Nicaragua
Foreign Investment, Environment and Autonomy
Envío team
Many believe that foreign investment is the solution to all of Nicaragua's economic problems and, therefore, should be promoted at any cost. But there are many kinds of investment: at one extreme is that which simply extracts raw materials and inflicts irreparable damage on a country's natural resources; at the other is investment that truly promotes sustainable development.
Nicaragua has had very little success in attracting investment so far, though there are some new investments in free-trade zone assembly plants, in fishing and, of course, in commerce. Everyone recognizes that this poor showing is primarily due to the country's high degree of instability, but not all sectors agree on what causes that instability. The government and the right wing lay the blame on rebellious Sandinista workers and armed rural groups of impatient and battle-hungry former soldiers. But they do not admit that behind these rebellions lies the government's own economic plan, which is driving these sectors to desperation.
Nicaragua's most important and attractive investment potentials are its natural resources, the majority of which are located on the Atlantic Coast. Other important considerations thus arise with respect to investment, such as its environmental impact and the question of the autonomy of the Atlantic Coast's peoples. And although the government maintains a very acceptable discourse, at least with respect to environmental protection, the mechanisms for guaranteeing both it and respect for autonomy have failed in practice, at least where large investments are concerned. One prime example was the enormous forest concession almost granted to an unqualified Taiwanese company—finally rejected early this year only after significant national and international pressure (see box on pages 40-41).
What is "good" investment? Some say that foreign investment is good in and of itself: the capital it brings to the country can help in times of crisis of domestic capital; it offers new jobs; and it can bring new technology. But the history of Nicaragua's Atlantic Coast demonstrates the weakness of these criteria. For many years, the coast was at the mercy of foreign companies that exploited the region's natural resources, plowing nothing back into the local economy, then simply picked up and left when the resources were exhausted.
Governments want to attract investment because it will supposedly bring foreign exchange into the country. But this is not guaranteed unless the government takes care to do so: in many cases, investors simply borrow money from the recipient country to build or buy their assets. In addition, there should be control over the repatriation of capital. Nicaragua's law—which curiously only applies to those who choose to accept the rights and obligations it stipulates—allows capital repatriation after three years.
What would be a good investment? On the one hand, raw materials extracted from Nicaragua should not be exported as such; the industry that processes those materials and increases their value should also be located in Nicaragua. And industry, on the other hand, should acquire the majority of its inputs from raw materials produced or extracted in Nicaragua. Instead of operating in isolated enclaves, such integration of economic processes, from raw material extraction to industrial processing, would tie each individual production process into others, producing a multiplier effect in the economy. This means, for example, that cotton itself should not be exported, but that cloth, thread and even clothing should be produced here and exported; and an industry that produces clothing should not import cloth or cotton but purchase its inputs from local producers.
Industries that bring new technologies to the country can be especially beneficial. For example, according to the Ministry of Economy and Development, some investors are interested not just in fishing for tuna but also in establishing a canning plant. On the other hand, experts in foreign investment suggest that it may be cheaper and more advantageous to simply buy new technology if an investment is undesirable for other reasons. Joint ventures between national and foreign investors also tend to be more beneficial and less damaging than entirely foreign-owned investments. Investment should also have a medium- or long-term vision, protect and respect the rights of workers and conserve the environment and natural resources for future generations. It is hardly worth paying off all of Nicaragua's debts today by cutting down and exporting all of its remaining forests if tomorrow everyone will die of hunger due to the consequences. And if the government does not impose strict controls, it is almost inevitable that resources will be irrationally squandered.
Both national and foreign investors accept greater controls and fewer profits where the risks are lower. One concern with respect to Nicaragua is that it is currently seen as "high risk." It is important that the government not fall into the trap of being excessively generous in order to attract investment. The damages could be irreparable. .
Why so little so far Nicaragua has historically received less investment than its Central American neighbors, largely due to the bribes demanded by the dictator Anastasio Somoza and, more recently, to the economic and political blockade suffered during the decade of Sandinista government. Today, the world economic crisis has affected the overall investment capacity internationally. In addition, the pattern of transnational investments has changed. Where their primary interest is exports, those investors prefer to be as close as possible to their principal market; thus Mexico, for example, is more attractive than any Central American nation due to its proximity to the US.
The availability of infrastructure and service facilities that a country can offer is also an important investment consideration. Nicaragua's problems with power outages and poor telephone service alone could make potential investors change their mind.
The unresolved property situation in Nicaragua also scares away investors. Their fear that their own enterprise will be taken over is aggravated by the fact that outstanding property conflicts have still not been resolved. The government should take the World Bank's advice and legalize all properties "of those who are in legal possession of them, that is, that they hold a property title, an agrarian reform title given to them by the current or previous government, or a certificate of possession authorized by INRA [Agrarian Reform Institute]."
Other key problems in attracting investment have been Nicaragua's recent war, an organized work force not afraid to protest unjust labor policies, and armed rural groups demanding solutions to the worsening crisis in the countryside. "Instability" is the catchword for all these phenomena, and is generally blamed on those who protest. But there are two distinct issues here. First is the degree of very real instability caused by the neoliberal structural adjustment program being imposed all over Latin America, which has manifested itself in different ways in different countries. Second is that in Nicaragua, where the people have learned to organize, protest and even take up arms when they deem it necessary, this instability is manifested in strikes, demonstrations and rural armed rebellion.
Nicaragua's government and business sectors generally seriously oversimplify all this into blaming the instability on the Sandinistas. But the instability caused by neoliberal economics has been demonstrated in Venezuela, Peru and Colombia, as well as in Nicaragua. Few deny that the poor are getting poorer all over Central and South America due to structural adjustment policies—promoters of these policies simply claim that this is a temporary stage of increased suffering while light awaits at the end of the tunnel.
Instability is not caused by those who protest; protest is a predictable response to instability. If the government and big business insist on blaming the Sandinistas for the results of their own policies, they should be more accurate: the FSLN played an important role in heightening the people's capacity to protest in an effective organized fashion. Since Nicaraguan officials often cite Chile as this government's model for economic policy and growth, perhaps they see the "problem" in attracting investment here as simply the lack of an ironhanded Pinochet.
Nicaragua's "attractions" The resources that most attract investors to Nicaragua are its natural resources—fishing, forests, mining and hydroelectric energy. Government representatives report a lot of interest in all of these areas, but admit that actual investment to date has been limited. Juan Fernando Ramírez, coordinator of the Ministry of Economy's National Program for Export and Investment Promotion, reports only one $6 million investment to date in wood processing, and, while there is high potential in mining—gold, silver, marble, silicate, cement, fertilizer and copper—the process of selling off the existing state-held mines has just begun; a Canadian company recently won the bid for the La Libertad gold mine.
There have been some new investments in nontraditional agricultural crops and private banks, and some existing industries, like Esso, have expanded their operations. Maquila assembly plants have also attracted interest and some investment.
Nonetheless, many more have made new investments in commerce than in production, though for the most part this is national and not foreign capital. Anyone who walks through Managua's streets can see at least five new large supermarkets, new restaurants, bakeries and stores that sell clothing, computers and numerous other specialty goods. This kind of low-risk, short-term investment serves only the country's wealthiest sectors and provides little toward Nicaragua's development.
Maquila plants Since October 1991, three new assembly-for-export plants, known as maquila plants, have rented space in Nicaragua's Industrial Free Trade Zone—two textile enterprises and one that assembles gold chains. According to Sergio Zamora, the zone's general manager, the textile companies, Neptuno and Ronaco, are joint ventures between Nicaraguan and US capital, and the gold chain company, Crecen, is a predominantly US venture with some Costa Rican capital The majority of new investors are foreigners who are generally not very familiar with the country and prefer the administrative infrastructure provided in the special zone. Outside of it, there is no new investment in maquila plants, although some existing factories have been reactivated.
Despite Nicaragua's serious problem with power outages, it has been able to attract these new investors due to various advantages over its neighbors. According to Zamora, one of the textile companies moved here from Guatemala to avoid that country's quotas for textile exports to the US; the cost of renting space in the zone is cheaper here than in Honduras; workers' wages are much lower here than in Costa Rica; and Nicaraguan workers have a reputation for being more productive than either Honduran or Costa Rican workers. Zamora also mentioned that problems with electric power in the Dominican Republic are even greater than in Nicaragua.
Three state enterprises are also operating in the zone: the Pronto shoe factory; NICALUM, which produces aluminum panels; and the blue jeans assembly plant ENAVES, which appears to be in the process of closing as this issue of envío goes to press. Zamora claims there is a lot more interest than space available. He has 10,000 square meters of space confirmed to various US, Taiwanese, Korean and Italian companies as well as demands for 18,000 more.
The six existing companies together occupy 25,000 square meters, almost all the space currently available. Only 26% of the 57-hectare industrial park has been constructed. New construction and remodeling, which will be undertaken with a $7.6 million loan from the Inter-American Economic Integration Bank, will bring the total to about 35%. The National Penitentiary System, says Zamora, has agreed to abandon the 8,600 square meters within the zone that it is currently using as a prison by the middle of this year.
What real benefit does this kind of investment offer Nicaragua? One supposed benefit is the increase in national exports. But these six industries only exported $1.2 million in the first four months of this year. If they continue at this rate, maquila exports will come to little more than 1% of the $300 million total national exports projected for 1992.
One of the most commonly cited benefits of maquila activity is the provision of new jobs. Zamora says that the six factories employ 1,021 workers, but if this number is not exaggerated, it appears that the vast majority is in the three state enterprises. Crecen's administrative manager, Noel Latino, says that it only employs 121 workers, and Barricada reported that Neptuno only employs 115. Even if it is true that the six companies employ 1,021 workers, statements like those published recently in La Prensa are probably overblown. Citing Zamora, La Prensa reported that the 8,600 square meters currently occupied by the prison could generate 1,500 jobs, and that the Free Trade Zone as a whole could generate some 8,000 jobs in two years. To accomplish this, there would have to be a much more intensive use of space.
Wages in the zone, according to Zamora, average $0.57 per hour, compared to $1.50 in Costa Rica. Workers in the state enterprises claim that their salaries and benefits are much better than those in the private companies. And in an interview with envío, Crecen's manager repeatedly refused to reveal the wages his company pays, saying only that "we're around the minimum wage authorized by the government. In fact the Labor Code says that, since they are apprentices with a new technology, they can be paid less than the minimum wage... and we're above that."
Low wages are one of the most important "advantages" that an investor seeks. According to Zamora, many investors in textile factories have left Costa Rica due to the significant minimum wage increase in the 1980s. This means that maquila industry, as a whole, has very contradictory consequences—it can offer jobs where there are none, yet, by nature, it works against any improvement in workers' wages. The Costa Rican example also demonstrates how easily it can pack up and move on if it gets better "advantages" elsewhere.
In addition, investors in maquila prefer authoritarian governments where there are no unions or they have no power. None of the three private companies in the Free Trade zone has a union. Though Latino said that he would accept any "reasonable" workers' organization in Crecen, he had previously referred to workers interested in forming a union as "rebels," who, according to him, "left on their own."
Maquila workers, for the most part women (Zamora estimates 70% in the zone, Latino estimates 90% in Crecen), are protected by the same laws as any other workers in the country. Given that occupational health and safety laws are almost non-existent, some analysts are concerned about the kinds of industries that could be attracted to Nicaragua by promoting maquila plants. For example, the lack of restrictions on the use of toxic substances in production is an "advantage" for some industries. These kinds of operations would pose a significant health danger to workers, especially women, who are more vulnerable to certain substances due to risks associated with reproduction.
It remains to be seen what will happen with workers in the Taiwanese and Korean plants. Companies from those countries are much more likely to use repressive measures as production "incentives." Without unions, it will be even more difficult for workers to negotiate under repressive circumstances. Zamora assured that he had already spoken openly with those investors about ways to avoid cultural conflicts and that the zone's administrators will also defend the workers' rights—a poor and paternalism-tainted substitute for a union.
Zamora also claims that maquila plants will bring free worker training in new technologies and the transfer of technology to Nicaragua. This, however, is a somewhat absurd assertion. Maquila plants by definition only do piecework—one small part of an assembly process—in the host country. If workers learn a new skill, it is one with very limited use, as is any new technology that an industry would import.
Zamora also asserts that over time there will be "vertical integration" with the local economy, that is, that the maquila plants will begin to purchase some part of their inputs from the domestic market. But while this is true in a few cases, there is no vertical integration in the vast majority. Purchasing inputs from the local economy could interfere with mobility, and the very nature of maquila plants is that they are highly mobile enterprises. If conditions suddenly look better in another country, it is easy to move. The kinds of conditions that could encourage such a move include rising wages, active unions or effective worker health and safety laws—conditions to which we would hope Nicaragua aspires. Because of the "attraction" to investors of conditions that could include a dangerous work place or the abuse of workers' rights, many activists are fighting internationally for a "social charter" that would make it more difficult for transnationals to compete "on the backs of the workers."
Fishing Fishing is another area in which foreign investors have shown a lot of interest, but, as in most others, there has so far been little new investment. Marine resources are considered one of Nicaragua's most abundant and least exploited resources. Over 80% are located on the Atlantic Coast. The director of the Fishing Institute INPESCA, Javier Morales, claims that only 35% of the country's "optimal sustainable potential" of fish and shellfish is currently being exploited. Nevertheless, local environmentalists have expressed concern over the lack of vigilance of marine resources. On top of numerous unlicensed "pirate" fishing boats, legal licenses are authorized without any environmental impact review, and the only existing environmental "control" is that Dr. Jaime Incer, Minister of the Institute of Natural Resources and the Environment (IRENA), is a member of INPESCA's board of directors. And with the recent decision to move INPESCA under the auspices of the Ministry of Economy and Development, it is unclear if even this minimal control will continue to exist.
Foreign investors or joint foreign and Nicaraguan investors have leased the three important state fishing enterprises in the South Atlantic Autonomous Region (RAAS)—the PROMAR y PESCASA shellfish freezing and exporting plants and the shipyard at El Bluff. These are not considered "investments" because, until they purchase the enterprises, the investors are only providing working capital. In addition, Ray Hooker, National Assembly representative from the RAAS, reports that PESCASA is not even operating, though it was supposed to begin in April, because the government chose to lease it to a company with no capital.
According to Morales, one company with Colombian capital and two with US capital have just installed three new fish processing plants in Puerto Cabezas. An engineer working in that town who has seen them says they appear so far to be real fly-by-night operations, with little of the investment in sophisticated freezing equipment and sanitary infrastructure of the older plants in the south. There is also interest in purchasing the two state plants on the Pacific coast, at San Juan del Sur and Corinto, which will be offered for public bidding.
The government has authorized dozens of new fishing licenses for shrimp, lobster and fish in Nicaraguan waters and says there is interest in "nontraditional" sea products such as tuna, shark and squid. But the fishing companies are not even obligated to sell their catch to local plants, and thus contribute a little more to the national economy. According to Morales, both Colombian and Soviet ships sold their catch to other countries last year. RAAS governor Alvin Guthrie has had virtually no luck in his efforts to get these companies to at least hire a quota of Nicaraguan crew or to even use El Bluffs shipyard for gas or repairs.
But while they could offer minimal new job possibilities if such hiring conditions were mandatory to obtain a license, the investments that only involve fishing are not really "investments" at all—they are merely resource extraction activities that do nothing to promote the country's development. And bulk packaging plants such as the new investments in Puerto Cabezas are reported to be barely more than that. An investment that would truly promote development would be not only to fish for tuna but also to establish a tuna canning plant in the country—a new industrial process for Nicaragua. Ramírez says "there's a good possibility" of establishing this particular investment; US, Japanese, Mexican and Venezuelan investors have all expressed interest.
Another investment possibility that has awakened significant international interest is shrimp farming. INPESCA has a six-year development plan for this project, which proposes cultivating 7,000 hectares of shrimp in Estero Real, an estuary on the northwest coast of Nicaragua. It already has requests from foreign companies for 4,000 hectares. Some are already undertaking feasibility studies.
Government strategy and priorities Through the Ministry of Economy's National Program for Export and Investment Promotion, the government is launching an international campaign to attract investment to Nicaragua. With the aid of glossy pamphlets and videos, as well as data banks currently being developed on the country in general and specific joint venture possibilities, this office, says coordinator Ramírez, has begun to train Nicaragua's foreign consuls, set up volunteer support organizations in other countries and participate in numerous international forums. Ramírez hopes to have the resources to move into telemarketing in the near future, to help change Nicaragua's image of instability.
The government's strategy includes encouraging large businesses currently operating in Nicaragua, such as Esso and the British Tobacco Corporation, to expand, and then use them as examples to attract others. Ramírez believes that a few large companies are indispensable for attracting smaller investors, as well as for making some investments possible: in shrimp farming, for example, one large company is needed to generate shrimp larvae so that the smaller companies will always have a guaranteed supply.
On the other hand, he says, investment no longer just means large multinationals establishing their factories here; Nicaragua is more interested in promoting co-investment schemes between foreign and national capital. Such joint ventures allow greater local control of resources as well as technological transfer. They also do not generally alter the local balance of power as multinationals can.
Using Chile as its model, the Nicaraguan government's priorities, according to Ramírez, lay in agroindustry and the industrialization of natural resources, such as canning fish and processing lumber into plywood or furniture. Other investments, he says, such as in tourism, transportation and maquila, are complementary but not strategic. The government's priorities, therefore, appear to fall precisely in line with "good investment" as described above.
But this is contradicted by a document called "Basic Information for the Investor," written by Ramírez' office. It specifically says that "the highest priority is placed on investments in nontraditional agricultural exports," which are not likely to further the country's industrialization and development. While the director of Nicaragua's Non-traditionals Commission, Alvaro Velásquez, told envío of his hopes for establishing plants for making and canning fruit juices, the most common nontraditional crops grown in Central America—such as melons, snow peas and broccoli—involve no industrial processing whatsoever. In addition, while crop diversification in itself is clearly not a bad thing, nontraditional agriculture generally brings with it excessive agrochemical use, with all the health and environmental consequences that generates, as well as significant economic risks, and should hardly be Nicaragua's top investment priority.
The November 1991 preliminary version of another Ministry of Economy (MEDE) publication, "General Guidelines for a National Development Strategy 1991-2000," states that development would be based on both natural resource processing and "production processes not integrated at the local level, which form part of multinational production chains and make intensive use of national labor," in other words, maquila industries.
The Nicaraguan government's general strategy seems to be to accept whatever investment it can get—even that of little to no benefit to the country—in hopes of later drawing in the kind of industrial investments it would prefer. There are clearly many in government who believe that investment is good in and of itself and, thus, that any investment—even if harmful over the long term—is better than none.
Weak links in the system Environmental review mechanisms. While the Chamorro government proclaims that environmental and natural resource preservation is one of its key concerns, the structures that are supposed to guarantee an environmental review with respect to investment considerations appear weak in practice. This means that investments that do more harm than good could actually be approved. If national and international outrage had not forced the stoppage of a huge forestry concession to the Taiwanese-financed company Equipe de Nicaragua, clearly incompetent in sustainable forestry methods, it seems apparent that the concession would have continued to slide right through the approval process.
Even without what appear to have been shady intentions behind the Taiwanese concession, the case raises numerous doubts about the effectiveness of the mechanism for reviewing investment proposals as well as the government's commitment to protecting the country's natural resources. The only other investments that the government has rejected are those related to toxic waste dumping.
The Foreign Investment Law. This law, just put into effect, offers certain guarantees and benefits to investors as well as imposing some obligations on them. The law covers not all investors but only those who choose to accept it, which means there is no national law that truly regulates investment. Several MEDE officials admitted in separate interviews that an investor may make any direct arrangement in any part of the country without going through a central office. Who, then, decides if an investment is going to benefit Nicaragua? Or if, like the Taiwan concession, it would do more harm than good?
Joaquín González, MEDE's foreign investment director, pointed out that the law requires any investor to obtain a written guarantee from the Institute of Natural Resources and the Environment (IRENA), but was unable to explain how this applies to those who do not choose to follow the law. Edgar Sotomayor, director of the Technical Office of the National Commission on the Environment and Land-Use Planning (CONAMOR), also of MEDE, said that the majority of current investments—in infrastructure—are financed by international organizations such as the International Development Bank, which require environmental impact statements. One way or another, Gonzalez insisted, if an investment will have an environmental impact, IRENA will find out.
Ramírez stressed that any investment in natural resources has to pass through the MEDE offices; a license is required to fish or cut wood, for example. But he also admitted that "there is a serious problem with respect to the regulation of natural resources. We are still not clear if it's Economy [MEDE], IRENA, or someone else. We have to resolve this." One good example is the case of petroleum. The Nicaraguan Energy Institute (INE), the electricity utility, currently oversees the distribution of oil imports. It should not be in charge of authorizing concessions for oil exploration.
Atlantic Coast autonomy. Another weak link in the investment approval system relates to respect for the autonomy of the Atlantic Coast. According to Ray Hooker, "The Autonomy Law stipulates that the autonomous parties must participate not only in the planning of any program the central government wants to put into effect in the autonomous regions, but also in its execution. In other words, the central government cannot carry out any major program affecting the natural resources of the region without the consultation, participation and consent of the autonomous governments."
In practice, the central government has consistently ignored this stipulation. INPESCA, for example, appears not even to have informed the RAAS government that the lease agreement to foreign companies for the PROMAR and PESCASA plants includes an option to buy at the end of three years. Continual conflicts between the central and regional governments over the management of fishing led the central government to finally agree to eliminate INPESCA and establish a new entity in which the coastal governments would not only participate but have a determining say. This change, says Hooker, was supposed to take place before January of this year, but the government has not complied. Nor did it officially inform the autonomous governments of its recently-announced decision to move INPESCA to MEDE.
The regional governments have also not participated in any way in the process of privatizing the mines located in the autonomous regions, nor has the central government even kept them informed. For its part, the Mayangna organization SUKAWALA recently issued a communiqué criticizing IRENA for authorizing the "indiscriminate cutting of trees" by the company FISONIC in nine Mayangna communities, without any prior consultation with them. SUKAWALA claims that FISONIC is doing nothing to protect the forest.
The central government's most egregious violation of the autonomy law was its failure to consult with or even inform the autonomous government in the North Atlantic Autonomous Region during its negotiations on the forestry concession to the Taiwanese. Even after the outraged regional government lodged public complaints, the central government begrudgingly conceded it a merely formal role.
A better investment In order that investment actually promote development in Nicaragua, a number of improvements can be made. At the institutional and inter-institutional level, each entity's responsibilities should be clearly defined. Every investment proposal should pass through a central body and should include a mandatory environmental impact statement. The government's investment policy should be well defined and support good—and not all—investment; before any investment is approved, the medium- and long-term costs and benefits should be thoroughly analyzed. Where investments that could have serious consequences for the country, such as large forest concessions, are involved, the petitioner's experience and capacity to protect the resource it seeks to exploit should be fully investigated before signing any agreements.
Information on all investments and investment proposals should be available to the public. And the government should facilitate the participation of the public, as well as experts and nongovernmental organizations that work in the affected area, in decisions that affect the lives of Nicaragua's citizens and the future development of the country. This includes respecting the autonomy law and the right of the governments and peoples of the Atlantic Coast to this participation.
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THE TAIWAN CONCESSION: WHAT HAPPENED IN SECRET?
The best example of a very important investment that flew in the face of all environmental considerations as well as of respect for autonomy is the case of the concession of over 600,000 acres of pine forest in the North Atlantic Autonomous Region to the Taiwanese company Equipe de Nicaragua, Inc. How is it possible that, with a government professing a high level of environmental consciousness, this outrageous concession almost became a reality in Nicaragua? How is it possible that such an important stretch of forest in such a large part of the Atlantic Coast was almost conceded without consulting either the autonomous governments or the affected communities? There is no doubt that, without the fierce public opposition that arose, the investment would have been approved. As Roberto Araquistain, IRENA’s Director of Forestry, admitted, “I think the international and national press had enormous influence in making things happen the best way.”
The Company’s Shortcomings
On August 5, 1991, IRENA signed the Permit for Exploration and Agreement for Forest Exploitation, Products and By Products, with Equipe de Nicaragua, a national company financed by a Taiwanese transnational. At the same time, a delegation of forestry experts directed by Araquistain visited Malaysia to analyze that company’s capacity to manage a sustainable forestry project. Its final report raised serious doubts about this. “It can be said that the petitioner does not engage in forestry management but in the industrialization of the lumber that is sold to it,” stated the report. “As far as the delegation could observe, the petitioner does not bring any experience in forestry management to Nicaragua and it remains to determine who will provide that. Forestry management in Malaysia is largely the result of a well-trained public forestry administration and a stable agricultural frontier.”
With respect to the possibility that IRENA could assume a role similar to the Malaysian government’s, Araquistain demonstrated the futility of that idea: Nicaragua has 53 forestry employees compared to Malaysia’s 7,000.
The delegation’s report also pointed out significant errors in the potential investors’ petition: for example, the period it allowed for the maturation of tree plantations was 6 to 7 years, while Nicaragua’s northeastern pines mature in a minimum of 20 years. “These observations,” says the report, “indicate that the company does not have forestry experts.” Araquistain told envío that the Taiwanese investors “prepared a document of little value, in order to fulfill the requirement.”
Incer Defends Concession, Conceals Information
In spite of these indications, the government signed a Statement of Intent with Equipe on August 26. It was at this time that information about the concession filtered to environmental organizations, the media and Atlantic Coast leaders. On September 3, IRENA Minister Incer held a meeting with environmentalists. According to Jaime Guillén and Kamilo Lara of the Nicaraguan Foundation for Conservation and Development (FUNCOD), Incer explained that there was still no concrete agreement, that any existing arrangement was only preliminary. He distorted the Malaysia delegation’s report, indicating that it suggested the investment had the possibility of being beneficial to Nicaragua’s forests.
Incer said, “[We must] give this investment, which could come from Taiwan or another country, an opportunity, study it, present an ecologically sound, technically feasible, socially beneficial management plan, then negotiate what benefit a company of this nature—which presents a commitment to the protection of natural regeneration, to plantations in already deforested areas, to payment for the supervision of the management process-would bring to the country… There is interest in studying this alternative, working along these lines.”
It was after this that it came to light that an agreement had already been signed on August 5, by two representatives of Equipe and Patricio Jeréz, deputy director of IRENA, which explicitly “confers the right [to Equipe de Nicaragua] to extract, store, transport, sell and export the indicated forestry products and by-products.”
In his August 26 appearance before the National Assembly committees on the Environment and on the Atlantaic Coast, Dr. Incer defended the agreement, maintaining that it did nor represent a concession, basically because of all the requirements that Equipe still needed to fulfill. According to Ray Hooker, “Incer blatantly lied to the National Assembly, then made wild accusations against us, calling us hotheads, ignoramuses, etc.”
Guillén, Lara and Hooker, as well as Pedro Obregón of the Nicaraguan Environmental Movement (MAN), contend that there was a systematic effort to conceal information about the case from interested people and organizations. This, says Obregón, provoked a strong reaction and deep distrust, even from international environmental leaders and old “trusted friends” of Incer. The government made no effort to either include or inform the region’s autonomous government, or even INDERA, the central government’s entity that attends to the coast, despite the autonomy law and common sense. Instead, it sought to conceal information from them too.
CONAMOR director Sotomayor denied that there were obstacles to the flow of information, and also stated that the decision was the government’s in any case, no one else’s. “Decision,” he said, “must be well made, not because [some nongovernmental organization] would say this or that; that’s not the way it should be.” But a government that so loudly lauds democracy cannot deny that this attitude is highly undemocratic. The people did not abandon their right to participate in decisions about the country’s future after electing their new leaders in February 1990. As Guillén says, “Government officials should use public opinion as a resource in order to improve their institutional roles.”
Why did Dr. Incer—until this a proven environmentalist—support the project and make an enormous effort to conceal information? Some believe that his position simply demonstrates the contradictions between being an environmentalist and being a minister who has to respond to certain central government pressures—one cog in a very large wheel. Others belive that those pressures in this case where especially strong, because of some of the interest apparently at stake.
The Obscure Elements
If not for still other curious aspects of the case, one could imagine the possibility—though remote—that in the end the system would have worked by itself and IRENA would have rejected the investment on technical grounds, without the need for so much public pressure.
Many questions remain unanswered. Ray Hooker insists that all high government officials were fully aware of this case for before it hit the news. Why did they do nothing? Why did not even the FSLN’s central structure respond after opponents to the deal specifically informed and appealed to them? There are strong rumors that the Sandinista Popular Army would have directly benefited from this investment. Are they true?
In addition, why would the government sign an agreement with a rapidly-formed new national corporation (Equipe de Nicaragua), instead of directly with the indicated Taiwanese transnational? Who had shares in that Nicaraguan corporation?
Why were Assembly representatives and coast leaders Hooker and Mirna Cunningham threatened, warned that they were “treading on dangerous ground”? Why did Fernando Chang, Equipe representative for the Taiwanese, tell them that he had been assured that they would not be in a position to stop this project, that they would be “silenced”?
While these questions may never be answered, the Nicaraguan people have he right to demand that, for the future, the government establish an investment review system that does not allow space for these kinds of situations.
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