The Constitutional Reforms: Another Opportunity

The National Assembly should introduce constitutional reforms in order to exercise its right to legislate in economic matters. And to revise the accords signed with the IMF.

Nitlápan-Envío team

The world is going through a change of epochs that touches even the traditional industrialized countries, particularly those forged in heated struggles that culminated in compromises between social classes and the creation of what are known as welfare states. Now accused of being "over sized," these benefactor states are ceding ground to transnationalized production, increasingly independent financial operators and the formation of regional blocs that are designed for capital interests and beyond any social control.

In Nicaragua, on the other hand, we are barely into the task of constructing the state, trying to forge or consolidate institutions that can assure greater social consensus and put it in practice with signs visible to all of economic and social development. Despite that, Nicaragua is not exempt from the change sweeping the world as a whole. Its immediate survival depends on international financial aid and it must pay its debt for the "help" it received in the past, including the irresponsible loans contracted by past and present governments. It is the highest per capita debt in the world.

With its fragile institutions and traditionally weak state, Nicaragua, toy of its most powerful economic groups, watches as the multilateral financial institutions those orchestrating the great changes in the world economic system put conditions on it that have nothing to do with its national reality. The message of these institutions, as they peg their aid to a reduction of the public sector, seems to be, "What is good for the wealthy is good for the poor."
The World Bank is currently pressuring Nicaragua's legislature to pass a bill permitting the privatization of TELCOR, the country's telecommunications system, to international bidders. Among others, companies in Mexico, Spain, Korea and the United States have expressed strong interest. In a letter to the president of the National Assembly, World Bank representative in Nicaragua Ulrich Lachler warned that any further delay could prevent the arrival of US$57 million in international funds tied to this sale. Assembly president Luis Humberto Guzmán's response is that the legislative body was not taken into consideration in the original agreement between the World Bank and the Chamorro administration.

It is difficult to decide which is more shameful: a World Bank so brazenly favoring the communication transnationals or an executive branch that, trapped in its unilateral commitment, echoes the World Bank in blackmailing elected legislators to approve a sale that undermines the nation's interests.

Both deeds are symptomatic of the institutional weakness and sell out that puts Nicaragua in a very disadvantageous position in this "change of epoch." It is hard to know whether a past of selling out makes us weak or the other way around, since history provides many examples of both: the weakest countries most easily cave in to pressure, and weak states accustomed to being led from outside are a powerful factor in weakening their own institutions.

Hard Currency Is Not Scarce

TELCOR is one of the few state enterprises that makes a profit. If not, who would want to buy it? Admittedly the government does not have the resources to massively invest in this sector and provide the country a modern and extensive telecommunications network. But it is something else to claim that the lack of such a network is the main factor inhibiting the country's economic take off. All that is clear is that, despite far more urgent economic priorities in the country, the most profitable thing immediately available to the government is the sale of TELCOR.

The government wants us to believe that its inadequate and unviable economic plan could be saved by privatizing TELCOR, but that is not quite true. The government's technocratic ineptitude is so great that even if the $57 million that the World Bank has linked to the sale of TELCOR were put into specific investment projects, it would not necessarily translate into development. In fact, there is no guarantee that the projects would even be implemented, since it would not be the first time that programmed public investment did not take place.

If, in contrast, the $57 million were earmarked as freely available funds to back the national currency, it would assure neither economic take off nor any relief from the crisis. We know the Central Bank is now looking for a way to neutralize the impact that the "surplus" of hard currency due to the rise in coffee prices will have on the economy. In other words, there is "too much" foreign exchange in Nicaragua this year, not too little. Other explanations will have to be sought if the government's program does not function and the economy, employment and living standards do not grow.

More Debts to Pay

In the short run, the current tensions are not only political ones derived from the all out "war" between the executive and legislative branches around the constitutional reforms. Other possible tensions loom. For example, an International Monetary Fund mission is arriving soon to evaluate how well the government has followed the economic commitments it took on in signing the Enhanced Structural Adjustment Facility (ESAF) agreement in April 1994. One of the most important was that the Central Bank not finance the government with so much as a córdoba in credit to close its deficit. This has not been respected, which is serious since Nicaragua needs the IMF's green light to get its request for a substantial reduction of its foreign debt and easier service payments considered in the next round of the Paris Club.

Without such a reduction, any success in the country's efforts to grow will just end up in creditors' pockets, and the government will have to rely on still more loans, tightening the foreign debt noose around the country's neck. That noose was already asphyxiating in 1994, and the "undue" credit the Central Bank provided to the government was precisely to compensate for the enormous burden that interest payments on the debt represent in the public budget. Nicaragua could find itself in the absurd but tragic position of being unable to get its debt reduced because it paid too much on it.

The presidency should openly discuss the scope of this huge problem with the nation and its legislative representatives, gambling on real national consensus to negotiate a new agreement with the international financial institutions. At the least, it would earn more credibility than it gets by using the existing disinformation about major economic issues to crudely threaten and blackmail.

Constitutional Reforms:
A Transcendental Step

Nicaraguan society's lack of solid institutional mechanisms for debating and correcting the problems that continually arise in a market economy and a democratic society is not the fruit of the immediate past or even a recent situation. Today's state is the heir to patrimonial post colonial institutions and the more recent Somoza dynasty, which for nearly half a century organized top down development that functioned only for the benefit of a small segment of society, repressing the rest. Since then, the different political groupings that have come to office have been more concerned with controlling power and the apparatuses of repression and ideological control than reforming the state.

It is this trajectory that gives so much significance to the current political scene, as well as the extreme but inconsequential tensions surrounding the constitutional reform issue. It is a transcendental step for a fraction of political society to undertake such a substantial institutional transformation, one that could initiate the modernization of the state. The step is so transcendental that it matters little whether those taking it are aware of their historical role or are motivated by the circumstances of the political game in such an unstable setting.

As always happens in concretely defined moments, what is merely circumstantial gets mixed up with what is fundamental. This is what allowed the finance minister who is more worried about his image with the international financing agencies than about the nation to pressure the legislators for TELCOR's privatization while they were busy debating the reforms. In other words, they were discussing the institutional rules that will oblige future finance ministers and other executive officials to remember that their only real judge is the people or, in the absence of a referendum, the people's elected representatives.

What Is Not Seen

Another essential characteristic of this moment is that the constitutional reforms did not come at the beginning of a period of predictable continuity in power. On the contrary, they came at the start of an electoral period in which the national interest is the last thing on the mind of the extremely fragmented political class. The reforms were born in the midst of a pre electoral fight that has already disfigured the debate around them and is cloaking their true dimension.

A general note in this period is the absence of electoral platforms. The politicians do not know how to get out of their well known game of seducing and manipulating public opinion. They are not healing their divisions and in fighting and seem better trained for making alliances of convenience even with bitter rivals and promises they cannot possibly keep than for dialogue, consensus and real alternative projects. Precisely because no political group seems to have anything original to propose, the most surprising and unlikely alliances are not only possible, but are being forged.

"In politics, what is real is what is not seen," say the Machiavellians for all times. And this appears particularly true in Nicaragua, where what is most real seems hidden behind the stage on which the politicians play their roles. Is it possible to imagine a greater ethical disqualifier of politics than to say that it is what is never visible? How can the electorate be expected to cast a vote of conscience if it cannot see or know anything? If Nicaraguans are fed up with politics, it is not because they are apathetic by nature. On the contrary, they have demonstrated a high level of interest in the course of the nation in the past. It is the leaders' responsibility if the leadership function is losing respectability, not the responsibility of those who have ceased believing in it.

The Reforms: A Catalyst
For Strange Bedfellows

The constitutional reform project has played an important catalyzing role in this period already so marked by next year's elections. It has pitted all political sectors into pro or con camps that have little or nothing to do with the content of the reforms themselves. Over the past months, Cardinal Obando expressed his total support for the reforms, while the media of the "official" FSLN blasted them for selling the country out to "savage capitalism." Government officials opposed them as "Marxist and populist" and selling the country out to "the Sandinistas." According to polls, 60% of those surveyed in Managua favored the reforms, but without knowing their exact content or having much of an idea about their repercussions.

That polarization obviously spread to the election of the National Assembly's new board in January and revealed the immediate interests of the various political groups regarding the reforms. The lobbying preceding it centered on whether the reforms would be quickly pushed through and defended against administration maneuvers to block them (represented by a vote for Christian Democrat Luis Humberto Guzmán as board president) or not. As with everything else, the general public got thoroughly confused between what was visible and what was behind the scenes, particularly since Guzmán's rival for the post, Conservative leader Miriam Argüello, repeatedly insisted that she had made no deal with her FSLN backers to block the reforms, and that there were quite enough votes in the Assembly to pass them in any case.

On January 9, Guzmán was reelected as Assembly president for two more years by 48 votes to 40 for Argüello. Guzmán was backed by the 32 Sandinista bench members belonging to Sergio Ramírez's new Movement for Sandinista Movement (MRS) and by representatives still loyal to the now dissolved UNO coalition, as well as Guzmán's own Christian Democratic Union. Argüello's support came from the "centrists" (also ex UNO members, but loyal to the President), and a strange alliance between legislative representatives of the "official" FSLN and those of Arnoldo Alemán's Constitutionalist Liberal Party (PLC). The results strongly favored the MRS and the UNO loyalists, who now control the board and head 13 of the Assembly's 19 commissions.

It was logical that various sectors from UNO, which promoted many of these same reforms in its 1990 presidential campaign, as well as the MRS, which has sought to build an alternative to official Sandinismo through parliamentary politics in general and the reforms in particular, would firmly ally to defend them. It was also logical that the President and her ministerial followers who represent no one but themselves would oppose reforms that are anti reelection and anti presidentialist to boot. Nor is it surprising that official Sandinismo would be against the reforms, given both its short term political rivalry with the pro Ramírez representatives pushing for them and its innate preference for the 1987 Constitution's autocratic presidentialist cut.

What was surprising, however, was that the FSLN Presidency alliance against the reforms brought into the open a community of interests between Sandinista leadership and the governing oligarchy that goes beyond either side's political philosophy. The behavior of Managua Mayor Alemán and his Liberal fraction was also a surprise. Why was Alemán so interested in derailing the reforms? It may be because he is considered the front runner of all presidential hopefuls at the moment, and would find it very pleasant to govern with the FSLN's presidentialist Constitution. It may also be that he did not want to appear allied with the Sandinista sector promoting the reforms for fear of upsetting his most recalcitrant potential backers. However rational or kinky his logic may have been, Alemán publicly distanced himself from the reform project in those tense January days.

Political Hardball: Not a Gentleman's Game

The tensions between the two branches reached a worrisome climax with the kick off of the required second round of legislative debate on January 25. That day, President Chamorro asked the legislators for a 10 day postponement so that a joint executive legislative commission formed for the purpose could reach a prior consensus on the reforms. She also announced that she would send her own comments on them in writing within two days. By a 68 14 vote, the representatives decided not to accept her proposal. Miffed, the President decided not to submit her comments.

As the Assembly debate got underway, the executive unleashed various activities to stop the process. One was an intense media campaign to convince public opinion that the reforms had no consensus; this campaign became even stronger after their approval. Another was an urgent call to the diplomatic corps to denounce that the legislature was attempting a "coup d'etat" against the presidency. And third was a dramatic presidential message to the nation on January 27, leaving "historic evidence" that everything had been tried to prevent what happened. All this feverish activity led to growing speculation that the executive would call out the army to implement a Fujimori style self coup to stop the reforms. Finally, after days, both the executive and the army moved to quash the rumor.

Then, on January 30, Minister of the Presidency Antonio Lacayo charged that the National Assembly was trying to install a "parliamentary dictatorship" and announced that the government and various social sectors would petition the Supreme Court of Justice to declare the legislative action illegal. Lacayo himself was among those who would present such a petition, since he felt personally affected by the reform that prohibits anyone from running for president who is closely related to an incumbent President (he is married to President Chamorro's daughter).

Late in the night of February 1, after five days of hurried debate, two thirds of the 92 legislators voted in favor of the 65 reforms to the Constitution's 202 articles. A week later, Assembly president Guzmán signed the reforms in a formal act, only hours after President Chamorro announced in another message to the nation that she would not put them into force, on the grounds that they would break the balance of power.

The FSLN: Two Projects Or Not?

The polarization around the reforms was also the straw that broke what was left of the FSLN's unity. First, on the eve of the election for the new National Assembly board, the 39 member FSLN bench divided into two groups: the 32 who sympathized with the MRS accepted Dora María Téllez as bench chief, while the other 7 remained loyal to the official FSLN. In the absence of Daniel Ortega, in Cuba recovering from a heart attack, Assemblyman Natán Sevilla coordinated these 7.

The formal action that sealed the long expected split in the party, however, was the "forced separation" of MRS leader Sergio Ramírez from the "orthodox faction," in the words of other MRS leaders. Since then, the MRS has been presenting itself as a new party, signing up and organizing members in various cities, picking up Sandinistas who have resigned from the FSLN. The MRS flag is three horizontal stripes: red, black and white (for "peace"). Ramírez named Orlando Castillo, former Nicaraguan ambassador to Spain, as the party's executive secretary, and announced that the Socialist International supports his project.

The official version is that he resigned from the FSLN after it refused to allow his group to use official party symbols following several failed attempts to establish a dialogue with MRS leaders in November and December. But it has not escaped notice that Ramírez waited for the lowest provocation to resign. The day before the Assembly board elections, Radio Ya director Carlos Guadamuz reported in alarmist tones the "news" of supposed sexual relations between FSLN legislator María Ramírez (Sergio's daughter) and Dora María Téllez in a crude attempt to discredit their political activities. On January 14 both father and daughter resigned from the FSLN and Dora María Téllez withdrew from its National Directorate. In a written statement, Sergio stated that he resigned "for reasons of decency" and criticized "the impunity of the evil doer, unofficial spokesperson of the party's owners." Although the National Directorate disqualified Guadamuz's statement as "injurious," Téllez declared that she no longer felt linked to the FSLN leadership body, which she called a "segment of individuals in profound decomposition." On February 3, she, Luis Carrión and Mirna Cunningham, all Directorate members, resigned from the party. "Where before there were principles, today there only calculations and interests," they declared.

In any case, to separate there must have once been two. Are there now "two" projects that are heirs to historic Sandinismo? Or are there just two groups of leaders trying to sell themselves to Sandinista public opinion instead of selling an authentic project to the nation as an alternative to that of the current government? And which one "separated" the one that stayed or the one that went? Is it not the repetitive immobility of the official ideological discourse that is now separating the FSLN as a whole from its early ideals?
Blaming the rupture on the other side could prove useless to attracting an electorate that still longs for the unity and strength of yesteryear. Would it not have been better if both sides had presented programs and gone out to convince the electorate of them?
The stunned, pained and worried witness to this indefinition is the mass of Sandinistas "without current" not the "politicized" ones who claim to belong to neither and criticize both, but those who simply say nothing and belong to the disoriented mass of the disillusioned. According to a recent document by "non aligned" intellectuals who identify with Sandinista ideals, such people represent about 60% of those registered in the FSLN. They are characterized as the mass "that gives body to the structure and fills the plazas...but lacks the capacity to come together and speak as a united voice, and their potential strength is manifested only on extraordinary occasions."

There Is a Course to Follow

This Sandinista mass will face a decision as the electoral campaign gets underway, but it will be a hard one to make due to what these same authors impute to both "currents" as "the failure to re-elaborate the ideological postulates of Sandinismo." A poignant sidelight is that by time this analysis was circulated, there were no longer two currents, but rather two parties: the FSLN and the MRS, both heirs of Sandinismo.

Their lack of an alternative program is mainly because neither has any program at all. When there is no course, it is hard to propose changes to one. But the seeming simplicity of this argument is deceptive, because it is not quite true that there is no course. The state is leaving vacuums that suggest a course for the economy and society, even though it is not sketched out in any program. The vacuums result from the state's abdication of its responsibilities, its shrinking credibility with the international financing agencies and donor governments, its lack of managerial skills to reform public administration particularly tax administration, which is the sustenance of any government's activities and the reduction of its already inherently slim capacity to regulate the market economy, or, said better, get Nicaragua on the road to a successful market economy.

Less State or More?

An economy such as ours disarticulated by war, indiscriminate state intervention in the fabric of the economy, the protracted flight of human and financial capital, and the disturbances that result when a small and dependent country is inserted into an erratic international market in full transformation requires both more state and less state at the same time.

Such an economy needs less state to avoid the "law of the funnel" by reducing obsessive legal regulations. As it now stands, those with no political and family connections bear the brunt of all the bureaucratic snags while those with pull get all the facilities. In other words, the few get everything in the funnel's cup while the many fight over what is in its neck.

It needs more state to study the economic fabric, forecast the behavior of the actors and apply regulatory and, if possible, corrective policies to the injustices generated by the intolerable inequality of income distribution and let the "visible hand" of society act in each concrete market.

But the current situation is exactly the reverse: there is more state where there should be less, and less where there should be more. There is more because Nicaragua's traditional patrimonial state has reached the extreme of seeing government as the spoils of a small group of families and the quickest and most coveted road to wealth. There is less because the officials are becoming fewer and more dispensable, and the state is renouncing any attempt to know and regulate, confusing freedom with "let do."
The results of this leap to view. While the economy as a whole remains prostrate, as evidenced by employment rates and living standards, a few wolves are gobbling up fortunes. They use their political and family connections which are almost synonymous in Nicaragua to enrich themselves. They use the foreign aid and monopolize the few investment promotion policies, which do not reach the majorities. The result is a fearful, coddled business culture, dependent on the state and international cooperation, which proclaims the need in the name of austerity and foreign debt payments to reduce social services and public responsibilities.

Presidential "Maternalism"

Looking at the composition of the government team, one can conclude that it will be difficult for an efficient and disinterested bureaucracy to emerge in Nicaragua. The recent Cabinet shifts confirm this, in that no new faces were brought in; a few of the old ones simply shifted to a different ministry or state institute, director's title and all.

The ministers' involvement in the campaign to defame the constitutional reforms has been one more example of their servility. It is not clear whether the problem is tolerance of administrative abuses in the absence of a serious and independent comptroller endowed with the means to act, or the ambiguous "maternalism" of an atypical and non functional presidency. The President herself behaves like a scolding housewife; the Vice President has been null-and-voided; and the Minister of the Presidency is the plenipotentiary power behind his mother in law's throne. Putting the foxes to guard the henhouse is bad enough in any democracy, but it is worse still when the foxes' owners also think they own the henhouse.

Much has been said about ungovernability. But if a population becomes ungovernable, it is not only because it is disillusioned with all attempts to politically mediate the social conflicts and so opts for individualist responses (armed violence, fraud, tax evasion, contraband and other illicit lucrative activities). It is also because its governors offer no image of capacity or disinterested service to the nation. In such a setting, the cynical old saw that "good guys finish last" takes on the epidemic proportions of a contagious social disease.

In some countries, governors faced with such a situation usually appeal to people's patriotic fiber; seeking or even triggering a confrontation with some real or imaginary "enemy." But in war weary and destitute Nicaragua, a gambit like a border war would not be at all welcome, and yesterday's sworn enemy imperialism seems a bit hard to focus on today. Casting Sandinismo as the "internal" enemy would make some sectors quite happy. But it would be too much to ask most of the population to believe that it is the cause of all the evils "my government inherited" and the exclusive factor of instability that keeps investment away. People see too many top Sandinista leaders in the social circles of the national elite to fall for it. Whether by family credentials, recent insertion or affinity, many "Sandinistas" belong to the country's well off business, financial or commercial set. This makes it hard to peddle them as simple enemies in the image market, particularly when some jealous right-wingers are busy ridiculing them at the same time as opportunist "sell outs" to their cause.

Why Such Passivity?

Nicaraguan society has lost its sense of direction. In the northern part of the country, some members of rural society fight each other like the proverbial Hatfields and McCoys. But the use of repression as a means of social control is far less than it could be, given the lack of leadership, the importance of the conflicts and the institutional weakness in those outlying areas.

On the other hand, with 70% of the population below the poverty line and a relatively inactive repressive system, it is not easy to explain the passivity of the majority of the population. Perhaps one explanation is that a large part of it the part that still clings to its Sandinista ideals is resigned to living off its memory of a glorious past ("we overthrew the dictatorship," "we held off the imperialists," "we held power," "we were the center of the world"). Such an ideological system may help cushion today's desperate situation.

Another key piece in this passivity is the weakness of the Sandinista unions, a product of their confusion with the party in the past and the real weakness of the economy's formal sector today. The obviously partial and strictly economic character of unions' current demands also contribute to passivity. Perhaps last, but certainly not least, the current ideological confusion that Sandinismo is passing through fully reinforces it.

And Everybody Else?

The Liberals, the main potential beneficiary of the Sandinistas' problems, are not in much better shape. They are riddled with internal contradictions, both in their ideas and in their organizations. But at least today's Liberal factions have the advantage of never having been in power. It is actually a dual advantage: as parties, they are not directly tainted by Somoza's evils, but they are heirs to the grass is greener memories of development that accrue to his and previous Liberal governments. In the absence of any debate about government programs and social projects, this could earn them the vote that the indifferent masses usually grant to debuting candidates. Assuming they will apply the rules of good political chicanery, the Liberals, sensing victory, will have no interest whatever in promoting substantial debates about future projects for society in the upcoming pre electoral year.

The sector loyal to the Chamorro administration, although it represents no political idea recognizable as such, is interested in debating ideas and programs, even if only to please its main support: the international financial community. It also wants debates so it can try to project the image of an efficient technocracy. This helps explain the administration's effort a few months ago to put together a five year economic program, with the help of a group of government technicians. This project had the varnish of a propaganda operation, obviously so the international community would buy it, but it also enjoyed the participation of different groups from the agricultural sector, the focal point of any economic take off. The demands that agricultural producers organized in both UPANIC and UNAG voiced, as well as the silent ones of the poor farmers who are not represented by any organization, echo the government technicians' critique of the current economic policy. They all characterized it as indifferent and riddled with hidden privileges, especially in credits, incentives, technology and property ownership.

An Opportunity for Change

In its new governmental role, the National Assembly should test the new constitutional reforms to learn about these issues and exercise its right to legislate economic affairs as well as those related to international treaties and other agreements. Many laws are not retroactive, but Constitutional law is, as are the reforms made to them. It will thus fall to the Assembly to review what was agreed to with the international financing institutions to assure that it benefits the national interest.
If this happens, we will be facing an opportunity for a novel democratic initiative. In addition to righting the economy's course, such an initiative could help pull the current, though not yet official, electoral campaign up from its low level in which it is already showing that it could easily get stuck.

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