Envío Digital
Central American University - UCA  
  Number 80 | Febrero 1988



The War after Esquipulas III—In Check but not Checkmate

Envío team

The confrontation between little Nicaragua and Ronald Reagan’s imperial policies is entering its eighth and final year. What Nicaragua has been defending for seven years of pain, death and hope is the right to sovereignty and self-determination for the countries of the Third World.

When Ronald Reagan took office in 1981, he wanted to show the world the resurgence of US imperial might, using Central America, and especially Nicaragua, as a test case. Seven years later, the poor of Nicaragua have shown Reagan the humble but dignified strength that can arise from weakness. Even the rest of Central America, through the process opened up by Esquipulas II, has demonstrated significant margins of autonomy. Behind the Central American peace process, so harassed by antagonistic forces from within and outside the region, lies the proposition of a new relationship between the peoples of Central America and the United States.

Yet in the United States the debate in January was still waged over whether to continue a military policy toward Nicaragua or shift to a policy of peace. US and Central American politics intersected at Esquipulas III, the mid-January summit meeting of Central American Presidents in San José, Costa Rica.

Its results, despite all the obstructions, put the war in check. This eighth year of confrontation will be defined by the dynamic between Nicaragua's efforts to finally end the war and Reagan's last attempts to escape checkmate.

Peace plan wounded but not down

The peace accords signed on August 7 in Guatemala at a Central American presidential summit known as Esquipulas II, had as their objective that the social forces waging war in Central America achieve by political means what they have sought through military means. For the rebels in arms and those who support them, this implied abandoning war as a form of struggle, while the Central American governments, as a counterpart, were to widen internal political space to further democracy. In essence, then, the Guatemala accords are at the same time an agreement for both peace and democracy. The Central American Presidents determined that their actions in favor of peace and democracy be executed within the constitutional framework of each country. They established deadlines for simultaneous completion of the steps, set up an executive commission formed by the Central American foreign ministers and named an international commission to verify the signed agreements.

In the new presidential summit held on January 15-16, known as Esquipulas III, it was concluded that the actions carried out so far by the governments of the isthmus had not been entirely satisfactory. As a consequence, an agreement emerged to fulfill their obligations in an "unconditional and unilateral" manner, "completely and without excuses." (See the complete text of the Presidents' joint declaration at the end of this issue).

The summit recognized the work of the International Verification and Follow-up Commission (known by its Spanish acronym, CIVS) but signaled the reservations raised by some Presidents about its report and relieved it of its responsibilities.

Three significant elements emerge from a comparison of the texts of Esquipulas II and III. First, the Costa Rican summit does not cancel but endorses the essential content of the Guatemala accords—the substitution of strictly political forms of struggle for military ones—and ratifies, without additions or subtractions, all the specific measures that the Central American governments and other countries should take to achieve peace and democracy in the region.

Second, Esquipulas III drastically alters the procedure for fulfilling the accords, substituting unconditional and unilateral compliance by the governments in the shortest possible time for the mechanism of gradual and simultaneous compliance by all countries within specific deadlines.

Third, the Costa Rican summit gave the responsibility for verification and follow-up to the Central American foreign ministers who comprise the Executive Commission of the CIVS. This task was previously the responsibility of the CIVS as a whole, composed of the secretary-generals (or their representatives) of the United Nations and the Organization of American States and the foreign ministers of the eight Contadora and Support Groups nations as well as of the five Central American signatories. Although a clause stating that the Executive Commission may request the help of other countries or international organizations is included in the joint declaration, the measure has the intention of pushing to the side the role played by Latin America within the Esquipulas accords through Contadora and its Support Group, the OAS and the UN.

In the following pages, we analyze the causes and implications of each of these three fundamental elements.

Verification and Follow-up

In the first week of January, an ad-hoc commission sent by the CIVS toured each of the Central American countries, in accordance with the mandate they had received from the Presidents of the isthmus at Esquipulas II. They were to analyze progress toward compliance with the accords.

The delegation was made up of Alvaro de Soto and Harry Bellevan, respectively representing the UN and OAS secretary-generals, the five Central American deputy foreign ministers and the eight deputy foreign ministers of the Contadora and Support Group countries.

This commission was in Nicaragua on January 5th and 6th, where it received reports from National Reconciliation Commission head Cardinal Miguel Obando y Bravo, Vice President Sergio Ramírez and representatives of the business association COSEP, opposition parties, trade unions, mass media and various institutions. "There has been a very rich dialogue with representation from a wide spectrum of the sectors of Nicaraguan society" said Alvaro de Soto, spokesperson for the commission, as its members left the country.

When they finished their tour of the region, the commission members met in Panama to prepare their findings. The CIVS itself put the finishing touches on their official report, two days before the Central American summit. Although the discussions were not public, diplomats who participated in the sessions told journalists that "conflicting positions" had been presented, but that "the will to continue the peace efforts" had prevailed.

During these days leading up to the summit, the US government put pressure on Honduras, El Salvador, Costa Rica and Guatemala, according to revelations in the New York Times and Washington Post, to single out Nicaragua as the principal culprit in not meeting the peace agreement’s requirements. Behind this pressure was the aim of destroying the presidential summit in San José. Making a tour through the region (except for Nicaragua) were US National Security Adviser Lieutenant General Colin Powell; Under-Secretary of State for Inter-American Affairs, Elliott Abrams; and Special US Envoy to Central America, Morris Busby.

Powell warned the Presidents he visited that they could endanger additional economic aid from the United States for their countries if aid to the contras was cut because of their stand on Esquipulas III. The New York daily Newsday characterized the Powell-Abrams tour as aiming "to present the Reagan Administration point of view that the peace plan had to be suspended."

Salvadoran President José Napoleón Duarte, who kissed the US flag during his most recent meeting with President Reagan in Washington last October, fired the first volley against Nicaragua in San José. On arriving at the capital, he declared that Nicaragua had not complied with its commitments and that "today I will tell Ortega face to face that he should comply." At the same time, he rejected the CIVS report, critical of Salvador's compliance, as "biased."

Honduran President José Azcona, who arrived in San José to meet with Duarte one day before the summit, showed his own disgust with the CIVS report by commenting that it had "lumped us all together." Both Duarte and Azcona claimed that the lack of democracy in Nicaragua was the principal problem in Central America.

While Azcona was offering these declarations, the vice president of Honduras' Committee to Defend Human Rights, Miguel Angel Pavón, was assassinated in San Pedro Sula, Honduras—just like in El Salvador, where Herbert Anaya, president of the Human Rights Commission there, had been assassinated a few months before. Pavón had declared to the visiting CIVS commission the week before his death that the Honduran government had not complied with the peace accords and that human rights continued to be violated in his country.

The defense ministers of El Salvador and Honduras, Vides Casanova and Regalado Hernández, who did not let their Presidents travel alone to this summit as they had to the August 7th one, declared that the CIVS report’s "bias" should guarantee its rejection.

Nicaraguan President Daniel Ortega's position, set out in San José shortly before the start of the summit, was diametrically opposed. "We, the Central American Presidents," he said, "are part of the Central American conflict, not judges; it is the CIVS that, in accordance with the Esquipulas II agreement, has the most balanced and objective judgment of the situation. I submit to, obey and respect what is said in the report."

For their part, the Guatemalan and Costa Rican Presidents, Vinicio Cerezo and Oscar Arias, did not take a clear stand before the meeting on the role played by Latin America, the OAS and the UN in following up the Guatemala accords.

When the Presidents met behind closed doors, the few rumors filtering out to the media indicated heated debate about the report and the future of the CIVS. If there had been no agreement on this point, the meeting would have failed and Powell, Abrams and Busby would have won out. Reagan would have found it easier to step up the war against Nicaragua with congressional approval.

Two days after the summit ended, President Ortega, commemorating the birth of famed Nicaraguan poet Rubén Darío, declared that "until the last moment we disagreed with removal of the CIVS," which was a "substantial modification" of the Esquipulas II agreements. But that "negative aspect" of Esquipulas III, he said, was decided by a majority of the Central American Presidents.

This blow to the Latin American efforts for peace in Central America bears the stamp of President Reagan and his ongoing campaign to disqualify the Contadora and Support Group countries, isolate Nicaragua and undermine the search for a Latin American solution that might not have been in agreement with US interests. This attempt was also part of the original peace plan presented by Oscar Arias before it was modified in Esquipulas II.

President Ortega succeeded, nonetheless, in having included a statement in the January 16 Joint Declaration that the Central American foreign ministers, in order to comply with the agreement, should seek the collaboration of states and international organizations of "recognized impartiality and technical ability" that have shown their desire to collaborate in the regional peace process. Although giving in on an essential point of Esquipulas II, Nicaragua succeeded in this way in keeping the summit from breaking up in failure and left open the possibility that at the next meeting of ministers a decision could be made about which countries would be invited to collaborate.

Against the background of US pressure, the immediate cause of the rejection of CIVS by some of the Presidents is to be found in the final report it had submitted regarding compliance with the Esquipulas II agreements. The final, 75-page-long CIVS document, which includes opposition assessments of the Nicaraguan government, is far from pro-Sandinista. Yet it offers a very different picture than that painted by the Reagan Administration or the Salvadoran and Honduran Presidents. (See its document of conclusions, reprinted in this issue.)

First, Nicaragua is found not guilty of bad faith in the Esquipulas II process; on the contrary, "in the case of Nicaragua," says the final report, "the CIVS has been able to ascertain that in spite of the gravity of the aggression suffered by this country, concrete steps have been taken toward putting democratic processes in practice."

Second, in order to fully comply with the Esquipulas II accords, every single one of the governments of the isthmus still has steps to carry out. Every country except Guatemala was accused by another signatory of offering some sort of assistance to armed movements. It was Honduras that blocked the possibility of testing these accusations by opposing on-site verification by the CIVS unless Nicaragua first complied with all of the accords' democratization provisions. Indeed, Honduras had at first insisted on excluding Honduran military installations from verification entirely.

Violators of the democratization provisions range from El Salvador and Guatemala, where there are few political prisoners simply because most have been killed off, to Costa Rica, where very few strikes have been declared legal in the last ten years. Among other suggestions regarding Nicaragua, it was noted that it was necessary to move toward a clearer distinction between state and party institutions.

Third, the CIVS confirmed that "in spite of exhortations by the Central American Presidents, the US government continues in policy and practice to lend aid, military in particular, to the irregular forces operating against the government of Nicaragua" and cautioned that "the final ending of this aid continues to be an indispensable requirement for the success" of the peace process.

Tensions between the states and organizations making up the CIVS and some Central American states are nothing new. From its foundation, the Contadora group has had to struggle with the "Tegucigalpa triangle" of Honduras, El Salvador and Costa Rica, which in many ways act as spokespeople for US policy. In the process unfolding after Esquipulas II, the tensions were felt within the CIVS itself. Could the Central Americans be both judge and party to the agreements?

The final CIVS report presented to the Presidents suggested that participation by the Central American foreign ministers might be different from the other CIVS members, given that the former are parties to the agreement and the latter are not. Contadora, Support Group, OAS and UN representatives felt this would allow them a more operational framework for taking decisions. But the result of the summit was precisely the opposite. The Central American foreign ministers completely displaced the others.

Compliance deadlines and simultaneity

A second problem arose regarding deadlines. Esquipulas II had specified that compliance had to be simultaneous, and could not exceed a period of 150 days. When Honduras blocked on-site verification that it was not giving support to the rebel forces, and Congress approved President Reagan's urgent requests for funds for the contras on two occasions, the CIVS was unable to certify to Nicaragua that these two obligations in the Guatemala accords were being met. This meant that a broad amnesty decree and a lifting of the state of emergency, approved and signed by President Ortega, could not be put into effect because, following the accords' simultaneity provisions, Nicaragua conditioned these measures upon CIVS certification that Honduras was removing the contras from its territory and all Central American countries were urging the US to end contra aid. This in turn generated a debate about the concept of simultaneity.

In its final report, the CIVS offered a way out of this impasse. Recognizing that the concept of simultaneity was the formula that overcame apparently irreconcilable differences in drawing up the peace accords, it warned that the accords needed to be complemented by a chronologically ordered plan. The dates specified for completion in each country would be negotiated, a process that the CIVS judged could be initiated at the Esquipulas III summit. This would mean that the deadline set in August for the whole peace process would be extended, but the new, more specific deadlines for each step would ensure that the process not drag out indefinitely.

The extension of the deadline and, even more, the potential agreement by Central American Presidents on a detailed, chronological plan for compliance, created serious problems for President Reagan. With less than a year left in office to carry out his Central American policies, Reagan hoped to declare the deadlines passed and the peace process expired, with the summit ending in failure.

It was again President Duarte who played this card at the summit, proclaiming vehement opposition to any extensions of the deadline. Waving a copy of the Esquipulas II accords in his hand, he declared before entering the summit: "I'm not going to be anyone's pimp; I come to demand that everyone here who has not complied, comply.... The deadlines are up, and I have complied." Azcona made a similar declaration; descending from the plane in San José, he said, "Why more deadlines?"

According to unofficial accounts from members of Cerezo's government, the Guatemalan President consented, in principle, to support the CIVS proposal. The Nicaraguan President also arrived at the summit ready to support it, but contrary to what his detractors expected, he sought to keep the new time limits brief. "The United States has not been involved in fulfilling the accords," he declared. "Prolonging the deadlines indefinitely would create more demands on Nicaragua but not on the United States, and that would not correspond with the spirit [of simultaneity] of the accords."

President Arias' stance was similar to that of Duarte and Azcona. In a letter written to President Ortega shortly before the summit, he argued that the elections for the new Central American Parliament, to be held in all of Central America in 1988, required the immediate removal of obstacles—notably Nicaragua's emergency law—so campaigning could begin. Choosing to ignore that fulfillment of these accords obliges the United States to cease aggression against Nicaragua, Arias argued that, "however bad economic or other circumstances may be, they cannot be used as an excuse to postpone the democratization process."

The military might of a superpower directed against Nicaragua was thus reduced by Arias to "other circumstances." The concept of simultaneity, so essential to Esquipulas II, was being replaced by unilateral compliance by Nicaragua. Arias concurred with Duarte and Azcona: "There are no deadlines."

Behind this debate, once again, can be seen the pressures exerted by Powell, Abrams and Busby. We can read the joint declaration issued by the Presidents at the close of the summit in this light. It states that "because [the Presidents] were not completely satisfied with the compliance with Esquipulas II, they commit themselves to satisfy unconditional and unilateral obligations that oblige the governments to total compliance, without excuses...."

In demanding unilateral compliance from Nicaragua, Arias was exploiting the prestige he gained recently in winning the Nobel Peace Prize. The strong words he used to criticize military aid for the contras around the time he was awarded the prize were notably absent from the letter to Ortega and the Esquipulas III summit, indicating that he may have knuckled under to US pressure recently.

Then came the surprise. Hardly had the presidential summit finished when President Ortega declared at the press conference that a) the state of emergency in Nicaragua would be suspended immediately; b) the Nicaraguan government was calling on the contras to accord a cease-fire and, in order to remove excuses, agreed to direct talks between the two sides in which Nicaraguan representatives would participate—something Nicaragua had up to that point resisted; c) the amnesty law, which had previously been conditioned on CIVS verification that provisions were being fulfilled regarding non-use of territory by the contras and an appeal for an end to contra aid, would instead be applied once a cease-fire agreement was reached, and in fact some prisoners could be released before then if a non-Central American country agreed to give them refuge; and d) Nicaragua confirmed its pledge to hold elections for the Central American Parliament in the agreed-upon period, and municipal elections would be held in accord with the Nicaraguan Constitution. None of the other Presidents announced any measures still outstanding in their countries. Neither Duarte nor Cerezo, for example, called for talks with the FMLN or the URNG to arrange cease-fires; Arias and Azcona did not decree that the contra radio stations operating from their countries would be closed, and so on.

In this way, President Ortega quickly and ably turned around the objectives of Duarte, Arias and Azcona regarding the deadlines. Because he could not push forward the simultaneity proposal suggested by the CIVS and faced the danger of a failed summit, he took the proposal for unilateral implementation and radicalized it by executing it at once.

This move showed up the other Presidents of Central American "democracies," who, even had they so desired, could not have made such immediate decisions without approval from their military high commands; President Azcona did not even dare hold a press conference after the summit. It also put President Reagan on the defensive in his attempt to persuade Congress to renew contra aid.

With this quick thinking and flexibility, Daniel Ortega saved the summit meeting. Such capacity is based on the people of Nicaragua, since Daniel Ortega and the National Directorate of the FSLN, the party in power, are confident of the people they have called to elections, even though the US war has caused proportionately more deaths in Nicaragua than the United States suffered in all its wars in this century, and inflation in Nicaragua was around 1,200% in 1987. Reagan's decision to request more funds for the contras and Ortega's to hold elections reveal how both contenders really perceive the Nicaraguan people. Not even under these conditions does Reagan think that his contras and the opposition parties could win an election, and not even under these conditions do the Sandinistas think they could lose their popular support. This is perhaps the only point on which Reagan and the Sandinistas agree: the humble and impoverished masses in Nicaragua have not surrendered or sold out; their hopes remain high.

Rescuing Esquipulas II

By making these concessions and yet reaffirming Nicaragua's stance, Daniel Ortega not only managed to save the presidential summit from failing; he also kept alive the specific provisions of Esquipulas II that apply not only to regional but also to extra-regional powers. The halting of aid to the irregular forces attacking Nicaragua and the non-use of territory for such forces is still considered an "indispensable" element for achieving peace in the region, according to Esquipulas III, as is the "specific verification" of the governments' commitment to fulfill the Esquipulas II accords.

President Reagan did not accept the olive branch of peace. Even before the San José summit, he had begun a campaign to win new contra aid from Congress. The results of Esquipulas III did not make him change that objective. One day after the Central American Presidents reached an accord, White House spokesperson Roman Ropladuk emphasized that Reagan "is determined to help the Nicaraguan Resistance, whose pressure has brought the Sandinistas to the negotiating table...[because] until now the only evidence we have is a series of broken promises, a lot of rhetoric and some cosmetic measures."

Reagan, knowing his arguments were weak, reduced his request to Congress to $36.2 million, primarily in nonmilitary aid, in an effort to win undecided votes. But the size of the request must be weighed against the fact that the appropriation is only for a period of four months, and new funds may be requested again in June. Reagan had simply reduced his request to a quantity sufficient to keep his militaristic policy alive, in the hopes of bequeathing it to his successor. Strictly military supplies could still be passed along to the contras, as before, through US military maneuvers in Honduras, over which no congressional oversight is exercised.

Because of this, President Ortega declared on January 16 that the amount of aid to the contras was not what was important. A single dollar approved would be transformed into millions through the CIA and the Pentagon. What was at stake, instead, was the bipartisan approval of the contra war.

"Given the peace efforts of Esquipulas II," said Ortega on January 18, "we hope that the US Congress will not continue to approve funds for the mercenary forces, because we would not be able to accept that. This was made very clear at the meeting in Costa Rica, affirmed in the letter and spirit of Esquipulas II and ratified by Esquipulas III, agreed upon by the Central American Presidents. If Congress chooses war, it will leave the Nicaraguan government's hands free to take all necessary steps to defend our sovereignty, our self-determination and the independence of our country."

In the second half of January, Nicaragua fulfilled the Esquipulas II and III accords and presented once more to President Reagan, through a personal letter from President Ortega, the need to reopen the dialogue between the United States and Nicaragua. Nicaragua has expressed on several occasions that the establishment of a limit to the size of the Nicaraguan Army and armaments, a prohibition on foreign military advisers and active prevention of the use of national territory to threaten or subvert neighboring countries are subjects over which agreement could be reached between the US and Nicaragua, as soon as Washington demonstrates, with words and deeds, its intention to respect Nicaragua’s sovereignty in accord with international law. Thus, the ball is now in Congress' court to continue the indirect dialogue opened between the Sandinistas, the Republicans and the Democrats following Esquipulas II.

Meanwhile, the Sandinistas continued their international offensive. President Ortega traveled to Spain, Italy (including the Vatican), Norway and Sweden in the last week of January, meeting a receptive audience wherever he visited. The fundamental objective of this tour "for peace and democracy in Central America," which found receptivity among all the heads of state he visited, was to search for European help in verification and follow-up of the Esquipulas II and III accords. These nations could visit the entire Central American region if accepted by the other Central American governments. If the others do not agree, President Ortega has asked these European countries to verify the compliance of Nicaragua alone.

The invitation is not meant to supplant but to supplement Latin American efforts, thus while Ortega was touring Europe, Education Minister Father Fernando Cardenal toured the Contadora and Support Group countries with a similar request. These countries reaffirmed their support for the Esquipulas process and came out against aid to the contra forces. The Nicaraguan diplomatic offensive, pronounced a success in many media, sought to rescue the Central American peace process from the danger of international isolation it faced after the CIVS was sent packing.

The Sandinistas surrender?

The positions taken by the Nicaraguan government in the Esquipulas peace process have been the subject of varying comments, both within the country and abroad. For some, the Sandinistas have surrendered. In this view, US pressure, through the counterrevolution and Congress, has worn down the economy and ultimately forced the Nicaraguan revolution to yield, changing its original nature substantially.

For others, the changes the Sandinistas have made are merely "cosmetic." These argue that the measures Nicaragua took after Esquipulas II are easily reversible by the Sandinista government and thus are mere tactical measures to outwit Reagan.

A third perspective, situated between the other two, believes the Sandinistas have made strategic concessions that, while not tantamount to surrender, do threaten the original goals of the revolution.

Nevertheless, the stance of Nicaragua's government since signing the Guatemala accords, when read in the light of the Nicaraguan revolutionary process over the last ten years, shows different results. Those who think, coming either from a left or rightwing perspective, that the Nicaraguan revolution has surrendered, has made strategic concessions or is simply making tactical adjustments, come to this conclusion because they generally think that the road toward a new Nicaragua necessarily passes through, or ought to pass through, a popular dictatorship form of government. By comparing the kind of Nicaraguan society that would result from compliance with Esquipulas II and III by all the regional and extra-regional forces (culminating in a negotiated solution with the United States), such analysts believe that the real society would be out of phase with the desired one. The degree to which such thinkers believe this would occur leads them to one of the three perspectives mentioned above.

In order to correctly understand the Nicaraguan process, however, we need to look more closely at certain of its distinguishing features, which we will summarize briefly here.

First, the Nicaraguan revolution seeks to create a new Nicaragua, and to do so, does not base itself on any historical model of society as a permanent, inflexible guide. Bayardo Arce, whom US media are fond of presenting as a "hardliner" in contrast with more "pragmatic" members of the FSLN National Directorate, many years ago explained it like this.

“Let's put it in clearer language. If you ask me if I want the Nicaraguan revolution to be like the Soviet revolution, I will tell you no. Like the Cuban? I will tell you no. Like the Czech, like the Vietnamese? No. Because Nicaragua is not any of these countries; our people are not the same as their people, and for this reason no other revolution will fit the Nicaraguan revolution. Nor are we going to follow a Swiss, French, German, US or Mexican model.”

Second, the long transitional stage toward a new Nicaraguan society has as its driving principle the task of national liberation which, although it carries with it profound social change, does not begin or end there. Humberto Ortega, another one whom US media like to depict as hard-line, explained this several years ago:

“I for one have always had the historical stage that Nicaragua ought to carry out in this century quite clear. I believe this is also true for Latin America. This stage, which it is our lot to carry out, is fundamentally one of national liberation. We cannot have national liberation and social liberation at the same time; [that] would be very difficult. First, we should go through a stage of independence, of national liberation with a deep popular content, which permits us to lay the groundwork to resolve the great problems of the economic, social and political order with which we have been burdened. Thus, it seems to me that it is an error to try to dress this essentially practical task in a totally orthodox ideology, in a particular stereotype of transformation and social ordering of change.”

Third, the theoretical potential of the Nicaraguan revolutionary project is found in Sandinista ideology. "Sandinismo," according to Tomás Borge, the third in the US media's trilogy of hardliners, "is a flexible ideology that, far from making it difficult to understand the revolutionary process, is part of its definition."

Speaking at the 50th anniversary of Augusto César Sandino's nationalist war against the US occupation, Bayardo Arce identified the roots of Sandinismo's flexibility in its three principles: nationalism, represented by the traditional struggles of the Nicaraguan people and in particular Sandino's struggle; Christianity, present as a liberating force in the people’s insurrectional culture, and Marxism read critically through the revolutionary experience of other peoples.

If, then, one starts from the desire to create a new society rooted in national realities, from the conviction that Nicaragua is embarking upon a national liberation project in the present century and from the knowledge that to do this Nicaragua can draw on a profoundly grassroots and flexible ideology because of the richness of its component parts, we can understand how the revolution, having firmly established the state as an instrument of the majority of the people long before the Central American summit, chose a democratic form of government in its gradual transition toward a new society.

These principles and the Nicaraguan government’s democratic zeal have been embodied in the nation's Constitution (see envío, January 1987). The aspirations of consolidating national sovereignty and real democracy, of a just international order that brings peace and social transformation in favor of the majority, are enshrined in this highest legal expression of the new social principles. The ideals of a mixed economy, participatory and representative democracy and nonalignment are constitutionally consecrated as a basis of Nicaragua’s revolutionary model.

The coercive measures that have occasionally been taken in Nicaragua respond, for the most part, to the measures all states have a right to take when they are the victims of aggression. In contrast to other governments, which justify states of emergency according to their own interpretations of the dangers they face, Nicaragua has gone to the highest tribunal in the world, the International Court of Justice in the Hague, which has ruled that Nicaragua suffers unjust aggression from the United States.

As we have said, both Left and Right have interpreted Nicaragua's steps to comply with Esquipulas II and III as concessions, whether in principle, strategies or tactics, in response to the wearing down of the Nicaraguan economy. But in fact Nicaragua is simply putting into full force its own freely chosen Constitution as the US aggression shows signs of winding down—an aggression that had limited full implementation of constitutional law in the first place. This is the basis of Nicaragua's stance in Esquipulas II and III.

Nicaragua has clearly demonstrated great flexibility in the ongoing Esquipulas peace negotiations; Ortega's stance at the San José summit is only the latest example of this. But we can't label as "concessions" those measures that are tools by which to arrive at a negotiation that, if it ends successfully, will end the war, permit economic development and allow the Constitution to take effect. Given the democratic content of the Nicaraguan Constitution, neither can the steps taken by Nicaragua be characterized as "cosmetic" or "tactical."

One, Two, Many Dialogues

The Nicaraguan government has been in search of a negotiated solution since 1983, when it supported and strengthened the process initiated by the Contadora nations. It also made several offers of dialogue with the United States. But not until 1987, with the strategic decline of the counterrevolutionary forces and the new correlation of political forces in Central America and the United States, did this path of peace become viable.

As we have demonstrated, Esquipulas II and III provided the context for an indirect dialogue between the Sandinistas and sectors of the Democratic and Republican parties. In this dialogue, the Republicans, headed up by President Reagan, did not accept the terms of the negotiating process and maintained their commitment to the military overthrow of the Sandinista revolution. A significant sector of the Democratic Party thinks that full exercise of the Nicaraguan Constitution will result in the electoral defeat of the Sandinistas, thus producing a situation acceptable to the United States. The February 3rd congressional vote took place in this context.

As the congressional vote neared, Nicaragua did not sit idly by. After the Esquipulas III meeting, the government carried out two sets of talks oriented toward achieving peace: one with the counterrevolution, the so-called "Nicaraguan Resistance," which took place in San José, Costa Rica, on January 28 and 29; and the other in Managua with Brooklyn Rivera, who heads up a faction of the last Miskitu Indians who have not become part of the peace process on the Atlantic Coast.

In the first of these dialogues, the Nicaraguan government framed its proposal to the contra forces in the context of Esquipulas II. Essentially, it proposed that they give up their arms in exchange for full guarantees that they may take part, individually or in groups, in the country's political life. Nicaragua proposed the formation of a special commission to verify that it was complying with its end of the bargain. The commission would be made up of representatives from the UN, OAS, the US Democratic and Republican parties, the Contadora and Support Group countries, the Christian Democratic International, the Liberal International and the Socialist International. For their part, the contras proposed that the Sandinista Popular Army (EPS) dissolve itself to form, along with the counterrevolution, a so-called "national army." They also proposed three-way political negotiations among the government, the civic opposition and the contra leadership, as well as a series of technical suggestions directed specifically at a cease-fire. The talks focused primarily on technical issues and the next meeting was set for February 10 in Guatemala.

The second of these dialogues, carried out with Brooklyn Rivera as head of the indigenous group Yatama, concluded with the naming of a reconciliation commission including representatives of the Moravian Church and CEPAD (the Evangelical Commission for Development Aid). A temporary halt to offensive military actions was declared for the duration of the negotiations. Representatives from Canada, Costa Rica, Cuba, Denmark, Finland, the Netherlands, Norway and Sweden were invited to observe the negotiation process. On March 1, the negotiations will be renewed to discuss matters that have not been resolved to date. Although the small group that Rivera leads is incapable of substantially altering the peace process already underway on the Atlantic Coast, the Nicaraguan government, represented in the negotiations by Interior Minister Tomás Borge, has reiterated its willingness to achieve full peace in the Atlantic region through dialogue and negotiation.

It is hoped that a third dialogue will soon be started up again—the political talks between opposition parties and the government. The National Dialogue has been suspended since December 15 when the opposition parties refused to accept government proposals regarding discussion of the constitutional reforms demanded by the opposition. The government's new proposal is trying to overcome these stumbling blocks and reach agreement on dates for municipal and Central American Parliament elections. Meanwhile, the precarious unity of 14 opposition parties suffered a serious setback when the Coordinadora, an extra-parliamentary extreme rightwing alliance, met with top contra leaders in Guatemala to explore the possibility of explicit unity with the armed counterrevolution. The diversity of positions among the 14 opposition parties make it difficult for them to arrive at an agreement—either overall or in small blocs. Similar splits have also been observed among contra leaders.

The indirect dialogue between the Sandinistas, Republicans and Democrats is changing the political dynamic. In the wake of Esquipulas III, the ball is in the US court. Nicaragua is prepared to respond militarily if the war continues and politically if the peace process advances.

Economy: Imminent collapse?

In the last month, the lines of people waiting to buy gas and the cuts in water and power supplies have had a strong impact on popular consciousness. For their part, the international news media have described these events as harbingers of the economy’s imminent collapse, a precursor to massive political protests against the Nicaraguan government.

Although the Sandinista leaders keep on giving almost absolute priority to the war and the international diplomatic struggle—one sign of the gap between Washington's dire interpretation of the economic crisis and the Sandinista perspective—they already recognize that the state of the economy has become a factor affecting all diplomatic and military efforts. The gravity of the crisis does not permit political and military mobilizations without simultaneously involving people more directly in resolving their economic problems.

The "one-story" economy

The lines, blackouts and water shortages are not signs of the Nicaraguan economy’s near collapse, as analysts in Washington who began forecasting it as far back as 1984 think. Their oft-repeated prophecies have not coincided with the reality of the country for two reasons: they have failed to capture the nature of the Nicaraguan economy and, moreover, they interpret the freedom of grassroots criticism of the government in economic matters as signs of pro-imperialist political positions instead of seeing them as indications of a new, more outspoken and critical culture arising since 1979.

The Nicaraguan economy would have collapsed under such pressures if it had the size and industrial complexity of the economies of Chile, Colombia or Mexico. It has not collapsed because it is a "one-story economy"—on a floor that shakes easily but does not so easily fall down. The slump in exports, fiscal deficit, shortage of foreign exchange and hyperinflation, which might subvert the political regimes of more industrialized countries, have not had this impact in Nicaragua.

To keep a simple economy like Nicaragua's operating, a flow of foreign exchange is essential to pay for goods imported from other countries that have more sophisticated economies, but are less resistant to a severe recession. What has not been noted in Washington is that, despite the fall in exports, there has not been a strong fall in imports, which have stayed at the level of between $800 and $900 million in each of the eight years since the revolution. The Nicaraguan government’s most recent forecasts for the 1988-90 period indicate that the country will be able to obtain the same annual quantity of imports. Although the devaluation of the US dollar and the growing percentage of foreign exchange tied up in trade agreements limits the real economic value of a $900 million imports package, this will be enough to keep the Nicaraguan economy running in the coming three years.

But even though the economy is not about to fall apart, no one would say that the revolution's economic house is in order.

Behind the regular shortages of light, water and gasoline lie profound financial and structural problems. While international solidarity with revolutionary Nicaragua is able to guarantee minimal reproduction of the economy and continuing resistance to US aggression, it is time to repair some of the basic problems that stem above all from the Sandinista audacity and idealism that has characterized management of the economy.

The Sandinista government, confident of the support of its social base, has tried to simultaneously achieve three enormous tasks: 1) construct a second story, a new sector, for the economy, importing economic models and technical sophistication; 2) completely transform the first story in terms of equality and social justice; 3) finance an expensive war to defend national sovereignty and redeem Latin American dignity in a hemisphere still dominated by the United States.

Without the war, it would have been possible to attempt the development of a new and more sophisticated sector of the economy while continuing to reform the existing one. But the economic problems as seen in shortages and blackouts this January are clear signs of the impossibility of financing all three tasks simultaneously. The cuts in water and electricity have dramatically revealed the urgent need to stop construction on the economy’s second story before it sinks the first. Throughout the country it is felt that Sandinista economic idealism has come to an end.

The lines at the gas stations reveal that it is economically imperative to devalue the national currency in order to stop giving away imported goods to middle class consumers or speculators (the new breed of traders that all wars create), tackle inflation head on and return to a national currency stable enough to be able to make economic calculations.

What's behind the lines and shortages?

Behind the cuts in electricity and water lies this problem of giving top priority to constructing the economy's second story rather than maintaining the first. While the government made large economic investments in the energy, sugar and dairy sectors, and in irrigation and agricultural mechanization to go on line in 2000, it did not assign enough foreign exchange and resources to maintain electrical infrastructure. Although the 1987 plan signaled the economic danger in not attending to the urgent need to reinvest in productive and social infrastructure, it continued building the second level of the economy.

One year later, three power stations are shut down for lack of reinvestment in equipment and Managua is experiencing dramatic cracks in the walls of the first story. What happened with the power stations is happening in each corner of the economy’s first story. Although coffee and the cattle industry are the most traditional and least technified parts of Nicaraguan agriculture, they are now the sectors of the economy most able to free the country from its foreign exchange crisis and will be for some time. These sectors are mainly in the hands of small and medium individual producers and cooperatives.

Without doubt, investment and credit programs have favored state-owned property and large private producers in other sectors that, due to their relative technological modernization, are part of the second story of the economy. Moreover, a profound gap has opened up between the transformations made in the economy's first story and the investment plan. In 1980, the state owned properties and large private producers controlled about 55% of the cultivated area and the lion's share of investment. In 1988, after the agrarian reform, small and medium producers, poor peasants and cooperatives control two-thirds of the 630,000 hectares of cultivated land.

Nevertheless, the investment and credit profile has not undergone major changes during these eight years and has not adequately addressed an agricultural sector that is increasingly in the hands of the peasantry and the new "chapiolla" bourgeoisie, as they are known here—technically unsophisticated, or roughhewn medium-scale producers. Although the war has struck at coffee and cattle production in the mountains, the deterioration of this sector’s productive and marketing capacity is due in large part to lack of government attention and insufficient allocation of resources.

All of these problems surfaced on January 25 in a "De Cara al Pueblo" town meeting when President Ortega met with the National Union of Farmers and Ranchers (UNAG), whose peasant directors had strongly criticized the Ministry of Agricultural Development and Agrarian Reform (MIDINRA) and other public institutions serving the agrarian sector.

What is happening in the countryside is also being reflected in the cities. Since 1980, the ambitious long-term investment program, and after that the enormous cost of the war, have cut the population’s consumption levels by nearly 40%, according to official statistics. It is clear that the government cannot continue to finance the construction of the economy's second story in the midst of the war because the costs to the population would be unbearable, given the additional economic imperative of devaluing the national currency.

In June of last year, the international press began to pay closer attention to the problems between Nicaragua and the socialist countries regarding the supplying of petroleum. Socialist countries did not want to lose the opportunity to sell their petroleum on the international market, where a gallon of gasoline to the consumer costs up to $2 in Europe, while in Nicaragua the consumer was paying less than 10 cents for that same gallon.

Despite the decline in petroleum supplies, the government continued to subsidize the price of gasoline on such favorable terms that two glasses of fruit juice, which use nothing imported, were far more expensive than a gallon of gas. The result of this policy was an acute shortage of gasoline while Nicaragua awaited the arrival of the Soviet ships in early February.

What happened with petroleum is happening with all imported products: the shortages, exacerbated by the government's subsidy policies and the gap between the exchange rates set for imported and exported goods, meant that a dollar of goods imported by the government cost only 310 córdobas, while a dollar of exported goods was worth 6,000 córdobas and a dollar of goods and services bought on the national market cost an average 20,000 córdobas. Given this situation, it was more advantageous to import than export and for the same reason better to import than to buy on or produce for the internal market. In other words, government policy is largely responsible for the lack of foreign exchange and for inflation because every dollar of exports requires 6,000 córdobas, while every dollar of imported goods cost only 310 córdobas. Thus, every economic transaction left more money in circulation and an increasing demand for imported goods.

This subsidy to private producers and state-run enterprises could be characterized as another part of the Sandinistas' economic idealism, trying to keep everybody content and at the same time go forward with all their projects. The relatively rational political motive for this was the desire not to harm the country's fragile national unity in a time of war. The problem is the unequal sacrifices asked of the different sectors of the population.

Inflation: An unhelpful war tax

The brakes cannot be put on inflation now with purely financial measures such as devaluation, or closing the gap between the exchange rates for imported and exported goods, as the history of the last financial adjustment clearly demonstrates.

At the beginning of 1985, the Nicaraguan government did not have the capacity to implement an economic package to control inflation. At the time, the counterrevolution had some 15,000 troops and was not yet in decline. The government devalued the currency slightly, eliminated some consumer subsidies and narrowed the gap between the different exchange rates in an attempt to eliminate subsidies to producers, including state-run enterprises.

Nevertheless, a few weeks later, they gave up the readjustment program, thus restoring, indeed increasing, the gap between exchange rates as well as the subsidies to private producers and state enterprises. Most importantly, the government did not stop its investment programs. Because it did not adopt more austere measures, it increased the inflation rate—which the country is still experiencing—as a response to the ongoing war.

In real terms, inflation has been a "war tax." It has also been a tax to maintain public investment programs and a productive subsidy to private producers and state enterprises that protects high levels of inefficiency and waste of imported goods. The entire population pays this triple tax, some on a short-term and others on a long-term basis. A strong inflationary pressure was created due to the lack of a stronger devaluation or the elimination of producer subsidies and investments in MIDINRA's long-term projects. The consequence of this first step was a drastic decrease in workers' real salaries in 1985: a "tax." Flight to the informal sector and labor indiscipline weakened the productive sector and created more inflation. The inflation rate continued to increase, resulting in hyperinflation, making production yet more difficult and fueling speculation. In the end, the "tax" that had served to deal strategic blows to the contras began to undermine the economy.

A new economic package is essential if the country is to continue to defend itself. It will have to be different from the 1985 measures, in that the people can no longer carry on their shoulders the burden of long-term investment programs that are inappropriate in the midst of a crippling war, particularly considering the low levels of efficiency in production in both state and large-scale private sectors. Although the "taxes" for investment and productive subsidies will be cut, the result for the people will be a new, harder "war tax." Nevertheless, unlike the last economic package, which ultimately resulted in a hyperinflationary spiral, a new package calling for austerity from both the state and private sectors could solve some economic problems and pull the country back to the realization that it is living with a survival economy in times of war. This has been talked about at length, but the problem is that the concrete mechanisms to achieve it have not been put in place.

Carrying out an economic adjustment without international reserves, without the foreign exchange traditionally provided by the IMF at times like this, is similar to undergoing surgery without anesthesia. In Nicaragua, people's dignity and their will to continue making sacrifices in order to achieve their national liberation will have to substitute for IMF assistance. If the Nicaraguan government, and the FSLN as the party in power, really had doubts about its social base and popular support, they wouldn’t try to carry out this kind of adjustment in these conditions with relative prices in such disorder and without sufficient reserves in the Central Bank.

The current investment program will clearly have to stop cold. The problem will be how to convince creditors to transfer those resources to projects for immediate survival, replacement of equipment, credit to renew traditional production lost in war zones and importing basic consumer goods like rice, beans and oil, especially now that the brutal drought of 1987 has added a new problem to the production of basic foods as well as agroexports.

A devaluation, which the economy needs, is very strong medicine. Its aim is to favor those who are productive and punish those who are not, and to lower workers' real salaries in order to give incentives to entrepreneurial activity. At this moment, however, such medicine is so strong that it can eventually harm producers because the rise in the price of imported inputs can result in a recession or drop in production.

The normal question in a structural adjustment of such magnitude is: Who will pay the cost? In Nicaragua, it’s quite possible that the answer will be: everyone.

The great challenge for the Nicaraguan economy is to find those compensating measures that will distribute the burden of economic adjustment in the most egalitarian form possible among professionals, businesspeople, artisan manufacturers, public sector employees, workers, peasants, the military... to distribute the very high costs, which the public will go on paying for its liberty.

The army must bear part of these costs without diminishing its military tasks. Many popular armies in other countries have shown that this can be done in wartime situations. In Nicaragua, the people and the army, conscious that the tasks of defense and survival are intimately connected, must strengthen themselves as "one single army" to carry out new military and productive tasks, in order to begin a new, economically critical phase of the Nicaraguan revolution. As peace comes closer to Nicaragua, the army must gradually assume productive tasks along with military ones in order to consolidate the victories they have won by arms.

Esquipulas III, despite its ambiguities, effectively puts the war in check. It is up to Congress now. If it opts for more war, Nicaragua will make the changes necessary to strengthen its military hand, adjust its economic policies and maintain its diplomatic offensive.

If, however, Congress supports the regional moves toward peace, it would open the way for a series of complex but hopeful tasks. Complex, because President Reagan will not resign himself to losing. Hopeful, because Nicaragua's compliance with Esquipulas II and III strengthens the peace efforts. Direct negotiations between the next US administration and Nicaragua should be part of this process, focusing on both countries' mutual security concerns. When those talks produce an agreement, peace will have broken out.

It won’t be easy. President Reagan continues to interfere in the peace process. In the regional context, contra attacks from neighboring countries (Honduras, Costa Rica and El Salvador) will continue and the United States will try to turn the dismissal of the CIVS in Esquipulas III to maximum advantage. In Nicaragua, the Reagan Administration will try to disrupt the electoral process for both municipal seats and the Central American Parliament, likely to begin in late 1988. Opposition parties will be subjected to strong outside pressures to block the domestic electoral process. At the same time, the US will continue to sponsor contra attacks, in clear violation of the Esquipulas accords. For Nicaragua, 1988 will thus be similar to 1984 but with one crucial difference: the war is in check.

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