Latin America Report

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Nicaragua lª lerritorio Libre The U.S. government is engaged in a deadly battle with the Sandinista revolution. This battle takes different forms-from diplomatic maneuvers to the financing of a military buildup in the entire region to the imposition of economic pressures upon this small and technologically underdeveloped country. Of all the weapons in its arsenal, the weapon of economic pressure is the least costly to the United States, the least easily documented in the world press, and the most difficult for the Nicaraguans to counter.

The inheritance From the first days of the revolution's triumph, the Sandinistas were faced with serious economic problems. An agro-export society, vulnerable to even slight fluctuations on the world market, Nicaragua has little industry. Although it exports lumber, it must import all paper products, from newsprint to toilet paper. Although it is a leading producer of cotton, Nicaragua must import all of its thread.

Like many other countries whose economic development has been shaped by the needs of imperialism, Nicaragua is forced to sell its raw materials at prices determined to a large measure by the industrialized countries. The unequal rate of exchange means that, while in 1977 Nicaragua had to export 4.4 tons of coffee in order to import a tractor, by 1981 the same tractor cost the equivalent of 11.2 tons of coffee. In 1970, 100 bags of coffee purchased 100 barrels of oil. But a dozen years later, it bought only three barrels of oil.

Handicapped by the legacy of imperialism, the revolution also faced an immediate economic crisis. When Somoza cleared out of the country in 1979, he left $3.5 million in the national treasury. By July 1979 the foreign debt stood at $1.65 billion, the highest per capita debt in all of Latin America. Inflation was running at 80%, while one-third of the population was unemployed. Production plummeted both in the agricultural and industrial sectors. Famine was beginning to spread throughout the cities.

The Sandinista experiment What is remarkable about the Nicaraguan revolution is its capacity to reverse that process of disintegration. Nicaragua is the first Latin American country to carry out a land reform program that both massively redistributed land and increased production immediately. Today, state enterprises represent about 20% of the land ownership, while nine different kinds of cooperatives account for another 12%. While in 1978 nearly 43% of the land was owned by large landowners in plots of 500 manzanas or more (1 manzana= 1.7 acres), today the same group controls only 11% of cultivable land. They are permitted to hang on to their land only because they are able to use it productively.

Through the process of land redistribution-as SOCIALIST ACTION en Centro América Scene from "Nicaragua: No Pasaran," a film by David Bradbury. well as through price guarantees and the extension of credit to the cooperatives, the small farmers, and the state enterprises-the Sandinista government has pursued the fundamental goal of reorienting the entire economy to serve the interests of the majority. Although private producers who are efficiently using their land have not been expropriated, their economic power has been weakened by state intervention. Laws mandate that these individuals must pay their taxes and must turn their products over to the ministry of foreign trade in order for them to be exported.

The war's impact on the economy Since the contras launched their attacks on Nicaragua in 1981, many of the products grown on the northern border cannot be harvested. For instance, 80% of the beans are grown in the war zone. Propane gas that used to be trucked in from Honduras cannot be delivered. In other cases, the shortage of vehicles has resulted in an inability to bring the products to centers of distribution. For instance, the nearly 2000 small merchants who come from the Masaya area to Managua every day used to be served by 15 buses and 100 small trucks. Now there are two to five buses and 50 trucks.

Backed by U.S.military advisers and supplies, the contras have focused on disrupting the economy in two concrete ways. First, their constant attacks force the Sandinistas to reorient the economy to defend the country, diverting precious resources from economic planning. Military spending represented less than 7% of the 1980 and 1981 budgets, but doubled in 1983. This year, 25% of the budget is earmarked for defense. Because production must be diverted to equipping an army, the growing scarcity of shoes and cloth, for example, leads to spiralling inflation.

Secondly, the contras' targets for destruction include supply centers and vital services. Nearly 50 healthcare workers alone have been kidnapped, injured or killed since the beginning of 1983.

• While struggling to build a rational program for organizing an economy geared to feeding its population and increasing the standard of living, the Sandinistas have been forced to declare a war on speculation. The existence of literally thousands of sellers who operate in the marketplace has made distribution and pricing difficult to control. But the legislation and inspection process was recently strengthened. Under the new law, eight basic products-cooking oil, sugar, soap, rice, sorghum, corn, beans, and salt-are guaranteed for everyone at constant prices. In effect, the distribution of these goods has been nationalized. The government pledges to supply these items. If shortages occur, it is prepared to import them.

By organizing a system that ensures real control over prices and by basing the entire maintenance of the system on the neighborhood Sandinista Defense DECEMBER 1984 Committees (CDSs), the government is once again mobilizing the Nicaraguan masses in defense of the revolutionary process. Despite the economic difficulties, the Sandinistas have been able to ensure minimum supplies for the entire population.

When I was in Nicaragua in September, people of various social classes told me that the basic rations were adequate for their family needs. I ate lunch at the cafeteria of a government agency to which my brigade was affiliated. The agency provided a subsidized, well-balanced meal for 10 to 50 cents, depending on the worker's wage level. I went to several city markets where prices were what the traffic would bear. Eggs, chicken, fruit, and vegetables were plentiful, although expensive.

The U.S. role The U.S. government has consistently attempted to block loans and credit to the Sandinistas. It has done the following:

• Blocked in early 1982 a $30 million loan from the Inter-American Development Bank that would have revitalized the fishing industry.

• Opposed a $16 million World Bank loan for city development projects.

• Blocked a $5 million U.N. development program for a survey of rural peoples' needs.

• Pressured West Germany, Holland, and other countries to end their economic aid to Nicaragua.

• Cut by 90 percent the amount of Nicaraguan sugar the United States bought at subsidized prices.

• Ended all U.S. aid to Nicaragua (in 1981) and refused to disburse a $9.8 million food credit that was to be used to purchase wheat.

• Discounted Nicaraguan assets to 50 percent of value.

• Suspended last Sept. 28 the World Bank's credit to Nicaragua, citing the government's failure to make "timely" repayments on the debt.

Another factor that hampers Nicaragua's capacity to obtain essential imported goods is the bank practice of demanding "irrevocable" letters of credit several months before the goods are shipped. This halfyear time delay puts an incredible cash-flow problem on the government. It is similar to the problems workers would face if forced to pay their rent and buy their food six months in advance.

Because of the government's inability to obtain credit, machines sit idle. Spare parts cannot be obtained. The Sandinistas have encouraged the development of an inventors' movement similar to the one that developed in Cuba. Workers who have creatively figured out a way of repairing machines are treated as heroes.

Another way the government has attempted to obtain goods is through trading its products for others. For instance, they are experimenting with exporting cement and mattresses for Cuban products.

But the lack of technicians, the lack of administrative skills, the lack of basic industry leaves Nicaragua with a fragile economy. It is true that Nicaragua has lost fewer technical workers than any other country that has carried out a revolution, yet it is the third poorest country in all of Latin America. The economic pressures the United States has brought to bear range from outright sabotage to last spring' mining of the ports to the denial of credit.

'Many regard the economic pressure as the most dangerous of all the weapons the U.S. holds.

Many regard the economic pressure as the most dangerous of all the weapons the United States holds. The New York Times reported on Oct. 22 that Ruben Ulloa, a Sandinista labor leader, warned that several large Managua factories were on the verge of closing because they could no longer obtain hard currency to buy the parts needed. In many areas of the country, half of all the trucks and tractors are out of service, lacking tires or engine parts.

In summarizing the first five years of the revolution, the Historical Institute of Central America pointed out the four major economic projects the Sandinistas have attempted to implement: (1) refurbishing the country's infrastructure, much of which had been destroyed; (2) redistributing the nation's income in favor of the workers and peasants; (3) offsetting the current worldwide recession by a major investment project in agricultural and industrial production; (4) structuring an economy that can defend the country against attack.

The Institute points to the necesssity of international political support as key to helping the Nicaraguan revolution survive. It is a duty to which we must commit ourselves.

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LATIN AMERICA REPORT BILL SAN FRANCISCO-Congress failed to pass the Simpson-Mazzoli immigration bill before adjourning for the year. This means there will be no change in immigration laws until a new bill is introduced and makes its way through Mexican workers in the they are also exploiting ico-in complicity with ness interests.

On Sept. 24, a six-page section of The Wall Street Journal carried articles and ads devoted to luring U.S. corporations to invest in Mexico. The most United States, them in MexMexican busi-