Nicaragua wage-price measures undermine support for

Scan page 11

Downtown Managua, 1986. Sign reads: "For the country, For peace, For the future: We will do our duty."

On June 14, Nicaraguan President Daniel Ortega lifted wage and price controls and once again devalued the currency, the córdoba, in a move most observers characterized as a further step toward reinforcing Nicaragua's market economy.

Speaking on nationwide television, Ortega said the economy could survive only by adopting measures "similar to those taken by capitalist countries." He said that from now on employers and workers would agree on wages independently, and prices would be regulated only by market conditions.

Ortega also announced that the government would remove subsidies on a dozen or so staples and products.

These new measures came exactly four months after the government instituted a series of sweeping economic and monetary reforms aimed at curbing the rampant inflation and boosting production. [For more on the February reforms, see the June 1988 issue of Socialist Action.] Ortega's decision to lift wage and price controls represents an open acknowledgment that the February reforms had failed to achieve their goals. Since February, the annual inflation rate has climbed to close to 2000 percent, while industrial production has dropped by 34 percent. Since March, according to government officials, over 6000 public employees have been laid off.

Sharp attack on workers Immediately after the price controls were lifted, prices of basic goods and services skyrocketed to unprecedented levels.

The price of a tank of cooking gas, which lasts an average family about one week, rose overnight from 45 córdobas to 400 córdobas. The price of a gallon of gasoline shot up from 15 córdobas to 175 córdobas. And the list goes on.

Yet while prices jumped an estimated 1200 percent in just two days, the desperately low wages went almost unaffected.

The Nicaraguan government, which is one of the major employers in the country, decreed an immediate 30-percent wage hike—which is next to nothing. The average wage of a public employee is approximately 2300 córdobas a month. The private producers, for their part, announced that wage increases would be contingent on increased production and profits.

Protests from the workers...

The day after Ortega's speech, two proSandinista public-employee unions—the National Teachers' Union (ANDEN) and the Health Workers Union (FETSALUD)— marched to Ortega's presidential office to demand substantial wage increases.

The Sandinista Trade Unions Confederation (CST), which organizes most industrial, construction, and transport workers, has come under increasing pressure from its membership to fight for wage increases.

Some CST union leaders interviewed in Barricada, the Sandinista National Liberation Front's daily newspaper, have Don't miss even called for a sliding scale of wages to keep up with the pace of inflation. This demand has been systematically rejected by the government.

Miguel Perez, a CST leader at the EMEMSA plant told Barricada (May 19) that "the CST should be more concerned about the economic needs of the working class" and "pay attention to see that the government fulfills commitments made to the workers."

...Applause from the bosses Yet while the lifting of the wage and price controls was met with anger-often bitter and heated-by the working class, Ortega's declarations were greeted with praise and applause by the Nicaraguan capitalists.

Enrique Bolaños, the president of the Superior Council of Private Enterprise (COSEP), told the right-wing daily La Prensa that Ortega's June 14 measures were "timid and belated, but were headed in the right direction." He continued, "Now all that is needed is for the government to lift its monopoly on foreign trade."

Ramiro Gurdián, head of the National Union of Agricultural Producers of Nicaragua (UPANIC), was more forthright in his support of the measures. He told the pro-Sandinista daily El Nuevo Diario (June 16):

"I have to recognize that the government has imposed an economic plan which meets the current needs of our country. These measures are designed, for the first time, to resolve the economic problems we face....I am in complete agreement with the measures and I applaud them. I congratulate the government for having taken them."

The June 17 issue of La Prensa ran an editorial in support of the measures titled "Returning to Capitalism.

Government at an impasse The series of economic measures implemented by the Nicaraguan government in the past few months reflect the impasse of the government's model of the "mixed economy" (part public, part private).

The Sandinista government is acutely aware that the Nicaraguan capitalists are sabotaging the economy and contributing to the economic havoc in order to divert mass discontent against the government.

An article in Barricada International (May 19, 1988), for example, notes that "the capital flight [by the large agro-export ON LA PALKIAP producers] totalled $500 million in 1987, slightly less than export earnings that year. Credit was also used in speculative activities within the country...leading to an increase in production costs and the acceleration of inflation."

The government has also criticized the capitalist cotton and rice growers who have threatened in recent weeks to reduce planting and lay off workers unless the government agrees to raise prices for their products even further.

Yet despite all this evidence of open warfare by the capitalists on the revolution, he had met secretly with contra leader Alfredo César in Washington, Miami, and Managua to work out all the details of a final settlement.

Reichler said that the political reforms and timetable put on the table at the June meetings by the Nicaraguan government had actually been drafted by César and approved by three other members of the contra directorate.

At the last minute, however, César and the other contra negotiators raised new demands, and thus the talks broke down.

Following the collapse of the talks, Humberto Ortega blamed Enrique Bermudez, the top contra military commander, for "sabotaging" the talks. He also denounced Alfredo César for bending to the pressures of the contra military brass and for reneging on his word. César responded by stating that his meetings with Reichler had been "informal" and therefore not binding.

"Reconsidering military aid"

Predictably, after the negotiations broke down, contra representatives flew to Washington to demand renewed military aid. There they received a sympathetic Ortega and the Sandinista leadership have reiterated their commitment to the capitalist mixed economy.

In his June 14 speech, Ortega said, "For geopolitical reasons, we have not taken profound steps like those taken in Cuba, where private property has been abolished.... We cannot think of abolishing private property."

The "geo-political reasons" mentioned by Ortega appear to be a reference to the Soviet bureaucracy's public unwillingness that Ortega and the Sandinista leadership feel would be necessary to enable them to take the "Cuban road." Ortega has stated this much in the past.

But the Sandinistas, if they are to retain the allegiance of the workers and farmers of Nicaragua, have no alternative but to take the road the Cuban Revolution took in 1960 when it embarked on a socialist course.

The capitalists in Nicaragua will settle for nothing less than the removal of the Sandinista government and the reversal of all the gains of the revolution. They-just as their international counterparts-cannot be counted on to help increase production to salvage the economy and the revolution.

By implementing austerity measures aimed at bolstering the market economy, the Nicaraguan government is only undermining its support among those who made the revolution. This is a recipe for disaster.

reception.

Chief contra negotiator Alfredo César emerged from these meetings in mid-June with congressional leaders emphasizing that the new contra-aid proposal was gaining bipartisan support.

"It's time for Congress to admit that we gave negotiations our best try, but so far they've failed miserably and it's time to reconsider military aid," warned Rep. Richard Cheney (R-Wyo.), who sponsored a bill that would have allowed the CIA to use its secret budget to fund the contras..

At the same time, Costa Rican President Oscar Arias accused the Sandinistas of "intransigence."

This propaganda offensive is calculated to strengthen the contras' hand at the negotiating table. And unless they receive more concessions from the Nicaraguan government, the mercenaries will undoubtedly resume their U.S.-sponsored marauding raids.

The anti-intervention movement will better respond to these threats once current illusions in the peaceful intentions of the Democratic Party and the Arias Peace Plan are cast aside.

----- pull-quotes -----

to provide the economic and political assistance to the Nicaraguan Revolution

SEGUIREMOS CUMPLIENDO! Larry Boydimpı