From One Crossroads to Another

The crossroads reached when Alemán lost his immunity was followed by another created with the budget veto. While the alliances that characterized last year are adjusting and readjusting along the way, shortsightedness and lack of self-criticism are still producing blind spots when it comes to choosing the best road.

Nitlápan-Envío team

Though Nicaragua’s grave structural problems have not shifted one iota, and its leadership class has offered no new faces or speeches, much less ideas, the country’s panorama has changed some over the past two months. The stripping of former President Arnoldo Alemán’s immunity on December 12 and his subsequent arrest and conviction ten days later on several corruption counts pending appeal, not to mention his ensuing absence from the political scene, have had an impact that will not fade soon from the collective memory. More importantly, this chain of events began to spark political realignments and alterations in what had become a routine correlation of forces. Then, just after unexpectedly finding ourselves past that crossroads, we were suddenly presented with another.

Achievement of many celebrated by none

The stripping of the immunity with which Arnoldo Alemán, as an unelected lifetime member of Nicaragua’s National Assembly, shielded himself from accusations of corruption was unquestionably a mega-event, both politically and symbolically. The media gets a lot of the credit, because of their sustained campaign and bold, professional investigation.
Certain public officials also made a contribution, starting with Mónica Baltodano (Sandinista), who as a Managua councilwoman pioneered Alemán’s unmasking back when he was the capital’s mayor, and Comptroller General Agustín Jarquín (Social Christian), who took up the task once Alemán reached the presidency. The list reaches all the way up to President Bolaños, who gave the country an early Christmas present in the form of the “exemplary punishment” needed to begin to rebuild its moral standing and its credibility with the international community.

The population also deserves some credit, because its increasing awareness that corruption impoverishes virtually everybody and enriches only a few created a climate in which it became possible to strike a blow at the culture of impunity.

Those who legally and institutionally consummated the removal of Alemán’s immunity-impunity, however, were 47 National Assembly legislators, themselves protected by the same parliamentary shield. The alliances made and the deals cut to assure that the 38 Sandinista bench members would add their votes to the 8 from the pro-Bolaños Blue & White bench were as enervating as the stratagems calculated to wring the pivotal 47th vote from the pro-Liberal bloc. In the end, that all-important vote came from an alternate legislator from the Christian Way party, who was filling in that day as the representative in question had been temporarily suspended due to her poor attendance record. The process, which had initially nourished a rebirth of ethics and a desire for justice, ended up in the worst kind of wheeling and dealing. This so tarnished the outcome that the citizenry did not feel up to massively or festively celebrating. Exhausted, most contented themselves with deep sighs of relief and jocular remarks in their homes and offices.

One more mockery
in a sea of skepticism

With the traumatic hunt for votes over, Nicaraguans turned more joyously to their Christmas preparations, but joy turned to disillusion upon learning that Alemán was only sentenced to house arrest. This means in practice that he lives in a separate section of his own hacienda, amid his accustomed comforts, with a special police guard contingent on the state payroll. The disillusionment mounted when the judge justified this privilege on human rights grounds—he needs to bathe sitting down because of a prosthetic in his leg—and later turned to cynicism when, to limit his privilege, she ruled that he could only spend two hours per day at his pool.

Many viewed this acquiescence as a cruel mockery, lacking any legal basis. Daniel Ortega, however, justified it with this string of platitudes: “We Sandinistas have always said that we must be implacable in combat and generous in victory, and not try to make firewood of a fallen tree.” Bolaños, for his part, avoided comment.

The decision, which some are convinced is the result of a Bolaños-Ortega agreement, only deepened a demoralizing sense of resignation that the anti-corruption fight will probably go no further. The release from prison of all but one of those convicted in the Channel 6 case; shelved petitions to strip the immunity of other accused parliamentarians; silence about still other corruption charges already on the docket and increasingly ambiguous declarations about the fraudulent bank collapses several years ago all fueled the skepticism. Many assume that the corruption revealed was merely the tip of an iceberg whose underside will never surface.

The general message is that the fight will go no further because the country “won’t be able to take it.” And that, as became clear over the course of this last year, is because its entire leadership class, both political and economic, is so riddled with corruption that going after all those in high places who have had their hand in the till risks collapsing the country.

Attorney General Francisco Fiallos, however, seems not to have gotten that message. Responding to the question of whether former President Alemán’s imprisonment “crowns” his office’s anti-corruption fight, he declared, “Itr culminates a stage for us as an institution and for the country, in which we are opening an historic furrow, radically changing the State-booty conception. But our judicial, political and cultural effort is not over yet.”

Politically dead but not buried?

Those who know the Constitutionalist Liberal Party (PLC) structures from within continue to claim that their “maximum leader” is still directing operations from his hacienda-prison, still making all the decisions that his hard-line followers announce each day. Although the judge forbade Alemán any telephone or electronic communication and put controls on the use of cellular phones on the premises, including those belonging to the continual visitors and family members, no one believes that Alemán is just resting in his hammock oblivious to the news, as his wife claims. He is surely making use of all means of communication to direct the PLC from his confinement.

Such long-distance command aside, it is impossible right now to imagine him seeking reelection in 2005. And it is nearly impossible to imagine him even returning to the political stage after all that has transpired, even if he wins his appeal or is pardoned in one of those surrealistic moments of Nicaraguan politics or jurisprudence.

On the topic of surrealistic jurisprudence, the Central American Court of Justice agreed by a 4-2 vote (both Nicaraguan justices were opposed) to hear a suit Alemán filed against the Nicaraguan state and President Bolaños, claiming he was tried in conscious violation of his immunity as a Central American parliamentarian. The court promptly issued a resolution establishing that Nicaragua must “suspend the personal restrictions” preventing the “performance of his functions as a representative of the Central American Parliament.”
This apparently means that Alemán must be allowed to travel to PARLACEN headquarters in Guatemala and participate in its sessions, preserving his immunity. But the resolution is contradictory, because it also establishes that this must be done “without jeopardizing the judges’ continuation of the trials instituted against him,” which would presuppose that he does not have immunity. Furthermore, Alemán was convicted of money laundering, which in Nicaraguan legislation is not subject to release from custody or pardon—nor, it should be added, is house arrest.

Is Nicaragua bound by the Central American Court’s resolution or not? Will this resolution be the “passport to exile” that Alemán snubbed when he still believed his immunity would see him through? Will it provide a judicial “solution” to the political problem of Alemán interfering with the unification of Liberalism? Will this man who would be king take exile in Guatemala to plot his triumphal return?
Whatever his future holds, Alemán’s immediate well being is still an issue for his followers in negotiations with the Bolaños camp. For example, with Alemán’s political plug effectively pulled as far as the United States is concerned, Liberal unification under the PLC banner has become the next US political priority, which gives the pro-Alemán majority within the party a new bargaining chip for negotiating ways to palliate Alemán’s “exemplary punishment.” The decision to let him serve his sentence eating, drinking and sleeping peacefully within the four walls of his own luxurious house was only the first such palliative.

A resounding failure

The tri-polarization—among pro-Alemán Liberals, pro-Bolaños Liberals and Sandinistas—of the political scene over the course of 2002 is tending to wind down, or perhaps just reaching a new accommodation under new terms. The crisis of “the two PLCs” is certainly moving toward some kind of conclusion. As a result, the Supreme Electoral Council—headed by Alemán and Ortega loyalists—will no longer have to negotiate a resolution of the delicate legal issue of which of the two existing PLC leadership structures actually represents the party. Procrastination paid off.

The PLC faction brought into the world by Vice President Rizo directly from the presidential office on June 23, 2002, never really jelled, which ultimately obliged Enrique Bolaños to dialogue with the Alemán wing: the original, and still majority PLC. It also obliged Rizo to travel all over the country to procure what he calls the “seamless” unification of the PLC... and surely his own presidential candidacy while he’s at it.

The party’s organizational structures are cut to Arnoldo Alemán’s image and likeness. But caudillismo depends not only on the existence of caudillos, or political bosses, but also on the population. After all, there is only a supply because there is a demand. Like machismo, caudillismo is a cultural problem.

A general demobilization

After seeing its caudillo leave the National Assembly on December 12 stripped of his immunity, the pro-Alemán PLC announced angrily and confidently that it would “rock the country” with massive protest demonstrations culminating in a huge march in Managua to demand their leader’s release. But the Liberal grassroots did not rally. The threat was as big a failure as the Bolaños-Rizo attempt to appropriate the party, and shrank the advantage that the pro-Alemán forces held over the Bolaños forces.
The demobilization of people on both the left and the right, is motivated by mistrust of politicians, the justified fear of a return to violence and, above all, the arduous, daily search to fill one’s stomach. Furthermore, the politicians do not participate in their lives, do not live in their poor neighborhoods, do not experience their needs, do not “waste their time” on them. And that, in turn, is because political leadership no longer emerges from base-level educational processes, which have always been slow and difficult, but rather from television cameras and comfortable offices where they produce cookie-cutter project proposals whose irrelevant results are utterly predictable.

A red alert and
upcoming elections

A lot of resentment has accumulated between the two Liberal wings in recent months as a consequence of the tug-of-war over Alemán’s immunity, but one bond unites both groups and is shared by all, starting with President Bolaños himself: anti-Sandinismo. That bedrock sentiment is currently taking the form of deep concern over the FSLN’s soaring popularity thanks to its adept handling of the anti-corruption struggle. Daniel Ortega even carved out a niche as an arbiter shaping the course of events when Bolaños had to ally with him to ensure that the 38 disciplined votes of the FSLN bench would vote against Alemán.
This worry is even shared by the US government, which is why it is putting so much pressure on the Liberals to unify. Some analysts predict that the FSLN’s days will be numbered if and when Bolaños no longer needs its votes.
The approach of the municipal elections in 2004 is accentuating the concern and will surely accelerate the unification of the two Liberal sectors and revive the anti-Sandinista coagulant. Eduardo Urcuyo, a leader of the Bolaños sector whose opposition to Sandinismo is not as visceral as that of other Liberals, warned that “the division of Liberalism is the Sandinista Front’s electoral oxygen.” And Bolaños himself predicted the PLC’s “resounding defeat” at the hands of the FSLN if it fails to surmount its leadership crisis and disunity. To deal with both problems, Bolaños’ Liberal sector is proposing a plebiscite to elect new leadership, without Alemán’s all-powerful appointing finger.

Many factors are at play in the Liberal “unification” process now underway. These include the maneuvering of various PLC leaders to become the party’s presidential candidate in 2005, assuming they will be running against perennial candidate and former President Daniel Ortega. His continual self-projection as the Sandinista candidate only accentuates the weight of anti-Sandinismo in both Washington and Nicaragua.

Would it be illusory to expect Alemán’s “political death” to introduce some national vision into the PLC and lengthen its shortsighted thinking? It would indeed be foolish to contemplate such a possibility within the FSLN, where everything seems more static and immovable.

A few votes with a lot of power

Since the stripping of Arnoldo Alemán’s immunity, his hard-core supporters have made proposals and counterproposals to Bolaños’ team on an almost daily basis. These proposals are consistently met with either silence or public rejection since they seem intended to maintain a sort of “Arnoldismo without Arnoldo.” Hard-core Alemán supporters view Bolaños as an oligarchic businessman who has surrounded himself with technocrats and business magnates linked to the Conservative Party, Bolaños’ own affiliation prior to becoming Alemán’s running mate in 1996. Alemán’s people want “areas of influence” in the government and are determined to break Bolaños’ alliance with the FSLN, convinced that it is guaranteeing Bolaños’ future in government, if not in power. They still have 45 National Assembly votes and since Bolaños failed in his attempt to control the party on whose ticket he won, he has the unattractive choice of constantly negotiating either those votes or the Sandinistas’ votes. The latter only give him 38, plus his own 8-vote Blue and White bench remains loyal, one short of a majority, so he must always contend with the rogue legislator or two looking to line their own pockets by offering to make or break a tie.

A strategic alliance
or an ephemeral one?

In December and January, the two Liberal sectors engaged in constant thrusts and parries, understandings and misunderstandings. Various items were on the negotiating agenda, including possibly the earlier charges of electoral crimes against Bolaños, which had seemingly been put on the back burner. In the January 9 elections for the National Assembly’s new board, the Alemán sector played its now routine all-or-nothing card. While that approach often works with third parties to keep Sandinistas off the board of the Caribbean coast’s autonomous governments, it failed utterly in this case. They got nothing. Slow to get the message, they played their hand the same way during elections for the presidents of the various legislative commissions, and again came up empty-handed.
Instead, the legislators on the Blue and White bench ratified what they called their “strategic alliance” with their Sandinista colleagues to limit the influence and actions of the PLC bench. This decision strongly suggests that the correlation of forces forged to end Alemán’s immunity will persist in the Assembly’s legislative work and its relations with the President for at least a few more months.

With that, the furious pro-Alemán forces announced that they were breaking with the government and repudiated the continuation of what they call the “Bolaños-Ortega co-government.” Unbowed, Bolaños declared to a Costa Rican newspaper that he perceived a “more open, more modern, more understanding and more democratic” current among the Sandinistas. He went so far as to include Daniel Ortega, suggesting that “he has to appear orthodox and demagogic in front of his base.”

The modified budget:
Another national crossroad

It was in that context, with the FSLN secure and well positioned, that the nation found itself at another crossroads, one whose warning signs had been visible for miles: the year-end legislative debate over the 2003 national budget bill. That debate produced yet another redistribution of the negotiating chips among the three poles of power.

The bill sent by the executive branch to the National Assembly in October 2002 contained a fiscal deficit ceiling that Bolaños’ economic Cabinet had already agreed on with the International Monetary Fund (IMF). Despite an indisputable lack of consultation with both the legislators and the country’s social sectors, it was the sine qua non for signing a three-year agreement with the IMF currently being called the Poverty Reduction and Growth Facility (PRGF) after nine months of negotiations. Failure to comply with that agreement would jeopardize US$1.2 billion in both liquid and project-tied aid already negotiated for that period as well as application of the Initiative for Highly Indebted Poor Countries (HIPC) aimed at pardoning up to 80% of the country’s foreign debt balance, currently approaching $6.4 billion.

In fact, the week after Nicaragua signed the PRGF with the IMF in Washington on December 4, the Paris Club’s member countries pardoned US$406 million in interest on Nicaragua’s foreign debt and pledged to cut another $174 million over the next three years as an effect of the signing.

The legislative representatives studied and debated the bill at the most heated and shortsighted moment imaginable: in the midst of the battle for the vote over Alemán’s immunity. On December 16, four days after that battle was resolved, the legislators approved substantial budget modifications without a single dissenting vote. The FSLN representatives had adeptly taken the lead in the changes, seeking to accredit themselves as “opposition” after having been so closely identified with Bolaños for months. For its part, the PLC bench wanted to stick it to Bolaños for what had happened to their boss, while the Blue and White bench let itself be dragged along, hoping to win the popular sympathy it lacked into the bargain.

Two crucial changes

The legislators made a number of changes to the budget, but only two of them fundamentally affected the agreement with the IMF. The first was to shift 340 million córdobas (just over US$23 million) from the amount earmarked for payment on the domestic debt to all kinds of social projects. The project that most caught public attention was a small and more than justified salary increase for teachers, nurses, police officers, soldiers and judges. The second was to dedicate 3.5% of the overall budget as direct transfers to the municipal governments, raising it from just over 1%. This was done partly by reassigning to the governments control over municipal projects valued at $43.8 million that were originally budgeted for implementation by the central government’s Institute of Municipal Promotion (INIFOM) and Emergency Social Investment Fund (FISE).

The first change implied exceeding the fiscal deficit established in the IMF agreement, not to mention violating the cardinal financial rule that payment of the domestic debt is “untouchable” by any means other than renegotiation. The second change also violated international law because the donations and loans for the INIFOM and FISE projects were the fruit of their negotiations with the World Bank, and were not subject to a unilateral decision to shift them to the local governments.

All the legislators understood this to a greater or lesser degree, but the Sandinistas and Alemán-Liberals seem to have banked on it forcing a crisis between the government and the IMF, giving them both a high-stakes bargaining chip with Bolaños in seeking a “solution.” The conflict triggered by these budget modifications in December 2002 and the President’s subsequent partial veto in January 2003 was thus calculated and inevitable. And as of the publication of this issue, no resolution was yet in sight.

A domestic debt that
must be renegotiated

In line with the free market economy in which we live, resolving the first problem would require that the banks either renegotiate the domestic debt or not collect on it; the government cannot simply not pay, no matter what the legislators decide. So while their strategy was a positive political success in spotlighting the debt problem and the need to renegotiate it, financially it was a non-starter. The initial slogan “Don’t pay the banks” quickly evolved into “Let’s find a way of financing the salary increases.”
Certain aspects of today’s unpayable and questionable domestic debt that were previously neither understood nor discussed by public opinion were laid bare. It was explained that the bulk of the debt was not only contracted with national banks at excessive interest rates, but also resulted from illicit actions committed by all previous three governments. These actions included a bond issue as indemnification for properties considered to have been confiscated unjustly—some of which were not so unjust—during the Sandinista government, particularly cases in which the US government was applying pressure. Then came the Chamorro government’s selling off of state holdings at bargain basement prices and discretionary granting of the property compensation bonds. The most recent was the bond issue during the Alemán administration to cover the deposits in the banks that collapsed due to fraudulent activities in an environment of widespread corruption.

The way has now been paved for renegotiating the domestic debt with bankers who are quite accustomed to “privatizing their earnings and socializing their losses.” The Director of Internal Revenue now acknowledges that the banks have not paid any profit tax since 1997 thanks to the Alemán government’s “legalized discretion.” He has announced that taxes will now be collected from them, even retroactively, in line with the findings of planned audits. Trading the payment of residual taxes for a restructuring of the domestic debt favorable to the country is a new tool available to the government, and would be one positive result of the conflict, if it is indeed used.

The conflict with the
municipal governments

Underlying the other controversial budget modification is the issue of who will channel the direct transfers to the municipal governments, who will get the resources and who will implement the municipal projects. Will it be the central government through INIFOM and FISE, or will the municipal mayor’s offices do it directly?
It is an essential issue because the debate necessarily centers on the government’s conception of and proposed strategy for the country’s development. The government has decided to redirect public spending, choosing priority zones and municipalities from the central level. The “clusters” strategy (see the following article) requires central government control of the resources to prevent their dispersion. The government believes that its development conception is not viable if the resources are directly—and of course equitably—turned over the municipal governments. Proper decentralization, however, should be complemented rather than replaced by the application of the clusters strategy, so that while some municipalities are prioritized, all of them receive resources.

The mayors were divided in the ensuing debate. Some defended the direct transfers and questioned FISE and INIFOM for their bloated bureaucracy, which makes projects more expensive and slower to implement than if they were in the hands of the municipal governments. Others prefer to stay with the centralized INIFOM projects because with only one year of their terms to go—2004 is municipal election year—they prefer the World Bank and the IDB as secure counterparts together with their secure resources. Any change would require renegotiating agreements, which means time—one of many resources they lack.

Decentralization
begins to be valued

The followers of both Alemán and Ortega have suddenly become passionate advocates of decentralization. Daniel Ortega went so far as to propose the disappearance of INIFOM and FISE, while hardcore Alemán supporters are speaking of a profound reform of both institutions.
Thinking in the shortsighted political terms so commonplace in Nicaragua, this “passion” could be explained by the upcoming municipal elections, in which the direct transfers could ensure electoral resources for both parties. Seen through a longer lens, however, it can be recognized that after many years of a centralist conception of economic development and politics, the FSLN has begun to understand the importance of local government and the strategic role municipal power can play in helping a party survive and then win national elections.

Experiences such as Brazil’s, in which the Left’s honest and participatory administration of local governments in both large and small cities reaped a lot of votes for Lula in the presidential election, have put the FSLN on track. Nonetheless, a party run in such a top-down and central way as the FSLN will have a hard time harvesting the benefits of municipal government if it does not democratize at the core. It has won numerous municipal elections in the past decade and some Sandinista mayors have seen the genuine value of—or in some cases need for—autonomous government management to deal with the local population’s problems honestly, democratically and evenhandedly. Most, however, differ very little from their PLC counterparts with respect to transparency and participation.

Unnecessary insolence

Throughout the last half of December and the first half of January, the presidency remained tight-lipped about the modifications that the legislators had made to the budget. The country functioned without an official budget during that time because President Bolaños neither approved the modifications nor vetoed them, an unprecedented situation that again revealed the government’s slow political metabolism. Finally, on January 16, a top-level IMF delegation arrived in Nicaragua, called a press conference and in what can only be called an insolent tone “ordered” that the executive branch’s original budget be approved. Whose idea was such an inappropriate and unfortunate appearance?
The form as much as the very act of interference rubbed everyone the wrong way. It also tipped the balance away from analysis and toward ideology. The entire Left lined up against the IMF, neoliberalism, the Free Trade Area of the Americas and imperialism, and the entire Right against populism, Sandinismo, Venezuela’s President Chávez... The majority of the population—the unemployed, those lucky enough to have work but in danger of being fired because of the fiscal adjustment and workers whose wages have been frozen since the nineties—lined up, passively, on the side of relieving their poverty a little.

A veto to negotiate

On January 21, after the media had artificially created excessive expectations, President Bolaños announced that he was partially vetoing the modified budget. He argued that the country had no income to finance the wage increases, was in no position not to comply with international agreements for municipal projects, and was flirting with disaster...

Rejecting or approving the veto immediately gave Alemán and Ortega supporters a gold chip with which to negotiate the PLC’s unification, retool alliances and reach new accommodations. Given the unsustainability of its economy, Nicaragua has no choice but to respect the IMF agreement, which should make the positions of the three political power groups more flexible, orient the negotiations toward consensus and permit alternatives to be found. It will also sharpen the wits of the most skillful of the government’s opponents.

At this new crossroads, the government once again needs backing that can only be expressed in the votes of legislators from either the PLC or FSLN benches. Since many of those legislators are shielded from corruption charges by their parliamentary immunity-impunity, it is to be expected that many or even all of the pending corruption cases will be negotiated. Will the agreements reach as far as Alemán? That is surely the aim of his hardcore backers: support the veto and the IMF agreement in exchange for his freedom.

Two extreme scenarios and
one intermediary solution

Following the legislators’ budget alterations, the IMF suspended the agreement it had signed with the Bolaños government in the first days of December. This meant that the disbursements of cash aid earmarked for payment on the foreign debt were also suspended, and as a consequence of that, Nicaragua fell into arrears. At the same time, discussion by the IMF board of a World Bank “soft” loan to Nicaragua—40 years to pay at 2% annual interest—to support the balance of payments was also suspended until the budget issue is cleared up.
There are two extreme scenarios for getting past the crossroads. Either Bolaños pulls together enough votes to accept the veto and the IMF deal is applied as agreed, or the legislators reject his veto and the IMF agreement is broken. There is a lot of ground between those two extremes, and it is ground on which almost anything can be negotiated. Even if no intermediate solution can be reached, however, neither of these two extreme scenarios would be as apocalyptic as their respective opponents predict.
The IMF agreement is not quite the devil’s own work. It could offer some improvements if the administration proves capable of managing the foreign aid flow with more order and less corruption. This year should be economically better than last—it could hardly be worse—because the agreement unfreezes already negotiated resources for improving the country’s infrastructure, particularly housing projects, which could revitalize the economy. Naturally, there will be no improvements if the war with Iraq shoots up international petroleum prices too much for too long, because that would radically affect our weakened economy.
On the other side of the argument, breaking the IMF agreement would not be the “tragedy” that Bolaños and his Cabinet are auguring. Nicaragua’s credibility and seriousness would evidently be harmed just as it was beginning to rebuild the reputation lost to Alemán’s hyper-corruption, but the country wouldn’t be “abandoned to its fate.” The IMF will never totally break with the Bolaños government, any more than it did with Violeta Chamorro’s administration in 1995 for failing to comply with the agreement in effect then. The IMF knows that Bolaños fully supports its policies and has a total vote of confidence from the United States and the rest of the international community. It would not cut off his government’s lifeline at such a critical moment.

Nicaragua needs to be
self-critical as a nation

At crossroads such as these, from which we seem never really to escape, it is increasingly incumbent upon us to be self-critical as a nation. Many of the problems underlying the budget controversy are in fact the result of our own actions, or at best of our tolerance of the actions of some, rather than international pressure.
Blaming everything on international pressure and shielding ourselves behind a shrill anti-IMF rhetoric is always tempting, but it keeps us from analyzing the nation’s crucial problems more honestly and realistically, with less ideology and polarization. It is certainly true that the IMF pressures and imposes here and in the rest of the world and there is growing consensus that its imposed policies here and elsewhere are a failure. There is also no argument that the ultimatum issued by the IMF officials in their press conference was an outrageous affront.

It is even true that the IMF shares much of the responsibility for the national problematic by imposing such a severe fiscal adjustment on the Bolaños government as a condition for signing the three-year accord. But how many of the politicians who rage about that adjustment have hands unsullied by the various piñatas, the bank collapses caused by bad and corrupted debts and all the other institutionalized and free-lance acts of corruption that contributed to such a huge debt? Those self-serving, shortsighted activities were not imposed from outside; they are homegrown national products for personal consumption.

Myopia: An endemic ill

The shortsighted vision that has dominated all our governments explains many of the accumulating problems that seem—and in fact are —unsolvable in the short run. The “solutions” that the politicians conjure up to bolster their own images are always quick fixes that never tackle the root of the problem and have no vision of the state, of the nation.

Starting this year, but mainly next year, Nicaragua must pay off the property indemnification bonds the Chamorro government issued. At that time, property was the pressing issue and the bonds were seen as the best way to “solve” it, but the decision to issue the bonds was made without sufficiently calculating, or perhaps even caring, what this was going to mean for the country 10 years later. According to the Central Bank president, half of the domestic debt is tied up in those property indemnification bonds.

When the country’s legislators changed the budget, they whittled down the mega-salaries of the top executive branch officials and some presidential spending lines. Whether they did so for fairness or revenge is an open question, but what requires no interpretation is their failure to touch their own mega-salaries or those of the rest of the top state bureaucracy bloated by a pact they endorsed. Then in Bolaños’ otherwise savvy pedagogical speech explaining how rejection of his veto would aggravate the national situation, he never mentioned his lifetime pension for his five-year term as Vice President (which he resigned a year early to run for President). These lapses by the country’s policymakers, both those who defend the IMF and those who attack it, are, quite simply, unconscionable.

On those rare occasions when the Bolaños government discusses the mega-salaries that in a few years will become mega-pensions, it claims that they are necessary to attract the most capable people and thus guarantee efficiency. But the only thing that such an inequitable salary structure has done is generate a tiny group of overpaid top officials and a raft of underpaid, resentful underlings who are directly responsible for the services provided to an even more underpaid population and who stand to lose their jobs when the government changes because there is no civil service protection. And this only serves to guarantee inefficiency and sloth and create justifiable aspirations that simply feed the populism of the caudillos. The money saved by cutting the mega-salaries of the ministers and their immediate subordinates should be used to improve the mini-salaries of those who take orders from them. It is the only way to ensure efficiency and quality in state services.
Myopia and self-serving behavior are seen across the political spectrum and in all branches of government; they do not characterize just one political pole. Nicaragua needs self-criticism as much as an accident victim needs painful therapy to be able to stand up and walk again.

Ethics at the crossroads

Although a substantial reduction of the mega-salaries and redistribution of the savings among the lower-income state workers would not have a very large economic impact, the symbolic impact would be extraordinary and stimulating. It would increase the credibility of the government’s austerity program and its rhetoric about honesty. It would also beef up the government’s capacity to draw support for its fight against corruption, which has barely begun and upon which the country’s development depends. If this struggle is to continue with any seriousness, it will necessarily bring us to new crossroads. Choosing the ethical turn, however, is still a distant utopia.

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