Coming
in September
From AK Press
Featuring Essays by:
Edward Said, Robert Fisk, Michael Neumann, Shahid Alam, Alexander
Cockburn, Uri Avnery, Bill and Kathy Christison and More
Recent
Stories
August
7, 2003
M.
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It the US a "Terrorist Magnet?"
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6, 2003
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Said
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Z.
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Jackson
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Nike's Full Court Press Breaks Down
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August
7, 2003
Neo-Liberal Nicaragua
A
New Banana Republic
By TONI SOLO
When US-backed candidate Violeta Chamorro won
the most observed election ever in Nicaragua in 1990, she promised
Nicaraguans that US government aid would quickly put the country
back on its feet. After a decade of war, exhausted Nicaraguans
took Chamorro at her word. However, US aid currently averages
around US$38 million a year--a trickle by any standard [1].
Nicaragua has taken twenty years to recover output levels it
attained in 1982. Always among the poorest countries in the
region, the war and its aftermath have left Nicaragua the second
poorest country in the hemisphere after Haiti.
Nicaragua has been a hapless guinea pig
for a neoliberal and neoconservative experiment--if one can call
it that. The neoliberal treatment is better described as "misery
by design", and the neoconservative penchant for democracy
has meant corrupt and inept governments installed by means of
rigged elections in which US government representatives have
actively campaigned for their preferred candidate. A quest for
self-determination and overcoming the legacy of dictatorship
and war has given way to a systematic impoverishment of the country,
and to craven subjugation by the country's governments to the
whims of the US embassy. The implicit promise once made to Nicaragua
before 1990, to bring the country out of its misery, has given
way to neglect. An observer may conclude that the US is still
punishing Nicaragua for having attempted to obtain its independence
and exercise its right to self-determination. One wonders how
much longer this torture must continue.
A Snapshot
Nicaragua's economy has always depended
on agriculture. But, whereas the US subsidizes its farmers at
record levels, the doctrine imposed on Nicaragua has been rigidly
free-market. Predictably, Nicaragua's agriculture is in crisis.
The extensive network of cooperatives built up prior to 1990
has fallen apart, unable to compete through lack of access to
credit, spiraling costs and stagnant or falling prices. Government
policy, while not openly attacking agricultural cooperatives,
has been deliberately unhelpful.
Until 2000, coffee had been Nicaragua's
main foreign exchange earner, and it had a long history since
the 1870s. After years of World Bank pushing countries (especially
Vietnam) to plant this cash crop, the coffee sector in Nicaragua,
as elsewhere, has collapsed. The resulting migration from the
land has exacerbated all of Nicaragua's serious social problems,
compounding the economic crisis that is affecting the whole region.
Last year, hundreds of destitute families camped out for months
on the roads leading to the coffee growing areas, pleading for
work. Television showed pictures of children in Matagalpa, the
coffee capital, showing levels of starvation usually associated
with Africa.
This month the Nicaraguan Institute of
Statistics and Census announced that 30% of people in the Matagalpa
suffer malnutrition. 5000 rural workers and their families are
marching from Matagalpa to the capital Managua to demand assistance
agreed between the government and the rural workers--promises
the government has not kept. CENIDH, the national human rights
organization has confirmed that nine people have died of hunger
on the march so far, including several children.
The problems of the rural economy worsened
through the 1990s with the unraveling of the radical land reforms
carried out under the Sandinista government of the 1980s. Former
supporters of the Somoza dictatorship, as well as people with
legitimate claims, appeared to reclaim land for which many of
them had already been compensated, in some cases more than once.
Many of them had racked up huge debts against property before
fleeing the country with the proceeds in 1979. The Sandinista
government failed to issue solid legal land titles for most of
the properties they distributed, leaving the way open for dispossession
and eviction of thousands of families and cooperative members
under the Violeta Chamorro government and her successors.
Even former Contra fighters who took
up arms against the Sandinistas in the 1980s remain disgruntled.
Their leaders faced tough negotiations to get any just compensation
for their supporters. Confronting the very politicians who urged
them to go to war in the 1980s, they often resorted to armed
force to occupy land. So disenchanted are these former Contras--now
referred to as the ex-Resistencia--they have joined their old
enemies, the Sandinistas, in a political alliance known as the
National Convergence. Politicians of all parties agree that
the last few years have exacerbated the economic crisis with
no progress in sight.
Chronic Corruption
US government and World Bank officials
have praised recent anti-corruption measures in Nicaragua. But
their espousal of neo-liberal economic measures, like privatization
and government cutbacks, actually promoted corruption in the
first place. The IMF has prompted wage reductions in the public
sector of 44 per cent since 1990. This impoverishment has further
increased the incidence of petty corruption.
To bear that out, pay a visit to the
local Public Registry office. Want a certificate that your property
is free of any lien so you can get credit at the bank? Ten dollars--no
questions asked--yields a preferential procedure and a certificate
is produced straight away. Non-financially assisted "normal"
service will take much longer.
Thirty dollars and a quiet word to the
relevant official can readily improve problematic exam results.
Fifty dollars in hand and a persuasive conversation with the
judge will help resolve a tricky lawsuit, especially in remote
rural areas. Stopped for a traffic violation? To avert a heavy
fine, take the two officers (there are almost always two) to
their nearest friendly Coca Cola stall, buy two very expensive
sodas and the friendly lady at the bar will pay her two uniformed
clients later.
An anti-corruption drive headed by someone
like current President Enrique Bolaños is unlikely to
root out systemic corruption. He was Vice-President for five
years under President Arnoldo Aleman--know popularly as "Gordoman"
(Super Fatman)--now under arrest for defrauding the country of
hundreds of millions of dollars. Recent testimony by disgraced
former Treasury Minister Byron Jerez directly implicates close
relatives of Bolaños in Gordoman's ransacking of the treasury.
In February 2003, in a regional seminar
on corruption, US Ambassador Barbara Moore said, "It is
very appropriate that we are meeting in Nicaragua which has been
in the front line of the struggle against corruption under the
leadership of President Bolaños." Setting the tone
of his anti-corruption government, President Bolaños draws
a lifetime pension as a former Vice-President as well as his
salary as current President. When he was questioned about this
on television recently, he replied: "It's legal, isn't it?"
Bolaños was installed as President
in 2001 with a helpful US electoral high tech manipulation, just
as Arnoldo Aleman had been eased in before him in 1995. Opposition
Vice-Presidential candidate leader Agustín Jarquin related
how the then US Ambassador Oliver Garza arrived at the electoral
count center in the small hours of election night demanding that
the count be restarted with new US embassy-approved personnel.
Election officials tamely submitted to Garza's demands. The
count developed into a marathon. Despite a large back room computer
staff, the electoral authority took weeks to confirm all the
results against a background of acrimonious political wrangling.
It is possible Garza was confused--maybe he thought he was in
Florida.
Perhaps this is an example of what former
US ambassador, Lino Gutierrez, meant when he told the Managua
American Chamber of Commerce in June 2001: "Certainly we
ought to celebrate the fact that 34 of the 35 governments in
our hemisphere came to power through the ballot box. But we
have all learnt that democracy is much more than holding free
and fair elections."
One trend the neo-liberals should approve
is the way the Nicaraguan Army has become a major player in the
economy. After three major bank failures over the past two years,
the banking regulatory body was looking hard at Banco de Finanzas,
in which the army has a large interest. The regulators soon
backed off perhaps because former Army chief, Humberto Ortega,
is an important regional investor inside and outside Nicaragua.
Although not as powerful as the army in Guatemala, the enterprising
Nicaraguan army has followed its counterparts in Honduras and
El Salvador in consolidating a shady and powerful military-business
elite.
Neo-liberalism: neo-business
as usual
Since 1990, the World Bank and the International
Monetary Fund have worked to open up markets (of course, it is
always referred to as freeing the markets) and cut back government
expenditures. Privatization is a key part of this program.
Over three hundred small state enterprises were privatized between
1990 and 1995, but it has taken longer to bring the big state
utilities--Power, Communications and Water--to the market. Under
cover of the unconvincing measures to improve efficiency, neo-liberals
hoped to hoodwink people in Nicaragua into accepting the privatization
of the water utility. Anxious to force the issue, the IMF tried
to impose this as a condition for a loan earlier this year.
However, legislators defeated the proposal when it came up for
approval in the National Assembly. The measure has been shelved--at
least for the moment.
Nicaragua has already privatized its
telephone utility, creating a monopoly of landline phones. It
did the same with electricity distribution, sold to a Spanish
multinational, Union Fenosa. Consequently, stories of over-charging
abound, such as the woman tortilla maker living in a shack with
just a small television and a couple of light bulbs, earning
around US$28 a month. Accustomed to bills of US$3 or 4 a month,
she suddenly received one for US$200. Forced to pay these exorbitant
demands or go without, many Nicaraguan families sink deeper into
debt.
Resentment against the price rises is
widespread. The prices of both water and electricity have increased
fivefold since 1990. During the same period, despite a modest
increase in the minimum wage in 1997, wages have been virtually
frozen, while prices for basic items rise relentlessly. Over
60% of the population make do with less than US$2 a day--that
many people live in poverty. The cost of the basic basket of
goods for a family of four has doubled since the early nineties.
Health and education services are impoverished,
and the government can barely provide even the most basic facilities
and services necessary. For the huge numbers out of work, health
services might as well not exist at all. What use is a prescription
for US$10 of medicine to someone with an income of US$28 a month?
Hospitals depend on donations from individuals and foreign charities
even for the most basic equipment--a nebulizer, a dialysis machine.
Nicaragua is unable to educate the people
it needs to develop its economic potential. Over 40% of the
school age population fails to attend classes. Nineteen-year-old
Gabriela Garcia has almost finished a degree in Information Systems
Engineering at her local university in the capital, Managua.
Her mother is a nurse earning around US$55 a month. Gabriela
was brought up in her grandmother's house where family remittances
from relatives overseas helped see her through college. The
household includes Gabriela's pregnant sister, her brother and
two cousins. To complete her degree Gabriela needed US$900.
She says, "Maybe I'll get lucky and win the lottery."
For the foreseeable future, her life is on hold. She's looking
for any work she can find to help pay the family's routine debts.
But Gabriela's lucky to have gotten so far; 65% of Nicaraguans
starting school never finish their secondary education.
Education initiatives collapse because
incompetent, ideologically motivated Education Ministry personnel
are incapable of sustaining program agreements from one semester
to the next. Off the record, a high-ranking World Bank official
will say they would rather cut Nicaragua loose; the government
is so inept. They hang in there because an admission of failure
would have a very high political price.
The majority of Nicaragua's economically active people cannot
generate enough income to sustain their families. Family remittances
from abroad are now Nicaragua's principal source of foreign exchange.
Rural areas suffer depopulation as able-bodied men, women and
children move to the cities and beyond in search of work. Nearly
a million Nicaraguans work in Costa Rica, and most do so illegally.
In a typical barrio in any city around 60% of people will be
out of work. Many people cook just every other day in order
to save money.
Y drogas tambien...
Drugs also have become a dominant and
unwelcome fact of life in neo-liberal Nicaragua. Bags of crack
can be bought on the street for a dollar. Most petty crime is
drug related. Drug and solvent abuse have become a way of life
for the youths of the widespread and increasingly violent gang
culture. Neo-liberals should certainly admire the enterprising
spirit, while neo-cons may well approve the drug-induced passivity.
Recently police chiefs on the Atlantic
coast were arrested for involvement in the local drug trade.
A police chief in Managua is alleged to have authorized paying
informants with bags of drugs. Noting the lack of economic options
for survival apart from the drugs business, local Atlantic Coast
Catholic Bishop Pablo Schmidt, stated: "If you take this
away, how are they going to live? This is not an easy problem
to solve. And it destroys not only the image of a people, but
their culture as well."
Yes, this is globalization
Beside this misery, for over a decade
USAID has subsidized agribusiness elites in organizations supposedly
promoting market solutions. At the same time, the banking system
starves small and medium farmers of credit, stacking the broadly-based
domestic agricultural economy in favor of large agribusiness.
The clear conclusion is that Nicaragua has been softened up
prior to being railroaded into a Central American Free Trade
Area (CAFTA) to yield preferential trade advantages for US investors
and corporations.
Mario Arana, the Nicaraguan government
representative in recent CAFTA negotiations remarked: "The
offer made by the United States to Central America is well below
expectations and this is particularly true in the case of Nicaragua."
He added, "I believe that Nicaragua comes out worse than
the other countries, because of the nature of her economy, fundamentally
agricultural."
Jose Marin's story is emblematic. He
owned a smallholding in the beautiful rural coffee growing area
of San Juan del Rio Coco, but he had to sell it to pay off his
debts. Now he lives with his family of seven children in a rented
shack. He works as a security guard earning US$90 a month--and
he should consider himself lucky.
Under the former Sandinista government,
Jose Marin would have been able to renegotiate his debt with
the state-owned National Development Bank, keep his land and
continue producing. A talented young woman like Gabriela Garcia
would have finished her education with a grant from the State.
Books were subsidized. Health care was free. Prices for basic
goods were controlled by the State.
Murky politics...
The Sandinistas, who promoted that welfare
state model back in the 1980s, now continue to emphasize health,
education and support for small and medium agricultural producers,
but as part of a market economy. The biggest group in the National
Convergence opposition front, the Sandinistas are still headed
by Daniel Ortega who led the opinion polls in the run-up to the
last election despite controversy provoked by sex-abuse allegations
from his former step-daughter Zoilamerica Narvaez, herself a
prominent figure in Nicaragua's women's movement. Most people
believe he will again be the opposition presidential candidate
in the next election in 2005.
Despite widespread disenchantment with politicians, Nicaraguan
civil society is vibrant and vociferous, a valuable inheritance
from the revolution. After a decade of cutbacks in health, education
and social services, community associations and non-governmental
organizations have shouldered much of the burden. Their operations
are funded overwhelmingly by overseas donations from the plethora
of aid and development programs offered by foreign governments
and aid agencies. To a large degree, government cutbacks and
market reforms in Nicaragua, as elsewhere, are only feasible
on the back of subsidies from foreign donors. Neo-liberal accounts
of international development seldom acknowledge this fact.
The importance of
Nicaragua
The importance of the Nicaraguan experience
is that members of the same gang who ran Reagan's illegal Contra
war (Negroponte, Armitage, Abrams, and others) are now prominent
players within the Bush Junior regime. Back then, they lied
that Nicaragua threatened US security, just as they have lied
about Iraq. A look at contemporary Nicaragua therefore gives
some idea of what Iraqis can expect from their US occupiers.
Miguel D'Escoto, who guided the successful
Nicaraguan case against the US for terrorism in the International
Court of Justice in 1986, wrote last month, "It would be
a serious mistake to conclude that the current behavior of the
United States represents something temporary that will change
when George Bush [Junior] leaves the presidency. Never in its
history has the United States taken a backward step in its drive
towards universal domination and never has it corrected its behavior,
going from bad to worse from the point of view of the rights
of the rest of humanity." He writes from experience. In
Nicaragua, as elsewhere, no self-determination is tolerated,
and the US ambassador is the de facto proconsul.
Today's neo-conservatives pontificate
about democracy, freedom, and economic development. One only
has to look at Nicaragua to see what this means. From the Nicaraguan
perspective, US foreign policy is made up of three main ingredients:
hypocrisy, cynicism and sadism. Nicaraguan society was destroyed
by the Reagan and Bush Sr. regimes to make a policy point--countries
that diverge from US control will be undermined economically
and, if sanctions fail to bring them into line, subjected to
military attack.
Fifty thousand people died during the
US-instigated Contra war against Nicaragua, ostensibly to put
it on the "road to democracy". In 1987, the International
Court of Justice ordered the US government to pay Nicaragua an
indemnity of US$16 billion in compensation for the losses caused
by its terrorism. But of course, the US ignored the ruling and
pressured the 1990 Violeta Chamorro government to drop attempts
to secure this just restitution. Nicaragua was rewarded with
an economic aid drip feed and the prescriptions of the World
Bank. Whereas Israel receives US$540 per capita in economic
assistance, Nicaragua, one of the poorest countries in the world
with a similar size population, receives little more than US$7
[2]. Note, a very well off society with a notorious apartheid-like
reputation, receives over 70 times more aid than a very poor
and battered society, and a country battered by the effects of
American intervention.
The US owes a moral debt to Nicaragua,
due to the war it waged against the country, the long-time support
for the former dictator Somoza, and the promises made leading
up to the 1990 elections. Seen in that light, US aid to Nicaragua
is a pittance.
Today, most people in Nicaragua are even
worse off than they were twenty years ago. The Clinton and Bush
Jr. regimes intervened decisively to ensure the elections of
Arnoldo Aleman and Enrique Bolaños; one a crook, the other
a stooge. Under the aegis of the US and the World Bank, these
proxies, and Violeta Chamorro before them, put in place the disastrous
policies that have reduced most Nicaraguans to ever-deepening
penury. The hopes of the poor majority for a decent life have
disappeared. The sign at the end of the neo-liberal route for
Nicaragua reads loud and clear: "Dead end. Made in the USA."
Toni Solo is
an activist based in Nicaragua and can be reached at tonisolo@hotmail.com
Endnotes
[1] It is very difficult to obtain US
aid figures for Nicaragua. First, the Nicaraguan government
doesn't have these figures, as any request to the Nicaraguan
Central Bank will reveal. Furthermore, much of the aid is "in
kind"--thus with US technicians or goods, and any value
can be imputed for these. Even if USAID states that it has spent
$1.1bn since 1990 (US Census Bureau tables show a total of US$540
million aid for the same period), one must reckon that a significant
portion of this pays for US input--roughly estimated to be about
40%, i.e., funds that mostly pay for expensive American personnel
and overheads. Finally, one must realize that US aid is not
under the control of Nicaraguans. Aid to Nicaragua is not a
lump sum like the aid Israel receives to disburse at will.
NB: the US embassy, USAID, and Nicaraguan gov't agencies were
most unhelpful in obtaining these numbers. They all referred
us to their websites, and one can easily verify that there is
little break down in their numbers or no figures at all.
[2] For the figures on Israel, see Paul
de Rooij's Feeding the Cuckoo,
CounterPunch, Nov. 16, 2002. The Nicaraguan figure was obtained
as follows: the average reported aid flows for 1998 to 2003 were
divided by the average population during those six years.
Weekend Edition Features for August 2/3, 2003
Tamara
R. Piety
Nike's Full Court Press Breaks Down
Francis
Boyle
My Alma Mater, the University of Chicago, is a Moral Cesspool
David
Vest
Sons of Paleface: Pictures from Death's Other Side
Neve Gordon
Nightlife in Jerusalem
Uri
Avnery
Their Master's Voice:
Bush, Blair and Intelligence Snafus
Robert
Fisk
Paternalistic Democracy for Iraq
Jerry
Kroth
Israel, Yellowcake and the Media
Noah Leavitt
What's Driving the Liberian Bloodbath: Is the US Obligated to
Intervene?
Saul
Landau
The Film Industry: Business and Ideology
Ron Jacobs
One Big Prison Yard: the Meaning of George Jackson
Thomas
Croft
In the Deep, Deep Rough: Reflections on Augusta
Amadi Ajamu
Def Sham: Russell Simmons New Black Leader?
Poets'
Basement
Vega, Witherup, Albert and Fleming
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