Nicaragua
Globalization and Development Seen from Below
In 1996-97, Rodgers, an English anthropologist,
lived in a poor Managua neighborhood to study poverty and violence.
He returned for a couple of months in February 2002,
to find that the barrio had been “globalized.”
Dennis Rodgers
Nicaragua cambia—Nicaragua’s changing—was President Arnoldo Alemán’s slogan during his five-year administration (January 1997-January 2002), and certainly, to a visitor such as myself who returned to Nicaragua in February 2002 after an almost five-year absence, much seemed to have changed. Managua, for example, almost appeared to be a different city from the one I had known in the mid-1990s. There was a multitude of new features including the new luxurious Metrocentro and Plaza Inter malls, new luxury hotels such as Metrocentro Intercontinental, the Princess hotel and the Holiday Inn, new consumer businesses such as Pharaoh’s Casino, McDonald’s, TGI Friday’s and the Hard Rock Café, as well as new infrastructure including the renovated international airport, the imposing Pellas building, and perhaps most noticeably, an improved network of high speed avenues and roundabouts crisscrossing the city. Further afield, Granada and León had been given facelifts, eco-tourism initiatives had developed on Mombacho volcano and along the Río San Juan, and San Juan del Sur had developed into a full-fledged seaside resort. Wherever I looked there seemed to be novelties, new businesses and developments, even a new consumer culture.
I initially interpreted these very visible transformations as signs of Nicaragua’s increasing globalization. Although this seemed somewhat surprising to me, considering the country’s long history of underdevelopment and seemingly chronic stagnation, I began to wonder whether these immediately observable changes might be harbingers of a more positive development take-off. It quickly became obvious, however, that most of these transformations were rather limited in scope, principally benefiting specific groups, namely the Nicaraguan elite and moneyed foreigners. The poor who made up over 90% of the country’s population certainly did not seem to frequent the new shops, hotels or restaurants, and even the new, supposedly public road network in Managua seemed to be mainly for the rich, above all linking the different spaces of their lives—the airport to the malls to the ministries to Las Colinas (Managua’s Beverly Hills) to businesses to Plaza España to El Crucero (host to Alemán’s sprawling hacienda)... They only incidentally benefited the rest of the city’s population.
Seen in this way, the important question about what I could observe was not so much whether Nicaragua had changed but to what extent anything had really changed for the poor. To answer this question, a different view of Nicaragua’s trajectory was required, one that is not seen from the Princess Hotel’s window or from the tinted windows of the multitude of luxuriously outfitted four-wheel-drive vehicle racing over the multi-lane inner city highways. Rather, it needed a perspective that can be qualified as the view from below, in other words from Nicaragua’s grassroots neighborhoods and villages.
This view is also that of anthropologists, who traditionally seek to describe the lived experience of social reality from the grassroots perspective. To attain it they commonly immerse themselves into a local community, conducting what is known as “participant observation.” This is what I had done in 1996-97, when I spent a year living in a poor neighborhood in Eastern Managua studying processes of poverty and violence. In February 2002, sponsored by the Crisis States Programme at the London School of Economics and Political Science, I had the opportunity to return to the same barrio for a month and a half, in order to see how things had evolved. Contrary to what might be thought, the picture that emerged from this second stay was not so much a story of stagnation or decline at the lower levels, but one of change and mutation, albeit in ways that I found surprising—as I suspect that the reader will as well.
Poverty kills hopeIn 1996-97, the barrio—which I shall rename Luis Fanor Hernández to protect its inhabitants’ privacy and security—was an obviously poor neighborhood, plagued by high unemployment rates, low incomes, bad infrastructure and social atomization and disintegration. According to a survey I conducted then, the combined unemployment and underemployment rate stood at over 70%, with open unemployment alone affecting almost 4%percent. There was little local economic enterprise apart from theft and delinquency, and few opportunities outside the barrio either, particularly for a labor force that tended to be relatively unskilled. Most of those who worked did so informally, and the average monthly household income tended to be about 700 córdobas (around US$85 at the time). The barrio infrastructure was in a bad state, with the mainly wooden houses falling apart and patched up as best they could be, public spaces converted into rubbish dumps, and roads and paths full of potholes.
Community organization in the neighborhood was virtually nonexistent, and there was little in the way of a social collectivity, as neighbors mistrusted each other, refusing to share anything or to take on obligations. In an interview in 1996, one of my informants, don Sergio, who had been a neighborhood organizer in the 1980s, described the situation this way: “Nobody does anything for anybody anymore, nobody cares if their neighbor is robbed, nobody does anything for the common good. There’s a lack of trust: you don’t know whether somebody will return your favors or won’t just steal your belongings when your back is turned. Poverty kills hope, today; it’s the law of the jungle here; we’re eating one another, as they say in the Bible…”
After a year studying the barrio, I had reached conclusions similar to don Sergio’s, and left Nicaragua in July 1997 imbued with a deep pessimism about the country’s future. Certainly—as observed from Europe—nothing in the intervening period seemed to indicate any likely improvement in the country’s predicament, so I expected the situation in the barrio to be the same or more likely worse when I returned in 2002. It therefore came as a great surprise when one of the first things I observed on returning was that a large proportion of households in the barrio seemed to display signs of a significantly improved economic condition.
Most visibly, almost 50% of what used to be a relatively uniform neighborhood of somewhat ramshackle, mainly wood housing had been very visibly ameliorated, with many houses now made of brick and concrete block, as well as having been expanded. Also in big contrast to five years previously, it was striking that a significant number of residents seemed to have better quality clothing, jewelry, and even designer sunglasses, while many households sported luxury commodities such as wide screen televisions, mega-wattage sound systems, and even Nintendo game consoles!
This economic betterment was clearly not universal, however, as many houses remained unchanged. It was very obviously the result of private rather than public initiative, as was starkly underlined by the fact that neither the neighborhood’s roads nor its drainage system had improved, public areas continued to be rubbish dumps and public lighting was still nonexistent. The private and partial nature of the households’ economic improvement was further underscored by the stark contrast between the “haves” and “have-nots” in material consumption terms as well as housing.
For all the unevenness, the changes were impressive and I immediately set about trying to find out what lay at their roots. Following several weeks of investigation, it became apparent firstly that these economic developments were relatively recent—no more than a couple of years old—and secondly that three distinct processes were at work: 1) increased remittances from abroad and some return migration, 2) a rise in taxi ownership, and 3) the development of local economic opportunity in the form of drug dealing. In different ways, and generally in different households, these three processes had provided capital with which to improve houses and buy consumer goods.
International migration and remittancesAn important factor contributing to the economic improvement of many barrio households compared to five years earlier was the increase in remittances sent by family members who had emigrated abroad. To a certain extent, this increase was related to the fact that migration abroad itself has increased tremendously in Nicaragua during the past five years. But another, perhaps more important, factor was that there also seemed to have been a distinct change in migrant behavior patterns during this period.
In a survey I did on migration in the Luis Fanor Hernández barrio in 1997, I found that 48% of households had at least one member abroad, but that only 46% of those emigrants sent back remittances. Although I was unable to resurvey the barrio when I returned in February 2002 due to lack of time, it was clear on the basis of some informal sampling and what a number of key informants told me that up to 60% of households now had at least one and frequently more than one member abroad and, more importantly, that 75-80% of migrants now sent remittances back in either cash or goods.
That the emigration levels had increased was not surprising, considering Nicaragua’s desperate economic predicament. The change in the remittance-related behavior patterns of migrants was more unexpected, however, and seemed to be linked to two factors. Firstly, the November 1997 Immigration and Naturalization Service (INS) amnesty for undocumented Nicaraguan migrants in the United States led to the legalization of some 180,000 illegal Nicaraguan migrants in the country—three times the expected number—who as a result could now travel back to Nicaragua without fear of being unable to return to the States, and in doing so inevitably found themselves becoming entangled in webs of kin obligations, and therefore pressured into sending money. Moreover, it seemed there had also been a widespread fear within the migrant community in the US that the INS was monitoring wire transfer companies such as Western Union, which likely inhibited a certain number of illegal migrants from sending back money.
A new migration styleSecondly, to a certain extent migration now seems to be less permanent than it was in the mid-eighties and nineties, with migrants often engaging in circular or “pendulum” migration, going for six months and then coming back for a while before leaving again. By the very nature of this circular migratory process, migrants maintain closer ties to those they left behind and return to their communities of origin more frequently bearing gifts and accumulated capital, inevitably increasing the household income level.
Having said this, circular migration in Luis Fanor Hernández seemed to involve migrants traveling to Guatemala and Costa Rica more than to the USA, and most migrants and would-be migrants to the latter still aimed to leave permanently. Overall, the USA remained the top destination for migration from the barrio, but an increasing number were choosing to go to other Central American countries. Interestingly, compared to 1996-97, Guatemala seemed to have supplanted Costa Rica in February-March 2002 as the second most important migrant destination after the USA.
At the same time, although overall migration seemed to be on the rise, there was also an emerging trend for a small but steady trickle of return migration, mainly from the United States. This trend seemed to be linked to a general perception that Nicaragua has improved as a place for the better-off to live.
This idea is probably linked to the urban reorganization of Managua, with its new network of high speed roads and traffic circles—rendering it no longer necessary to stop at traffic lights and risk being exposed to potential robbery attempts—and the various “gated communities” that have sprung up on the outskirts of the city, both of which mean that the rich are now less “exposed” to the “inherently dangerous” poor… Most return migrants I talked to in the barrio seemed to regret their return, however, probably because they had returned to the barrio rather than a “gated community” such as Altos Los Domingos. Nevertheless, several of the nicest—and most fortified—of the new houses in the barrio belonged to individuals or families who had returned after generally extended periods of time in the US (on average 10-12 years). These returnees tended to come back with substantial savings and often an imported vehicle as well.
A barrio of taxis ownersThe second major source of economic improvement in the barrio was car ownership. It rapidly became obvious on my return that there had been a staggering boom in car ownership compared to five years previously. While in 1996-97 there had been just five cars in the whole barrio, now there were over seventy. At the same time, however, this boom was characterized by the fact that almost all the cars in the barrio were being used as taxis.
According to my taxi driver informants, the barrio’s explosion in taxi ownership began in 2000, and was linked to a scheme that began towards the end of 1999 whereby entrepreneurs began importing second-hand cars, initially from Japan but now mainly from Taiwan and South Korea, and selling them in Nicaragua. These entrepreneurs—both Southeast Asian and Nicaraguan, often operating in partnership—obviously make a big profit, since the cars are said to be bought in Korea for about US$500, then shipped in batches of several hundred at a time from Korea to Corinto for another $500 per car, then retailed for between $2,600 and $5,500 in Nicaragua, depending on the make and its age. A 1993 Hyundai Elentra, for example, was selling for $3,600 in February 2002.
If buyers paid cash, they would get a 10% discount, but what was particularly attractive to buyers in poor neighborhoods is that they could buy their cars on credit, at an interest rate of about 2% a month, which is extremely low in a wider Nicaraguan context where it is not rare for moneylenders to charge 20% a month (banks, of course, will not lend to the poor). After paying an initial down payment of between $250 and $500 (the amount depended on the seller’s confidence in the buyer), buyers had to pay back a fixed sum daily for a year. In the case of the above-mentioned 1993 Hyundai Elentra, for example, the down payment was $400 and the daily quota was $11.34, which meant that the total paid for a car bought in this way was $4,540, an effective 25% mark-up for the credit facility.
The easiest way to ensure that one could pay the daily quota was of course to make the car “work” as a taxi, hence the high number of taxis in the Luis Fanor Hernández barrio. Converting a car into a taxi is a complicated process in Nicaragua, however. Managua taxis are organized in closed cooperatives, and it is very difficult to gain admittance. Often one must bribe the president of a taxi cooperative to be admitted, which is a pre-condition to obtaining a taxi license. But then to obtain a taxi license, it is generally necessary to bribe a number of government officials, such as the Managua municipal transport authorities, the inspectors who test the car’s gas emission levels, officials in the departmental property office who register the car, and sometimes even municipal councilors.
Not surprisingly, perhaps, a wholesale informal taxi license market had sprung up. Some individuals who owned a taxi license but not a taxi would rent out their identity to license-less car owners. Alternatively, license-less car owners would rent out their cars to car-less taxi license owners. More straightforwardly, one of the (self-attributed) privileges of Managua municipal councilors was that each had the right to ten taxi licenses a year to distribute as he or she saw fit, which generally meant to the highest bidder.
Often the licensed taxi owner did not actually drive the taxi, but rented it out to a “cadete” for 200 córdobas ($15) per shift. There were two shifts per day, plus the night shift, but cooperative regulations stated that a taxi could only be used for one shift a day, plus the night shift. There seemed to be a near universal reluctance to rent taxis out for the latter because drivers could not see the potholes and thus damaged the cars more frequently.
But with just one shift, a taxi paid for itself and provided a little extra, although it should be said that more often than not, most of this extra tended to go to car maintenance. In actual fact, buyers were betting on the promise of a hypothetical income of 150-200 córdobas a day once the car was paid off (the equivalent of about $260-350 a month). This was very high in a context where the average wage of those in the barrio who worked was around $110 a month. Nonetheless, continually rising gas prices and insurance premiums in the past five years unmatched by an ability to raise fares has cut into this advantage. In reality, things rarely seemed to work as planned, however, partly because the cars being imported were relatively old—generally 8-10 years old—and tended to break down relatively frequently, thereby requiring constant repairs after about a year and a half (on average, they had already clocked between 175,000-250,000 kilometers before being brought over to Nicaragua). Some owners managed to extend the profitable life of their taxis by driving carefully, while others sold theirs for spare parts once they broke down terminally.
A drug economyThe third and undoubtedly most important process contributing to the economic improvement in the barrio, however, was drug dealing, although this activity was not necessarily new to the neighborhood. Marijuana was being sold in the neighborhood in 1996-97, but only by two individuals who grew it themselves (their main clients were the local gang members). By the time I returned, this small-scale trade had been completely superseded by a cocaine-based drug economy principally involving the sale of crack, better known in Nicaragua as la piedra—stone. (Cocaine is usually distributed either as a white powder, cocaine hydrochloride, or as chunky off-white nuggets that are a combination of cocaine and sodium bicarbonate boiled in water; crack is much less expensive than cocaine powder and is frequently referred to as “the poor man’s cocaine”).
The barrio’s drug economy was highly organized, as a three-tiered pyramid. At the top of the pyramid was the “narco” – also known as “the kingpin” or “el poderoso” (“the powerful one”) – who brought cocaine into the neighborhood “by the kilo”, according to my informants. The narco only wholesaled his goods, principally to local pushers “púsheres”, who either re-sold the cocaine in smaller quantities or else “cooked” it into crack. In either case, however, they sold from their houses, mainly to a regular clientele that included “muleros”, the bottom rung of the drug-dealing pyramid. Muleros then sold crack in small doses to all-comers on the street corners.
In February 2002, the barrio’s drug pyramid directly involved about 30 individuals: one narco, nine púsheres, and nineteen muleros. All three tiers were occupied by people from the barrio, and interestingly, were all current or former gang members or were closely related to them. Sixteen of the nineteen muleros, for example, were gang members, and the other three had been gang members at one time. All the muleros were males, as was the narco, but two of the púsheres were women, albeit with a history of close connection to the neighborhood gang, principally as partners of former members.
A large number of barrio inhabitants were also indirectly involved in the drug trade, acting as “warehousers,” stashing the drugs in their houses for the narco or for púsheres for payment (the narco or púsheres spread their stocks of drugs around in different places to keep only easily disposable quantities in their homes in case of a police raid. While this was apparently an extremely rare occurrence, the involvement of other households also served to minimize the risk of denunciation). Warehousers were generally paid between $15 and $70, depending on the quantity and the length of time the drugs had to be stored.
High profit margins
Although the narco and the púsheres obviously moved greater quantities, the muleros tended to sell most frequently, even if on a much smaller scale. muleros bought crack from púsheres in the form of tucos, nuggets about the size of the first joint of the thumb, generally for about $36 each. They would then cut the tucos into tuquitos of about 2 sq mm in size, with a variable weight of 1/10 to 1/2 gram, which they would wrap in aluminum foil and put into packets of two. Each packet sold for a standard price of 10 córdobas ($0.70).
On average, a mulero would sell 40-50 of these packets a day, with peaks of 80-100 on Fridays and Saturdays, and lows of 10-20 on Sundays. A significant proportion of clients were local residents, but the vast majority came from outside the neighborhood, and included both rich and poor, Nicaraguans and foreigners (although there were generally more Nicaraguans, if only for demographic reasons). Clients came into the neighborhood both by car and on foot, most of them after nightfall, although a substantial number came during the day. It should be noted, however, that there was a definite predominance of men over women.
The rewards of such small-scale drug dealing for the muleros were potentially substantial. Each tuco bought for 500 córdobas would yield 160-190 tuquitos, depending on the mulero’s cutting skills and on how much he would keep for himself. This in turn corresponded to 80-95 packets, which meant that the gross profit on each $36 outlay was $22-32, although 12 córdobas have to be discounted for a roll of aluminium foil, and a further 5 córdobas for a bunch of small plastic bags in which muleros would put the tuquitos. This meant that at the bottom of the drug-dealing pyramid, a mulero could make between 5,000-8,500 córdobas ($350-600) profit per month, depending on turnover and auxiliary activities.
At the top of the pyramid, the profits were clearly much more substantial, although it is important to realize that we are not talking about the multi-million sums popularly associated with the drug trade. Although I kept my contact with the narco to a minimum for obvious security reasons, and thus have little systematic information about his turnover, it was clear that he did pretty well for himself. In terms of some of his visible assets, he made enough to afford two houses in Luis Fanor Hernández, one in a neighboring barrio and another in a wealthier part of the city, to build a new house for his parents, to own a fleet of eight taxis, and to maintain two “wives” and half a dozen children in affluent style (for the neighborhood).
Moreover, the narco also frequently bestowed favors on his neighbors in a variety of different forms, which included distributing free food and lending money interest-free, or at a reduced rate.
Generally, though, it was clear from the barrio’s uneven development that this kind of largesse on the part of those involved in drug dealing was not the norm. Certainly, although púsheres and muleros would also share part of their profit with others, they generally did so only with members of their extended family. Nevertheless, in a barrio that is over 40 years old, this alone was a sufficient form of redistribution to extend the trappings of economic improvement substantially beyond just those directly involved in the trafficking.
Why did drugs come to Nicaragua? According to both my drug dealing and non-drug dealing informants, cocaine began to be traded in the Luis Fanor Hernández barrio around mid-1999, initially on a small scale by just one individual—the present-day narco—but rapidly expanding by the first half of 2000 into the full-fledged pyramidal structure I just described. Although modest quantities of hard drugs such as crack could be obtained in Nicaragua in the mid-nineties, they were not prevalent. Marijuana was still the most widespread drug at the time—along with glue—and was produced and sold domestically on a relatively small scale. The reasons behind the spread of crack in Nicaragua are both international and national.
Internationally, the mid- to late-nineties saw a diversification of cocaine trafficking routes from Colombia (the major cocaine producing country in the world) to North America (the biggest drugs market in the world). The Caribbean had been the traditional smuggling route, accounting for almost 80% of South-North drug flows, but from 1994 onwards, as a result of improved law enforcement efforts by the US Drug Enforcement Agency (DEA) and the signing of collaborative agreements with almost every Caribbean state (the exception is Cuba), drug flows moved to the Mexican-Central American corridor, to such an extent that the DEA now estimates that over two-thirds of all drug flows to the USA pass through this land corridor.
Due to its proximity to the Colombian island of San Andrés, Nicaragua is geographically a natural first trans-shipment point within this transit zone, as drugs can easily be shifted from there to Nicaragua’s Caribbean coast. This was a previously under-exploited route because Nicaraguan transport infrastructure was generally very poor and traffic was slight, making it difficult to slip drug shipments through to Honduras unnoticed; Nicaragua’s security situation at the time—particularly the presence of rearmed groups—also added to transportation difficulties. As a result, drugs passing through the Mexico-Central America corridor during the mid-1990s tended either to go directly to Honduras or Guatemala or else to rapidly skit up the Nicaraguan Caribbean coastline in order to be off-loaded in Honduras or Guatemala.
In late 1998, however, Nicaragua was devastated by Hurricane Mitch, which caused heavy loss of life in a couple of areas but major infrastructure damage over a much wider expanse and thus a major drain on resources. The latter had highly negative consequences on the already limited capabilities of local law enforcement institutions (due to both shortages of even the most basic material items within the police and army and to high corruption levels encouraged by low police salaries). This meant that the little anti-drug law enforcement there had been effectively disappeared. At the same time, post-Mitch reconstruction efforts focused largely on rebuilding transport links within Nicaragua, often improving them substantially over their pre-Mitch condition. The collateral effect of this was to increase the volume of traffic going through Nicaragua, in particular along the Pan-American highway, in turn making it easier to move drug shipments across the Nicaragua-Honduras border undetected.
An assortment of intermediaries—who according to various reports include veterans from both sides of the war during the eighties, fishermen, indigenous peoples, foreigners, tourist guides, and even members of the Catholic church and government functionaries—are involved in the trafficking, from drug pickup on the Caribbean coast to transportation to Managua and beyond. Those either picking up or transporting the drugs, or facilitating conveyance along the way, generally take a cut of the shipments as their payment, and make money by distributing it locally, fueling the thriving local drug economies, particularly in Bluefields and the Pearl Lagoon area—which are principal drug drop-off zones on the Caribbean coast—as well as in Managua, the principal transit center. Interestingly, although drug dealing is widespread in Managua, by all accounts there are just a small number of “entry-point” barrios in the city, one of which is barrio Luis Fanor Hernández. The reason for this seems to be personal links. Certainly, the neighborhood narco is originally from Bluefields, and it was through his family links there that he built up a network that ensured a regular supply of drugs.
Fear and ambivalenceAlthough many in the barrio had clearly benefited from the drug trade, a deep ambivalence towards drugs and drug dealing existed among neighborhood residents, including even those who were benefiting from it. This was notably contrary to the generally positive perception of the remittance and taxi phenomena and was due in part to the physical effects of regular crack consumption on users. Crack is a powerfully addictive drug and has very serious consequences on the health of regular users. In particular, smoking crack can cause pulmonary abnormalities including lung trauma and bleeding and respiratory arrest, and can potentially lead to cardiac arrest and seizures. Some half a dozen individuals in the barrio had died since 2000 from causes widely attributed to excessive crack consumption, and addicts often displayed grotesque wasting effects, to the extent that they were popularly referred to as “gargoyles.”
Probably more importantly, this generalized ambivalence was also related to the fact that crack consumption had clearly heightened insecurity in the neighborhood. Consuming crack also enhances aggressiveness and makes individuals less predictable and therefore social life more uncertain. As one of my female informants put it, “Now, if they’ve smoked some crack, anybody could be a potential danger any time… you can’t know what they’re going to do… With this drug, people become more violent, more aggressive, they don’t care about anything, you don’t know what they’re thinking or even if they’re thinking… they could just kill you, like that, without a thought…” Everybody I talked to told me that insecurity had worsened since the emergence of crack, that there had been an increase in robberies, assaults and common delinquency, which had also become more brutal. It was evident that acts of spontaneous, unpredictable public violence had increased compared to the past, and were more often than not linked to drugged individuals. Weapons such as knives, machetes and guns were also used much more frequently and much faster than in the past, and were frequently carried about openly, which wasn’t really the case in 1996-97.
Nonetheless, although crack consumption was clearly important in explaining this increased violence and insecurity, it was arguably also a consequence of the development of the drug trade in and of itself. Since an illicit drug economy cannot rely on classic regulation and contract-enforcement mechanisms such as the law, alternative informal mechanisms are needed to impose regularity onto transactions, and as numerous theorists have pointed out, perhaps the most basic form of social regulation is achieved through the use and threat of violence. In an already very violent Nicaragua, it is perhaps not surprising that this should emerge as the basis for managing the drug economy (it was no accident that the local gang members quickly dominated the barrio drug trade). Certainly, the rest of the neighborhood population very much feared those involved in drug dealing in the barrio, and with good reason, too, as they had repeatedly demonstrated that they did not hesitate to resort to violence, killing or maiming anybody who had tried to come in their way or challenge them in almost complete impunity.
The police were certainly not a significant presence in the barrio. Although there were more patrols when I returned in February-March 2002 than five years previously, they seemed to be rather token in nature, as all they tended to do was drive down one street, turn around and drive back up a parallel street—past the muleros on their street corners—and then leave. Indeed, the only time I ever saw a police patrol stop during my second stay, it turned out that they had stopped to buy a few tuquitos for themselves…
Having said that, there were occasional police raids on the neighborhood pushers, but these tended to turn up little of suspicion, often because a corrupt policeman had tipped off the pusher (as one told me after being raided). Sometimes the police would find something, but this seemed to occur only when sanctioned by the narco, who thus reportedly used the police to get rid of overly successful and ambitious pushers who potentially threatened to establish themselves as rivals. The general consensus in the barrio, in fact, was that the police had been “bought” by the narco.
The face of globalization in NicaraguaAlthough it came as a surprise to find that things had changed so much—and from a certain perspective, indeed improved—during my absence, the mutations that had occurred were rather logical in many ways. The increased labor migration and sending of remittances, the East Asian used car import-export business and Nicaragua’s emergence as an important actor within the hemispheric drug scene all constitute forms of integration into an increasingly globalized economy. In many ways, these processes in fact arguably constitute the country’s most successful engagement with the global economy.
Contemporary Nicaragua represents an interesting case of integration within that world economy. The country’s problem is not so much that it is not integrated, but rather that it is integrated in a particular way. To a large extent this is the consequence of the structuring of the regional economy by the United States, as signaled by various bilateral trade agreements and more recently the US-Central America Free Trade Agreement (CAFTA). The consequences are well reflected by Nicaragua’s negative trade balance, which steadily worsened throughout the 1990s. In essence, the United States more than quintupled the volume of its exports to Nicaragua between 1990 and 2000, although with the increase of total Nicaraguan imports and expansion of its trade partners, the US share only doubled from 12% to 26% during the same period; at the same time, the United States became Nicaragua’s primary export destination, particularly for the products of the free zone maquilas, with its share of Nicaraguan exports increasing from 7% in 1990 to 40% in 2000).
This is key to understanding how Nicaragua is integrating within the global economy. There are severe and increasing imbalances in Nicaragua’s economy, which is structurally constrained in macroeconomic terms given its import and export structure. Its imports have a high inelasticity of demand, while its exports tend to have a high elasticity of demand, and its traditional export sectors are becoming increasingly uncompetitive while there are few possibilities for the development of new export sectors. Within this context, Nicaragua has few options other than to develop nontraditional forms of capital accumulation. International migration, the importation of second-hand cars from newly industrialized East Asian countries, and drug trafficking all represent successful adaptations from below to existing structural constraints; they are global processes that have been grasped locally by individuals as opportunities to improve their standard of living.
Whether they are viable and sustainable paths is another matter, but what these processes clearly reflect in the Luis Fanor Hernández barrio is that life, even in crisis contexts, inevitably goes on and can sometimes do even more than that. As the saying goes, where there’s life, there’s hope, and hope, last time I was in Nicaragua, seemed to me to be a very scarce commodity... Even if the means through which the inhabitants of barrio Luis Fanor Hernández have survived and indeed progressed are ambiguous and perhaps even contradictory, being able to observe them, see change and improvement first hand and be proved wrong about my pessimism following my first visit to Nicaragua most definitely made my return to the barrio more than worth it.
Dennis Rodgers is a lecturer in Development Studies, Development Studies Institute, London School of Economics and Political Science (UK). E-mail: d.w.rodgers@lse.ac.uk
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