Concerns about the New Course Of International Cooperation

This expert on regional dynamics analyzes the new shift in relations between Nicaragua and Central America, on the one hand, and international cooperation, particularly European countries, on the other.

José María Castán

International nongovernmental organizations (NGOs) working for development in Nicaragua are very concerned by the change of direction currently being experienced in bilateral cooperation with Nicaragua. The same is true of the cooperation with the Central American region in general, because we mustn’t forget that the strategies of the governments of many donor countries aren’t only for Nicaragua, but for the whole of the region; or that the Association Agreement between the European Union and Central America, which we really fear will be a factor of anti-cooperation, of negative interference with much greater weight than the positive effects of cooperation, is now in the ratification phase.

At the same time, the donors’ development aid and their neoliberal policies are competing against each other, with the neoliberal policies having a greater impact and more serious consequences. The free trade agreement between Central America and the United States (now known as DR-CAFTA following the integration of the Dominican Republic) has also been operating for some time now, with a quite disastrous balance, particularly for peasant economies.

Reasons for the changing cooperation

In Nicaragua’s case, the governments of the donor countries use two factors in particular to justify cutting their aid or the turn taken by cooperation, and in some cases even their withdrawal from the country. On the one hand, they cite the international crisis, which is now being used to explain everything, including decisions to concentrate efforts on other countries or to reorient the forms of aid. On the other, they cite the absence of governance in Nicaragua following the allegations of fraud in the 2008 municipal elections. Most donor countries have explained their positions by appealing to both factors. But which weighs more heavily: the lack of governance in this country, or the international crisis affecting their countries’ budgets?

In our opinion, what appears to be weighing heavier with these governments is their decision to make an important change to the cooperation model they’ve been using. From now on they want cooperation to be more functional to incorporate the receiving countries into international commercial markets and agreements. For countries that have already made decisions of this kind, the argument that Nicaragua lacks governance is very convenient for the readjustment they’ll make to their cooperation policy.

Norway is abandoning Nicaragua, informing that it will now direct its aid toward “emerging countries” like Brazil, Thailand and those of eastern Europe. Sweden left after having collaborated with Nicaragua and its people for a long time, stating that it was going to concentrate on Africa and other countries. Austria and Denmark announced that they are withdrawing from Nicaragua and Holland announced cuts…

The financial crisis certainly implies lower tax collection levels in the European countries, which reduces the percentages earmarked for cooperation in state budgets, so it could be understood that the governments are deciding to concentrate and reorient their diminished resources. But the fact that the Scandinavian countries have exited almost domino fashion—and it’s not certain whether that line of dominos has reached its end—also allows us to think that those decisions must have some kind of relationship with their governments’ vision of the deficiencies regarding governance in Nicaragua. This intertwines the financial consequences of the international crisis and the governance problems in Nicaragua. What is clear is that the consequences of the decision to abandon Nicaragua aren’t positive for the Nicaraguan population, although it’s also difficult to measure the impact the loss of that cooperation will have for the people that were benefiting from the projects involved.

The European debate:
From budget support to MIAL

The European Union’s public and most publicized decision was to suspend its budgetary aid to Nicaragua as a result of the electoral fraud, although it did commit itself to continue supporting the education budget. The EU is currently debating its international cooperation strategies and mechanisms, thus defining a new strategic cycle that will start in 2014. The European debate is much broader, transcending its relationship with Nicaragua, and the budget support mechanism is also being subjected to a discussion that transcends the Nicaraguan case, as it has also been employed with other Latin American and African countries.

The terms of the European debate have been laid out in two green papers, both of which can now be found on the European Union’s web page: “EU development policy in support of inclusive growth and sustainable development. Increasing the impact of EU development policy,” and “The future of EU budget support to third countries.” In the case of Nicaragua, the midterm evaluation of its Country Strategy shows that the European Union will continue cooperating with Nicaragua in the same three sectors agreed to for 2007-2013: governance (particularly democracy, good government and the rule of law), education and the economic sector. However, the cooperation modalities will be different, particularly for the economic sector. Thus, for example, it has already been decided that the EU won’t continue supporting the Nicaraguan budget, although we don’t know whether or not other donor countries will continue with the budget support modality.

The mechanisms that will substitute the budget support haven’t yet been defined, but everything suggests that what the European Union is calling the Investment Mechanism for Latin America (MIAL) will play an important role. This is the most significant change. Through this mechanism, the European Union will seek to provide non-reimbursable capital to capture additional loans, particularly for projects in the areas of infrastructure, energy, transport and social services. Other agencies, European banks and also the Central American Bank for Economic Integration (CABEI) and Inter-American Development Bank (IDB) will also be brought into this mechanism.

The European Union will support those big projects with a small part of non-reimbursable funds, while the rest will come from bank loans, which will imply greater indebtedness for the receiver countries. The final objective is to create attractive infrastructure conditions for European companies to establish themselves in Central America and capitalize the resources of Nicaragua and the region as a whole.

The EU is prioritizing its economic
interests and abandoning conditionalities

Economically speaking, the priority will be growth. The idea is to strengthen the production of small- and medium-sized companies in Nicaragua and Central American as a whole, particularly in terms of complying with sanitary standards to turn them into exporters of their production to Europe, all within the logic of Europe’s Association Agreement with Central America, which has just been signed and is currently in the ratification phase. Cooperation is moving towards encouraging commercial trade, taking advantage of the framework of regional agreements.

Taken in this perspective, the cooperation priority will shift from promoting human capacities to providing Nicaragua and the region with a suitable infrastructure to facilitate the investment of European companies and contribute to the flow of private investment. This change of direction implies distancing itself from issues such as democracy, transparency and the rule of law, which up to now had been fundamental elements in the dialogue with the region’s governments when they provided budget support, conditioning it on compliance with goals related to those subjects.

The new modality neither commits nor conditions the government, which won’t have to be accountable for its way of governing in order for the projects to be implemented. This has a certain logic and appeal: without conditionalities and with these infrastructure investment policies, the European governments will never have to face off against governments and will no longer come up against problems of the sort they have faced in Nicaragua. In Nicaragua’s case, I don’t even think the donors will insist on electoral observation as one of their standards. I don’t think they’re going to condition aid to the way the elections are developed, even if that’s the discourse, because there are economic interests that transcend that conditionality.

That’s the context in which the discourse of international cooperation on governance in Nicaragua has to be placed. And we mustn’t forget that conditioning international aid to the existence of democratic governance in any country is a criterion that the European Union employs at its own convenience, according to different contexts and countries, because Europe continues cooperating with countries that have governance problems similar to or worse than Nicaragua’s.

In bringing about this change of direction, the European Union will continue calling for social projects, as long as they are “complementary” to its cooperation strategy. But if the new strategy centers on investment in macro projects and strengthening commercial relations, it’s worth wondering how civil society-strengthening projects should be formulated in order to be complementary.

We also wonder who’s going to manage the projects of this new modality, what participation the Nicaraguan government will have and how it will do the contracting, the public bids, given that one of the characteristics of this new aid modality is that it no longer places conditionalities on governments, unlike the budget support modality.

So far we don’t really know very much in concrete, but what we already know about the mechanism and the objectives makes us wonder whether we can call this “development cooperation.”

The different forms of Spain’s
cooperation with Nicaragua

The case of the Spanish government’s bilateral cooperation provides an insight here. Nicaragua is still a priority country for Spain, which always bases its argument for cooperation on the two country’s common historical relations and cultural roots. A long history of Spanish cooperation in Nicaragua that’s going to continue with emblematic projects such as the transformation of the La Chureca garbage dump in Managua and various drinking water and sanitation projects. Spain also provides support to state institutions and civil society. The Spanish Embassy in Managua highlights other more concrete reasons for its cooperation when stating in an official communiqué that 30 Spanish companies are already established in Nicaragua, including those of the magnitude of Unión Fenosa, Movistar or Pescanova, and expects more to set up here. Spain is interested in capitalizing its companies here, investing here and, of course, generating profits.

There are three forms of Spanish presence in Nicaragua: investment from Spanish companies, bilateral support to the government, and support through AECID (the Spanish Agency for International Cooperation) for social projects with NGOs that are its national counterparts. There is also development cooperation from the autonomous communities of the Spanish State, which have their own budgets for that, and even cooperation from certain Spanish municipal governments, which also have their own cooperation departments. Nicaragua is one of the countries that most benefit from decentralized Spanish cooperation.

Cooperation through international NGOs

Now let’s talk about the relationship between the Nicaraguan government and the international cooperation that comes to this country through international NGOs. At the end of 2008 there was serious tension between the government and international NGOs when the government launched a campaign against Oxfam UK, the Center for Communications Research (CINCO) and the Autonomous Women’s Movement (MAM). At that moment, the government announced that there would be greater control of international NGOs and that it wouldn’t allow us to support public policy advocacy programs and projects, considering this “political interference.”

This restriction—and that’s how we express it—was an attack on our raison d’être, which is precisely to strengthen capacities among the population, the human beings in the countries where we work, so they can use these capacities to influence public policies, as doing so is both a civic duty and a human right.

During that moment of tension, the government also said it would modify the agreements with international NGOs to add certain restrictive clauses about the projects we were financing. Many of our concerns at that time had to do with regulations and rules. We proposed that the government establish a “single window” where we could go to comply with all of the requirements it deemed convenient. But two years after all that, nothing has happened, either for better or for worse, and I can’t remember any sanction against any international NGO since then.

As had happened before, we maintained a dialogue with different government dependencies during that stage of tension, including the Ministry for Foreign Affairs and certain other ministries, on everything corresponding to us. But we haven’t had any communication with the government for a long time now. It hasn’t opened up any spaces again and the dialogue has been paralyzed. We’ve seen neither advances nor reversals. We’ve been left in limbo. Following that critical moment of great pressure, we now find ourselves in another more positive stage that consists of letting us be. However, we are working with the uncertainty that the situation could change at any moment. But it being an electoral year, we understand that neither international nor national NGOs will be a government priority.

We expected better relations
from this government

It has to be recognized that international NGOs that have been working for a long time in Nicaragua, and that also experienced the era of the Sandinista revolution, were expecting better relations from this government than we had with the governments of (Arnoldo) Aleman, (Enrique) Bolaños, and Violeta Barrios (de Chamorro). And although it can’t be said that there has been any more pressure since that crisis stage, there also hasn’t been any improved dialogue, let alone an explicit recognition of international NGOs or non-official Nicaraguan social organizations.

How did we think that relations should be between NGOs and the government of Nicaragua? We thought they should move toward complementarity: complementing public policies with actions from local NGOs supported by us international NGOs. That would be the ideal scenario. We NGOs neither want to nor should replace the State, which has its responsibilities and the duty to comply with them. Nor do we want to replace society, which has the duty and the right to check that the State is complying with those responsibilities. No matter who’s in government, organized civil society and the NGOs working with it should be valued for what we are: a leading player in building alternatives from below.

El Salvador’s positive experience and
the need to reflect on our impact in Nicaragua

The example of El Salvador during the current government of Mauricio Funes seems a positive experience to us. In that country, government institutions and local and international NGOs are currently working to achieve greater efficacy in development aid, sharing the assessment of the country’s reality to jointly define priorities for the coming years. This kind of space is called “concertation.” There is concertation among the social organizations, which in turn maintain arenas for dialogue with representatives of the Legislative Assembly and with officials from the different ministries. Naturally, the practice, the type of laws they push through and whether they are approved or not, is a different matter, but having these arenas for citizens’ participation is useful and necessary. It’s something that should be done in all countries.

We international NGOs should also conduct an in-depth reflection on the impact of our intervention in Nicaragua, taking stock of our cooperation. That would help provide us a better understanding of our strengths and weaknesses and of what our role and place in this country should be. I think we don’t yet have well-established relationships with our Nicaraguan counterparts and there are still aspects we have to improve. With a more precise stocktaking, we could more appropriately clarify our function for the coming years, always defending a cooperation model centered on attending to people’s needs, as opposed to the model we’re moving toward, which seeks a cooperation that functions to strengthen the markets, incorporating the countries of the South into asymmetrical commercial agreements, such as the Association Agreement with Europe and the free trade agreement with the USA.

Nontraditional cooperation

I also want to refer to the non-traditional international cooperation Nicaragua receives from countries such as Iran or Taiwan. These are forms of cooperation that haven’t been studied very much; they include loans, certain donations and technical assistance, without imposing the kind of conditionalities that the European Union has been applying. It is evident that Taiwan’s cooperation has a political intentionality and is dependent on its recognition as a nation in international forums. The case of Iran also involves political commitments, as President Ortega and President Ahmadinejad stressed when they stated that “Nicaragua and Iran have common interests, common enemies and common challenges.” You have to be a little careful with the political commitments that this kind of cooperation is based on. For example, Nicaragua also has cooperation with Libya and Libyan President Gaddafi recently condemned the democratic revolution in Tunisia. We believe there’s a need to really examine things carefully when establishing political alliances with countries whose reality and political culture is little known.

South-South cooperation and Venezuela’s
alternative to the wealthy countries

My NGO, Mundubat, and many other international NGOs working in Nicaragua are decided supporters of South-South cooperation. So we find Venezuela’s cooperation very interesting as an alternative to the cooperation and market policies currently being proposed by the countries of the North. Blocs or alliances among countries, in this case those of Latin America, are an opportunity for mutual collaboration that could make us less dependent on the rich donor countries, which generally base their cooperation on conditionalities from which they tend to wring unilateral advantages.

Venezuela proposes its cooperation as an alternative to the aid practised by the rich countries. That is Chávez’ discourse. To build that alternative, he has at his disposal the financial resources generated by the country’s enormous petroleum reserves. Can the funds Venezuela is providing to Nicaragua really be called “cooperation”? The mechanism being used is well known: through a commercial agreement between the Albanisa company and the Petronic company, Venezuela exports to Nicaragua all of the petroleum it consumes in a year, which Nicaragua sells at market prices, giving Venezuela back half of what it makes from the sale and keeping the other half. Should the funds from the half that stays in the country be channelled through the state budget? The answer is certainly yes, but this doesn’t happen and there is instead a kind of “camouflage” mechanism, more or less well-designed, justifying the funds not going through the budget because it is a commercial deal between two private companies. It’s not official, but rather para-official cooperation, which doesn’t facilitate transparency in the use of those funds or any guarantees that the benefits derived from them reach the ones they should reach.

Beyond the petrodollars is ALBA (the Bolivarian Alternative for the Peoples of Our America). In Chávez’s discourse, ALBA is presented as a means for economic, political and even monetary integration. But beyond the discourse, ALBA’s current reality is limited, in Nicaragua, to transfers of petroleum through Petrocaribe; financial support for certain social programs; opening the Venezuelan market to Nicaraguan products through an export company that participates in the camouflage mechanism for the petroleum agreement; and to common political positions. Also in Nicaragua’s case—and it’s not the only one—the reference point in the ALBA cooperation is the government, not the State, as it is the government that manages the Venezuelan cooperation through an entity controlled by people of President Ortega’s confidence.

Concerns about and possibilities for ALBA

The weakness of the ALBA project is that it has been designed by a few determined governments for their own profit, so that the fall of the main donor—the Chávez government—or of the aid receivers would imply the fracturing of the project. ALBA is very dependent on the stability of the Chávez government and the governments allied to its policies. Integration processes such as the one proposed by ALBA, should be based on the interests of the countries and their societies, not on personal and government wills, and should be viable beyond electoral vicissitudes. They should also respond to consultation and support from below, which hasn’t happened. All of this would give greater solidity to the project and make ALBA a real alternative.

ALBA can’t currently replace the necessary and strategic Central American integration, which is a crucial arena for this region. As a region, Central America must think and construct itself. And in the case of the Honduran coup d’état, we saw how, according to the way integration into ALBA is organized, that decision can become a negative and prejudicial factor that puts a real break on the already slow process of regional integration.

ALBA’s application in Nicaragua raises certain concerns. Parliament and civil society find it difficult to access information about its implementation. There’s no accountability through serious reports or budgetary control and no clarity about the roles of the public and private sectors in the management of ALBA’s different expressions. And there’s a gap between ALBA’s vocation, which seeks to benefit society, and society’s zero participation in the knowledge of how ALBA is being applied.

There’s also the suspicion that the government of Nicaragua is taking advantage of funds from ALBA for use with social programs, thus avoiding the kind of tax reform that’s indispensable in Nicaragua for any real distribution of wealth. ALBA is responsible for the State covering its social responsibility through foreign aid rather than through the political will of the State and society, with both committed to a real transformation of the national structures. Venezuelan aid ends up encouraging the State not to reorient its public policies for a better distribution of wealth.

Despite all of our concerns, we think that ALBA could provide an alternative to the North-South cooperation model, which seeks to function to incorporate the Central American countries into the international markets and neoliberal globalization. For ALBA to be that alternative, the agreements signed between the member countries need to be fully transparent, and not just party-based, and for those agreements to be managed from the public sector rather than private businesses.

The situation regarding international cooperation has grown more complicated and will get more complicated still for both Nicaragua and Central America. It’s up to us European NGOs to take an active advocacy role with our governments, not just to maintain development cooperation but also to strengthen it and ensure that it benefits those who most need it. That’s the responsibility of European civil society, and is what we are working on. Our main obstacle in that respect is the international economic crisis. The situation is very complex, so we need to strengthen the links between Central American civil society and European civil society in order to respond to it better.

José María Castán represents the Basque NGO Mundubat in Nicaragua.

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