The Economy in the Electoral Film: Strong Scenes, Uncertain Script

Shot by shot, scene by scene, sequence by sequence, the electoral film’s economic script is extremely worrying with only five months to go before the elections.

Nitlápan-Envío team

Five new national polls by different firms and institutions, done over a range of dates from the end of April to the end of May, all confirmed Daniel Ortega and the FSLN in first place for voter preference. In all of these surveys Ortega either got or came very close to the margin needed to win the presidential race on the first round.
In light of his party’s increasingly likely victory, anti-Daniel Sandinistas are muting their disputes, dissidence and discord and closing ranks with the FSLN candidate, while an ambiguous yet distinctly defeatist fatalism can be discerned in the Liberal ranks and in the pro-government media. Every day it looks less likely that the Conservatives will try to put together a truly national and genuinely "third-way" alliance. The FSLN-PLC pact to force a two-party system has worked. Many voters feel trapped into exercising their "free choice" either for the lesser of what they see as real evils or for an illusion that temporarily assuages the uncertainties they perceive on the national horizon but that they know hasn’t a snowball’s chance in hell of providing a real alternative.

Fear and loathing
on the campaign trail

President Alemán, who insists on informally acting as the governing Constitutionalist Liberal Party’s campaign orchestrator, is still gambling on an electoral strategy that pits the PLC candidates against their FSLN adversaries with resolutely confrontational language and images. The return of a Sandinista government is presented as nothing short of terrifying. The outgoing Alemán government’s dysfunctional fear-mongering rhetoric, which is completely out of touch with the country’s economic reality, is only serving to worsen the nation’s increasing economic crisis.

At best, there is a near-unanimous perception that an FSLN victory would expose the country to months or perhaps a year of economic uncertainties, with an investment freeze, capital flight, shelved expectations and paralysis as everyone waits to see what the new government’s game rules will be. It is an inevitable concern, given the history of the eighties, and FSLN presidential candidate Daniel Ortega is a sitting-duck target for it. His plan to announce his proposed Cabinet ministers on July 19—the anniversary of the 1979 revolution—is an attempt to put this concern to rest. Will they form a bulletproof shield or just be decoys?
If a possible FSLN electoral win justifies certain economic fears, however, the Sandinistas have very little to do with either the structural or the transitory part of the three crises that are currently intensifying an already acute recession. These crises—coffee, external cooperation and banking/finances—are indelibly painted on the scrim against which the rest of the electoral flick will be filmed from now until November. Although the powerful klieg lights seek to brighten up this backdrop for political marketing purposes, a pall hangs over the stage.

Responsibility

Nicaragua has its share of structural coffee problems but they have been aggravated in the past year by the fall in international prices and the overproduction of some new international coffee producing areas (discussed in more detail in "Speaking Up," in this issue). The problems of external cooperation, meanwhile, are closely linked to the ever-growing dossier on Alemán government corruption. The financial crisis, in turn, began with the failure of the Sandinista-linked Interbank in August 2000, followed by two other banks (first Bancafé then BAMER), while BANIC, the state’s only remaining bank, is on death row awaiting its execution date. This crisis, too, has structural roots, but was aggravated by the poor handling of the institutionally deficient Superintendence of Banks, while the political spins that President Alemán put on the first two announcements triggered runs on those banks that further eroded the Central Bank’s already low international reserves.

As the FSLN has virtually no responsibility for the current economic crisis, it has been given the chance to act the part of an opposition party again. In the earlier years of the Liberal government, the FSLN abandoned any pretext of opposition leadership and concentrated on cutting the deals that culminated in the Ortega-Alemán pact. Now the party is suddenly promoting both street protests—especially regarding the current transport crisis (see "Briefs," this issue)—and populist legislation in response to the genuinely serious economic problems. With its increasing conviction that it can win at the ballot box, the FSLN is doing all this with the shortsighted aim of consolidating and expanding the electoral clientele attributed to it by recent surveys.

The montage

The coffee crisis cannot be truly solved without a thoroughgoing medium-term strategy, yet most sectors are still dealing with this and other national problems in an incoherent, myopic and disunited way. The struggle to pass a law that would alleviate the economic crunch affecting a certain sector of coffee growers followed by another battle that ended up dismembering it expresses this behavior perfectly.

Fearful of seeing their farms embargoed, indebted large and medium-sized growers took to the streets to convince the government to support a subsidy—provided by the Taiwanese—through the banks in which the coffee debts are concentrated. The idea was that the banks would issue a US$25 bond to producers for every hundredweight of coffee beans that they can demonstrate, with the appropriate paperwork, that they have produced and exported. The majority of the thousands of small producers, however, have no such paperwork—either because they sell their product domestically or turn it over to intermediaries who will put themselves in line for the subsidies—and thus will get no support to cope with their overburdening debts.
After the first successful march, the roughly three thousand growers eligible for the bonds—out of a total of around thirty thousand—decided that $25 was not enough and marched again to demand $50. They also pressured for a legal disposition that would prevent the banks from embargoing or foreclosing on their properties for 60 days. The FSLN legislators skillfully got the National Assembly to extend this deadline to 300 days—that is, until the new government takes office. On April 30, amid this confusing sequence between benefited and jeopardized, promoters and promoted, what is formally titled the Law to Suspend Judgments and Executions of Sentences for Debts Contracted by Nicaraguan Coffee Producers—commonly referred to as the "coffee law"—was approved.

Since neither issuing bonds nor prolonging the agony before the embargoes, both of which are short-term electioneering solutions, will do the trick for a structural problem, the country was then treated to a month-long intense debate during which those opposing the new law attempt-ed to get it repealed. In the front ranks of that opposition were the bankers, who totally disagreed with a moratorium on embargoes and announced that they would finance no more coffee production until their guarantees were reinstated. They were flanked by the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB), which came out publicly against the law because it constituted state intervention in a conflict between private producers and private banks. These international agencies, which seem to have no such scruples about their own intervention in national economies, also expressed concern that the law would weaken institutions, presumably the banks. President Alemán had originally declared himself one of the "coffee growers in crisis," going so far as to say he wanted to head the marches demanding the legislation, which he claimed to support "unconditionally." Buckling to this pressure, however, he did a sudden about-face, accusing the FSLN of promoting what he now scorned as a "populist" law.

The sin

Both sides’ quick-fix electioneering approach culminated with the protesting coffee growers and the legislators who proposed extending the moratorium agreeing to let the President veto the suspension of the embargoes. Far from imposing order on the situation, however, the veto sparked new protests because no other response was forthcoming to deal with the desperation and latent violence experienced by the thousands of small coffee growers with no access to bank financing. Barely surviving, many of them have already had properties foreclosed and some have even been jailed.

By originally endorsing the coffee law, the Liberal government, for the first time in its over four years in office, abandoned its proclaimed role as "facilitator" to intervene in the functioning of the country’s financial markets. Caving in to the FSLN’s pressure, the government thus committed what neoliberal dogma considers a "mortal sin."
The PLC representatives in the National Assembly had done something with a similar electioneering stamp months earlier, when they approved an anti-usury law also submitted by the FSLN. That law reformed the judicial framework for micro-credit institutions, establishing a ceiling on the interest rate they can charge that is below the maximum rate allowed the national financing system.
The FSLN’s bill was indeed based on critical realities. With no state controls, some micro-credit institutions that have tried to fill the vacuum left by the closures of the private Banco de Crédito Popular and the state development bank BANADES have been charging excessively high rates on their loans to small market venders and peasant producers. The most evident case is that of the micro-financing enterprises linked to the now failed Bancafé, which charged over 60% a year. The FSLN found itself a real problem and knew how to cash in on it. The focal points of discontent caused by debts in both the city and the countryside are so numerous that local FSLN leaders knew they could use them to gain short-term political points. And since years of experience have taught them that there can be no struggle without someone to point the finger at, they chose the micro-credit institutions. This opportunist perception gave birth to the anti-usury law.

Shortsightedness usually produces incoherence due to a failure to think things through, and the anti-usury law is no exception; it is having a perverse effect. The micro-credit institutions belonging to ASOMIF currently provide the equivalent of nearly US$25 million in credits to some 45,000 clients, about 20,000 of whom are in the agricultural sector. With some of the most high-risk of these agencies being forced to close, the space they are leaving is being filled by a growing number of bone fide usurers, individuals who charge even higher interest and are under no control whatever.
By fingering the micro-credit organizations as solely responsible and limiting their annual interest rates, the FSLN acts as if micro-credit has no higher risks or costs than traditional bank credit. At a minimum, these "mini-banks" have higher risks precisely because they go into mountain communities and other isolated districts where no commercial bank would set foot to offer credits and personal oversight to small producers and merchants that big banks would not dream of having in their portfolios. While the national banks charge no less than 30% interest a year on a car loan to a Managua resident, the anti-usury law obliges a micro-credit operation that faces serious obstacles working with high-risk producers in Wiwilí to charge a ceiling of little more than half that (16-18%). This jeopardizes their survival and thus aggravates the nation’s crisis even more by liquidating the only ones who are currently providing small credits to the thousands of rural and urban micro-businesses that guarantee the national production and distribution of food and a good part of the export production.

Although the multilateral financing institutions generally view micro-credit institutions as marginal to an economy, the US Embassy in Nicaragua sent a letter to the National Assembly protesting its passage of this micro-finance law. Bankers, micro-credit institutions, production input distribution houses and export firms united to oppose both this and the coffee law and to advocate a search for solutions based not on generalizing laws but on case-by-case studies.

Will there be enough capacity and desire to do it?

The common denominator of the controversial coffee and anti-usury laws is state intervention in the financial markets to alter the balance of power between financial institutions and their clients. Both laws carry the Sandinistas’ populist stamp, which could favor their party at the ballot box but could also intensify the mistrust—shared by Nicaragua’s business sector, international cooperation and multilateral financial institutions such as the IMF, World Bank and IDB—of a future FSLN government. The real solution to the scarcity of credits and usurious interest rates is for the state not just to establish interest rate limits, but also to encourage the creation of micro-financing institutions that can adequately broker external funds and training programs. The current government demonstrated no real interest in such a response. Will the next one?

Alemán makes a bad calculation

The centerpiece of the government’s economic strategy for this electoral year had been to increase spending in visible public works and in investments of diverse sizes and degrees of flashiness to pull votes for the governing party and give the country’s prostrate economy a shot in the arm. The plan was to counteract the anticipated stagnation of private investment due to the uncertainties that the electoral process would generate.

With this in mind, the Liberal bench in the National Assembly irresponsibly pushed through President Alemán’s 2001 budget bill at the end of last year despite a nearly US$100 million deficit between its projected income from taxes and foreign donations and projected fiscal spending. The government expected to be able to finance this gap over the course of the year with income from the privatization of the state’s telecommunications utility (ENITEL) and electrical generating plants (ENEL) as well as foreign aid earmarked to finance the electoral process. It was a bad calculation; the economic crisis is so acute that it quickly turns any strategy into a tactic and defeats any tactic in a question of days.

The acute deterioration of public finances during the first half of this year exposed surreal nature of the new budget. Not only has the government failed to get the extra $100 million it needs to close the spending gap, but the domestic economic recession has reduced anticipated tax income, which in Nicaragua is dangerously centered on indirect consumer taxes, while the donations the government counted on are also in crisis. In May, the Treasury Ministry’s general budget director reported that tax collection had hit only 85% of the planned target and the country had received just 20% of the donations that had been pledged, programmed and signed for the first half of the year.

The IMF takes a hard line

In mid-May an IMF mission came to Nicaragua for two weeks to review goal fulfillment for the third and final year of the second-phase Enhanced Structural Adjustment Facility (ESAF) signed in 1998, and to analyze the situation for its continuation. The mission left without certifying the government’s fulfillment of the agreed-upon conditions.

As the government should have expected, the mission rejected the huge budget deficit and pressured the government to try to close it by slashing public spending. The government’s first measure provoked justifiable controversy: both changing and reducing the workday in central government offices to 7 a.m.-2 p.m. The claim that a good part of the savings the IMF is demanding will come from cuts in water, electricity and air conditioning usage and subsidized lunches in the public offices is malarkey. Independent economists calculated that the measure will only save about $3 million, whereas cutting the mega-salaries, assorted fees and other perks enjoyed by top government officials alone would save some $5 million. Cutting additional fat—the secret discretionary budget lines that have been swelling the personal fortunes of the same top officials—could save even more.
It was only logical that the IMF would react negatively to such an unbalanced budget. How could the government not have seen it coming? Its political calculation was based on the same anti-Sandinista flag-waving technique that it so abuses inside the country. It tried to sell the budget deficit as acceptable and even laudable because it is the only way to deter the "threat" of Daniel Ortega returning to power. With this, the government thought it could get the mission’s backing, regardless of its errors, inefficiency and corruption.

Underlying this calculation was the memory of the treatment Violeta Chamorro received at the end of her term in 1996. Despite such serious compliance failures that the IMF suspended the ESAF contract, which guarantees three years of funding in exchange for fulfilling the contracted adjustments, it instead applied what it called the "Shadow Plan," which served as a bridge to the continuation of international aid. The government ended up receiving US$540 million in external cooperation that election year, even more than it had received in 1995. But the circumstances then were very different. The Chamorro government’s economic technocrats had earned the IMF’s respect for their cold-hearted effort to comply, despite flagging at the end, and the likelihood of an FSLN victory did not loom large at the time.

This year the IMF is not in a flexible mood. The prolonged impasse in this fifth annual round of negotiations between the Liberal Government and the IMF—which had to be postponed and moved from Managua to Washington—reflected the crumbling of the Liberal’s overall economic strategy. The current IMF logic is to keep the tightest possible rein on the crisis-ridden macro-economy because it could become even more unmanageable in only a few months if the FSLN wins.

Furthermore, the Alemán government’s corruption has earned it little sympathy. While the IMF and World Bank are demanding compliance with their conditions and want results, they are in turn being pressured by the donors, who are fresh out of patience with Nicaragua’s current government. The foot-dragging, particularly by European governments, in releasing bilateral aid to the Liberal government cannot be explained away by the fact that it is already half way out the door, as the Chamorro precedent proves, or by technical and bureaucratic snags, as the donors diplomatically allege. The underlying explanation is political: they have decided to turn off the pipeline because they are shocked and even sickened by the government’s obscenely corrupt management of their funds, and are particularly appalled at the government’s inability or unwillingness to change its behavior despite warnings and even threats.

Rationing and number crunching

All this has produced a financial situation so serious that the government has organized an emergency committee that meets weekly to quantify the amount of income it receives and ration its distribution among the ministries and other state entities. The limitation of available funds explains the delay in meeting payrolls and the unanticipated cuts—not only of funds but even of water and electricity—observed in various state institutions for several months now.

The deterioration of the domestic economic situation is also linked to capital flight, which became a veritable hemorrhage starting with the Interbank collapse and has not been stanched since. Between August 2000 and February 2001, the level of long-term deposits in the national banking system dropped by US$40 million, which is a significant amount for an extremely poor and indebted country with a population of under five million. The gravity of the crisis is also revealed by the fact that bank credit to the private sector dropped by 3 billion córdobas in the same period (some US$ 230 million). In this context, the continuing financial crisis of BANIC, known to be linked to the capital of top-level Liberal government officials, is a hot political potato for the Alemán government in this election year.

Independent sources have calculated that this year’s economic growth rate will only hit 2%, half of the 4% that the Liberal government has been averaging annually. With this drop, per-capita economic growth will be in the red in 2001, a worrying phenomenon not observed since 1993, when the country was still recovering from the effects of the eighties’ war. The plummeting of coffee prices has produced a grim agricultural situation, while in the cities the crisis is somewhat cloaked by the flow of family remittances, which along with the amount of money being laundered in the country and foreign cooperation are the only things keeping the country afloat.

The US marches
to a different drummer

If the Europeans are scandalized by the Alemán government’s blatant corruption, the Bush administration has other considerations. It is profoundly disturbed by the specter of Daniel Ortega’s possible return to power, and not due to any great interest in what he might or might not do inside Nicaragua. The issue, as always for Washington, is its own foreign policy concerns: the Cuba-Venezuela-Colombia-Nicaragua axis has die-hard cold warriors very worried.
And the US government has a great deal of influence in the IMF and the World Bank.

On June 1, Lino Gutiérrez, US ambassador to Nicaragua until 1999 and now President Bush’s Under Secretary of State for the Western Hemisphere, spoke to the Nicaraguan members of the American-Nicaraguan Chamber of Commerce at a luxurious hotel in Managua. In his speech he unconditionally supported the government’s anti-Sandinista posture, expressing both his conviction that Daniel Ortega will win the elections and the nature of the effort the Bush government is pledged to make when that happens. After expressing the traditional US rhetoric that the elections must be free, fair and transparent, and the traditional promise of providing technical assistance to Nicaragua’s electoral branch and sending observers, Gutiérrez delivered a sermon from the US mount. He issued a series of commandments that the next government of Nicaragua must obey if it wants to enjoy "excellent relations" with Washington. They are the following:
• Show respect for democratic practices and principles,
• Respect human rights and the rights of private property,
• Commit itself to transparency and attack corruption,
• Participate in the fight against drug trafficking, trafficking of illegal migrants and other organized crimes of an international nature,
• Foster a favorable climate for the free market and for foreign investment, and
• Avoid contact with states that constitute a threat to the world and that support terrorism, or that do not share other values upheld by the world community.

The classic US arrogance of dictating to others how they should run their countries while brooking no such suggestions about its own role in the world was within bounds right up to the last point. It was when Gutiérrez, with no pretense of careful or respectful diplomacy, began to detail the final point, referring to Nicaragua’s foreign policy, that he turned on Daniel Ortega and the FSLN, dedicating extensive paragraphs to a criticism of Ortega’s friendly relations with Fidel Castro and Muhammar Khaddafi. Coincidentally, Ortega had traveled to Libya only weeks earlier to try to get his friend to pardon Nicaragua’s $250 million debt with it and to nail down Libyan investments in Nicaragua in the coming years.

The "electoral agenda" that this high US government official came to impose on Nicaragua responded only to his own government’s foreign policy interests, for all its lip service to democracy and transparency. He made no reference whatever to the issues on the Nicaraguan agenda that genuinely concern the country’s voters. The majority of Nicaraguans have been impoverished to an extreme by a Liberal government that has engaged in uncontrollable corruption, and a good number of them are enraged by its lack of democracy and its rampant authoritarianism. They know that Alemán—to his own benefit far more than that of his party, much less that of the nation—negotiated a pact with the very Daniel Ortega that has the United States in such a snit. They also know that the essential result of that pact was an exclusionary Electoral Law and various changes to the Constitution that today offer Ortega the chance to return to executive office and guarantee Alemán’s lifelong leadership of the Liberal bench in the legislature.

Gutiérrez not only did not touch on these concerns, but he implicitly supported the Liberals by raising the anti-Sandinista banner so high. And it worked. Alemán announced 72 hours after the speech that the IMF had given his government some breathing room during their negotiations in Washington. It had agreed to an arrangement for the last six months of the Liberal government and a loan that Alemán said amounted to US$120 million to resolve the main problems of the current crisis.
Although that amount is hardly enough to resolve the myriad economic problems inundating Alemán and could even come too late, it is hard not to surmise that the Bush administration pushed buttons to get the IMF to improve the economy’s solvency in the last months of the Alemán government. What Alemán chose not to say is that the IMF is maintaining its requirement that the fiscal deficit be cut drastically.

Will Gutierrez’ saber-rattling frighten voters away?

Alemán also announced that he will be traveling to Europe before the year is out to negotiate Nicaragua’s entry into the HIPC initiative with the Paris Club countries. How will he be received in Europe? There is reason to think that Nicaragua’s entry into this initiative to alleviate the foreign debt of highly indebted poor countries could get set back to January 2002, allowing the international agencies to use it as a way to pressure a new FSLN government to accept a series of conditionalities.

This of course assumes that the polls still hold after voters have reacted to Gutiérrez’s saber rattling. He concluded his speech assuring the "people of Nicaragua that we have not forgotten them and will not abandon them." It was a code that no one who heard the words failed to grasp. So much for the promise of excellent relations with Washington if the FSLN wins. The memory of the war in the eighties, financed, strategized and managed by the Reagan administration, fought by Nicaraguans paid and trained by that administration and prolonged well after regional negotiations could have ended it because the Bush administration kept it going, is still fresh in the Nicaraguan memory. And it has escaped few people’s notice that the United States is now being governed by a man some consider to be Reagan II. More sophisticated students of US foreign policy or those with a longer memory also know that Nicaragua is only one of the most recent and bloodiest examples in Latin America of what Washington is capable of if it does not like a particular government in its "back yard." And it has nothing to do with free, fair and transparent elections or any of the other commandments Gutiérrez laid down, as the Allende government in Chile demonstrates. Despite having met them all, the United States destabilized that government during its three years in office, backed the vicious military coup that overthrew and assassinated Allende and then supported the Pinochet dictatorship that ruled with an iron and anything but democratic hand for the next 17 years.

The FSLN’s challenge,
its dream and its dilemma

The FSLN knows perfectly well that it cannot govern if it does not get a green light from the multilateral financial institutions because without it the government cannot aspire to any bilateral cooperation. For all this, it can be predicted that the structural adjustment administered by the FSLN will have different variables, some of which will be aimed at winning support among the poor majority and others at winning the confidence of the IMF.
Among the points that the FSLN presented to the IMF mission in May was a sort of government platform that highlighted the proposal for a totally independent Central Bank, which would require reforming the existing banking law. It was an attempt on the FSLN’s part to satisfy the IMF’s recommendation, advocated all over the world, to separate the central banks from the government, a step Alemán has only taken half way. The idea behind the step is to guarantee a banking system managed with greater transparency.

If the FSLN is offering to cut the Central Bank loose to resolve aspects of the financial crisis, and has the opportunity—has it the will?—to deal with corruption in an exemplary manner to resolve the problem of blocked foreign aid, it still has no answer for coffee’s structural problem. But it will certainly try to fake it, in good film-acting fashion. After the fourth favorable poll, Dionisio Marenco, who is Ortega’s right hand man in all his packaging strategies, from the pact to the elections, admitted as much. "The situation here is so difficult," said Marenco, "that the winner will be the one who succeeds in awakening hopes and dreams. I can’t make coffee prices rise, no one can, but the voter has to believe that I can do it."
An important point in the negotiations of a new Sandinista government and the IMF will be the size of the fiscal deficit that the FSLN will be allowed after it takes office. The FSLN’s economic dilemma, if it can cut through voters’ hopelessness and rekindle hope, if it can revive nostalgia and sell its dreams, will be how to manage a budget that favors "a market economy with a humanist touch," as the FSLN propaganda announces, despite so many restrictions. How can it provide a response to the accumulated social demands and make some of the many dreams "bought" by all those who will vote for the FSLN into reality? It is crucial for the FSLN to convince the international community that it is going to administer the macro-economy correctly. Does the FSLN have a team that is trained enough and credible enough to assume this task in a nation made so fragile by the crisis and in an international setting in which it is viewed with such suspicion? There is no indication that it does—or, if it does, that it is listening to its members.

Chaos?

The financial crisis, the coffee crisis, the public transport crisis, the laws approved then vetoed, the government’s indolence and inability or unwillingness to negotiate with a sense of nation, the vacuum of power, the lack of leadership, the daily evidence of the damage that the Alemán-Ortega pact caused in all the institutions by giving them a party stamp according to the will of two caudillos… All this is increasingly contaminating the electoral atmosphere, which started by excluding and is still characterized by exclusion.
The stage at times appears so somber that one is forced to speculate that one of the irresponsible gambles of a sector of the Liberal government might be to create such artificial chaos over dozens of unresolved but real problems that the elections could be suspended. After all, there are many Liberals who fear an electoral defeat they are not prepared for and seem unwilling to prepare for. Another doomsday scenario cannot be discarded either: tense and polarized elections won by such a narrow margin that they lead to chaos after the elections rather than before.

Campaign snapshots

PC

After much tension and foot-dragging, the Supreme Electoral Council certified the participation of the Conservative Party (PC) in the presidential elections on May 23, after the party had, to everyone’s surprise, passed the verification test of its support signatures. The CSE has already abused this requisite established by the year-old Electoral Law several times to eliminate parties from last year’s municipal elections and this year’s general elections. Once past the verification hurdle, the PC has been engaged in a political-legal battle since June 4 to keep its vice presidential candidate, José Antonio Alvarado, a recently-expelled PLC dissident who in the first four years of the Alemán government ran three different ministries, from being "disqualified."
On the express instructions of President Alemán, announced over six months ago, the three CSE magistrates who represent the PLC plus the president of that fourth branch of the state agreed to disqualify Alvarado. While they have the votes to do it, they could not make the quorum needed to bring the issue to a vote, because the three magistrates from the FSLN refused to attend for obvious electoral reasons. Thus polarized and paralyzed, the CSE violated the electoral calendar and further delegitimized an already illegitimate electoral process. This new institutional crisis is a clear expression of what happens when state institutions are turned into party tools, in this case thanks to the Alemán-Ortega pact. Alvarado has received noteworthy support from other politicians, civil society organizations and even certain ambassadors.

PLC

Also on May 23, the Constitutionalist Liberal Party (PLC) presented the CSE with the official document confirming its electoral alliance with the Resistance Party and the Christian Way, an evangelical party. On June 3, PLC presidential candidate Enrique Bolaños released a summary outline of his platform, the first to be presented by any of the three electoral contenders. In his speech, he tried to distance himself from the corruption and squander of his former running mate and boss, President Alemán. It was the first time he has made such comments in Nicaragua although he did give the idea a trial run in a visit to the United States.

FSLN

On May 28, the Sandinista Assembly ratified Daniel Ortega’s running mate—former comptroller general Agustín Jarquín, a Social Christian—without debate. That same day, Ortega publicly presented a series of programmatic points for the government he expects to lead. In his speech he implicitly backed off the idea of creating a more parliamentary-based rather than presidential system, a position he had been reiterating for months. In a confusing presentation, however, he proposed holding a referendum following his victory on "a new government system" based on popular municipal assemblies that would not only be consulted on economic, social and political themes, but would also issue resolutions on these themes for later approval by the parliament.

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