Envío Digital
Central American University - UCA  
  Number 410 | Septiembre 2015



Centralism + secrecy: A toxic combination

The governing couple’s centralization of all decision-making and its penchant for secrecy are causing government inefficiency and paralysis. And in the population itself, they are breeding confusion, distrust and fears. History shows that this anti-democratic model of governing is erosive.

Envío team

Nicaragua’s current governing model, increasingly centralized over the past eight years, is already grappling with its latest challenge: to align everyone and everything behind ensuring Daniel Ortega’s third consecutive win in next year’s elections. Chances are pretty good that the governing couple will be both adept and intimidating enough to keep most of its domestic ducks in a row, but at the moment two external contexts beyond its control are unfavorable: the explosive regional one and the international economic one.

in Central America

The regional context as Ortega’s current term approaches its final year is one of unanticipated political volatility. The verified scandalous corruption of the Guatemalan and Honduran governments has brought thousands of indignant demonstrators in both countries into the streets calling for the punishment of those responsible, an end to impunity and far-reaching changes to the prevailing anti-democratic projects.

The pressure in the streets; the decisive role of the UN-backed International Commission against Impunity (CICIG) in Guatemala, which is supporting honest and responsible public servants; the growing calls for a similar organization in Honduras; and of course the role of the US Embassy encouraging changes that suit its own interests have all shaken up a regional scene in which Venezuela shows no signs of emerging from its economic crisis and Cuba is negotiating an “understanding” with the United States in an effort to resolve its own crisis.

In his first and only reference to the awakening of the citizenry in our neighboring countries, President Ortega superficially threw what’s happening there in the same sack with what’s happening thousands of miles away: “There is a destabilization process in the region,” he said. “I’m not going to mention the countries, but we can see that they are suffering the impact of destabilization, right here in Central America and in South America. And destabilization leads only to anarchy, to disaster, which is what’s happening in the Maghreb region, Libya and Syria, provoking the avalanche of thousands and what will be millions of African brothers seeking protection in Europe.”

Economic downturn
in Nicaragua

As for the national and international economic context, the annual report presented at the end of August by the Nicaraguan Foundation for Economic and Social Development (FUNIDES) shows that international market prices have fallen for the majority of our raw material exports, which are the motor force of the national economy. They haven’t been this low since 2009.

Another element, which is not getting the attention it should, is that shortsightedness has again prevailed in Nicaragua’s economic planning or lack thereof. As in the rest of the continent’s countries, with certain variations, the “boom” in raw material prices came to an end without Nicaragua investing the profits to vary our export products, add value to what we export or diversify our markets. “The boom is over and we’re still exporting the same thing,” commented FUNIDES executive director Juan Sebastián Chamorro on the TV program Esta Noche.

That think tank is also warning that the following factors should be borne in mind: the slow economic growth in the United States, which is Nicaragua’s main trade partner, and the drop in Nicaraguan exports to Venezuela, which are the way we pay for the oil received from Caracas under favorable repayment conditions. Based on these and other factors, FUNIDES projects a drop in the gross domestic product for 2015 from the initially calculated 4.5% to 3.9%.

Not surprisingly, the president of the Central Bank of Nicaragua doesn’t agree with FUNIDES’ projections, insisting that the economy will grow between 4.3% and 4.8%. But in any event, the economic growth rate doesn’t tell much about how things are going in a country because it doesn’t explain the inequalities in the redistribution of the benefits generated by that growth, show what the country’s budget is paying its teachers or has allocated to improve educational quality, or reveal what jobs one development model generates compared to another. Nonetheless, the government is flaunting both economic growth and other macroeconomic indicators to insist that we’re on the best possible road.

We lack a “data culture”

Commenting on his organization’s study, Juan Sebastián Chamorro lamented the lack of an official “data culture” that would permit a more realistic evaluation of the country’s economic course. Among other gaps, he mentioned that the government hasn’t even announced the population census that is supposed to be taken every ten years and was last done in 2005.

There’s no shortage of propaganda on the state institutions’ web pages, but information is scant. The data on the National Institute of Development Information (INIDE) page are old, with just a preliminary report for 2011-2012 corresponding to the Demography and Health Survey, 2012 data for the Continual Household Survey and no available data for the 2014 Living Standard Measurement Survey, just a brief notice that the survey form is going to be updated…

This lack of “data” is more profound than a mere dearth of statistics. To legitimize itself, the government usually presents only the favorable social numbers endorsed by international agencies in some categories (less malnutrition, less maternal mortality, fewer students repeating school years, more women in public posts, for example). Equally important but less favorable information, however, is conspicuously absent.

“Uncontaminated” information

The evident axiom that “information is power” suggests one of the explanations for the current government’s missing “data culture.” It lies in the toxic combination that has characterized the Ortega-Murillo power project: centralized decisions and information flow secrecy, justified in a 2007 announcement as a recipe to ensure that “the information will come out uncontaminated.” To these two characteristics must be added the arrogance that both feeds and is fed by absolute power.

The information the government bends over backward to share with the population includes prioritizing the “works” implemented and the “assistance” offered. But anytime some problem causes particular national concern on more delicate issues or the few remaining independent media uncover some arbitrary behavior or abuse, what dominates in the official communication is silence. So many realities in Nicaragua have become taboo or stamped as “top secret.”

Drought time

The drought caused by the cyclical “El Niño” phenomenon in Central Amer¬ica’s dry corridor, which runs from southern Mexico to northern Costa Rica, has been even more disastrous this year than last, and the fact that we’ve suffered it two years in a row is very serious. The US National Oceanic and Atmospheric Administration (NOAA) is predicting that “this El Niño could be among the strongest in the historical record.” A climatologist with NASA’s Jet Propulsion Laboratory more colorfully said it “has the potential of being the Godzilla El Niño.” NOAA models suggest it will peak in the fall of this year, which is typically when droughts break in Nicaragua and some planting can be done before the normal dry season begins again in November.

Coming on top of climate change, this drought is again compromising agricultural and livestock production in this area of the country, which for obvious reasons has the most impoverished population. Uncertain about how the rains will behave between now and the end of the year, the large agricultural enterprises, allied to the government, say one thing one day and something else the next, although some haven’t failed to recognize the already severe effect on export crops (sugar cane, peanuts and unirrigated rice). And as happened last year, cattle are again beginning to die for lack of pasture and water, although rainfall levels have picked up in the country’s two other climatic zones.

“We don’t see a problem”

Using data from the agricultural ministries of Honduras, El Salvador and Guatemala, the Famine Early Warning Systems Network warned of the food risk being faced by Central America’s poorest households, which have already lost their maize and beans crops. For its part, Nicaragua has presented no data of areas planted, estimated production or lost crops. Is this because the government does not yet have them or because the institutions aren’t authorized to present them? Are they not presenting them because they’re alarming? Is there a contradiction between the ministry’s information and what the governing party’s political secretaries must send to the presidency? Just how serious is the drought problem this year?

Although it may be too soon to evaluate crop losses for the two basic foods (maize and beans) in the dry corridor, their scarcity in the cooking pots of the poorest families deserves more precise information, even though maize and beans have little weight in the gross domestic product (GDP).

For some reason the government seems determined to minimize the situation and resist declaring an emergency. Nicaragua’s Central Bank President Ovidio Reyes actually declared: “We don’t see the need to declare a state of emergency; we’re not seeing a problem.”

But as August drew to an end, Nicaragua had no choice but to comply with the formality of ratifying the State of Alert in the Central American and Dominican Republic’s agricultural sector declared by the ministers of the Central American Agricultural Council.

Banking on the situation im¬proving before year’s end, Communication Secretary Rosario Murillo announced the delivery of food packets in the zone and called for religious optimism: “Given that we have three climate zones in our country we’re not going to come out so badly, God willing. Always with God ahead! With results perhaps a little less than hoped for in the first cycle’s harvest, God willing we will be able to recover in the second cycle.”

The BCN is providing
a photo-shopped image

Not seeing the problems, not naming them or renaming them and appealing to divine magnanimity has become routine in official declarations. Supplying opaque information about aspects important to the country has also become habitual, with the exception of the Central Bank of Nicaragua (BCN), an enclave of institutionality with a culture of reliable data and saved from opacity. Nonetheless, the BCN’s credibility has now also been compromised.

For over a month, independent economist Adolfo Acevedo—who worked for years with the Civil Coordinator, an umbrella of civil society organizations created in 1998 to provide the citizenry a tool to oversee public servants and institutions—warned that adjustments being made in the BCN’s National Accounts System were altering the balance sheet of the country’s economic activity and overvaluing the GDP. In particular he noticed serious inconsistencies in the import-export data from the free trade zones.

Acevedo, who meticulously and responsibly scrutinizes all economic indicators to substantiate his analyses, highlighted the following as particularly serious: “The adjustments are arbitrarily changing the overall structure of the economy, with the result that the system has become unable to provide what can be considered a realistic and legitimate photograph of our economic system.”

The BCN’s first reaction was the same silence that characterizes the other institutions, but with the tenacity and courage that characterize him, Acevedo continued demanding explanations.

Other economists, such as Néstor Avendaño of the think tank COPADES and Alejandro Aráuz, also expressed concern about what they observed, as did the independent media. Avendaño additionally commented on the failure to update the public institutions’ data and criticized the BCN for publishing indicators prepared with “very debatable methodologies.” For his part, Aráuz complained about “a secrecy that shouldn’t exist.”

Although one person shrugged off these professionals, calling them “opinionologists,” the local International Monetary Fund representative admitted it had also detected “inconsistencies” and had called the BCN’s attention to them.

“No more opacity”

On August 5, over a month after the first whistle-blowing, BCN President Reyes finally admitted that the National Accounts System had errors and they were doing a “methodological revision with IMF assistance” to correct them. He made this declaration flanked by Monetary Fund officials.

Following that official acknowled¬gement, Acevedo wondered with good reason: “If in the four years it took to set up the current system, with nearly forty IMF technical assistance missions, an error was able to incubate that ended up causing its collapse, how many new errors could be introduced in the kind of pressured, ad-hoc revision they’re doing now?”

Fearing that Nicaragua would come off looking like a country that doesn’t know how to keep its books or might even be falsifying them, thus throwing its international credibility in the economic sphere out the window, a number of “regular users of the National Accounts System” issued a communique. The signers included the Superior Council of Private Enterprise (COSEP), the Association of Banks of Nicaragua, the Nicaraguan Securities Exchange and three think tanks: FUNIDES, COPADES and FIDEG.

While recognizing “the BCN’s effort to improve and modernize the system,” they also included a critical demand: “We consider it opportune to stress that it would have been preferable for the methodological changes to have been presented at the same time as the publication of the data and we expect methodological changes and series reviews to be explained quicker in the future.” This communique may prevent a significant deterioration of Nicaragua’s image internationally, but nationally?

Why did the BCN wait so long to report on the methodological changes and do so only when forced by the public controversy? Did its directors also have to wait for authorization by the governing party secretariat before speaking about something as technical as that? Does the control really go that far?

Acevedo may have gone a bit too far in insisting that bad political intents were behind the hiding of the issue, but tenaciously determined to show the value of publicly criticizing government officials, he didn’t stop: “To recover confidence, the BCN must publish the complete work plan outlined for revising the National Accounts System and its different stages so the citizenry can learn about it, and periodically publish fully transparent progress reports. People only trust when nothing is hidden, they are told the whole truth and there is an ability to recognize errors. Enough of opacity!”

Acevedo’s courage has earned him attacks, pressure and harassment. One discouraging result on top of the regrettable institutional one is that the BCN, Nicaragua’s most prestigious and credible institution due to its legal and functional autonomy, previously uncontaminated by doubts, has now been touched by distrust.

“Resignations,” firings, substitutions…

Everyone in both the regime’s institutional structures and the arenas in which the governing party’s grassroots activists move has been informed that everything and everyone must “be aligned” to guarantee Daniel Ortega’s fourth presidential reelection. The result is growing centralized control over everything and everyone.

Four ministers and four deputy ministers from the economic area have been replaced (presumably fired) in the past year and a half with no explanation. This has either happened silently or with the sudden appearance of presidential decrees in the Diario Oficial La Gaceta following rumors picked up and published by non-official media. Some of those who left have a long trajectory, for example José de Jesús Bermúdez, deputy minister of development, industry and commerce, who clocked over 10 years in that post, two more than Ortega has occupied the presidency. Was it perhaps to “align” everything to the State?

The presidency also dismissed the directors of three Institutes: Agricultural Protection and Health, Housing, and Tourism… or did they perhaps resign as well? In any event, in their place co-directors were created in the latter two institutes. The departure most enveloped in secrecy is that of Mayra Salinas, head of the Institute of Tourism, which then went almost a month with no top post. The majority of these changes are attributed to the First Lady, who aspires to even greater quotas of power than she already has through control of the party apparatus and managing her own propaganda team, her own territorial network and her own budget, among other things.

The most visible instability resulting from such continuous changes is that afflicting the super-Ministry of Family, Community, Cooperative and Associative Economy (MEFCCA), created in 2012 and inspired by similar Latin American experiences. After proving that what tries to do too much affects little and ending up what presidential economic adviser Bayardo Arce admitted was a “disaster zone,” the MEFCCA was restructured, with two of its directors and a good number of technicians ousted and small and medium business affairs returned to the Ministry of the Economy. The only tasks left to this superstructure were those shifted to it from the Ministry of Agriculture. Three years were thus lost in a key area: governmental attention to the grassroots economy. But were these changes finally made to improve efficiency or to get everything and everybody into line?

Nothing without authorization

When ministries and other government institutions are restructured through bills President Ortega sends to the National Assembly, the governing party representatives never discuss their pros and cons; there’s not even a hint of debate. Ortega’s absolute majority in the parliament unfailingly gets him anything he decides on centrally.

“All we do is rubber stamp what we receive from the executive branch,” admitted FSLN legislative representative Alba Palacios when asked if the Tourism Institute’s restructuring had been debated. This obsequiousness is common practice with any bill, however important it may be.

Such blatant lack of autonomy runs through all state institutions at all levels, from the legislative, judicial and electoral branches right down to the smallest mayor’s office. It is the common denominator in the behavior and discourse of virtually all government officials. Hardly anyone gives declarations unless authorized because doing so risks being reprimanded or falling in disgrace.

And if unauthorized declarations are verboten, it goes without saying that no one makes decisions or even proposes initiatives without orientations “from the top.” The inefficiency produced is incalculable and this “all-aligning” characteristic of the govern¬ment’s authoritarian model has been increasingly eroding public administration.

Even community initiatives, an integral part of Nicaragua’s historical experience of neighborhood and district participation and organization, have stagnated. Everyone now just waits for orders, transmitted through what are now called the Family Cabinets, which faithfully replicate them and fulfill their tasks.

The ALBA businesses

Even issues of major importance to the country given the volume of resources they involve are treated as state secrets. Particularly critical examples of this include the government’s use of Venezuelan aid funds for the businesses run by Albanisa, the supposedly Venezuelan-Nicaraguan government joint venture that is in fact run by the governing party’s business group, and the administration of the Venezuelan oil agreement, also in Albanisa’s hands.

In late August, the two MRS legislative representatives, Enrique Sáenz and Víctor Hugo Tinoco, introduced a bill in the National Assembly in defense of consumers to ensure transparent pricing of oil derivatives, one of the most socially sensitive issues in the government’s opaque policy. Although the bill will surely be nothing more than symbolic, it reflects the feelings of a large part of the population, which wants to know how the fuel issue is managed in the country and why the electricity rate is still so high despite last year’s drop in international oil prices.

Electrical engineer Fernando Bárcenas, who ran the wholesale energy market’s operations council in 2002-2003, expects everything to remain obscure in this sphere because in today’s lucrative energy industry, Ortega is involved as a generator, transmitter, distributor and even the supreme regulator of prices.

Albanisa has been investing a good chunk of the profits from the distribution and retail sale of Venezuelan oil and its derivatives in traditional and alternative energy projects. But will these businesses be made transparent? Reports were provided on at least some of them for several months, until the exponential growth of the food company called Alba Alimentos (Albalinisa) caught people’s eye. One of the most profitable companies in the Albanisa consortium, it had become the country’s main export company by last year. In August, by order of the presidency, the government’s Export Procedures Center (CETREX) removed the country’s top 20 export companies in each category from its list of on-line statistics, leaving just products, prices and volumes, but no individual companies. The order “from the top” also eliminated access to knowledge about the volumes of Venezuelan oil Nicaragua exports to El Salvador and other Central American countries.

Why no attention to
the cattle contraband?

A great shroud of obscurity also conceals information about beef, the country’s number one export. Several months ago the leadership of the cattle associations began requesting that the government investigate the massive cattle contraband activities. They claim that 290,422 steers have been illegally rustled across the Honduran border destined for Guatemala and Mexico. In a more recent attempt to get the government to pay attention, they’ve begun defining it in terms of US$300 million in lost tax revenue.

“Are we all aware that we could end up without raw material for the meat industry and municipal slaughterhouses, with the consequent unemployment of thousands of Nicaraguans...?” asks a communique issued by the Nicaraguan Chamber of Beef Export Plants (CANICARNE). “Why this lack of attention, given that beef is the country’s top export category?”

What’s going on?

CANICARNE Vice President José Daniel Núñez has repeatedly complained of the government’s inattention and charged that the illicit trafficking in cattle is linked to money laundering. Representatives of UPANIC, FAGANIC and CONAGAN, the business elite’s three agricultural associations, don’t share this opinion, but they don’t deny an important reduction of the cattle herd and drop in slaughterhouse activity. In addition to contraband, they put it down to increased slaughter; climate change, which affects cows’ reproduction and accelerates the sale of the animals; and the fact that other countries pay Nicaraguans better prices for their animals.

The Honduran media have recently posited a whole new twist on the issue, relating it to massive cocaine trafficking to Mexico that involves surgically hiding the drug in the animals’ stomachs. The cattle business has traditionally been linked to illicit trafficking in Central American, which involves detailed knowledge of the rural geography, routes and blind points, as the article “The rise and fall of Los Cachiros cartel” describes in envío’s March 2015 issue (http://www.envio.org.ni/articulo/5005). That once-powerful family-run Honduran cartel made its first illegal money rustling cattle…

Did they really not know?

While not shedding all the light there is on the cattle contraband, the Nicaraguan magazine Confidencial revealed information in mid-August that may explain why nothing is being cleared up or resolved: low-level officials from the governing party in Somotillo, a municipality bordering on Honduras, were being investigated for links to the trafficking of cattle. Two FSLN Municipal Council members and the son of a former FSLN mayor in that locale were allegedly implicated. Will they be tried? Were they engaged in the contraband on their own initiative? If not, who were they working for?

The cattle problem is yet another “state secret” and is so opaque and so important that making it transparent has pushed the cattle association to become the first business conglomerate to insistently demand explanations and solutions from the government. “What shocks us most,” says Núñez, “is that the officials we’ve met with—the General Income Division, the National Police, the ministries of industry and agriculture and the Institute of Agricultural Health—all tell us they’re going to investigate and will call us, but they never do.”

It may well be that nothing happens because the officials only acquiesce to the formality of listening after a lot of insistence, but can’t actually make decisions or investigate, much less report back or provide solutions. It’s hard to believe that the governmental circle of power didn’t or doesn’t know what’s going on with cattle in the northern border area. How could a government that controls everything not know about contraband of this magnitude?

Be that as it may, CANICARNE has continued insisting. A new communique titled “We’re all losing – They’ve set us back 9 years” offers graphics illustrating the massive trafficking in cattle and again sounds an alarm: “If the cattle contraband continues at the same rhythm as in the first half of 2015, these will be the consequences: 200,000 cattle on the hoof valued at US$226 million will be taken, some US$12 million in fiscal income for social security and municipal governments will be lost, the economy will fail to receive US$46 million and 2,000 formal jobs will disappear.”

Big silences on big issues

The country is plagued with both big and small examples of this centralization of all decisions and secrecy about information that would explain to the population what is happening, what has happened and what could happen.

Here’s another recent one: In early August a Brazilian digital publication reported that Eletrobras and Queiroz Galvão are among the companies involved in the multi-million corruption scandal enveloping Petrobras, Brazil’s state oil company. These two Brazilian companies—one state and one private—hold the contract to execute the Inambari and Tumarín hydroelectric projects in Peru and Nicaragua, respectively, both of which were allegedly used to launder money to finance President Dilma Rousset’s election campaign and bribe Brazilian politicians.

In partnership with the Ortega government, the two companies created an electricity distribution company called Centrales Hidroeléctricas de Nicaragua (CHN) to run the Tumarín concession once construction is completed. It’s a star government project, announced in 2009 as the largest of its kind ever built in Nicaragua. The government finally granted CHN the distribution contract late last year, after long negotiations to determine the per-megawatt cost of the energy the Tumarín plant will produce.

Last year Fernando Bárcenas shared with envío other concerns this project has awakened in addition to the high price of the energy it will produce: the Brazilian companies’ demands, the privileges the Ortega government repeatedly granted them, the problems that climate change and Nicaragua’s ever more severe droughts represent for a “run of the river” plant… (See “A correct energy strategy must be aimed at Nicaragua’s development,” March 2014, http://www.envio.org.ni/articulo/5003).

Didn’t the Nicaraguan government know what was going on behind this project? Why was there no official explanation or even the tiniest comment to help us understand what has happened here and what will happen now that the lid’s off the corruption in Brazil? Will Albanisa still take on the project with the enormous predicted megawatt costs? Will it be yet another new and lucrative business for that consortium?

Silences on other issues

Even less important issues with respect to the resources involved are also subject to the habitual secrecy. The building housing the Nagarote mayor’s office ended up little more than rubble on August 21 when a short circuit set off a huge stash of fireworks left over from the previous week’s patron saint festivities that someone had irresponsibly decided to store in a bathroom used as a storage area. As a result, eight people suffered serious burns, three of whom later died. Not until 10 days after the event did the Fire Dept. release its report, but even then, the name of the person or persons who had made that decision wasn’t released, although it was surely known extra-officially. Are they waiting for authorization “from above” before revealing who was responsible?

The biggest “State
secret” of all

The interoceanic canal project is the largest of all Nicaragua’s “top secrets.” No substantive information has been forthcoming from the government since December of last year, when the ground¬breaking was inaugurated to great fanfare. To date, nine months later, the “works” have consisted only of widening and grading seven kilometers of dirt road to the mouth of the Brito River, where canal concession holder HKND Group says a deep water port will be built as the Pacific Coast entrance to the canal.

A Wall Street Journal piece on August 9 stated that “it’s hard to make an economic case for a Nicaragua canal.” The author wrote that she has it on good authority that the cost, initially estimated at US$40 billion and soon upped to US$50 billion, could end up costing more like US$70 billion. She also explains why the economics of shipping suggest that the demand for a Central American passage for extra-large post-Panamax container ships, touted as Nicaragua’s competitive advantage over the newly widened Panama Canal, “is unlikely to materialize.” While those ships are used to bring goods directly from Asia to West Coast ports in the US, the “Asian cargo ships that transit the Panama Canal for the Eastern Seaboard make multiple ports of call, from Halifax to Miami and the Gulf Coast,” many of which cannot accommodate the largest ships. Closing her case, she points out that “if the demand materializes in the future, Panama has the option of building a fourth, wider set of locks at a fraction of the cost of Nicaragua’s canal.” To cover her bets, she says that “if HKND has revenue projections that differ from this analysis, it isn’t sharing them. Mr. Ortega is not sharing much about the canal planning either. Nicaraguans complain that the entire project is one big state secret.”

So many silences are toxic

In May 2007, only months after Daniel Ortega had returned to the presidency, the National Assembly, at that time not yet under his absolute control, ap¬proved Law 621 on Access to Public Information, which it had been working on for some time. The law establishes informative openness in government institutions as a duty of public servants and access to public information as both a human and a civic right.

But the law is not being respected. President Ortega, the number one public servant, hasn’t held a single press conference in nearly eight years. And according to economist Edmundo Jarquín, a presidential candidate in 2006 and vice-presidential candidate in 2011, “not a single government official has ever agreed to participate in technical debates about the economy” since the FSLN got back into government.

Hiding or denying reality, which has included refusing to admit that rearmed groups operating in rural Nicaragua are politically motivated, instead insisting on calling them criminals, has justified the killing of peasants in wartime-scale military operations. And the policy of corrupting words, including ordering institutions to use the term “family misunderstandings” instead of “domestic violence, is minimizing and concealing the tragedy experienced in so many households. It all adds up to a policy of secrecy that has turned Nicaragua into a realm of rumors and a kingdom of fears.

It’s a policy that is wearing down society and even eroding the government. Weighed down by the burden of this erosion and nervously aware of the sudden changes that have taken place in Guatemala, Daniel Ortega looks a little worn down himself as he prepares for his third reelection.

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