Assembly without military or police repression.

In July, under orders from President Violeta Chamorro, the police dislodged protesters from occupied buildings and took down barricades put up by the Sandinista Left without violence. While there was a certain degree of armed confrontation between politically opposed groups, it was controlled without notable use of state force.

In November, the police and the army, again in response to presidential orders, cleared highways blocked by a rightwing movement in the central part of Nicaragua. Again, there were some armed incidents, a number of them attacks against the police, with as many victims among the police as among those protesting.

The armed actions may forebode future outbreaks of violence by the masses or security forces that could become very difficult to contain, but overall, Nicaragua seemed in 1990 like a "civilized" country, despite a crisis of economic ungovernability so profound that it would have provoked repression in most countries of the developed world.

Nicaragua is the first of the convulsive Central American countries to move toward overcoming its tragic history of military dictatorships and civil wars, the first in which civil society is beginning to predominate over political society and over the military, and in which the Constitution and democratic institutions carry more weight than arms.

If it were not for the equal treatment given to the Right and the Left, the skeptics of the Right would be correct in accusing the Sandinista Popular Army of not allowing Violeta Chamorro to govern. To accept that judgment would be to accept their basic argument: democracy and civil society are the property of the state, which possesses the weapons, and not of the people, authors of the Constitution. The problem confronting the rightwing skeptics in the Nicaragua of 1990 is the advent of the first army in the hemisphere committed to professional modernization. This army is at the service of Nicaraguan law, and is not controlled by one social or political class that can use that body of law to pursue its own interests.

Internal division in the FSLN:
Cost of political maturity

The year's outstanding political characteristic was the maturity of both the FSLN and Violeta Chamorro in adhering to the transition protocol through constant negotiation and, apart from some questionable moments, respecting the Constitution. The cost of this maturity within the FSLN has been a profound and unaccustomed public division and, in the governing UNO coalition, an intensification of its already obvious split. The cost was higher for the FSLN than for UNO because UNO had never enjoyed political cohesion among its 14 member parties, while the FSLN, though it included a very broad range of positions, had maintained them under fairly strict discipline while in government.

The division in the FSLN has arisen around what its left wing calls "co-government with UNO," "negotiation at the top echelons" and "Kupia Kumi." (Kupia Kumi—Miskito for "hearts united"—refers to pacts during the Somocista period in which almost nonexistent opposition parties accepted payoffs from the Somoza dictatorship in exchange for their political support in the fictitious sphere of legal democracy. The term is inappropriate to a Nicaragua with 11 years of revolutionary process and the strongest opposition party not only in the region, but perhaps in the continent.) Centrists within the party argue that there is no "co-government," but an effort to maintain the transition protocol and guarantee the democratic structures put in place at the cost of 100,000 lives.

There have indeed been high-level negotiations and an opening for new entrepreneurs from the right wing of Sandinismo (whose "career option" divides the party and allows Minister of the Presidency Antonio Lacayo to take advantage of the split). But there have also been negotiations between the Sandinista National Workers' Federation (FNT) and the government over the fiscal deficit, layoffs of state employees, salaries and privatization policy that can hardly be characterized as pacts between elites with shared interests. An elitist negotiation does not produce the economic ungovernability that marked 1990. This level of autonomy and freedom creates profound confusion for the IMF, the UN Economic Commission on Latin America and the World Bank, which are not accustomed to seeing this in Latin American society. As we go to press, none of these institutions has been able to write its annual analysis of Nicaragua.

The cost paid by the FSLN for the recently surfaced division also has benefits: the revitalization of debate within the party, the growing autonomy of the grassroots organizations, and the questioning by those at the base of the top-down style that once dominated the party and the mass organizations.

The desire to negotiate and overcome the division in the upcoming FSLN Congress in July is severely constrained by the inability to separate the tasks of guaranteeing the transition protocol and negotiating economic agreements regarding the stabilization and structural adjustment program imposed on the region. The Sandinista base and some ultra-left sectors of the FSLN media constantly confuse political compromises with economic ones. They still imagine that it’s possible to accept or reject the stabilization and structural adjustment policies as if it were a simple choice between the devil of the right and the angel of the left. In this sense, the Sandinista movement is no more sophisticated than the rest of them in the region. The ill-starred marriage between a notable political maturity and a profound economic immaturity in the FSLN deepens divisions and hinders its consolidation as an opposition party.

How can this economic immaturity be explained in a party that had 11 years of responsibility for national economic policymaking? In the first place, the FSLN never designed an alternative economic policy. In its first years, it adopted economic plans from the Cuban experience to Nicaragua’s mixed economy and open market model. The priority put on the state over civil society, criticized for the last five years in envío's regional analysis, is the clearest indicator that the FSLN never had an economic policy that could be characterized as a viable grassroots alternative.

In the second place, the FSLN's valiant efforts as a shoemaker trying to refit a pair of old shoes to new pathways did not work. Beginning in 1988, the government was forced to impose a major adjustment plan that differed little from the neoliberal package of the rest of the region. The fundamental difference was that the IMF and the World Bank, influenced by the US low-intensity war strategy, refused to finance it, causing intense economic suffering for the people. To say that the 1988-89 economic measures were a "package without the people" is to recognize that the FSLN was never able to develop a people’s alternative within the market context.

1990's economic ungovernability:
The price of economic immaturity

The Chamorro government is largely responsible for the country's economic ungovernability and its lack of an economic plan able to respond to the needs of the people under conditions of adjustment. At the same time, it is ingenuous to expect the new Right to represent the interests of the poor. We are thus inclined to view the FSLN's economic immaturity as a main contributor to Nicaragua's ungovernability in 1990.

Leadership and base share the FSLN’s economic immaturity equally. The leadership undermined its own structural adjustment before turning over the government to Violeta Chamorro. The base supported the decision because it meant better salaries for the Sandinista unions, both in industry and in the public sector. Once Chamorro took office, the FNT and the mass movement undertook a partial protest around public-sector salaries and employment without presenting an overall plan for managing the economy from a popular perspective.

The economic results of this merely reactive tactic are analyzed in detail in the last issue of envío. The government's incompetence in dealing with the three currencies circulating in the economy throughout 1990 (the old and new córdobas and the dollar) led to an incoherent policy that profoundly denationalized the economy by transferring earnings from domestic production to commerce in imports. Salaries rose 63%, but benefited only a third of the economically active population. The production of both the peasantry and artisans in the urban informal sector was profoundly affected. In other words, the lack of an economic alternative with a national character undercut the most important basis for the construction of a popular and national alternative.

If the FSLN does not develop a coherent people’s alternative, it will confront increasing problems not only with its plan to "govern from below" but also with its consolidation as an opposition party. Without a strong shift in its economic struggle, the FNT's 1990 victories could translate into a growing loss of support for the FSLN before the next elections in spite of the Chamorro government's expected incoherencies.

Scenarios for 1991: The people vs. the IMF

The pivot point of possible scenarios for the government, the FSLN and the popular movement in 1991 will be the accords established between the government and the International Monetary Fund. Without an IMF agreement, Nicaragua cannot pay its debt service and no financial resources will be forthcoming. For Nicaragua, as for the rest of the region, the stabilization and adjustment package is not a choice, but a reality imposed within the new international balance of forces. The character of the package can be debated—and Nicaragua will do that with its experience of 11 years of revolution—but the package itself cannot be.

The debate with the IMF revolves around five issues: 1) the rhythm and degree of the córdoba oro devaluation; 2) the credit policy, or degree of liquidity, the IMF will permit for the country's producers; 3) the size of the fiscal deficit; 4) the scope of privatization (whether it will be only for the bourgeoisie or follow a mixed-economy model); 5) the politicization of the compensatory economic packages for the peasantry and urban poor (whether these resources will be distributed democratically or used to create a political clientele for the government).

Four possible scenarios, developed in more economic detail in the last issue of envío, grow out of the debate:

Scenario #1: The IMF gives in to Sandinista pressure for a gradual stabilization program and concedes broad international financing.

Scenario #2: The IMF imposes a conventional "shock" program, ignoring Sandinista demands regarding privatization and the use of compensatory programs for the poor.

Scenario #3: The agreement is rejected or delayed, either because of government fear of the social reaction or because of IMF fear of committing funds in such an ungovernable economic situation in the absence of a coherent economic plan either from the government (classic neoliberal program) or from the FSLN (popular alternative).

Scenario #4: The grassroots movement negotiates an alternative adjustment plan with the Chamorro government, the IMF and the World Bank, based on a profitable economic alternative rooted in the practice of the movement’s organizations.

Scenarios #1 and #4 are both unlikely; the former would require a surprise conversion of the IMF and the latter a rapid and almost magical surmounting of the movement's economic immaturity. Nevertheless, it is illustrative to consider the consequences of these improbable scenarios. In the first, the moderate option within the FSLN would be strengthened, although the party's internal divisions would continue and there would be space to develop a popular economic alternative with more consistency in the future. The right wing of UNO would abandon the government in this scenario. In the fourth, the FSLN would achieve a more stable unity through the purging of its right wing and the party would be revitalized, mobilizing the grassroots sectors around their own alternatives and pressuring the government "from below" to advance in that same direction.

Scenarios #2 and #3 are the most likely ones. In the shock adjustment of scenario #2, the economic tensions among the poorer classes would force the FSLN to abandon a large part of the economic and social agreements, sharpening even further the tensions between moderates and radicals. In this scenario, the grassroots movement could be detoured into mere reaction and lose time for the construction of its own alternative. (As we go to press, the government has announced a package of monetary "shock" measures, with a minimal compensatory program for part of the vast army of unemployed. The IMF is reportedly waiting to see if the ,measures bring the desired results before signing any agreement.)

In scenario #3, rightwing pressures within UNO would weaken the government. The FSLN could maintain its unity but internal divisions would increase. This scenario offers space to search for truly national alternative plans, but an alternative requires more than proposals and ideas. Before the grassroots movement could gather and analyze its experience from below, the government would give in to the IMF and the "shock" adjustment because of its imperative need for external funds.

Independent of what happens with the IMF, scenario #4 is the only positive one for the movement and the poor in general to aim for in the medium term. Although the path will be easier if the IMF concedes to FSLN demands, the movement can construct its future in any of the scenarios. The challenge is to begin now without waiting for gifts to be bestowed by national or international institutions.

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Introduction and Dedication

The United States: Redefining Central America and the World

The Neoliberal Model in Central America: Gospel of the New Right

The Nation-State Crisis: Ungovernability

Demilitarization: The Other Face of Democratization

Central America’s Grassroots Movement: A Partial Alternative

Guatemala: The Civilian Facade Collapses

Honduras: A Grassroots Party Emerging from Grassroots Organization

El Salvador: UN Mediation and Civil Negotiations

Nicaragua: Political Maturity and Economic Immaturity

Panama: Eternally Condemned

The Popular Alternative: The Agenda and Challenge for the 90s
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