Economic crisis sparks debate in ¡Nicaragua over revolution's course

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'Purpose of was tr The Nicaraguan economy, all observers agree, is rapidly disintegrating.

The inflation rate in 1988, according to Nicaraguan President Daniel Ortega, was 20,000 percent. More than one third of the workforce is unemployed. Factories close for lack of electric power. Hospitals are infested with vermin.

Tens of thousands of Nicaraguans are leaving the country in search of a better livelihood, mainly in the United States. Most are unemployed workers and poor urban dwellers. But a large number of those emigrating are skilled professionals, many of them defectors from the Sandinistas' own ranks.

And, for the first time in decades, there is widespread hunger-particularly among the children. Photos of entire families digging through garbage heaps in search of food have captured the tragedy of a war-weary population fighting desperately to survive.

New course under discussion Over the past few weeks, according to official Nicaraguan government spokespersons, the nine Sandinista government commanders have been meeting for as many as four hours a day to discuss what to do about the deteriorating economy. In mid-January, an extraordinary closed session of the Sandinista National Assembly was also held to take up this burning topic.

Sources close to the Sandinista leadership have reported that the government is seriously considering enacting economic and political measures that could radically modify the course of the Nicaraguan Revolution. These sources claim that among the policies under consideration are the return of confiscated lands and factories to the Nicaraguan capitalists.

In early January, government leaders approached leading representatives of the capitalist opposition for informal talks. Ramiro Gurdián, head of the Superior Council of Private Enterprise (COSEP), the major association of the Nicaraguan capitalists, said he was told by FSLN Victim of Gorbachev's 'peaceful coexistence' It is not everyday that one can read about the true role of the Soviet Union in Nicaragua. Joseph C. Harsch's opinion piece in the Dec. 29, 1988, issue of The Christian Science Monitor contains some perceptive statements that rarely find their way into the mainstream press. He notes:

"Nicaragua's economy would not be running an inflation rate like that and the people would not be complaining of near starvation if the Soviet Union cared about Ortega and his Sandinista movement. The entire population of Nicaragua is only about 3.5 million. The U.S.S.R. has its own economic problems, but it could easily relieve Nicaraguan economic troubles—if it cared enough.

"Ortega is looking hopefully toward Washington. ... He has been abandoned by Moscow for the obvious reason that Moscow cares more about good relations with the United States than about turning Nicaragua into a client and satellite in Central America." Commander Luis Carrión, the Minister of Economy, that the Sandinistas now recognize "past mistakes." "They say they should have been backing the private sector in the very beginning and that from now on, they will back us," Gurdián said. (San Francisco Chronicle, Jan. 28, 1989)

Heightened anticipation The latest flurry of debate over the future course of the economy comes amid growing speculation in the international press that Nicaraguan President Daniel Ortega is ready to make a new peace overture to George Bush. The New York Times, for example, notes that "Many Nicaraguan leaders in and out of the government, believe there will soon be new talks aimed at creating a more open political climate." (Jan. 17, 1989) Speculation over the Sandinistas' expected new course has been nourished by a growing number of conciliatory statements by top FSLN leaders and advisers that include the view that "1989 will be the year of 'normalization."

Also, in a statement reprinted with a favorable comment by the right-wing daily La Prensa, Economy Minister Luis Carrión ruled out further government expropriations of capitalist property. "We do not see a leftward shift as a viable alternative," Carrión said. Were the Sandinistas to embark on the course of "creating] a socialist state," he continued, "we would probably not create any socialist state at all. We would only bring upon ourselves an even more disastrous and chaotic situation than what we have now." (La Prensa, Nov. 15, 1988)

In a similar vein, FSLN Commander Bayardo Arce recently told Barricada, the official Sandinista newspaper, that the Sandinista leadership group is in the process of revising its "perception of reality® and "redefining how the Nicaraguan Revolution is going to advance." (quoted in The New York Times, Jan. 17, 1989)

The example of Inturismo The Nicaraguan capitalists' anticipation of big changes to come has also been fueled by concrete actions taken by the Nicaraguan government in recent months.

Last November, for example, Nicaraguan Minister of Tourism Herty Lewites announced that Inturismo, the state tourism corporation, had decided to reprivatize the state-owned hotels and restaurants, a substantial industry in Nicaragua. The Nov. 11 edition of La Prensa includes interviews with 10 of the capitalists who met with Lewites to hear his reprivatization proposal. They all said they welcomed the idea but were reluctant to sink in a lot of capital at this time. Marthon Daetz, head of the firm AS-Daetz, told La Prensa that the Sandinistas "have yet to offer a favorable climate for investment."

Soon after this measure was announced. Adolfo Miranda, a columnist for the proSandinista daily El Nuevo Diario, applauded the government's decision. "It represent[s] the road forward not only for Inturismo, but for other state entities as well."

But for the privatization effort to be economy, contra war negotiating table.' successful, Miranda warned, there are "two indispensable conditions: Private businessmen must have sufficient guarantees to confidently invest, and workers must act maturely and not obstruct administrative and management efforts."

producers. The Nicaraguan government Miranda's statements, according to economists at the independent research center ITZTANI, represent the thinking of a growing wing of the Sandinista leadership.

Spearheading the drive

Tourism Minister Herty Lewites is widely viewed as the man within the Sandinista front who is spearheading the national drive to return confiscated property to its previous owners.

He is the force behind the expanding chain of hard-currency stores that do business only in dollars. [For more on these "dollar stores," see accompanying commentary by Carlos Vilas.] Lewites is also the mastermind behind the new Montelimar tourist complex, which is currently being built on an estate that belonged to the Somozas. It is to be financed by a $10-million loan from Italian investors. Despite the widespread opposition from the Sandinista youth and rank and file, Montelimar is projected to feature gambling casinos and nude beaches-ultimately oriented to the U.S. tourist market "once relations are normalized."

Lewites' conceptions about the role of the Nicaraguan mixed economy are being closely scrutinized by those anxious to find clues to the future course of Nicaragua's mixed economy. His defense of the hotel and restaurant privatization plan, published in the Dec. 12 El Nuevo Diario, was particularly revealing:

This revolution is not totalitarian," he said, contrasting it to other revolutions that have established socialized property forms. "Here we have a real private sector. We give dollars to TANIC [Nicaraguan Tobacco Corp.] so that it can operate. This is also true of the "Toña" Brewery and of Esso Standard, which receives state money so that it can operate the refinery. We also give dollars to private coffee growers, cotton growers, and ranchers who do not support the revolution."

The workers' reaction Armando Ruiz, general secretary of the Sandinista-affiliated Hotel and Restaurant Workers Union "Edgard Lang," said he strongly disagreed with the government decision to sell the state-owned restaurants and hotels to private owners. "When Tourism Minister Herty Lewites makes these kind of deals," Ruiz said in an interview with El Nuevo Diario, "he should take the union's point of view into account. But we were never informed. This is unbelievable. Now we have a situation where 30 workers, all of whom have families to feed, will be fired—and in the context of our worsening economic crisis, this is dramatic." (Dec. 8, 1988)

Ruiz continued, "We were told by top leaders of the FSLN that state-owned corporations would not be returned to their previous owners. ... Herty Lewites should realize that with these proposals we are losing little by little the rights we fought so hard to gainand I repeat, we are over 4000 workers."

Revolutionary gains under threat The Nicaraguan capitalists and their U.S.government supporters resorted to open warfare against the Sandinista government in mid-1981 in order to press the Sandinistas to relinquish their monopoly on political power. The purpose of the contra war was to cripple the economy and bring the Sandinistas to the negotiating table, where some form of power-sharing scheme could be worked out. Despite the hefty government subsidies and credits granted yearly to induce them to invest productively, the Nicaraguan capitalists have been unwilling to coexist with the Sandinistas in the framework of a mixed economy that denies them political power. They have "decapitalized'-that is, they have taken an estimated $1.7 billion out of the country since the beginning of the revolution. [See accompanying articles in this section.] If the Sandinistas expect the Nicaraguan capitalists-and ultimately imperialist investors—-to come to the aid of the waravaged Nicaraguan economy, they will have • make une pollucal concessions aemandea o them. They will have to undermine and reverse the gains of the Nicaraguan Revolution.

This is the dilemma the Sandinista leaders face as they tackle the problems of a devastated economy.

Joseph Ryan/Socialist Action In an interview with Alexander Cockburn published in the December 1988 issue of Z Magazine, Carlos Vilas, an Argentine economist and author of numerous books on Nicaragua, provides deep insight into the problems of the Nicaraguan economy.

Vilas speaks from first-hand experience. He worked in Nicaragua from 1980 to 1987, first at the Ministry of Education, then at the Ministry of Planning, then at the Ministry of Labor, and finally on a research project in Nicaragua's Atlantic Coast region.

In his interview, Vilas describes the debates during the first years of the revolution over national policy priorities: "There were two basic options: agroexports versus development of the internal market and of basic consumption. In the end the agro-export strategy was preferred, which was mostly the MIDINRA [Ministry of Agrarian Reform] strategy and also the one dear to the heart of the segment of the more conservative bourgeoisie that was an important part of the government. "So they said agro-exports would be the national salary paying for development projects. They thought that this support of agro-exports-coffee, cotton, sugar, bananas—would prove to the private sector that the government had a real commitment to defend and expand the mixed-economy strategy. "But of course there were problems. First, the evolution, downward, of international commodity prices; second, private enterprise turned out not to be as committed to the mixed economy as the Sandinistas hoped."

Punishing workers and peasants Elsewhere in his interview, Vilas describes how the austerity measures implemented by the Sandinistas in February 1988 have severely punished Nicaragua's workers and peasants: "If you look at the evolution of wages from 1980 to 1987, with 1980 as 100, they have dropped from 100 to 11. If this goes on, the working class will disintegrate and become self-employed, vendors, good-for-nothings, and the like. Is this the kind of society a revolution wants to build? "True, the middle and upper classes have been forced to pay, too, but they have managed far better because they started higher on the scale. This is one of the reasons why social differences are so deep in Nicaragua right now. There's been an additional polarization of incomes."

Vilas strongly criticizes the introduction of diplomatic "dollar" stores, where Nicaraguans can buy consumer items in dollars. "The dollar stores introduce additional social differences between those who have dollars and those who don't. ... Outside the stores there are scores of children begging and people trying to get into the stores, asking you to get things for them. What has this to do with the Sandinista revolution and the war against the contras?"—A.B.

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'Government policies fuel growing social polarization'