Our Place in the World

As candidates queue up for next year’s municipal election race, the US Project for a New World moves inexorably forward, having already assigned Nicaragua its place.

Nitlápan-Envío team

As the planet’s military superpower, the United States has used the war against Iraq to show humanity the direction it wants to impose on all of the world’s recent and increasingly fast-paced changes. The Bush administration and all of its allies in the domination business have shown us not only their goals but also the arsenal of methods they are prepared to use to achieve them.
It is now up to each nation, each people, each group, even each individual, to get the message and act accordingly. This terrible learning process will surely leave a long trail of violence and pain in its wake, but perhaps—although no time soon—it could also boomerang into progressive transformations for the inhabitants of this global village into which our world has truly shrunk.

Morally and militarily supreme?

Although the Bush administration would never discard the covert operations that Nicaragua learned so much about in the eighties, they are unnecessary right now, so the Bush team has shown us the broad brushstrokes of its outrageously arrogant “Project for a New American Century.” Ultra-right US “intellectuals,” including figures well known to Nicaragua from the eighties such as Elliot Abrams and Jeanne Kirkpatrick, cooked up this plan following the collapse of the Soviet Union. It is a foreign policy agenda based on the conviction of US moral supremacy and the “shock and awe” guaranteed by its excessive military supremacy, defined both by its inventory of weapons and its merciless use of them. With these two simple ideas, the United States is prepared to conquer the world, destroying any competitor and preventing the emergence of any rival, whether economic, political or ideological. No obstacle will be allowed to stand in its way, be it Osama or the UN.

The September 11 tragedy brought this agenda out of the kitchen, and the war in Iraq showed the world what it is all about. As Tom Barry, one of the most astute analysts of this project, put it in an article that appeared in the November 2002 issue of envío, the days of the “good gringo” are over. For Barry, the project bears the characteristics of a “messianic mission,” inspired as it is by a perverse fundamentalism with a religious bent.

A reliable and consistent ally

Where do Nicaraguans see themselves in relation to the United States and what they know of its project? The bulk of the population simply depends on the approximately 350,000 Nicaraguans residing in the United States who send dollars home as often as they can to keep the family machinery functioning in a country where nothing works without “foreign cooperation.” A small group of corporate business leaders—some of them already “globalized”—are enthusiastic about the negotiations for a Central American Free Trade Agreement (CAFTA), dreaming of becoming the junior partners of the future big investors because they believe they can become more powerful that way than they ever could as independents in the US backyard. Then there is the significant but shrinking sector of the population still found singing the verse of the historic FSLN anthem that so got up Reagan’s nose in the eighties: “We fight against the Yankee, enemy of humanity!”
This ideological gamut would weigh heavily on any intent to design an independent foreign policy, but politicians design policies and the majority of Nicaragua’s politicians have already bought into the “Project,” either through conviction or impotence. President Enrique Bolaños and his government team are totally aligned with its premises and its logic. As early as his inaugural speech in January 2002, Bolaños announced the underpinnings of his foreign policy in the following way: “On the international stage, my government’s strategic mission will be to convert the country into a clear political ally—serious, reliable and consistent—of the world’s democratic nations in the fight against terrorism, drug trafficking and money laundering.” Soon afterward, the United States made very clear that it would define and direct these struggles anywhere it chose.

The war against Iraq:
A “perfect crime”

The US war against Iraq, which guaranteed the world’s largest oil consuming country total control of all oil from the world’s second largest producing country, was a “perfect crime” from the perspective of US interests and calculations. It was brief, with few military casualties, little or no resistance in Baghdad, abundant proof of Hussein’s despotism and fewer civilian victims than anticipated—at least nobody will ever be able to prove differently. Above all, it had widespread public support at home.

With that successfully concluded war now paving the way for new “preventive” ones all over the world, President Bolaños said he felt “proud and satisfied” that his government was one of the first in the world to join the United States in its military aggression. In doing so, he disdainfully ignored the opinion of 80% of the Nicaraguans polled in a telephone survey during the conflict, who expressed dissatisfaction with Bolaños’ alignment with the US option for war and stated that they opted for peace.

Praise, grumbling
and “another chance”

Nothing is proposed in the US project; everything is imposed, and woe be it to any dissidents. Chile and Mexico began paying very quickly for expressing their own foreign policy in the UN Security Council when they opposed the unilateral US declaration of war that broke the UN’s multilateral ground rules. Mexico is paying through US foot dragging in resolving pending migratory issues and Bush’s effrontery to President Fox. Chile is paying through delays in the signing of its free trade agreement with the United States. And both countries have received an array of “warnings.”
Once the war was over, Secretary of State Colin Powell publicly praised the seven Latin American countries (Colombia, Costa Rica, El Salvador, Honduras, Nicaragua, Panama and the Dominican Republic) that backed the attack on Iraq “for their courageous position on what is correct, what is necessary, what is just.” And he grumbled that the region’s other countries—Canada included—had “disappointed” his government by not supporting the war, openly criticizing them for allowing themselves to be pressured by their respective societies.

They will be given “another chance,” Powell said: they must convince themselves of what is correct, necessary and just for the new century and the future of Western civilization. And to “orient them” on how to rectify and amend their error, he presented to both the wayward and submissive countries the three priority fields of action for the US project in the continent today: help Colombia in its fight against drug terrorism, help Venezuela “surmount” its political instability and help Cuba attain democracy.

Rewards for the region
within CAFTA

Central America was rewarded for its adhesion to the war not only with praise, but also in practice. On April 11, President Bush himself deigned to receive the five regional Presidents who were in the United States to lobby about the current CAFTA negotiations. Following the encounter, chief US negotiator Robert B. Zoellick spoke of the enormous significance of having been received by President Bush “even in the midst of war” and expressed US determination to conclude the negotiations in 2003. He reported the decision to include Panama and the Dominican Republic in this free trade agreement and announced that there would be some flexibility in the negotiations, though he failed to reveal the extent of this “reward.”
In his speech, Zoellick also declared that “as a global trading nation,” the United States plans to establish free trade agreements with countries near and far, including developing and developed countries from Africa, Asia and Latin America, as well as Australia. He defined these trade agreements as essential pieces in the American strategy for this new century.

Bolaños in the vanguard

Although El Salvador’s ARENA is the political party whose socioeconomic leadership role best meshes with the US geo-strategy, the United States seems to have chosen Enrique Bolaños for the mission of pushing along and strengthening Central American integration. At least that is how he behaves. Bolaños performed the role of regional leader to perfection in the Washington meetings, receiving slaps on the back, support and positive responses to his lobbying efforts. His successes included getting a fourth extension of the Temporary Protection Status that will allow some 85,000 Hondurans and 5,000 Nicaraguans who migrated to the United States between December 30, 1998 and July 5, 1999 as a result of Hurricane Mitch to continue living and working there for another 18 months without legal problems.

In the meeting with Bush, Bolaños was the only Central American President to address as a priority one of the touchiest issues of the free trade agreement: the defense of protectionist principles for the region’s agricultural sector. “We are going to take particular care to defend the weakest part of our economy, the agricultural part,” Bolaños explained with satisfaction upon his return to Managua.

“We want to help the poor”

History has shown that although vanguards lead struggles, they do not necessarily win them, and following them does not necessarily get you what you are seeking. Protection of Central American agriculture is linked to the reduction of US agricultural subsidies, and Zoellick made it quite clear that the United States will not reduce subsidies to its growers unless the European Union does likewise. Though he acknowledged that agricultural is the heart of Central America’s economies and that a huge number of poor people work in this sector, he self-servingly twisted the argument: “As President Bush emphasized, the purpose of this treaty is not just trade. It is to try to help poor people and workers better their lives, so we must do it in a way that helps both sides. Now, the other point is that…if you are not a farmer, it helps you to actually have lower price food…” which will obviously be exported by the United States to Central America.

No more armies?

As a “clear, serious, reliable and consistent ally” of the United States, Bolaños is trying to rise to the regional leadership task conferred upon him at a moment in which his national leadership is eroding as his fight against corruption dwindles into nothingness and the economy shows no signs of recovery. Could it be any other way in a country with a political culture so based on corruption and such a fragile economy?
Bolaños’ regional leadership must deal with various issues, including the military. In the Central American version of its grand “Project,” the United States is redefining the role of the region’s armies, historically the countries’ most solid institutions thanks largely to US support. Now, however, the United States is promoting regional disarmament, and Bolaños is once again acting as the vanguard.

The ultimate goal seems to be to strengthen the national police forces so that they will be capable of fighting terrorism and drug trafficking, not to mention trafficking in emigrants and passports. If disarming the armies is the first step, the final one will be to dissolve them into the police, since they will no longer have a mission once there is no national sovereignty to defend. By that time, what are now Central American nations (some more so than others) will be only places for free trade governed by reliable allies. It is intrinsic to the project that the US government will be the only sovereign entity on the planet.
What sovereignty remains even today? Never before has Central America been so dependent on the United States. Three quarters of its exports go to the US market duty free under preferential agreements that can expire or be changed. A seventh of the region’s population lives and works in the United States and from there sustains the economies of their countries of origin with the dollars sent home to relatives. In four of the isthmus’ five countries, these remittances are the main source of hard currency. According to the Inter-American Bank, Nicaraguans sent down US$759 million and Hondurans $770 million last year. Salvadorans sent far more; in fact, El Salvador is the region’s first country so far to formally dollarize its economy. The businesses leaders in the isthmus who survived the early stages of “free trade” now lean toward economic annexation, while the governors of each country are increasingly inclined to cave in to the power of the United States. And of course the governed themselves are increasingly influenced by the “cultural” products disseminated by the US mass media and beamed into the region’s middle-class homes via satellite TV.

Bolaños’ legacy:
Infrastructure and finances

Bolaños did not bring home the bacon only from Washington for his prompt and consistent support for the war against Iraq. Days earlier in Brussels he got the green light from the World Bank and Inter-American Development Bank for a US$300 million highway construction loan. His target is US$500 million so that by the end of his term in office he can bequeath the country 1,200 km of new roadways, a project closely linked to his development strategy. That strategy, to be discussed publicly at the end of the year, once everything is locked in place, is centered on “clusters” (see the January-February 2003 issue of envío), a scheme in turn linked to the free trade agreement with the United States and Plan Puebla Panama.

The new road infrastructure, which Nicaragua desperately needs, and healthy public financing are the two prongs of the socioeconomic legacy that Bolaños wants to bequeath the country at the end of his mandate, while his political legacy would be to disentangle the state institutions from the Ortega-Alemán pact. Of the three, getting money for the highways is the easy part. While Bolaños continues to insist on separating the judicial and electoral branches from the interests of the FSLN and PLC caudillos to which they now overtly respond, the legislators from both those parties still appear to be putting the pact before institutionality.

The domestic debt problem is also complex. During his trip to Washington, Bolaños sought financial support from the US government to change the domestic debt into foreign debt—so far without success. There will be no cleaning up of national public finances unless the government resolves the problem of the domestic debt, which is strangling the economy. This problem is one of the Bolaños government’s priorities, but a major reason for its complexity is the fact that the government is so highly influenced by leading bankers, who are in turn the debt’s main creditors. Bolaños is hoping that the US government will provide a solution as a special dividend for his leadership and clear alignment with the “Project for the New Century.”

The domestic debt
is heavy baggage

The domestic debt is largely the product of the government’s issuance of Negotiable Investment Certificates (CENIs), which started out as a healthy policy and ended up becoming one of the most scandalous deals that Nicaragua has ever seen. During the Chamorro administration, the Central Bank came up with the idea of selling these state-issued bonds to absorb the economy’s excess córdobas in circulation and thus reestablish a monetary balance after the years of rampant hyperinflation. Over time, the practice degenerated and the CENIs started being traded on the market in this pitifully poor country at the stratospheric interest rate of 20%, when equivalent bonds in the United States were generating interest rates of 1-3%.
The banks bought up most of these plum bonds, which not only have a higher interest rate than they could find anywhere else in the world, but also short maturity periods for recovering both the principal and the juicy interest from the Central Bank. Nicaragua’s onerous domestic debt thus consists mainly of these CENIs and the indemnification bonds issued to compensate owners of properties confiscated in the eighties, whose maturity dates start coming due next year.

The fiscal law came,
it saw and it conquered

The Fiscal Equity Law, passed at the end of April, is a major part of the project to straighten out public finances. A technical team of six experts studied Nicaragua’s extremely unjust tax system and discussed technical proposals to transform it for four months before presenting its findings to the government (see envío April 2003), which accepted many of its proposals and submitted a bill to the National Assembly tagged for urgent treatment. Although that tag allowed 90 days to consult all sectors and achieve social consensus, the bill was unexpectedly pushed through in less than 24 hours, with no consultation or even parliamentary debate. It will go into effect as is on July 1.
It was approved with 47 votes, the bare minimum required to pass an ordinary law: the Sandinista bench’s 38 and the other 9 from the Blue and White bench of Liberals loyal to Bolaños plus the Christian Way party. The Sandinistas had publicly conditioned their vote, with no shortage of rhetoric, on the salary increase for nurses, teachers and police officers they had earlier tried to tack on to the budget bill, and on a budget increase for various state institutions. Once granted, they defended the law without further hesitation. FSLN general secretary Daniel Ortega went so far as to claim, rather inaccurately, that it represented a “victory over the International Monetary Fund.”
The Liberals loyal to Arnoldo Alemán walked out of the plenary session without voting when their request for a week of consultations and debates was denied. They rejected the law as “demagogic, pharisaic and despicable,” but the arguments buttressing that unequivocal condemnation were weak and confusing. They reserved their greatest wrath for the “immoral marriage” between Bolaños and Ortega that spawned such quick passage.

The good, the bad and the ugly

According to fiscal law expert Julio Francisco Báez, one of the technical committee members, this law is “not just another patch job.” As proposed by the committee and largely accepted by the government, it aims to be “comprehensive,” covering not just taxes but the whole fiscal package (income and expenditures, taxes and budget). The government also plans to announce three complementary and transcendental laws over the next six months: a budget regimen law, a fiscal responsibility law and a tax code. Báez also sees the law as positive because it offers various fiscal incentives to encourage export growth and tends to be progressive rather than regressive (there are no new indirect taxes, while new direct taxes will be levied on the consumption of over 800 luxury products, bank deposit interest and business assets). Another positive aspect is that it raises the tax-exempt salary threshold for workers, eliminates a series of discretionary and/or unjustifiable exonerations—though not yet all—and establishes no new taxes for the poorest sectors, who already pay more than their fair share, even eliminating previously-existing taxes on products in the 53-item basic market basket.

Among the law’s risks, says Báez, are possible anomalies that could creep into the four regulations and five ministerial agreements that must be issued to clarify the law and make it fully applicable. The business leaders represented in the Supreme Council of Private Enterprise (COSEP) are leaning on the government to skew the regulations in their favor. They are particularly unhappy with the 1% income tax to be charged on the assets of some two thousand big businesses accustomed to declaring losses and thus paying no taxes. They predict that the new tax law will trigger greater recession and the generalized bankruptcy of these businesses. This is COSEP’s first important run-in with Bolaños, himself a COSEP president in the early eighties and now the businessman-President they have backed so strongly.

All privileges to the bankers

The most negative aspects Báez sees is that the financial sector continues to be favored, thus calling into question the equity suggested by the law’s title. In the new taxes on assets established for both businesses and banks, for example, companies pay 1% while banks pay only 0.6%.

Furthermore, to hold that 0.6% tax on bank assets as a ceiling, the new law repealed the 90-day-old Extraordinary Income Law of the National Private Banking System, which sought equity by making banks pay taxes on their profits. In addition, and this is both the greatest privilege and the most serious inequity imaginable, the new law does not tax the outrageous interest earned by the banks’ security holdings, headed by the CENIs. It is nothing short of scandalous that the law has for the first time ever slapped a 10% tax on the interest on bank savings deposits over $5,000 or its córdoba equivalent (which admittedly affects only 3% of all savings account holders) but does not tax the interests earned by bondholders.

The vicious circle that this creates around the domestic debt issue is the worst aspect of this scandal. The state has to pay its domestic debt with the banks, but the banks owe millions of dollars to the state because they have not paid income tax over the past seven years. Yet now, when the state has an opportunity to make the banks pay taxes on the bond interest, it is charging them nothing. They thus come out ahead in two ways—tax evasion on part of their income and tax exoneration on another part—while the state and the honest taxpayers are left holding the bag.

As Báez summed it up for envío: “Nicaragua owes those who owe Nicaragua. The tax legislation establishes that a compensation system must be applied to those who owe the state and are in turn owed by the state. If Nicaragua has a domestic debt with the banks that bought CENIs and the banks owe Nicaragua because they did not pay their taxes, the compensation must be applied by law. And if the banks cannot pay immediately, agreements and payment arrangements should be made. But none of this has happened, nor will it. This tax evasion by the banks, which are legally registered entities that have defrauded the fiscal system, is the most colossal evasion that has taken place in Nicaragua’s tax history.”
And rather than being penalized, the banks have been rewarded with a new privilege. Society is beginning to understand that the business of cleaning up public finances has a very limited reach, just as it has seen in the fight against corruption, which began and ended with former President Arnoldo Alemán and his partner in crime Byron Jerez.

Electoral calculations
are never far behind

The FSLN legislators’ unmitigated support for the Fiscal Equity Law is partly explained by their party’s tendency to collaborate with the government of the day. So it was during the Chamorro administration, the Alemán administration and now the Bolaños administration. But it has even more to do with the electoral calculations of Ortega and his followers.

The new tax law, Ortega’s comments to the contrary notwithstanding, generally meets the IMF’s requirements because the resulting tax collection will shrink Nicaragua’s enormous fiscal deficit down to IMF parameters and thus guarantee a prompt write-off of 80% of the country’s foreign debt within the initiative for highly indebted poor countries (HIPC). And that goal—which Alemán precipitously celebrated in the streets in 1999 just before his blatant corruption pulled it unexpectedly from his grasp—is one of the very few genuinely shared by the IMF, the Bolaños government and Ortega.

The latter’s interest in slashing the debt, and thus in the new tax law that will indirectly guarantee it, is inspired mainly by his conviction that he will be voted back into office in 2006; he wants the debt problem resolved and the powerful financial sector at his side the day he takes over again. Both of those desires are of immense strategic importance. Ortega’s prediction that he will be reelected on this, his fourth consecutive try is based on Bolaños’ plunging popularity in the polls and slim chance of producing economic improvements palpable to the majority of voters by the end of his term, the international climate of anti-American rage and above all the split within the PLC caused by Arnoldo Alemán’s trial and conviction.

Caution: Caudillos at work

Who will inherit Enrique Bolaños’ “legacy” when he leaves the presidency? Who will benefit from the improved infrastructure and healthy financial situation? Although the presidential elections are not until November 2006, the municipal elections are only a year and a half off, and they are increasingly gaining ground in the political debate. The FSLN and the PLC, the parties to the exclusionary pact that pushed virtually everybody else out of the race, are already busy designing strategies and launching candidates, especially for the big race in Managua, whose pulse will determine how strong the two caudillos—Ortega free in the streets and Alemán imprisoned on his hacienda—still are.

These two men, whose power within their respective parties is virtually unchallenged, will handpick their party’s candidates, starting with the capital. Ortega has already signed off on his party’s mayoral ticket there: his loyal communications expert Dionisio Marenco and three-time boxing champion Alexis Argüello. At least the FSLN’s strategic design for the other mayoral races is also public knowledge: the candidate in the municipalities that the FSLN traditionally wins will be a party militant while in those that it does not, space will be given to candidates from the Convergence, the alliance with the FSLN created for the 1996 elections.
The Alemán wing of the PLC, which in March declared itself “in opposition” to the government it nominally heads so it can wash its hands of any responsibility for Bolaños’ failures in the upcoming campaign, is more indecisive. It is toying with an array of names for its Managua mayoral candidate, although in the end all will depend on the orientations communicated by Alemán from his “prison’s” poolside hammock.

Politicians on all sides are turning to the task of the municipal elections with notable determination and passion, and not for nothing. The only “cluster” that is really up and running and offers guaranteed profit in this ever less sovereign and more dependent Nicaragua is the political one.

Will Bolaños
create his own party?

Enrique Bolaños is up against the greatest challenge. Getting Alemán convicted, the only effort that bore fruit in his fight against corruption, bringing him kudos on the international stage, has alienated him from the party on whose presidential ticket he ran.

Bolaños has spent months trying to win over the PLC structure, its national, departmental and district leaders and its legislators to his government team with different initiatives, but to no avail. Every dialogue ends with the same Supreme Condition: free Alemán, wiping the slate clean for their maximum leader.

Were he to cave in to that demand, Bolaños would lose all the political capital he has gained, nationally and internationally. Furthermore, he, his ministers and advisers know that the only way to hang onto the “legacy” is to win first the municipal elections and then the presidential ones. Their attempts with the PLC frustrated, Bolaños and his followers decided in late April to create a new party from their position in power. They believe it can beat the FSLN by breaking the PLC’s stranglehold on the anti-Sandinista vote and in the bargain they anticipate demonstrating that Alemán’s corrupt caudillo leadership sank his party for good in less time than those same qualities took to create it.

The only person at least nominally in the Bolaños camp who disagrees with this course of action is Vice President José Rizo, who has been straddling the worsening split within his party for months. Just before his colleagues in government launched their efforts to form a new Liberal party, the pro-Alemán wing of the PLC tried to pull Rizo over to its side, publicly accusing Bolaños and his team of marginalizing and humiliating the Vice President. Rizo denied the accusation, but also refused to join the efforts to create a new party, pledging instead to continue leading a unifying and democratizing tendency within the PLC. To this end, Rizo is insistently calling for a party plebiscite, consultation or election to select new PLC authorities in all of the country’s municipalities, based on lists of candidates presented by all Liberal tendencies. His stated goal is to create a “new” PLC in which all tendencies, Alemán’s included, will have representative space.

Government Minister Eduardo Urcuyo, one of the leaders of the PLC’s pro-Bolaños wing, explained what led them to decide on the risky course of forming a new party: “We’re tired of Vice President Rizo blackmailing us about Liberal unity. He still believes that the solution to the party split lies in the pro-Alemán PLC, even though it’s shouldering the cost of the corruption. Reality has shown us that the Liberal family cannot reunite due to the ‘Alemán factor.’ We Liberals sit down together for hours to talk and everything goes well until the Alemán factor comes up and things start heating up. We can talk about the future of Liberalism, about supporting the Bolaños government, but when the Alemán factor is placed on the table, it’s as if everybody’s blood gets poisoned. There is basic consensus on everything, except the Alemán issue.

“There is consensus that we have to change Liberalism, to make a different party, to offer the citizenry something different. Where there is no consensus is on the Alemán issue. For his backers, everything depends on Alemán’s freedom. We know that we must offer a different Liberalism, that people want to hear that the country is not going to the dogs thanks to six corrupt leaders and forty obstinate legislators in the National Assembly.”
Doing the paperwork to create this new party—or coalition of parties under a new Liberal banner—will be the easy part. The challenges are getting this new political formation to shake off the historic caudillo political style and attract both anti-Sandinista votes and those skeptics who are neither pro- nor anti-Sandinista. While the latter make up the majority of the Nicaraguan electorate, their centuries-long formation in caudillo politics tends to kick in as soon as they see a ballot box.

Our place in the world?

As this small-scale and mediocre national political debate, devoid of principles and focused only on the prize, heats up, the great “US Project for the New Century” grinds on like the juggernaut it is, crushing everything in its path and indicating everybody’s respective place in the world. Will we resign ourselves passively, apathetically, following the path of least resistance in thought and action to this dark and narrow place?

Central America’s attempts to diversify its dependence

On April 30, Nicaragua’s Foreign Minister Norman Caldera was in Panama for a meeting with the Council of European Union (EU) Foreign Ministers to initiate talks on a European-Central American Free Trade Agreement. While there, he also discussed Nicaragua’s participation in the Taiwan-Central America Economic Development Fund.

Meanwhile, during his trip to Belgium in early April, President Bolaños told EU foreign policy and security representative Javier Solana that “we in Central America are anxious for an economic trade agreement with Europe similar to the one we’re negotiating with the United States.” For his part, Solana added his voice to the chorus backing Bolaños as a regional leader. “We are very satisfied with the work you have done in your country,” said Solana, “particularly in the fight against corruption, which has had great successes at very difficult moments. Your work for regional integration, especially with Honduras, is also very positive and it can be said in all frankness that you are a leader of Central American regional integration.”

Pre-HIPC teasers for good behavior

On April 25, the government of the United States announced that it had pardoned another $30 million of Nicaragua’s bilateral debt with that country. The US government explained that the write-off is the result of the Bolaños government’s positive performance in dealing with the country’s disastrous public finances. This pardon means that Nicaragua is freed from service payments on its remaining $97.5 million debt with the United States for the next five years. The US Ambassador in Nicaragua stressed that if the government continues implementing the economic program agreed to with the IMF it would reach the “culmination point” within the HIPC initiative, thus allowing its bilateral creditors to significantly reduce its debt with them. The Fiscal Equity Law, approved at the end of April, was one of the main conditions that Nicaragua has to meet in order to reach that point.

Three weeks earlier, on April 2, Germany pardoned US$160 million of Nicaragua’s bilateral debt with it, and days later France and Spain followed suit by respectively pardoning US$40 million and $70 million of its debt with them. Nicaragua’s total foreign debt is still in the neighborhood of US$6 billion.

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