What’s Behind the IMF Pressure?

Nicaragua is plagued by ungovernability, corruption and crushing poverty. With the complicity of the FSLN’s inner leadership circle, the Nicaraguan government is aggravating these age-old and chronic epidemics. But there has been mounting international pressure to address these issues, to which the International Monetary Fund recently and unexpectedly added its voice. What benefit might Nicaragua reap from such pressures?

Nitlápan-Envío team

When Hurricane Mitch's winds and rain lashed through Central America last year, they whipped away the veil of invisibility that had obscured the poverty and backwardness trapping most Nicaraguans. The international community in particular got a clearer glimpse of the profound limitations, created over the last 25 years, that make it so hard to eradicate this huge inequity. The extensive international coverage given the visits of foreign delegations, along with news and feature reports on the damage and interviews with Nicaraguan officials inadvertently spotlighted the government's most negative characteristics and revealed its limited efforts to deal with these problems.

Today, a year later, with the wounds inflicted by Mitch all still visible and most still untreated, the International Monetary Fund (IMF) has issued the government an unexpected warning. Because there was no build-up to it and it was delivered within the standard formal framework, must we conclude that it was perfunctory, sterile? Perhaps, but some of the events that followed permit a tiny spark of optimism.

The IMF rained on the government's parade

When the IMF mission arrived at the end of September, the smell of firecrackers was still in the air from the official celebration of Nicaragua's admission into the HIPC Initiative, a debt reduction scheme for highly indebted poor countries. It was already known that the mission, headed by the Fund's top representative for Latin America, Leonardo Cardemil, wanted to discuss the government's letter of intent for entry into that initiative, which had been rejected. It was assumed that the IMF, which is overseeing the initiative together with the World Bank, was dissatisfied with the government's treatment of financial and economic policy.

The mission, however, broke the IMF mold by not limiting itself to its traditional macroeconomic issues: fiscal deficit, trade balance, international reserves and the like. Instead, it also asked the government to explain its plans on issues of governance, transparency and poverty eradication because the rejected memorandum had failed to adequately deal with these fundamental themes. In a new turn of events, the mission conditioned its green light for pardoning part of the country's foreign debt on government guarantees of independent institutions, greater equity and a halt to corruption. As positive as this international pressure may turn out to be, however, major obstacles on the national stage will have to be skillfully eluded if it is to translate into genuine advances.

Nothing new in this critical scene

At the time of Cardemil's visit, the country was in its usual shambles. A small group of Sandinista army veterans—demobilized in 1990, rearmed in 1994 and re-demobilized in 1997—was still holding a Canadian engineer kidnapped a month earlier from a mining company in Bonanza to force the government to fulfill demobilization agreements negotiated two years ago. The Supreme Court had been paralyzed for weeks, polarized and bereft of directors due to President Alemán's crude pressures, applied publicly through the media and privately through other means, to impose candidates of his choice. The Superintendence of Banks had been without directors for three months for much the same reason. The Office of Comptroller General and its chief, Agustín Jarquín, had been under siege in the courts since April, and were now being attacked in a costly smear campaign financed by the ruling PLC party. Last but hardly least, the government had still not designed a strategy or detailed any concrete programs to eradicate the poverty suffered by the majority of the population, as it had pledged to do in a donors' meeting in Stockholm in May.

None of these convulsive situations were new or particularly exceptional. The President's open meddling in the other branches of government, his war against the comptroller general's office and the lack of an efficient social policy that would, among other objectives, help heal the still open wounds of last decade's war, have been constants in the three years of PLC government. The only novelty was the fact that the IMF was actually registering concern about such non-economic issues.

Countries without good governance

The IMF, World Bank and other multilateral financial institutions, governmental aid agencies from the North and even some powerful international nongovernmental organizations are starting to take an in-depth look at why Nicaragua's economic adjustment and the exceptional amounts of foreign aid offered to support it have had such limited success over the last decade. The departure point of their analyses is that what is happening in Nicaragua is also happening everywhere else. In many African and Latin American countries, all of which launched their adjustment programs before Nicaragua, poverty is at least as bad as it was before the adjustment, and often worse.

Latin America has a unique twist, however. The region still holds the world title for the most abysmally unequal distribution of its wealth, but now, alongside a notable increase of poverty, a new caste of multi-millionaire politicians has emerged in just a few years. In this worrisome landscape, Nicaragua's behavior provides a particularly interesting “case study,” given its wracking pendulum-swing history. In only 20 years, it has experienced a military dictatorship, a socialist revolution, a civil war and the beginnings of a transition to democracy. The distribution of wealth has undergone its own pendulum swings in the same period.

Analysts from the North now attribute the persistence and even increase of extreme poverty and the rather unsatisfactory economic behavior in the countries of the South to a lack of “good governance.” The term governance is somewhat ambiguous and easily confused with “governable,” but they are quite different. An ungovernable country is one with an uncontrollable or politically volatile society. A country without governance is one whose government is incapable of successfully carrying out its task of governing. In the North's analysis, the problem in the South is fundamentally one of bad governments and inefficient and corrupt institutions. According to this view, no economic policy will be good enough and no aid flows large enough to guarantee improvement in these countries’ poverty indices unless this is corrected.

This analysis is obviously limited, since it ignores other elements that also contribute to our crisis—for example, the unequal exchange that has always prevailed between the North and South. This inequality is expressed in the steady deterioration of international prices for our export products, which has nothing whatever to do with government corruption or inefficiency. In 1999 Nicaragua will produce almost twice the volume of coffee it did three years ago, but will receive less income, because coffee prices this year are half of what they were three years ago. The countries of the North never include this and other such scenes from our own particular tragedy in their analyses.

US-led cooperation with its own conditionality

The novelty of the IMF's new conditionality can be more clearly viewed against a broad brushstroke summary of international cooperation with Nicaragua over the past decade.

In 1991, after the FSLN lost the elections, Nicaragua received an exceptional amount of foreign aid—over a billion dollars, equivalent to 75% of the country's gross domestic product. The country was second only to Israel in per-capita aid. Part of those resources were used to stabilize the country's post-war economy through what was known as the Lacayo Plan, which involved controlling the runaway inflation of the final war years and re-imposing some rationality over prices and the exchange rate for national currency.

That year kicked off the Chamorro government's three-year honeymoon with international cooperation, with the US Agency for International Development (AID) playing the leading role. The Bush administration got congressional approval for close to $800 million in aid and wrote off Nicaragua's debt with the United States, bringing the total assistance for the three-year period to nearly $1 billion. The US’s leading role extended well beyond the economic stabilization program, however; the US Embassy also directed the Chamorro government's peace negotiations with the Nicaraguan Resistance (the “contras”), thus directly influencing both the political and economic course of the country.
The US strategy was clear: plug Nicaragua back into the traditional economic and financial circuit of the countries of the South, under the tutelage of the World Bank, IMF and Inter-American Development Bank. In exchange for its help, the United States, which is so accustomed to using blatant economic blackmail for its own unilateral interests, demanded that the Chamorro government renounce the International Court of Justice's 1987 decision in Nicaragua's favor. After hearing Nicaragua's suit, this world court had ordered the United States to compensate Nicaragua for the estimated $17 billion worth of damages caused by the US government's financing, equipping and directing of the contra war between Nicaraguans in the 1980s. The United States had never formally recognized the court case or decision in any event, so forcing Nicaragua to renounce it was mainly a formality signaling the return to traditional power relations between the two countries, which the Sandinista government had challenged for a decade. Despite vociferous opposition from the FSLN bench, President Chamorro dutifully pushed legislation through the National Assembly preventing hers and any future government from ever trying to collect on the claim.

Meanwhile, getting the green light from the multilateral lending institutions for reinsertion into the circuit involved settling Nicaragua's old debts with those institutions. USAID joined other bilateral government aid agencies in providing the funds to bring the country's accounts with the multilaterals up to date.

With all that concluded, Nicaragua signed its first structural adjustment agreement with the IMF in mid-1991 and received the first World Bank loan for economic recovery in September of that year, soon followed by the first IDB loan. By December, the Nicaraguan government was in Paris, attending its first group meeting with creditor nations to discuss the renegotiation of Nicaragua's bilateral debt, a process that continued with significant successes until the Chamorro administration left office five years later.

Once Nicaragua was locked back into the international circuit, the curtain came down on the political and economic “exceptionality” represented by a decade of revolution and its immediate aftermath. Suddenly Nicaragua was being treated just like any other country of the South. That moment also signaled the slow shrinkage of US aid and the start of growing influence from the European countries and Japan, followed by Taiwan, as bilateral donors and lenders. At that time, the multilateral institutions were only just entering this circle of influence.

Europe's turn at conditionalities

The lowering of the US profile marked the beginning of the golden age of bilateral aid, which can be bracketed between 1994 and the end of the Chamorro government at the start of 1997. In those years, Europe's bilateral aid agencies and the European Union itself had a major influence on the Nicaraguan government; the United Nations Development Program (UNDP) began to exercise increased influence as well.

Nicaragua signed its first three-year agreement—known as an Enhanced Structural Adjustment Facility (ESAF)—with the IMF and World Bank in 1994, but failed to meet its obligations from the outset. Surprisingly, however, the IMF recommended that bilateral cooperation, the World Bank and the IDB continue to provide financial backing to Nicaragua, which it would not have done with any other country in the South that did not meet the agreed-upon conditions.

Two factors explain this “unconditional” support from the normally conservative IMF. The first was the political crisis that afflicted the Nicaraguan government in late 1995 and effectively paralyzed it for the first half of 1996. The executive and legislative branches had locked horns over constitutional reforms approved by the parliamentary opposition that would transfer some executive powers to the legislative branch. In such a tense and tenuous situation, the Europeans stepped in to mediate and pressure both branches to compromise. Their conditions, more political than economic, were aimed at breaking through the impasse created by the fact that the legislative branch was operating under the newly reformed Constitution while the executive stubbornly continued to operate under the old one. The resulting agreement, which came to be known as the Framework Law, established a selective calendar for applying the reforms: those that the executive refused to countenance would not go into effect until the Chamorro government left office in 1997.

The second factor was that the IMF was not in a good position to penalize the Nicaraguan government for failing to meet the ESAF conditions in any case. It had already realized that the economic program was badly designed and that the target set for reducing the fiscal deficit had been too strict for a country in Nicaragua's fragile shape. Had the IMF withdrawn its financial support to Nicaragua, the scant macro-economic stabilization already achieved would have unraveled. In addition, the IMF itself would have been blamed for the consequences of the crisis at such a politically unpredictable moment.

Despite the shrinkage of US aid in those conflictive postwar years, bilateral aid grew overall, mainly earmarked for development, health and education projects. Meanwhile, the IMF limited its influence exclusively to the area of macroeconomic policy.

The Liberal government's new leadership style

With the coming to power of the Liberal government in January 1997, President Arnoldo Alemán drastically shifted Nicaragua's emphasis in its relations with the circles of international cooperation.

Throughout his election campaign, Alemán's discourse was strongly nationalist. He insistently criticized the donor countries for excessive intervention in national political life. The social and democratic values promoted by European cooperation were in strong contrast to the project with which the then-mayor of Managua aspired to take power. Alemán mixed the purest neoliberal dogmatism with an anti-Sandinista and populist rhetoric designed to attract dispersed and dissimilar forces. Once in office he stressed that he did not intend to eradicate poverty through social programs, but through economic growth, arguing that the “trickle down” from that growth would be enough to resolve the social problems and wipe out poverty. He repeated it so often and with such conviction that he was spared ever having to explain how he thought it might work. He also made it clear from the beginning that he considered the concerns of the bilateral donors—democratic values, institutionality and transparency, in other words “good governance”—to be domestic affairs that were none of the international community's business.

Because of this perspective and project, bilateral aid dropped consistently in 1997 and 1998, the Liberal government's first two years in office, despite the disaster caused by Hurricane Mitch. Conversely, the influence of the multilateral institutions grew. After the second ESAF agreement was signed in mid-1998, the multilateral agencies' profile and financial support grew even more. The Alemán government's strategy was—and still is—that it is more advantageous to negotiate directly with the multilateral institutions because once an understanding is reached with them, the bilaterals have to follow their financial lead even if they have reservations in the political sphere. An expression of this logic is the presence of Luis Durán as the President's technical secretary, the official responsible for negotiating with the IMF in Nicaragua's name. He also just happens to have worked for the IMF for decades, and was given permission—or, perhaps better said, was designated—to perform this task.

Mitch: A new shift

The unexpected and devastating consequences of Hurricane Mitch provided bilateral cooperation with the opportunity to begin counteracting the Liberal logic. In the Stockholm meeting in May, organized by foreign donors to support Central America after the tragedy, a group of European countries and the UNDP proposed conditioning the aid to an agenda of themes to which the Nicaraguan government had previously only paid lip service. Those issues were governance, transparency, participation by civil society, decentralization and social policies to ensure the eradication of poverty.

Alemán's delegation welcomed the proposal, but only rhetorically, confident that if it continued dealing with the IMF and multilateral institutions, bilateral cooperation would be unable to mount effective pressure or a boycott. When the delegation returned from Stockholm with its dangerous mix of triumphalism and injustice, it felt safely ensconced in its logic and ignored the bilateral agenda with increasing disdain. The corruption scandals, the sidelining of civil society and the weakening of institutions not controlled by Alemán continued apace between May and October, in an undeclared “reign of impunity” for those on top that left those on the bottom feeling even more powerless than usual. Alemán's open accomplice in this anti-democratic career was the clique of FSLN leaders that currently controls the party and with which the Liberals were hammering out a pact. One of the many aims of that pact is to co-opt and thus strike the governance agenda proposed in Stockholm by the UNDP and bilateral cooperation. Given this context, the International Monetary Fund caught the government off guard by taking up that agenda.

Two assessments, two agendas

The new IMF line is backed up by both the assessment of the South's poverty and underdevelopment currently underway and the evaluation already done of Nicaragua's insufficient economic success during this decade. There is also agreement between two agendas: that of bilateral cooperation, always more political and social, and that of the North's own societies, which are becoming increasingly sensitive to the problems that generate the North-South imbalances.

The Group of Seven, meeting in Cologne, Germany, in the summer of 1999, began to move toward a new “conditionality” in providing aid to the countries of the South and in the process of pardoning their foreign debts. For its part, the World Bank has just published a document explaining the link that must exist in each country between foreign debt cancellation and the reduction of poverty.

“No help can be provided to a country that does not seek stability,” explained Carmelo Angulo, the UN representative in Nicaragua, “but stability stands on three legs: a political one, an economic one and a social one. It is even possible to talk of a fourth, environmental, leg because a country cannot progress when it is environmentally unsustainable.” According to Angulo, Nicaragua is the first Latin America country facing the application of this new conditionality. Two years ago, in 1997, when Angulo himself publicly suggested that the IMF condition its support for macroeconomic adjustments to an emphasis on social policies, only one aspect of this new conditionality, he was very nearly expelled from the country by direct order of President Alemán.

Pilot plan: With what indicators?

The government's first reaction to the IMF pressure was silence and disgust. Weeks later, on October 24, David Robleto, who headed the Secretariat of Foreign Cooperation until its recent restructuring, stated in an interview in La Prensa that governance “is not part of the IMF's professional management” and is an issue in which “it has no experience.” He added that “alleging problems of governance to condition access to the HIPC doesn't affect the government, but infringes on the efforts of society, which has borne the adjustment program's effects.” Robleto criticized the IMF for “changing the rules of the game” and noted that the Fund lacks indicators to measure the effectiveness of a country's social policies and governance.

These indicators will obviously have to be found but, that aside, Nicaragua seems like a good candidate for this pilot plan. A survey done in September by the Institute of Nicaraguan Studies (IEN) found that of every 100 Nicaraguans, poverty affects 86, extreme poverty 57, and complete indigence 29.
Furthermore, survey after survey demonstrates that the population perceives an increasing lack of transparency in the management of the Nicaraguan state. It is becoming impossible to grasp the extent of the scandals that come one on top of another, almost invariably involving top government officials who fail to display the slightest remorse, embarrassment or scruples for having used state resources as if they were part of their personal or family accounts.

The latest Transparency International report on perception of corruption places Nicaragua eighth in Latin America and seventieth among the 99 countries studied, earning only 3 points on a scale of 10. The country lacks fundamental laws to ensure efficient and transparent administration. There is no law regulating civil service, none permitting organizations or individual citizens to take the state to court for injustices committed against them and no code of ethics for public officials. The penal code is obsolete in the extreme and influence peddling is not even defined as a crime in the current system, where such activity reigns with impunity. These are just a few of the reasons demonstrating that Nicaragua still needs to construct the “legs” to provide a stable base for the country's governance.

A reality with many rough edges

This shift in the IMF and other multilateral institutions cannot be understood without taking into account the pressure the North's civil societies are exerting on the multilateral and bilateral development agencies working in the South not only to pardon the foreign debt of the poor countries but also to change their own policies. This sustained ethical pressure has been forcing all of international cooperation, including the powerful IMF, to include real and effective social policy, poverty eradication and foreign debt relief issues in their agendas.

In addition, it would be naïve not to emphasize that the shift is also the expression of an intelligent policy on the part of the North's governments, since they have an interest in controlling the flow of migrants from the South. Supporting the South’s countries not only by adjusting their macroeconomies to open the way for the North's investors, but also by making their governments better so the countries are more attractive to their own citizens thus also responds to the North's own interests.

From this perspective, it is surprising that the most powerful nation in the world, the United States, appears to lack such good sense. The official US government aid agency, AID, now has a tiny budget in Nicaragua and hypocritically states as a basic foreign policy postulate that the only way out of the South’s poverty is by fully opening its markets to world trade. This crass mercantilist notion is so full of contradictions that the United States won’t even open its own markets to a country as insignificant in world competition as ours. As an expression of protectionism for its own national producers and a signal that it wants no risk of contamination within its own borders, it has refused to lift the quota restrictions imposed on the sugar, textiles and meat it imports from Nicaragua.
The Europeans are at least more consistent. While they do not want to destabilize their own societies by opening their protected markets either, they are at least increasing their aid to stabilize the South’s societies and contribute to their development, recognizing that doing so satisfies both their interests and ours. This is only one of many contradictory rough edges that must be incorporated into any serious analysis of the new and highly complicated global reality.

Will the government feel the IMF's pinch?

The IMF's pressure and its critique of the priorities agreed upon so far with the government will have few if any immediate consequences, but they can be expected to have some symbolic impact. If a group of citizens, NGOs or the media had made the complaint about governance, the Alemán government would have completely ignored it, as it has repeatedly demonstrated over the past three years. Nor would the complaint have affected Alemán's administration had it come from a European government; such complaints have fallen like rain over these same three years and nothing has changed. It might have some effect if it came from the US government, but now that its aid package is so small, it has less leverage. Coming from the International Monetary Fund, however, the complaint is a bit harder to ignore.

Since Nicaragua’s Liberal government depends on the support of these multilateral agencies, the IMF's complaints could throw a monkey wrench into its macroeconomic strategy, which is also the basis of its short-term electoral projection. The least the government can do immediately is respond by designing a concrete and specific strategy for poverty eradication, since it has never had or even contemplated one. It is in fact already busily drawing one up, and promises to have it ready by December. Putting it in practice, however, will be quite a different matter.

The IMF pressure could also speed up the National Assembly's approval of certain laws regarding governance and transparency. These efforts, too, will be limited if the laws are not provided enabling legislation, as happens frequently with controversial laws not to the liking of the governing circle. The effects of the pressure would be more concrete if Nicaragua had an independent legislative branch, a genuine political opposition and a more organized civil society. These forces, however, do not exist. The National Assembly, which has functioned as Alemán's branch office given the Liberals’ relative majority, is now becoming the barker for the pact, since the Liberal and Sandinista benches have enough votes between them to pass any legislation agreed to by the political bosses of their respective parties. It is in that “spirit” that this majority will ram through the reforms to the electoral law and the Constitution previously agreed upon in the pact.

The month's scandals:
Some resolved, others worse

Following the IMF's pressure, some of the recent problems mentioned earlier were cleared up, albeit not in the fashion most becoming good governance. The longest running problem, President Alemán's battle with the comptroller general, went from bad to worse.

The Canadian mining engineer was released on November 3, together with a Nicaraguan soldier kidnapped at the same time, after being held hostage for 34 days. The small armed group that had kidnapped them was originally part of the Andrés Castro United Front (FUAC), a sizable armed organization of Sandinista sympathizers that operated in the mountainous mining areas of the Atlantic Coast between 1994 and 1997 to call attention to the needs of its impoverished citizens. The FUAC demobilized in 1997 after the Alemán government signed an agreement promising them land and other social advantages. The purpose of the recent kidnapping was to force the government finally to make good on those agreements. The mediation of the Nicaraguan Human Rights Center (CENIDH) played a decisive role in getting the hostages released. After turning the two men over to the Ministry of Defense, CENIDH director Vilma Núñez de Escorcia publicly underscored the extreme poverty and abandonment she had seen in Bonanza and the other mining towns.

On that same day, Liberals and Sandinistas joined forces to elect the superintendent and deputy superintendent of banks, posts that had been vacant for over three months. In that lapse of time, the Superintendence of Banks lost all institutional autonomy as the result of a new law regulating its functions, which the IMF endorsed. The President's preferred choices, Noel Sacasa and Alfonse Llanes, were elected to the respective positions. The election of Llanes was particularly scandalous since the comptroller general had listed him a month earlier as one of those responsible for the “decapitalization” (read pillage) of the state-run Nicaraguan Bank of Industry and Commerce (BANIC) before its capitalization (read privatization).
The “governance” achieved in the Supreme Court after 50 days of crisis was not an encouraging omen either. The internally-elected executive posts as well as the maneuvers engaged at the last minute under pressure from the IMF all bore the seal of the Alemán-Ortega pact's inimitable style and appear not to have enjoyed the officially proclaimed unanimity. The 12 Supreme Court justices elected Francisco Plata as president and Yadira Centeno as vice president of the court. Plata was President Alemán's designated choice, and was thus involved in the crisis from the outset; Centeno emerged a bit later as the candidate of a sector close to the FSLN. The Court's constitutional bench, so strategic given the current political dynamic, ended up mainly in the hands of justices close to the executive. Although these elections—a “solution” hastened by international pressure—offered a way out of the long and very public leadership crisis in the judicial branch, they do not augur authentic governance. We will only learn how deep a wound was opened up by the crisis a few months from now, when another four justices will be added to the Supreme Court thanks to the pact. The same day this crisis in the Court got untangled, the pact negotiators met for four hours, following a hiatus of more than two months, to sort out new details, surely thanks to the pressure from the IMF.

As for the President's mania to free his government of the comptroller general's constant exposure of corruption, the IMF pressure had the immediate effect of getting the PLC to suspend its massive radio and TV campaign against Jarquín and his deputy comptroller, Claudia Frixione. It was a gratuitous gesture, however, since six months of intense and calculated manipulation—the media campaign alone reportedly cost the PLC over half a million dollars—has begun to erode their image and that of the Office of Comptroller General (CGR) itself. In another gratuitous, even burlesque gesture, the party ordered its National Assembly bench to applaud the comptroller when he presented his annual report.

The “governance” the pact offers

The now-consummated political and economic pact forged between Alemán and FSLN head Daniel Ortega is designed to increase the top executive posts in state institutions and share them among the faithful of both parties, not to make the institutions more effective, and certainly not to guarantee transparency in government. It is also aimed at dominating the electoral framework through a two-party structure that closes democratic channels, only recently opened, and forces society to align itself with one of two choices under the aegis of the two political strongmen and their unassailable circles of power.

This is not, of course, how the pact has been sold to the population and the international community. Its authors have presented it publicly as an attempt to bring about good governance. Part of the Nicaraguan population, both within the Sandinista movement and outside of it, has bought into this line, but a significant portion has not. The problem is that the opposition is dispersed, critical Sandinistas—both within and outside the FSLN—are adrift and unable to reach agreement among themselves and society as a whole seems to have put itself on an expectant hold, a sort of indignant inertia, but nothing more.

Will international cooperation go along with the governance that the pact promises, which will be expressed in new appointments, new laws and new institutions? It may well do so, whether through cynicism, exhaustion, inexperience, or even the lack of appropriate indicators adapted to a reality so lacking in governance as that of post-war, post-revolution and pre-pact Nicaragua.

Bad omens for transparency

Transparency remains the crucial issue of governance, although the institutional performance of the comptroller general's office has been as exemplary as it possibly could be in a country like this one. How much “transparency” will be required to satisfy the IMF and the international community in a country where excessive corruption has been traditionally accompanied by the impunity of high-ranking officials of all governments, regardless of their ideologies?
In the early pact negotiations, the FSLN opposed paying the excessively high political price of actually getting rid of the comptroller general and his deputy, which was clearly the presidential circle's real desire. With the passage of time, this prudence began to disappear. Since the government's premeditated image-bashing against Jarquín has begun to have its effect, the price that the FSLN will have to pay for actively turning against him has shrunk. FSLN leaders have even dared to publicly refer to him recently as a “political enemy.”
The party leaders are trying to minimize that cost even more by painting the plan to dilute or eliminate Jarquín’s role in the CGR as a positive move for the good of the nation. In the official FSLN discourse, a collegially-led CGR will not only strengthen the institution, but will give its resolutions more authority, since the reduction of Jarquín's influence will strip them of the taint of revenge or political self-promotion they supposedly had when he was solely in charge of issuing them. Since this justification professes “governance” and “transparency,” the IMF officials might lose interest in the issue of who will now guarantee that the five new pact-appointed comptrollers do in-depth investigations of the many acts of corruption.

Jarquín sentenced to prison

On November 8, after eight months of judicial give and take, a judge sentenced Comptroller General Jarquín to prison for fraud against the state. The sentence related to a publicity contract he signed last year with journalist Danilo Lacayo in which the latter used a false name, backed by false identity papers. In handing down this sentence, the judge fulfilled one of President Alemán's most publicly stated dreams: that the judicial branch establish Jarquín as a criminal, thus stripping him of any moral, institutional and legal authority to fight corruption and paving the way for his dismissal in the National Assembly. The presidential plan to achieve this sentence had been in the works long before the IMF's unexpected pressure became public.

The sentencing was briefly delayed by the IMF's insistence on formal meetings between high officials of the presidential office and the CGR to seek an “institutional rapprochement,” but that obligation was quickly dispatched by ensuring that the meetings would fail. The executive's delegates asked that Jarquín not attend and refused to negotiate a common agenda. The objective of the agenda they presented was to review and ultimately rectify the CGR's resolutions on high government officials right up to President Alemán himself. The judge's sentence followed immediately on the heels of the failed meetings. Should international cooperation insist that the meetings continue, they will be useless if the government's only interest is to improve its image, especially in the eyes of the international community, and if its idea of consensus is to insist on closing the corruption cases named by the CGR instead of seriously investigating them.

Agustín Jarquín and his deputy, Claudia Frixione, have headed this institution charged with watch-dogging state goods since April 1996. In that time they have overseen 700 audits, the majority of which determined administrative, civil and penal responsibilities against state officials. In most of those cases, however, the courts exempted the accused of the charges against them; many other cases never even got as far as the courts, especially when top-level officials were implicated. Despite everything, the CGR estimates that its resolutions have saved the state some $140 million.

Alemán had promised months ago that he would free Jarquín once he landed in jail. Informed of the sentence and asked about this promise, Jarquín responded that “the President doesn't have the moral quality to do it and I here and now reject such a hypocritical gesture. The comptroller immediately appealed the sentence.”
Jarquín is no stranger to imprisonment for his independent stance; he was imprisoned once by the Somoza government and six times by Sandinista government. This time he quipped that the sentence was his “wedding gift” to President Alemán, since it was handed down on the same day Alemán returned from his 15-day honeymoon in Venice. Asked earlier about the pending court decision, Jarquín declared that “these are the risks one runs when assuming a commitment full of conviction. Prison can be one of the costs for having fought to avoid corruption and for denouncing it, but this risk reaffirms our principles and our determination to continue working to build a better country in which there is full democracy. I did not become comptroller to get rich. They are accusing me of misuse of state funds, but I have never put a single córdoba in my own pocket. If acting like that is a bad example for the powerful and I have to be imprisoned, then we will go back to jail, with the conviction that we have always done the right thing and have worked consequentially.”
At the beginning of the month, Jarquín authorized Cardinal Obando, Reverend Gustavo Parajón, the Nicaraguan Human Rights Center, three other civic organizations and the country's three main daily newspapers to do a thorough investigation of his personal and family holdings. He provided them with special powers to do so and guaranteed them access to his bank accounts and registry of belongings, even turning over to them the documentation necessary to begin the investigation. It was an exemplary and previously unheard-of gesture. In a notarized document, Jarquín stated that he was doing this “because it is my right and obligation to preserve the heritage, honor and reputation of my name, which will be carried on by my family.”
The President's clumsy management of his government’s international relations and his domestic impunity are common tendencies that help explain the unfortunate sentence against the comptroller general, who was put behind bars the very next day. For all that, the President's audacious and obvious blunder in giving the green light to his plan so soon after the international complaints is still surprising.

No one working in international cooperation has the slightest doubt that the scheme leading to this sentence was hatched and plotted on a daily basis from the President's own offices from the outset. On November 9, the day the comptroller was jailed, the 15 European Union ambassadors met to analyze the event. They concluded that the presidential attack on the CGR and its chief is an expression of the lack of governance in Nicaragua and that the sentence against Jarquín jeopardizes EU aid to Nicaragua. The future of the CGR, in danger of becoming a collegial instrument of impunity, and of Jarquín and Frixione, in danger of being needlessly fired, will be the litmus test of the degree to which the international pressures on the government are really serious, and not just formalities.

In Nicaraguan hands

What influence could and should international cooperation have on the complex chain of daily decisions and measures, still so marked by the country's backward political culture? Should they indeed be a strictly national concern? Already bereft of our economic sovereignty, just like any other country of the South in the new globalized world, how much of our “political sovereignty” will be affected by this new, more political conditionality? Have we seen the end of the complaints or will there be others? What view of our history and our capacities is implied by the imposition of such conditions? And what view when they are reduced to merely formal declarations of intent? It should not be forgotten that the powerful international institutions pressuring our bad governments are themselves short on transparency and governance, and their officials find accomplices and even protégés among the top-level officials of these very governments.

On the other hand, can the ongoing power games in Nicaragua ever allow governance and transparency? Could the municipal elections in November 2000 serve to pull together genuine alternatives to what the pact stands for and to a national setting that seems quite closed to the values of the “new conditionality”?
Even with all these questions, the new international pressure is worth celebrating; it may just have positive consequences. Depositing our hopes in it, however, would be irresponsible. The discouraging national scene could reduce the potentially positive results of any well-directed international pressure into a simple image game, a cosmetic operation, while intensifying the most negative aspects of our traditional dependence. At the end of the day, making Nicaragua into an equitable, governable nation with transparent administration is the responsibility of Nicaraguans, and will only be achieved if we find the will, the desire and the unity to fight for it.

Print text

Send text