FSLN alters policies to counter effects of

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MANAGUA-The signs of war are visible everywhere in this small nation of 3 million people.

Armed militias patrol factories, bridges, farms, schools, and hospitals at all hours of the day. The Sandinista Army is on alert throughout the country in response to the U.S. "Ocean Venture" war maneuvers off the coast of Puerto Rico. Buildings destroyed by the contras lie in rubble while others still bear the marks of the intense fighting that preceded the victorious revolution seven years ago.

But the signs of war also include the long lines at the government's retail stores and the thousands of people who swarm the city's markets and bus terminals peddling anything from cloth to avocados. "This is a period of economic survival," a woman standing in line for clothing says. "There are shortages of everything these days, but we must endure until peace can be won.

Economic survival is the term used here to describe the current war economy. Indeed, due to the continued terror rained down on the Nicaraguan people by the U.S.-backed contras, the Sandinista government has been forced to devote over half of its annual budget to defense.

Factories that once produced cloth for the population must now make clothing for the army. Over 250,000 people have been displaced from their land because of contra attacks, leading to a drastic drop in agricultural production. And tens of thousands of workers and peasants have been mobilized in the war zones, leaving women and even children behind to pick tobacco or work on the assembly lines.

Fertilizers, medicine, machinery, and spare parts that were once purchased in the United States are now inaccessible because of the U.S. economic blockade. It is estimated that $861 million has been lost over the past six years due to material damages or production losses.

Moreover, the burden of Nicaragua's debt to the imperialist banks has further increased the strain on the economy. In his speech to the United Nations last fall, President Daniel Ortega stated that "with the blood and sweat of the people of Nicaragua, we have paid $621 million in debt service in five years." This, Ortega explained, represented two years' worth of income in export earnings.

Limits of liberalization

In February 1985, the Sandinista government adopted a series of economic measures aimed at reactivating production and reducing the inflation spurred by a war economy.

Incentives were given to the private producers (mainly the agro-export capitalists), state subsidies for basic foods were eliminated, government spending was sharply cut back, and the Nicaraguan currency (the córdoba) was devalued.

Envio, a monthly magazine published in Managua by the Central American Historic Institute, explained that these measures represented a shift toward less state intervention in the economy: "The U.S. belief that the pressures of the war are pushing the state toward increasing its role in the economy is totally belied by the 1985 program" (Envio, October 1985).

But as Envio also stated, "the effects of this economic shift were felt unevenly...with the workers and poor peasants bearing a disproportionate burden of the sacrifices." Indeed, the workers saw their purchasing power steadily decline, while the speculators and petty merchants were allowed to reap large profits from a mushrooming informal commercial sector.

Moreover, the 1985 economic measures did not produce the desired results. The Gross Internal Product in 1985 actually went down 2.7 percent; investment by the capitalists fell 17 percent as more money was diverted 8 SOCIALIST ACTION JUNE Empty shelves in a Managua market. The economic boycott by the United States continuing contra war have aggravated the shortages of basic consumer goods.

toward speculation; exports fell by 13.8 percent; the state's budget deficit rose to 26.5 million córdobas; inflation reached a yearly rate of 210 percent; and the purchasing power of the average wage fell 36 percent.

By the end of the year, the Sandinista government faced a difficult dilemma. The liberalization policies had not worked. Yet something urgent needed to be done to increase production and to lessen the economic burden on the workers and peasants, the social base of the revolution.

Envio (October 1985) stated the government's dilemma in this manner: "The Nicaraguan government is caught between a rock and a hard place. It is committed to maintaining the mixed economy and therefore to preserving a sector of large private capitalists. It does this both to sustain the economy and as a political project of national unity.

"But the government is also committed to responding to the popular demands and to spreading the costs of the war more equitably....These pressures inevitably mean readjusting the mixed economy...toward (1) a stronger government control over the distribution system, (2) a more radical agrarian reform, and (3) a series of advances in workers' participation in the management of the factories."

Confronted with this drastic economic situation, the Sandinista government was compelled to once again shift its strategy in 1986. It would prioritize the needs of the masses—but still within the framework of the mixed economy. This would require an even more delicate balancing act.

Problems of distribution

One of the economic problems most discussed in Nicaragua is the problem of distribution of food and basic supplies. Due to the increased shortages and the lack of effective government controls, a parallel or informal market known as the "bisnes" has been able to develop and flourish.

Thousands of workers and peasants have flocked to the city's markets, parks, and bus terminals in the hope of making a better living. Managua's population has doubled since 1979 to its present size of 900,000, largely on account of this exodus from the countryside.

The reason for this terrible waste of human resources is not hard to find. According to Envio, a peasant woman can actually make more money than Nicaragua's president by selling soft drinks or homemade coconut sweets in a public park.

This situation has in turn created chaos in the labor market. According to a Nicaraguan government survey, the official minimum wage in 1985 would buy only a quarter of the basket of basic goods necessary to feed a family of six. Those who don't quit the productive sector altogether are therefore forced to take one or two days off work each week to do "bisnes" if they wish to make ends meet.

To help resolve this severe problem, the Sandinista government has decided to reinstitute wage and price controls and to guarantee a minimum quota of low-priced basic supplies to Nicaragua's workers and peasants. This has meant a greatly increased role by the state in the distribution of basic goods.

Workers and peasants can now buy basic grains and limited amounts of rice, oil, sugar, salt, and soap at Structure of 1978-1985 (Percentages of cultivable land)

Sector Large private • Medium private (2)

Smali private Cooperatives State farms Source: MIDINRA, Managua (1) Over 345 acres (2) 85-345 acres (3) less than 85 acres 1113 and the subsidized prices in the new Workers Supply Stores (Centros de Abastecimiento de los Trabajadores/CAT).

In addition, the Sandinista Defense Committees (CDS), which before the 1985 economic measures had been given some power in controlling speculation and prices, were again reactivated as organs of consumer defense.

In February, the Ministry of Internal Commerce (MICOIN) worked with the CDSs to carry out a massive consumer census in the Pacific region of Nicaragua. MICOIN is also training 4000 "popular inspectors" to help check on distribution at the local level and to turn in the speculators. Workers in the factories are also being trained in the factories to make sure that production is not diverted to the black market.

This shift by the government, however, has not been well received by the Nicaraguan capitalists-nor by El Nuevo Diario newspaper, which is a supporter of the Sandinista government.

"The government is moving toward monopolizing the distribution system," writes Diario staffwriter Adolfo Sanchez on May 3. "The recent reordering of commerce will not work. The laws of supply and demand must be allowed to regulate this market....This is the only realistic perspective under the present circumstances."

Agrarian reform law expanded Tens of thousands of peasant families remain landless in Nicaragua. The hit-and-run terror of the contras has forced thousands more to abandon their land. Together, the landless and displaced have increased pressure on the government to distribute land to the peasants.

The two agrarian reform laws decreed in 1979 and 1981 expropriated lands from Somoza and his cronies as well as all idle land over 865 acres. This land was distributed to state farms and service or production cooperatives. But only a small percentage of the land went to the poor land 1978 1985

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peasants in individual parcels. And by 1985, the agrarian reform was grinding to a halt as little land was left to be distributed according to the provisions of the laws.

Peasants in Masaya Province became increasingly impatient with the pace of the land redistribution and, in defiance of the law, stepped up their occupations of the estates of the large private landowners.

In Nicaragua's Region V, which makes up one-fifth of the country's total land area, the pressure for the land was equally strong. As late as 1985, 1000 wealthy families controlled 1 million acres while the poor peasants, over 40 percent of the population, owned only 400,000 acres.

In response to the continued demand for the land and in order to undercut any possible support for the contras among the peasantry, the Sandinista government amended its agrarian reform law last January.

Idle lands of any size can now be expropriated. The state is no longer obliged to pay compensation for the expropriated idle lands. And, for the first time, the law allows the state to confiscate the estates of efficient large capitalist landowners.

By moving in this direction, the government also hopes to stem the rural exodus to the cities.

Commander Jaime Wheelock, minister of agrarian reform, explained the new measures in this manner: "We maintain our principle of integrating all private producers, large and small, into the mixed economy. But the mercenary imperialist aggression has forced us to State can confiscate the farr Coronel continued, "If an occupation is considered illegal by the regional committee of the Agrarian Tribunal, the land must be returned to the owner....The revolution wants to favor the peasants, but within the framework of a legal juridical system."

Workers' participation and control One of the primary preoccupations of the Sandinista government in the 1986 economic plan is to win the battle of production. A key component in this strategy, government planners believe, is to increase the participation of the workers in the management of the enterprises. The unions and mass organizations are expected to play a major role in this task.

Barricada devoted its entire May 5 weekly economics section to the lessons of the state-run Induquinisa plant, where workers were able to surpass the production quotas Soclalist Action/Alan Benamin itself.

Francisco Cano, international director of the Rural Workers Association (Asociacion de Trabajadores del Campo/ATC), explained that the Ingenio San Antonio, the largest private sugar refinery in the country, "places great obstacles in the path of workers' participation."

Cano explained that San Antonio, which is not necessarily representative of other private companies, "is unwilling to open its bank books to the union, claiming the right to bank secrecy." Without the right to know the profits of the capitalists, workers' control over pro -duction means little.

Other limitations have to do with the scope of decision-making of the unions. The national wage scales, codes on working conditions, and economic priorities are all decided by the FSLN national directorate and the Ministry of Labor.

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in 1986 U.S. war