Nicaragua
Two Faces of UNO
Envío team
Since the UNO coalition came to power two event-packed months ago, views on what the new government actually represents have swung widely. During the public workers' strike in May, many wrote off as wishful thinking the hoped-for distinctions between the currently dominant Chamorro faction and the political and economic hardliners led respectively by Vice President Virgilio Godoy and the big business association COSEP. Others still see differences, although mainly ones of tactics and timing, that could be important to the design of a revolutionary strategy in the coming period.
A Nicaraguan analyst said recently that it would not be adventurous to predict the near future—it would be suicidal. Any new government tends to try to gain the most ground in the first “honeymoon” period, before the losers determine their opposition strategies and dig in. In Nicaragua's case, that initial obstacle to an accurate assessment of UNO's longer-term strategy is complicated by three others. 1) With no history of a peaceful change of government, even between the barely distinguishable Conservatives and Liberals of the past, Nicaragua must now deal with changing from a revolutionary government to a non-revolutionary one at best. 2) UNO is not a party with a past; it is a new and badly fractured coalition of 13-½ parties, only a few of which even existed as such before 1985. 3) UNO was caught off guard as much as the Sandinistas were by its unexpected win. For all these reasons, when UNO got the ball and began to run with it, players' assignments and the exact direction of the goal post were still in dispute. It is not yet clear who the final coach will be, what signals mean and whether a play is a tactical end run or a strategic forward drive.
A fourth and crucial factor affecting UNO's immediate policy options is that Nicaragua's economy is on its knees and requires drastic austerity measures to stabilize. Is the disproportionate burden of these measures being put on the poorer sectors proof that the campaign promises to them were all lies?
Most assumed that COSEP, always the Sandinistas' strongest and most strident political opponent, would be the major influence in designing UNO's economic logic and ideological guidelines for restructuring society. But there are no “Cosepistas” or even “Godoyistas” in President Chamorro's Cabinet. Most of the key people around her—in addition to being relatives in several cases—are members of a two-year-old economic thinktank called CORDENIC (Commission on the Recovery and Development of Nicaragua). So far this group—known as the “Las Palmas Group” after the neighborhood Chamorro lives in and ran her campaign from—is calling the plays, but it would be precipitous to assume that COSEP has gone to the locker room in defeat.
This article has the unadventurous objective of defining the principal economic coaches—COSEP and CORDENIC—and looking at their game record, not the suicidal one of predicting how they will play this game and to what precise end. It is based mainly on past documents, pronouncements and activities, and on the new government program. But since words and actions have a way of not necessarily being congruent, we have tried, with several examples, to compare and contrast words with actions since UNO took office. We leave it to the future to determine which were feints and which strategic moves.
COSEP & Co.In the constellation of Nicaragua's business associations, COSEP (Supreme Council of Private Enterprise) is a young star, bursting into the firmament only 12 years ago. By 1980, it represented six national business associations. The oldest, the Chamber of Commerce and Industry, was, founded in Managua in 1928 (Industry later split off as a separate chamber). The two youngest were formed just before the revolutionary triumph: the Union of Agricultural Producers (UPANIC) in March 1979, and the National Confederation of Professionals (CONAPRO) in May 1979. The fifth is the Chamber of Construction, and sixth the 17-year-old Nicaraguan Development Institute (INDE), private enterprise's “human face.” (See “Just the Facts,” for further details and stated objectives of these organizations.)
A Brief History of OppositionThe business associations' defense of private property took on weight only shortly before Somoza's downfall, although the Chamber of Commerce had entered into direct conflict with the dictatorship over its fiscal policies four years earlier, and by 1978 its strong anti-Somoza pronouncements got its legal status suspended. As with INDE, which suffered the same fate, its legality was reinstated shortly after the revolutionary triumph.
In a paper on COSEP, researcher Marvin Ortega defines two key elements to understanding the private sector's timid behavior up to that point: the retarded formation of a national state resulting from constant military interventions and civil wars until the 1930s, and the business sector’s consequent slowness in coalescing as a solidly integrated hegemonic class. A third factor, which may have been too self-evident to mention, was the imposition of a family dictatorship which, though unquestionably capitalist, usually opted for family accumulation over the interests of the class as a whole and skillfully kept the private sector divided.
Until the 1972 earthquake, the bourgeois “opposition” was generally an accomplice to Somocista policy. Ortega notes two particularly clear examples of this complicity. One was the jailing and deportation of German-Nicaraguans during World War II, and the confiscation of their agricultural, industrial and commercial properties; the Chamber of Commerce even published US Embassy lists of their names in its bulletin. The other was the agroexport development of the 1950s, in which Somoza broke up indigenous communal lands, particularly in cotton and coffee zones, opening the economy up to rapacious enrichment at the expense of the peasants. This led to the famous bipartisan “Generals’ Pact,” in which state policy supported private initiative. Capital accumulation was further aided by the creation of the Central American Common Market in the early 1960s.
Only when the Somozas increasingly used the state apparatus and USAID funds for what the opposition saw as “unequal competition” did the pact begin to crumble; opposition businessmen were now being edged out alongside the peasants. In that context INDE, the strongest association at the time, pushed the idea of an umbrella organization to defend private sector interests as a whole. Thus COSIP (Superior Council of Private Initiative) was born, shortly before the Managua earthquake. In 1974, COSIP held its first convention, also prompted by INDE, but even though its members agreed that Somoza was becoming too greedy, they were divided on social and economic development alternatives.
In the tumultuous last years of the 1970s, political forces also tried to create alternatives. La Prensa director Pedro Joaquin Chamorro formed the Democratic Liberation Union (UDEL) with other disaffected politicians and businesspeople; his assassination on January 10, 1978, catalyzed opposition to Somoza. Two weeks later UDEL, backed by INDE-COSIP, called for a passive “civic work stoppage” to demand clarification of Chamorro's death, the resignation of Somoza and “democratization.” Their fear that a more active strike could get out of hand was not unfounded; thousands of workers, led by revolutionary union leaders, mobilized in their neighborhoods. Somoza's refusal to respond and the National Guard’s repression led the bosses to call off the business shutdown after two weeks, but the popular movement had been notably strengthened and leadership of it came increasingly into FSLN hands.
Within weeks Alfonso Robelo, outgoing INDE-COSIP president, founded his own political party, the Nicaraguan Democratic Movement (MDN). a wealthy young cooking-oil magnate, Robelo had his base among similarly young and dynamic entrepreneurs. He called for reforms beyond those of UDEL and well beyond what COSIP’s rightwing sectors could accept. Robelo also helped organize a new political coalition in May 1978—the Broad Opposition Front (FAO). The FAO was promoted by the Group of 12, progressive professionals and businesspeople who were a bridge to the FSLN. On August 25, three days after the FSLN took over the National Palace, the FAO called its second strike in a month. After four days, INDE and the Chamber of Commerce endorsed it-by which time it was turning into a full-scale popular insurrection.
When the September insurrection failed to topple Somoza, the US saw its chance to recover the initiative. It moved in with a mediation scheme Nicaraguans dubbed “Somocismo without Somoza.” Rightwing groups in the FAO pushed through its endorsement, causing the Group of 12 to withdraw; with an infusion of powerful new conservative members, COSIP changed its name to COSEP and backed the US proposal. A small flaw in the US plan was that Somoza himself did not endorse it; he refused to resign.
With or without Somoza, however, no variant of “somocismo” was acceptable to the Nicaraguan popular sectors. Led by the FSLN, they forced Somoza to flee and brought his hated National Guard to its knees. On June 27, 1979, COSEP endorsed the provisional Government Junta of National Reconstruction, named 11 days earlier in Costa Rica. But by July 19, as the triumphant Sandinista guerrillas marched into Managua, COSEP was already voicing anxiety about the course of the revolution.
Mixing Business and Politics In early 1980, COSEP president Enrique Dreyfus told a magazine interviewer that “the FSLN is intelligent, capable and pragmatic, and private enterprise is responsive to reality. The terms of reference are therefore pragmatic.” Like many current statements of the UNO government, it was encouraging, but pragmatism is as relative a term as is reality. By June, when the interview was published, both Robelo and Violeta Chamorro had resigned from the governing junta and the COSEP chambers had begun to boycott the six seats they were given on the co-legislative Council of State. COSEP heavyweight José Francisco Cardenal even denounced his appointment as vice president of the Council as a “hellish conspiracy of the Communist machine,” and left for Miami.
Reality for the FSLN was that Nicaragua was now a revolutionary state with a national project based on a mixed economy, political pluralism, international nonalignment and participatory democracy, in which popular sector interests would be hegemonic. Its pragmatism consisted of guaranteeing a place for big business if it accepted that framework. It was not the reality COSEP envisioned when it endorsed the five-person government junta that had two of its own on it, or agreed to sit on a legislative body in which it and its political allies had enough votes to pass bills. Contrary to the FSLN's pragmatism, COSEP's consisted of the view that, unless it controlled political decision-making, it could not guarantee its own economic future. The bourgeoisie represented by COSEP and the rightwing political parties had no intention of playing a minority role in the new state, particularly one that did not share its ideology.
In November 1980, COSEP issued a scathing communiqué, criticizing abuses and arbitrariness in state and civil affairs, the lack of a legal framework, no definition of the “rules of the game,” press restrictions, “artificially created” labor conflicts, and, most importantly, the private sector’s marginalization from government decision-making. By then, the government had nationalized the banking system and foreign commerce and decreed the confiscation of properties of the Somoza family and “allies.” While the communiqué addressed those actions, it took most issue with the FSLN’s readjustment of the Council of State for new popular organizations that had come into being with the revolution and old parties that had disappeared: in the new structure, the bourgeois bloc of COSEP and the rightwing political parties would only have veto power. COSEP members staged a walkout from the Council of State; their cry of foul play was heard all the way to Washington.
Also in November, COSEP leader and major coffee grower Jorge Salazar was killed in circumstances reportedly involving his role in gunrunning to the incipient contras. Salazar was immediately made a COSEP martyr (later also the namesake of a contra regional command). His death led many COSEP figures to join the Somocistas in exile, abandoning their properties to confiscation. A smaller but active sector decided to tough it out in Nicaragua, demanding their rights in an ever louder and more strident voice. The only thing they lowered was their investments.
UPANIC organized sorghum, milk, banana, sugarcane and rice growers to combat what it called the “tendency of FSLN leaders to divert the Nicaraguan revolution toward left totalitarianism and the possible disappearance of the private sector.” Such venomous rhetoric only turned FSLN mistrust into contempt, particularly after the newly elected Ronald Reagan openly sided with both the rightwing civic opposition and the armed counterrevolution.
Genuinely pragmatic positions within COSEP, however, still found an ear in the revolutionary government. INDE maintained a low public profile for several years, and was rewarded with space to expand its development activities and continue receiving US financing. The Chamber of Construction and the rice growers’ association, too, kept their public exposure low, except to make moderate and conciliatory speeches. They worked on establishing good relations with the relevant ministries, emphasizing technical arguments, their demonstrable efficiency and the fact that they could transfer the costs of their non-cooperation to the government. While this pragmatism did not gain them the top-level decision-making role they sought, they received favorable economic treatment.
In October 1981, Defense Minister Humberto Ortega publicly threatened the pro-US opposition in the event of external aggression, to which COSEP responded with an open letter warning that the revolution’s transformation into a “Marxist-Leninist adventure” would only bring “more bloodshed and suffering to our people.” The next day four COSEP leaders were jailed, among them COSEP president Enrique Dreyfus. They were released in February 1982, after COSEP mounted an international campaign. That same month the US press revealed that Reagan had authorized $19 million for the contras, who promptly blew up two major bridges in northern Nicaragua. The Sandinistas decreed an emergency law limiting certain civil rights; the country tensed.
COSEP tangles in politicsLater that year the “Coordinadora” coalition of rightwing parties and trade unions was formed, with COSEP unofficially at its head. In December 1983, with elections promised for the following year, COSEP announced nine necessary preconditions for an “authentic” process in which the Coordinadora would agree to participate—all were political or ideological issues more properly suited to a campaign platform than to an ultimatum for participation. COSEP and INDE also became the unofficial voice of the US government, announcing its proposal to provide “generous economic support” to the Sandinista government if it pursued “genuine” national unity with the opposition. In February 1984, a COSEP leader declared in Washington that the Coordinadora would abstain from the elections unless the government met the nine conditions; other Coordinadora members publicly disagreed. Recognizing the importance of Coordinadora candidate Arturo Cruz's participation to international acceptance of the election results, the Sandinista government negotiated with him right up to the eve of the November elections, all to no avail. Cruz later admitted that the Coordinadora never had any intention of running.
Following the Sandinistas' win, economic policy shifted to respond to the increasing production downturn and the political requirements of the war. Domestic trade was freed up and price controls lifted; “patriotic” agricultural producers were offered more financial facilities, and the agrarian reform policy began to provide land to individual farmers rather than insisting on cooperativization. Nonetheless, COSEP kept up its pressures; it wanted political power. The state of emergency, in place to varying degrees until the Esquipulas peace process began, limited COSEP’s access to public opinion; it shifted to international denunciations that made their way back on the Voice of America. By this period, COSEP had almost totally abandoned economic demands in favor of political and ideological rhetoric.
COSEP had been badly hit by confiscations, the declining economic situation, the exodus of many of its members from the country and, not least, the defection of important producers who felt COSEP's political posture was economically counterproductive. COSEP had clearly embraced the US strategy of militarily defeating the Sandinistas; some COSEP members directly supported the contras in the field. Those who did not want to be identified with that policy resigned. Within the increasing economic constraints imposed by the entire war syndrome—falling production, rising inflation, shrinking international aid, shortage of workers, brain drain, severely limited economic options, etc.—producers who stuck to economic demands and showed a “patriotic” willingness to continue producing were heard.
Of the agricultural producers who left COSEP, many became sympathetic to or members of the pro-Sandinista National Union of Farmers and Cattle Ranchers (UNAG), which was flexible enough to fight for their interests along with those of peasants and small and medium producers. UNAG, created in 1981, now claims 80,000 members organized in over 3,000 cooperatives of one kind or another and more than 1,000 individual affiliates. According to UNAG figures, its members control more than 55% of national coffee, cotton and beef production, 80% of com and beans and 22% of rice for domestic consumption.
UPANIC at one point had considered organizing corn and bean producers, but concluded that “even though fundamentally important for the national economy, these crops are almost all in the hands of smallholders, who are difficult to associate.” UNAG succeeded in organizing them around its stated objectives of supporting national reconstruction; working to raise their living standard and production; developing national unity with workers and all patriotic sectors of the country; participating in tasks to assure peace, production and sovereignty; and representing producers' interests in problem-solving participation with the state and other bodies. While COSEP is strongest in urban areas, UNAG is strictly rural; COSEP is also a far larger labor contractor, while UNAG members tend to rely more on family labor.
Enrique Bolaños, COSEP president between 1983 and 1988, showed no signs of rethinking COSEP's polarizing strategy, despite its continual losses. “We accept now with clarity and pride,” he said in 1987, “that as much as the government tangles in production, COSEP will tangle in politics even more.”
Handing over LibertyCOSEP's weakened member associations were reactivated somewhat when, in 1988, the FSLN bypassed COSEP to discuss possible agreements (concertation) directly with them. To raise production, the Sandinistas gave further production incentives, eased financing, guaranteed respect for property and controlled possible strikes. It also began to return some confiscated factories and farms. Bolaños called the measures “late,” and gave little sign of genuine interest in concertation. With the 1989 election campaign, he even accused the Sandinistas of trying to buy votes with these measures. “Liberty is the life of free enterprise. Those who hand over liberty for temporary security ... do not merit either liberty or security.”
When Bolaños lost his bid for both the presidential and vice-presidential candidacy of UNO in mid-1989 and the COSEP draft of a government platform, called the Blue and White Plan, was not adopted, COSEP virtually retreated from the campaign arena. Only two weeks before the elections, however, INDE used its bulletin to urge people to vote, defining the choices as between “the rule of law, liberalization of the economy with social equity, an end to militarism, recuperation of technical and professional education levels” or “a failed ideology like Marxism-Stalinism.”
After UNO's win, COSEP aspirants to powerful ministry positions found themselves in face-to-face combat with members of the UNO Political Council, who had the same idea. The day before her inauguration, Violeta Chamorro announced her Cabinet selections. There were none from the Political Council and only two from COSEP—Jaime Cuadra, a large landowner, and Gilberto Cuadra, successor to Bolaños as president of COSEP and reportedly a participant in drafting the UNO program. Both angrily resigned the following day, when President Chamorro announced in her inauguration speech that she would retain General Humberto Ortega as head of the army to oversee contra demobilization and the reduction of the army.
What’s a CORDENIC?CORDENIC was founded in April 1988, once the Esquipulas process was underway, its founders explain, to contribute to the debate about Nicaragua's economic reconstruction in peacetime conditions. CORDENIC members saw two requisites to lasting peace: 1) a change of attitudes by all sectors of society, in which roles and responsibilities would be redefined, and 2) the identification of strategic economic priorities. To those ends, they sponsored a series of forums the following year at the Central American Institute of Business Administration (INCAE).
It was the year, not coincidentally, that the Sandinista government announced its willingness to seek concertation with the private sector, whereby the government would negotiate economic concessions in exchange for the private sector's agreement to invest in reconstruction. Forum topics thus included “Agreement Process for Economic, Social and Political Pacts” (including a seminar on negotiation techniques), “Strategy and Alternatives for Exports,” and “Designing the Future: Reflections on a Worker-Entrepreneur Understanding for Reconstruction.”
The forum organizers generally invited business representatives, political party leaders, union officials and government representatives, but government representatives and the FSLN itself were sometimes excluded. Asked about the exclusion of government representatives from a presentation by COSEP president Enrique Bolaños on “Negotiations Between the Business Sector and the FSLN,” CORDENIC member Francisco Mayorga, then an economics professor at INCAE, explained that “this is an academic and reflective event for independent sectors of the country. Possibly we will organize a similar event later for leaders of state enterprises and government technicians.” Political motivations, though subtly framed, underlay the events.
CORDENIC defined three other programs at the outset: through an agreement with INCAE, it would set up a databank and documentation center for use by all sectors, conduct a macroeconomic and sectoral investigation of Nicaragua and hold essay competitions to promote open and creative intellectual debate regarding the construction of a more just and humane society. As CORDENIC president (and former COSEP president) Enrique Dreyfus told La Prensa, “Given the enormous problems and polarization resulting from the political conflict, individual action and decisions have to be based on an element of logic.”
The programs demonstrated not only CORDENIC's proclivity for stimulating intellectual participation, but also for learning from other experiences. Two of the forum seminars, one on hyperinflation and another on concertation, included studies of other countries’ attempts, good and bad.
Of CORDENIC's two requisites for peace, some headway was made on identifying strategic economic priorities. The other—changing attitudes and redefining roles—was less successful, at least with the opposition. Barricada reported that politicians showed no interest in economic problems or the need for dialogue in polls CORDENIC conducted by participant category during the forums; the UNO parties used the early forums mainly as a platform to try to unite the others behind a single candidate. In turn, a union representative from the Socialist Party’s General Workers Confederation criticized both politicians and businesspeople for their lack of concern about workers. And while CORDENIC member Francisco Rosales later claimed that “the FSLN never understood what concertation was ... it was a monologue,” even La Prensa reported that Rafael Solís, representing the FSLN, had on several occasions announced the government party's willingness to dialogue and even to reform the Constitution. Even Jaime Bengaochea, president of COSEP’s Chamber of Industry, reportedly said, “I feel optimistic because there is a willingness in the government that didn't exist before.”
CORDENIC's eight members remained aloof from the polarizing rhetoric, carefully choosing neutral language that would not antagonize either side. For example, while attributing the economic problems to the government’s “counterproductive economic policies,” CORDENIC's founding document recognized that “the economy was severely affected by the actions of the counterrevolution”—an acknowledgement COSEP avoids.
In a political climate where such circumspection was a rarity, it fostered speculation about CORDENIC's underlying aims. Did it plan to usurp COSEP's leadership of private enterprise, or at least provide an alternative association for those who felt COSEP’s politics jeopardized their economic interests? Mayorga tersely put the idea to rest in an August 5, 1988, interview in La Prensa: “The commission is a small and closed group that is not seeking partners or affiliates.” He added that while not all of CORDENIC's eight members are businessmen, those who are belong to COSEP associations. (This, intentionally or not, falls diplomatically short of saying they support COSEP politics.)
Then did CORDENIC have political ambitions to pattern itself after the internationally prestigious Group of 12, to build support for a new political alternative? Mayorga gave a similarly succinct response: “We don't want to get involved in the political debate for two reasons: first because none of the members is political; we have neither political ties nor [party] militancy. Second, because we share the concern that...no effort is dedicated to thinking about how to get out of the economic prostration once a political solution and peace have been reached. We can contribute professional and technical points of view...in a high-level debate about the country’s future.”
CORDENIC members were in a good position to do just that. Many had studied at INCAE, highly respected for its technical and professional excellence, and all studied business and financial administration abroad at schools like Harvard, MIT and the Sorbonne.
Despite Mayorga's assurances that they had no interest in politics, four have become key members of President Chamorro's Cabinet: CORDENIC president Enrique Dreyfus is foreign minister; Francisco Mayorga, CORDENIC's secretary general, is Central Bank minister; the coolly rational Antonio Lacayo is minister of the presidency; and former FSLN leader Francisco Rosales heads the Ministry of Labor with an Orson Welles flare. (See “Just the Facts” for biographical data on all CORDENIC members.) Rosales simply explains, “The president called on us to play a role.”
INCAE—forging techniciansINCAE has been a foundry for other members of Chamorro's Cabinet as well as those in CORDENIC. Minister of Economy and Development Silvio De Franco, and Finance Minister Eduardo Pereira both taught there, as did Mayorga.
INCAE celebrated its 25th anniversary in February, having graduated 1,300 Masters in Business Administration, double that in top management, and 58,000 more in executive seminars, many of them Sandinista state administrators. In 1983, INCAE organized an international postgraduate program in functional administration and founded a banking administration program. The following year it opened new installations in Costa Rica, but, to the surprise of many, maintained its campus in Managua.
Academic director Francisco Leguizamón stressed the importance of INCAE's “case study” methodology in a La Prensa article on the anniversary. “It is like democracy in learning and makes protagonists of the students themselves, who are responsible for finding the solution in a gamut of possible roads.” It is a technical, pragmatic approach, one that, in the best of circumstances, would appear to remove ideological straitjackets and inspire creativity.
Linked to Harvard, INCAE receives funding from the Ford Foundation, the Interamerican Fund, and enterprises in Ecuador, Panama, Central America, Germany, Norway and Sweden. Leguizamón defines INCAE as multinational, academically independent and apolitical—the latter, he insists, a condition of funding as well. Sandinistas who have studied there praise its academic standards and do not view it as a tool of US policy. “INCAE people have their own ideas,” says a former Ministry of Agriculture official. They stop short of agreeing that it is apolitical, however. “Mayorga used INCAE during the election campaign,” one Sandinista pointed out.
INCAE's “own ideas” and its backing of Mayorga caused one INCAE professor to contradict himself. In a March 23, 1990, La Prensa interview, Hans Peter Lankes, an econometrician who participated in several of the forums, endorsed Mayorga’s accusation that the Sandinistas had intentionally “ambushed” the economy by printing more money, making necessary the strong devaluations immediately after UNO took office. Later in the article, however, he said that “inflationary pressure will not come from excess of demand, because there's no more money than before, but from the pressure on costs that devaluation could have on the black market.”
Sanford Commission—Forging regional reconstructionIf INCAE fostered an appreciation for technical and professional excellence, and perhaps even ideological tolerance with a capitalist bent, the Sanford Commission provided the opportunity to think through peaceful reconstruction schemes at a regional level. Mayorga and Dreyfus were two of the four Nicaraguan representatives, and others who participated say the final report reflects much of their own thinking. Dreyfus acknowledged that CORDENIC was formed at the initiative of the commission.
The International Commission for the Recovery and Development of Central America, known as the Sanford Commission for its founder, US Senator Terry Sanford (D-NC), was founded four months before CORDENIC, also motivated by Esquipulas. It was made up of economists, development experts, businesspeople, bankers, social scientists, union leaders and current and former government officials from 20 countries. Of the 47 participants, 20 were from the 5 Central American countries, 11 from the United States, and the rest from Canada, Japan, Latin America and Europe.
According to its final report, “Poverty, Conflict and Hope: A Critical Moment for Central America,” published in 1989, the commission's aim was to “foster the peace process, strengthen and stabilize democratic institutions, broaden popular participation and provide a solid base for socioeconomic development.” The group broke with US policy by emphasizing that Central America's problems are “profoundly rooted in the endemic poverty and injustices that have battered the region for some time.”
In its summary, the report describes Central America as “trapped in a vicious circle in which war impedes development, and underdevelopment intensifies war.” Thus, the commission's fundamental premise was that “enduring peace, authentic democracy and equitable development are inseparable...; each is equally necessary to achieve the others.”
The report recommended both immediate measures and elements that must be put in place for sustained development. It stressed social and economic justice, the democratic participation of previously excluded groups, the revitalization of exports, regional cooperation and sustained international support. The commission's recommendations for the region became a virtual blueprint for Nicaragua.
COSEP and CORDENIC: Distinct or just different?Differences between COSEP and CORDENIC can be symbolized by those between Enrique Bolaños and Antonio Lacayo. Bolaños, the traditionalist, is a producer of agroexports (raw cotton); Lacayo, the modernist, is an agroindustrialist (cottonseed cooking oil). Bolaños and most of those around him owe their vast landholdings to family inheritance; Lacayo is a self-made shareholder in processing plants in several Central American countries. Bolaños is a Conservative, but the cotton sector circles in which he travels were once heavily Somocista; Lacayo, like his mother-in-law President Chamorro, has no party affiliation or personal political history. Bolaños is a bombastic political orator, given to distortion and obstinacy; Lacayo speaks like a cybernetician, preferring logic to emotion.
Lacayo's experience with GRACSA, a cooking-oil plant, gives a clue to his idea of government-business relations. According to a December 30, 1988, summary in La Prensa, the state audited and took temporary control of GRACSA in 1982. Whereas the other shareholders took off for Miami, Lacayo stayed and filed a claim with the Supreme Court, which was eventually upheld. With Nicaragua’s cotton production shrinking, Lacayo shifted from cottonseed to soybean processing. He offered the government what La Prensa called a “constructive negotiation,” resulting in GRACSA-ALMESA, a mixed-ownership arrangement. Lacayo told La Prensa: “If you’re a businessman, you have to think about the state's interests and vice versa, seeking the way in which the two can complement each other.” (Shortly after his appointment as Minister of the Presidency, Lacayo resigned his shares in and presidency of GRACSA.)
Class domination vs. class hegemonyCOSEP has few official documents, but its vision of an ideal society can be gleaned from its leaders' pronouncements. Bolaños, for example, has defined five basic principles, all straight from the 19th century English philosopher and economist John Stuart Mill: the right to private property; freedom to use one's own ingenuity and initiative; the pursuit of happiness (freedom of religion, association, action, etc.); equality; and government at the service of the individual. “We aren't masses,” he has stressed. “There is no collective mind, only the individual mind. Man is not and should not be an instrument of government.” His idea of “equality” is as strongly laissez faire as his Adam Smith economic ideas. Inverting classic assumptions about the relation between individual freedom and social responsibility, Bolaños believes that the rights of others end where the rights of an individual begin.
The logical extension of such thinking is a state exclusively organized for and directly dominated by large capitalists. Economically, as occurred with the Somoza dictatorship and similar capitalist “states of exception” in Latin America and elsewhere, the classic tendency for capital accumulation in ever fewer hands and larger units is speeded up. Workers are ruthlessly exploited with little or no state protection, and their own attempts at self-protection are repressed. Small producers are starved out, either by lack of access to credit and a depressed internal market, or by foreclosure when credits they succeeding in getting are unpayable. Equality, to which so much lip service is given, does not mean creating equal conditions for the participation of those historically rendered weaker, but rather that they must compete with the strong in an “equal” setting. The ideological byproduct is that those who fail are “backward”; their failure is made to appear their own fault. Another byproduct is a kind of noblesse oblige paternalism in which social services are not provided as a right of the population, but as a favor to the “less fortunate.”
CORDENIC’s language, at least, differs to a significant degree. Dreyfus has been cited as saying that CORDENIC was inspired by the Kennedy statement, “Ask not what your government can do for you, but what you can do for your government [sic].” La Prensa, which has become almost exclusively the voice of the Chamorro faction since the elections, has published long editorial think pieces about the future system on its “Society and Economy” page. (Although the articles are unsigned, envío learned that their author, Jacinto Mena, has only recently been contracted full time and was previously a professor at INCAE for several years.) One such article on May 26, titled “The State and the New Economy,” explicitly opposes what it calls “absolute laissez faire.” The article argues that “market forces should be used mainly to promote economic efficiency, and selective state intervention to achieve social equity. The ‘invisible hand’ of Adam Smith should be combined with the ‘visible hand’ of the state.” Another article stresses that UNO's proposal for “social market economy” is “far from any restorationist extremism since that would have meant a return to the oligarchic, Somocista past, against which the people justly rose up in struggle.”
The term “social market economy” first appeared in UNO's August 1989 platform, in which “private, state, cooperative and mixed enterprises will function harmoniously.” UNO's February 1990 “Agenda for the Recovery of the National Economy,” later known as the Mayorga Plan, describes it as “based on the principles of liberty, economic efficiency, private property, social equity and a state that participates in production only when production cannot be undertaken by the private sector.” While that is not such a far cry from COSEP, a March 11 La Prensa article adds that the social market economy will “strongly support peasants and medium and small producers, without discouraging the role of the large entrepreneurs, in which the state plays an important, but not exaggerated or authoritarian role.” Another article on the same date adds that it will be “a mixed economy model... with specific social objectives, leading toward concrete ends: progress and development for the country and well-being for the people.”
COSEP ideas of a “mixed economy” do not include the state, only various forms of private property. Except for FONDILAC, a dairy consortium that tolerated state participation after Somocista shareholdings were confiscated, UPANIC has rejected any participation in mixed enterprises with the state.
CORDENIC thinking, on the other hand, excludes neither mixed state-private enterprises nor wholly owned state businesses. Countering COSEP's main argument during the past decade for why production should be in the hands of private entrepreneurs, “Society and Economy” authors posited that “to re-privatize everything would mean renouncing the state as an efficient economic agent.” They went on to suggest that the retention of some enterprises would provide income beyond that which comes from taxes and could be promoted with national social and economic development objectives in mind.
A comparison of the key points in COSEP’s “Blue and White Plan” with the UNO platform in the accompanying box shows both overlaps and differences. In summary, CORDENIC's vision appears to be one of capitalist class hegemony rather than its direct domination. As the Italian theoretician Antonio Gramsci wrote, “Hegemony unquestionably presupposes that the interests and tendencies of the groups over which hegemony is exercised be taken into account, that a certain equilibrium of commitment is formed; in other words that the leadership group make sacrifices of a corporative economic nature.”
The document the UNO government presented to the June meeting of donor nations in Rome speaks of creating a “tripartite mechanism—workers, government and business—to negotiate an equitable distribution of the costs and benefits of [economic] adjustment among the different economic agents.... This tripartite mechanism will similarly be used to determine the minimum salary....”
There is ominous irony in the fact that this “corporativist” tripartite notion was unveiled in Italy. That is where corporativism was inaugurated—by Benito Mussolini's 20-year Fascist regime. It consisted of corporations of employees and employers set up to administer various sectors of the national economy. Represented in a “National Council,” the corporations were weighted by the state in favor of the bourgeoisie and aimed at absorbing the trade union movement to dilute class struggle. Perhaps only by coincidence or ignorance of history, La Prensa on March 11 proudly explained on its “Society and Economy” page that “economic planning will be democratic and will be the responsibility of a National Council.”
Without suggesting that UNO aims at reproducing the fascist states of the 1930s, there are numerous indications that it hopes to co-opt the popular movement. The UNO “Agenda for Recovery” outline for Phase 2 (“Accelerated Recovery: Plan for Reconstruction and Change”) states that “the management of state institutions and enterprises will have the participation of opposition representatives, private enterprise and the workers.” (In this tripartite twist, no justification is offered for the apparent conflict of interest inherent in including private enterprise in the management of state entities. Nor is there even a hint at who the “opposition” might mean).
In a reference to “democratization of property,” the Rome document says the government will “establish worker participation in the profits of productive firms and participation in ownership of enterprises sold through privatization. It will create a Workers' Bank, dedicated to productively investing resources from part of these earnings and making workers further participants in the fruits of development. The government will also design from the outset a broad popular credit program destined to facilitate the creation of small businesses....”
Stress on DemocratizationLa Prensa waxed lofty in its philosophical explanation of what lay behind the reference to "democratization of property” in the Rome document: “The dispersion of property is the basis of the dispersion of power and the democratization of society.”
It adds that measures must be designed to “prevent speculative property transfers and the formation of new latifundios in the short or long run.” It thus assures that UNO's announced plan to provide ownership titles in place of the use titles given out under the agrarian reform “need not be at odds with establishing regulations and restrictions...to protect the interests of peasant families and prevent enormous land concentration in few hands.” Use titles, which do not confer sale rights to the holder, were the Sandinistas' solution to land speculation. La Prensa clearly hoped to assuage widespread fears that the new titles are a means to that precise end.
The “Agenda” brims with plans to democratize property, participation and even financial intermediation, although the latter simply means facilitating the establishment of private financial organizations to compete with the state banking system. Among the references concerning a democratization of society for Nicaragua's popular sectors are the following:
Government spending: Quickly redirect government expenses toward public works and the improvement of social services, particularly health and education.
Public service entities: The poorer sectors will have preferential tariffs.
Tax reform: Reduce excessive direct taxation on the low-income sector.
Emergency Safety Net: A special program to improve the difficult situation of war widows with small children, orphans and war-handicapped.
Special aid to orphanages and nursing homes.
Immediate improvement of retirement benefits destroyed by inflation.
A Social Emergency Fund to create temporary employment to alleviate the situation of families suffering from the country's high unemployment levels.
Small business program: Ample supervised credit program and technical assistance for small producers of goods and services to establish businesses at or near home, especially for single women with children.
Special support to small rural agricultural enterprises of commerce, processing, transportation and storage.
Creation of an institution to provide management training, technical assistance and guidance in establishing new small and medium rural and urban entrepreneurs.
Ensured access to information for small businesses about necessary materials and equipment and supply sources for small and medium production.
Government institution to provide technical assistance for local and international marketing with credit lines for small businesses.
In the past four months, La Prensa's “Society and Economy” page has further amplified UNO's campaign promises to draw the grassroots sectors into its plans for economic life.
Privatization of state properties: "Not only big national or foreign capitalists should be considered, but also workers, who could be encouraged to carry out self-management programs. They should be given more flexible credit treatment, given the redistributive income effects of this kind of property.”
“The workers themselves, in associated forms, could gain ownership of some businesses. These policies express the desire to overcome and go beyond the nefarious Somocista model, in which high macroeconomic indicators were achieved but only benefited a few, especially the military leadership.”
Vehicles, equipment and other assets will be sold in public auction and preferably in small lots, so that cooperatives can benefit from such sales.”
Rural and Urban Small Production: “The program plans to give state lands to landless peasants.”
“Basic grains producers should also be stimulated.... Increased efficiency and productivity can be achieved through assistance and by putting modern technological resources at their reach.”
“Small and medium producers, both rural and urban, are called on to play a relevant role, given their capacity to respond rapidly to favorable stimuli, which do not necessarily imply enormous sums of foreign resources.”
“...Will highlight the role of small and micro-industry, whose capacity to absorb employment and generate income is very high, supporting them with the creation of a multiple-services center and coordination of training programs. Will create macroeconomic policies so micro-businesses are not discriminated against regarding credit or access to inputs.”
Rural and Urban Social Organization: “One proposal is to constitute 'family patrimonies' and promote peasant population groupings in cultivable areas and in villages to give them the benefits of civilization such as health and education.”
The UNO government will support “voluntarily organized cooperatives, even collective property forms,” and “other forms of worker associations.”
“The union movement should prioritize the participation of workers in the ownership of enterprises, accompanied by the democratization of the movement itself.”
Distribution of Wealth: “A tax reform will be effected to modify the composition of tax collection in favor of consumers.”
“Social democracy will be protected to prevent the oligarchization and oligopolization of wealth.”
“The new government is trying to avoid an offensive distribution of income, prevent future social explosions and the economy becoming controlled by big consortiums.”
While there are elements of cooptation in many of these proposals, others are based on healthy economic logic for the grassroots sectors and should be encouraged, particularly those regarding support of small urban and rural producers for the domestic economy. For such support not to be in vain, however, the purchasing power of salaried workers must be improved to create a domestic market.
COSEP president Gilberto Cuadra does not agree with supporting small business. “Look at the United States,” he argues, forgetting that the US began its development with small producers. “To give everyone his little plot of land to grow rice and beans,” he insists, “you're going against civilization.”
Creating a climate of confidenceThe most likely explanation for this plethora of pluralism can be found in the introduction to the “Agenda”: “The objectives of this Agenda can only become true if we can rely on the effective and enthusiastic participation of all sectors of Nicaraguan society.” Francisco Mayorga has said that the FSLN model failed because its proposals were never clear, provoking “a lack of consensus and confidence among business people and politicians.” UNO's problem is the same, but with a class inversion; at least in this vulnerable stage of economic reactivation, UNO cannot afford the destabilizing result of unbridled opposition from workers, peasants and the poorer sectors in general, which could be sparked by a belief that UNO's election signals a return to exclusionary capitalism or by high expectations and no results.
The need for confidence also explains the unusually open debates about such topics as privatization and the future of cooperatives, which have been appearing with great frequency in La Prensa. A “Society and Economy” article on April 21 admitted as much: “The new government must tread carefully to keep the situation stable and turn things in its favor: the population's enthusiasm and foreign support can put the country on the path of development. [This] enthusiasm and confidence [can] be maintained through great government transparency, clear and simple policies and broad dissemination.”
The confidence climate turned quite chilly in May, when the government began a dizzying spiral of devaluations and inflation that has yet to stop. “Society and Economy” tried to come to the rescue with a “transparent” and “simple” explanation. “Our economy is lazy; it has to be reanimated. There are two ways to wake someone up: with taps on the shoulder or with a bucket of cold water. The first is slow but sure. The second is ambitious but risky, since it could lead the sleeper to have a heart attack. Our government has decided to run the risk....”
The militant state workers' strike that followed was triggered not only by their loss of purchasing power, but by an outright government lie. The Agenda states that “the Civil Service Law will guarantee employment to state employees and technicians, including those in ministries and their regional dependencies and in all state entities, disregarding political affiliation.” Yet the government responded to the first partial work stoppages by suspending that law. Aggravating matters further, the very day after strike negotiators agreed that the law would be reinstated and jointly regulated by the government and state workers, President Chamorro sent it to the National Assembly where the UNO bench gutted it of most worker protections. It was the first of many alarming, and even in some cases unconstitutional, legal maneuvers. Since that time layoffs have begun at a growing clip; there are rumors that many are based on “black lists” of Sandinista activist workers.
That was not the only sign that the transparency is little more than smoke to hide actions that do not match words.
An “offensive income distribution” and ensuing social explosion were not avoided by raising Managua Mayor Arnoldo Alemán monthly salary to $1,750 and the probable increase of other high city officials' salaries to $1,500. Alemán then refused city workers' salary demands, forcing them to take the issue to the Ministry of Labor and threaten a strike.
When household electricity bills were issued in June, calculated in the yet-to-be-released “córdoba oro,” rates had also increased drastically.
The Ministry of Health is reportedly faced with a request to cut its budget 40%. Nongovernmental organizations have been asked to take up the slack.
Transport subsidies have been eliminated, doubling the urban bus fare; there are reports that it will more than double again, once the new coins are put in circulation. Free student fares were also eliminated (families with four children in school will now spend up to a quarter of one minimum wage on their transport.)
Devaluations of the official córdoba price of a dollar—to which the domestic price of petroleum products is pegged—have continued at the rate of twice a week, shooting the price up more than 650% since UNO took office. This has caused tremendous ripple effects on internal inflation, while salary increases have lagged far behind.
Even with these measures, COSEP and the business exiles are skeptical. Cuadra says the exiles are looking “for very specific conditions”—the return of confiscated properties, the climate for large exporters and the social situation. Noting that they do not yet like what they see, Cuadra adds that COSEP’s political role may have to continue.
New Revolutionary ChallengesAre these government moves just a bucket of cold water to jolt a moribund economy (which can only offer the possibility of implementing the above programs if it revives), or Machiavellian maneuvers to make the revolutionary sectors misstep? In either case, they are sparking a grassroots reaction diametrically opposed to the confidence the government said it hoped to instill.
A similar phenomenon resulted when IMF-sponsored austerity measures were imposed in Venezuela and Argentina a year ago. The major difference with Venezuela is that there the massive social eruption was spontaneous and put down with equally massive repression. In Nicaragua, a large part of the population is both politically conscious and organized. The eruptions are being channeled into calibrated strikes combined with constant calls for realistic negotiations. So far the government has not responded with either dialogue or repression.
In the governing coalition's division of labor, COSEP has recently taken on the task of trying to isolate and discredit the FSLN. As usual, its appeal is clumsy and resonant only to existing reactionaries. In an official communiqué published in La Prensa on June 2, COSEP denounced the “armed FSLN party” for “well coordinated actions to torpedo the Government of National Salvation,” creating a climate of “political, social and economic destabilization” through its mass organizations. COSEP added that “the Sandinistas' 10 years of bad government, destruction, war, death and internal lack of tranquility is not enough, it still persists, after its defeat in the February 25 elections, in taking the people and the new government on roads that distance us from concertation, development and peace.” The communiqué ended by giving total support to Violeta Chamorro and Virgilio Godoy, all government authorities and National Assembly representatives, mayors and the government plan itself.
Only days later the “destabilization” chant was repeated by INDE, which had delegated its Executive Council to analyze the post-election situation. The council document describes a systematic plan using “gangs, strikes, business sabotage and abuses by the army, which is a privileged class,” demanding that the police maintain public order and respect for private and public property.
The future will depend on how Nicaragua emerges from this critical austerity period. While the government has not yet unleashed any riot police, neither has it shown much sympathy for the plight of the low-income sectors. The Tin Man in “Wizard of 0z” had more heart than the “Las Palmas Group” technocrats have shown thus far.
If Nicaragua gets past the austerity stage without a major social explosion, the revolutionary forces must not allow the UNO government to isolate them from those who will be initially lured by the new-sounding ideas. It will require much more sophistication to understand, explain and counter the moves of CORDENIC thinkers than those of traditional actors like COSEP or the Somocistas.
In large part, the struggle in the coming years will be for hearts and minds, a struggle between different visions of society. Government supporters, recalling failures of the Sandinista model and in many cases distorting the causes of those failures, will argue that individualism is superior. In the debate already begun about cooperatives, for example, the government has argued that those with collective property ownership performed more disastrously than those without. In a La Prensa article titled “The Rescue of Cooperatives,” the author argued in favor of restoring the old Savings and Credit Cooperatives organized by INDE's Development Foundation (FUNDE). “The member of [such] a cooperative feels secure that he is an active part of the organization because he knows that his money is forming part of a whole, destined to procure the common good.” FUNDE itself is reappearing on the scene, and is a likely target for AID funds. A similar issue will be the offer of shares to workers in re-privatized companies.
In this work, a leaf can be taken from CORDENIC's own book. Just as its members studied other countries' examples of halting hyperinflation, revolutionary organizers must familiarize themselves with the good and bad results of worker shareholding, and with more modern applications of corporative models. Furthermore, with the demise of old ideas of the state, new alternatives must be openly debated and experimented with in practice.
Meanwhile, the government’s concern about “transparency” means that the promising statements quoted above are clearly on the record. The government must be held to them. This will undoubtedly be a major fight. The IMF has privately stated that UNO's stabilization plan is not austere enough to work—it has too many social programs. No matter how genuine the new government may have been in proposing them, the IMF, the US government, COSEP and the returning Somocistas will use their economic leverage to re-impose a society dedicated to the welfare of the wealthy.
CONFISCATIONS AND EXPROPRIATIONSBlue and White Plan
* Immediate annulment of all confiscation decrees.*
* Immediate return of unjustly confiscated properties or compensation of just value.
UNO plataform
* Retain Decree 3 [regarding Somoza family, government and National Guard property] and the properties confiscated under it, though cases that merit it may be reviewed.
* Injured party may request review of confiscations, expropriations, land invasions and illegal interventions to demand their restitution or compensation if restitution is impossible.
THE MILITARYBlue and White Plan
* Immediate elimination of obligatory military service.
* Immediate reduction of armed forces according to nation’s economic capacity.
* Begin total dismantling of armed forces; substitution by police. During dismantling, armed forces should be national, apolitical and under civil authority.
* No mention.
UNO plataform
* The same.
* Not mentioned, but will follow contra demobilization.
* A national army without political power or interference.
* No mention, but put under civilian authority. Land assignment, technical training and job priority for those who leave the military.
* Civilian police. Technification not mentioned, but being planned.
STATE AND SOCIETYBlue and White Plan
* Principles of individual freedom, economic efficiency, social compensation, private property and initiative and free enterprise, subsidy of state by individuals and communities but not state subsidies.
UNO plataform
* Authentic democratic national revolution, guaranteeing social and political pluralism, independence from hegemonic interests of world powers and a social market economy.
AGRARIAN REFORMBlue and White Plan
* Protect and guarantee rights of present occupants of affected lands that meet characteristic as subject of agrarian reform.
* Recognize and confirm subjects of “Revised” Agrarian Reform; give real property rights to land.
* All Agrarian Reform land and goods administered by foreigners or foreign companies shall be returned to legitimate owners.
UNO plataform
* Those who occupy lands de ipso will become subjects of Agrarian Reform, respecting decisions of tribunals and compensating legitimate owners.
* Campesinos occupying lands with Agrarian Reform titles will receive ownership titles.
* No mention.
When COSEP railed that the Sandinista “illegal” confiscation decrees violated individual freedom and property rights during the campaign, a Barricada op-ed raised the challenging question of who the rightful owners were. It charged the private sector with a double standard for never defending campesinos’ property rights when they were massively dispossessed in the 1950’s.
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