Envío Digital
Central American University - UCA  
  Number 240 | Julio 2001



The Electoral Film Rolls On

Who would want to govern a bankrupt country? Three parties are fighting to do so, polishing their strategies and scripts, but one is offering only warmed-over economic programs, another is touting only contradictory, demagogic ones, and the third blew its shot at being a real alternative.

Nitlápan-Envío team

With the elections only four months away, polls still show Daniel Ortega in the lead, though the latest one, done by CID-Gallup at the end of June, indicates a narrowing of the gap between him and his nearest rival, Liberal candidate Enrique Bolaños (29% vs. 26%). That puts Ortega six points short of a first-round victory. The polls are also reflecting a new sentiment: the majority of those surveyed are now beginning to express confidence that things will get better after the elections and more of the stay-at-homers have decided to vote to guarantee that change. It is that standard anticipation drummed up by any electoral campaign, the blinding brilliance of klieg lights on an otherwise cheerless set. The backdrop to the electoral process, were voters to look at it closely, leaves no rational reason to expect any post-electoral improvement, however, since it is defined by the country’s bankruptcy. Another reason for expecting more of the same is that the majority of actors on this pre-electoral set will be written into the post-electoral script as well, and none of them are offering any real ways out of the seemingly interminable crisis.

The script of Sisyphus

Nicaragua has been rolling the heavy boulder of its impoverished economy up the hill of indebtedness for 12 years now, each time with the hope that its unpayable foreign debt will be written off upon reaching the summit. But just as it approaches the top, the boulder rolls back down and the task must be begun all over again. That was what happened at the end of the Chamorro government, when the belt-tightening efforts made within the adjustment program since 1991 slipped out of control in 1995—also a pre-electoral year. The government could not meet its signed commitments with the International Monetary Fund (IMF), leaving no better choice than to accept an ad hoc "Shadow Plan" arrangement with the IMF to avoid the drastic aid cuts by multilateral agencies and donor countries that accompany non-compliance. Aid was not cut off, but the boulder was back at the foot of the mountain. Six years later, the ghost of Sisyphus, again at the bottom with his ever-growing rock, is haunting the latest round of negotiations between the outgoing Alemán government and the IMF.

The breaking of the first Enhanced Structural Adjustment Facility (ESAF) agreement between the Chamorro administration and the IMF had long-term negative consequences for Nicaragua. The new Liberal government found that it had inherited quite a sizable fiscal deficit and a totally depleted National Development Bank. During 1997, his first year in office, President Alemán could not come to any agreement with the IMF and was forced to increase the country’s debt at high interest rates to maintain the country’s macroeconomic stability. The Central Bank issued a record number of short-term bonds that year, whose interest rate was above those in the international or local markets. Since then, the government has reissued such bonds each year, with the consequent drain on the country’s international reserves when they come due. The chain of corruption-triggered bank failures that started in August 2000—and were resolved politically rather than responsibly, with only one politically unprotected bank director serving any time in jail—finished the job on the reserves. Since no deposit insurance mechanisms were in place, the Central Bank itself had to bail out all of the mismanaged banks that went under.

Will the US and IMF step in?

The net amount of international reserves that the IMF requires Nicaragua’s Central Bank to keep in its vaults is the greatest obstacle to the Alemán government reaching an ad hoc agreement with the IMF similar to the one granted the Chamorro government. The IMF is also insisting on the quick recapitalization of BANIC, the partially state-owned and nearly bankrupt bank in which the Liberals have concentrated their capital.

The Liberal government knows it has no choice but to adopt an economic policy even more recessive than the one currently in place to increase its reserves. Since May, it has been forced to take steps in this direction, but they are an electoral risk and trigger reactions that the government can no longer control. It lifts public transport subsidies and the bus companies go on strike, causing huge economic losses and permitting the FSLN to step in and gain electoral points by controlling it. It reduces the workday in state institutions and inefficiency increases even more. It slashes the Ministry of Culture’s budget and closes cultural projects and other activities—even those aimed at attracting the incipient tourism—and provokes an unexpected and unprecedented strike by culture officials and even the resignation of the minister.

Seeking to get out of this bind, the government’s strategy toward the IMF has been simply to pledge strict fiscal and monetary discipline over the next six months in exchange for an increase in foreign resources to finish its term. The government has offered strictly political reasons for its insistence on a more open-handed policy, confident that the US government, which is obstinately determined to prevent the FSLN from returning to power, will exercise its powerful influence on the IMF board. Nicaragua’s government would need US$250 million more to get through the second half of 2001. Will it come in time to halt the bankruptcy and prevent the Liberals’ electoral loss?

What’s in it for the
legislative candidates?

Who would want to govern a bankrupt country full of unemployed people? Reality has shown that ambitious but myopic politicians control all three parties running. The main thing they want—especially as National Assembly representatives—is a piece of the action: salaries, other perks and the business opportunities that this post offers them in a country totally dependent on the international community’s financing and projects.

The FSLN turned in its lists of candidates for the Central American Parliament and for at-large and departmental representatives to the National Assembly on June 30, the first of the three parties to do so. All of those at the top of the respective slates, and thus sure to be elected, are known to be loyal to FSLN general secretary Daniel Ortega. While they were ostensibly chosen in the party’s "popular consultation" held earlier in the year, it appears that the charges of fraud in that party primary were well founded. The FSLN, which in past years—including when it was in power—permitted qualified non-party candidates on its slates, declared at the outset this time that no outsiders will get on, even if the FSLN allies with another party. The memory of the chaos in past legislatures caused by splinter groups formed of unruly allies as well as mutinous party dissidents on both sides was surely behind this decision.

The Constitutionalist Liberal Party (PLC) followed suit on July 11, with all of the party’s legislative candidates handpicked by President Alemán, as expected. Six family members got winning slots, together with numerous personal cronies, partners in his multiple businesses and politicians loyal to him who will need the immunity-impunity that a parliamentary seat guarantees them for the next five years. No candidate from the Resistance Party, which allied with the PLC, was put high enough on the slate to win, generating violent outbursts, eroding the alliance and further dividing the former "contras."
So, with the FSLN and PLC lists dominated by utterly loyal legislative candidates, we can already define a National Assembly controlled by two caudillos—Ortega out of the executive office and Alemán as head of the legislative opposition, or, should Ortega lose the presidency, both from their respective parliamentary benches. There is no chance this time that any splinter groups will form, as has happened in the past, weakening the majority headcount and forcing brokered votes. Since these two parties will control the votes, they could continue their pact of the past several years, divvying up what is left of the country, its state institutions and whatever else remains of value and reforming the Constitution to suit their interests even more. The only thing that could have stopped this unfortunate scenario would have been a significant number of independent legislators with an anti-pact mentality and a pluralist outlook.

Alemán writes himself the
lead part for Godfather IV

Not even the PLC’s own presidential candidate got a say in choosing the legislative candidates. Thus Enrique Bolaños finds himself trapped between an electorate he is having trouble attracting and a party in which he, a former Conservative, has little clout. The best campaign argument to defend his seriously handicapped candidacy is "Bolaños isn’t Alemán." Pathetic but true: Bolaños is more sober, more upright and controls his anti-Sandinista sentiments better. But a different style is not enough against the PLC boss’ heavy guns. Reality has been watering down the argument that differentiates the two men. Precisely because Bolaños is not Alemán—and thus does not control the party on whose ticket he is running—he would be unable to exercise his own style even if he ended up winning.

The past months have provided signs that President Alemán is more interested in winning again in 2006—or even earlier, through a Constituent election?—than having his party stay in office now. It has become clear, for example, that he would prefer to lose with Bolaños than win with a more attractive and more commanding candidate such as Eduardo Montealegre. Alemán has his control of the subordinated Liberal bench sewn up, in any case, since one of the constitutional changes resulting from the Alemán-Ortega pact of the past few years is that outgoing Presidents automatically gain legislative seats for life, without ever having to run. It is thus logical to assume that his confrontational spirit would be better suited to heading up a bench opposed to an executive branch controlled by Ortega than having to collaborate with a President Bolaños. The logic of this hypothesis holds up when tested against the particular skill with which Alemán has moved over the five years of his mandate.

The ongoing scandals involving him and/or his cronies and loyal figureheads in government have also made it obvious for some time that Alemán has no real interest in Nicaragua’s present or its future, other than insofar as it affects his own present and future personal and family wealth. There is no other way to analyze his behavior, which has further undermined Nicaragua’s already deteriorated international reputation and strangled economic possibilities. The philosophy he has held up to a physically, economically and psychologically battered population is that "good guys finish last."

Ortega’s rural script

The FSLN’s victories in the municipal elections last November clearly illustrated the long-known fact that the FSLN has more voters in the cities and the PLC has a clear advantage in the countryside. The PLC’s advantage in rural areas has grown over the past five years where the peasant population views public works as "favors" from a good government. Alemán’s propagandists have seen to it that the ubiquitous pre- and particularly post-Mitch projects whose international financing was necessarily channeled through the central government carry huge signs bearing his slogan: "Works not Words." These "works"—highways, roads, schools, etc.—indeed carry more weight than "words"—the government’s broken promises and the reporting by Managua’s media about government corruption in constructing these works.
The FSLN thus has a big challenge in the countryside. The rural vote may not make or break Daniel Ortega’s candidacy, but it could tip the balance in the National Assembly. In his electoral speeches, Ortega has thus insisted that, if elected, he will not confiscate or expropriate any property and, though he has shied away from the term "agrarian reform" for this reason, he is clearly trying to put himself at the head of rural causes. He has promised to write off the agricultural debt, create a state bank to promote agricultural development with credits on favorable conditions, and establish a land bank to provide land to poor peasants.
Not surprisingly, the polls suggest that these promises are catching on with the rural population, especially in the northern departments, where the rural crisis is concentrated. Most of the package, however, is pure demagogy. The accumulated agricultural debt is not only too large for public resources to cover, but any policy to pardon it would negate the viability of the FSLN’s other promise—a state bank to foster production. It would also rekindle a latent expectation among farmers and peasants that their debts would repeatedly be pardoned—as they were in the eighties—in the face of falling national or international prices for agricultural products, drought, floods and pests, eventualities that recur year after year. Today’s promises would become a breeding ground for tomorrow’s no-pay movements, which would permanently cripple the promised banking institution and with it the already fragile national financial system. Another serious consequence of the scheme Ortega is promising would be that any commercial banks and micro-financing institutions still providing credit to the rural sector would pull out.

Bolaños’ rural script

Despite all the signs of Alemán’s logic, Enrique Bolaños seems to want to win and is campaigning as hard as he can. He was the first in the campaign to offer a serious government platform. At the end of June, to great fanfare, he unveiled his Policy for Rural Zones and sealed it with his campaign slogan: "With Bolaños, we can do it!"

This proposal, which Bolaños referred to as an "integral national policy" with "concrete programs rather than little programs here and there," can be interpreted as a reaction to the FSLN’s rural offensive. It has the additional virtue of being formulated in direct and attractive language. Its weakness, however, is that it is short on new ideas, while the ideas it does propose would in practice be a continuation of the current government’s failed rural policy, announced as the centerpiece of the 1996 campaign, to turn Nicaragua back into "Central America’s granary."

The most publicized aspect of Bolaños’ plan is the creation of a National Peasant Credit Program, which would cover some two hundred thousand rural families over his five-year term. It is simply an expanded version of the Program of Support to Small Producers pushed by Mario De Franco, now Bolaños’ economic adviser, when he headed the Agricultural and Forestry Ministry at the beginning of Alemán’s term. The government proved unable to administer it and abandoned it after two agricultural cycles. During the program’s short life, its credit recovery rate did not hit 40%, suggesting that its continuation would totally depend on indefinite financing from donor countries.

The final attempt to breathe life back into the program was made by Alemán’s fourth agricultural minister, José Augusto Navarro, with support from the US government’s Agency for International Development. The obvious objective was to strengthen the Liberal’s electoral campaign in the countryside, but once again, as so many times before, Alemán’s intolerance prevailed over his party’s interests. He fired Navarro at the end of June for daring to criticize the "mega-salaries" that other high Liberal government officials had granted themselves in defiance of the economic recession, IMF requirements that public spending be slashed and the most elemental, social, political and even electoral sensibility.

Take 1: Land

Other projects in Bolaños’ plan are in fact either already underway or being negotiated with multilateral organization in general and the World Bank in particular. For example, programs to construct community-based metal silos to store grain harvests and to provide improved seed have existed for several years. The new bit is that bigger subsidies are now being promised for acquiring the silos and the seeds. The proposal to title lands and to subsidize credits for the purchase of land are already contained in the territorial planning project under negotiation with the World Bank for several months now. Ever since the Chamorro government, that bank has been supporting Nicaragua’s efforts to put some legal order into the tangle of rural property problems. The centerpiece of the Bolaños proposal is to conduct a national cadastral appraisal linked to the registering of these properties. If this plan, similar to one implemented in Honduras with World Bank support, is carried out, it would have a positive effect on the judicial ordering of agricultural lands.

The brake on this project—actually initiated during the Chamorro government—has been the lack of administrative capability and even more importantly the Alemán government’s lack of political will to continue pushing it. The President’s personal interests and those of his circle of cronies explain the continuing legal disorder in the countryside. Although affecting producers, the confusion over properties and the lack of titles—and thus of access to credits—have made it very easy for the "President’s men," not to mention the President himself and his partners in the pact, to so voraciously grab up land. Would a Bolaños government have the political independence needed to radically turn around this land concentration policy?

Take 2: Development promotion

Bolaños’ plan also includes special policies to support agricultural, forestry and fishing businesses. The most notable part of this proposal would be the creation of a new Credit and Investment Fund. The Alemán government already tried it once—the Nicaraguan Investment Fund—with barely visible results. Could Bolaños simply be dressing up Ortega’s proposal for a development promotion bank in a different disguise? Bolaños is additionally promising to eliminate the advance deduction of income tax from agricultural, cattle and forestry businesses and to establish a general sales tax rate of zero for productive activities. Fulfilling these promises will be extremely tough given the precarious fiscal situation that the new government will inherit.

Take 3: Coffee

The Bolaños plan recognizes the urgent need to promote technological change in the country’s agricultural, forestry and fishing sectors. It is crammed with references to the low productivity of the national agricultural sector, which is implicit recognition of the scant impact of the millions invested by the Agricultural Technology Institute during not only this government but the Chamorro administration as well. In this aspect so crucial to the country’s development, there are no innovative proposals, with the exception of the one for modernizing coffee.

Bolaños proposes a target of 35,000 hectares of renovated coffee plantations by the end of his five years in office. Despite the fact that President Alemán is himself a coffee producer, his government failed to promote technological modernization of the country’s coffee production, which has led to notable deterioration of the plantations, particularly since international coffee prices plunged. Where will the resources come from to finance an investment involving nearly half of the land dedicated to coffee cultivation? How many growers will be willing to run up debts to modernize their production knowing that international prices are not likely to rise in the next five years? How will technical support for such a sizable project be organized? The last large-scale coffee renovation experience in the country was the Sandinista government’s highly-touted Plan Conarca, which ended up an unmitigated failure.

Take 4: Concertation

Once Bolaños finished laying out his plan, he exhorted producers’ organizations and NGOs to collaborate in all its programs. But the nation’s most recent history demonstrates that the road to institutionalized appearances is paved with good exhortations. Bolaños’ proposal does not mention how any agreement between the government and civil society for the implementation of these rural programs will either be hammered out or institutionalized, despite the fact that such concertation is crucial to Nicaragua’s development.

The Alemán government has been openly hostile to civil society in general, and the NGOs and their leaders and spokespeople in particular. It has never shown interest in anything beyond a formal and theatrical show of concertation for the cameras in the numerous events commonly held in the conference salons of Managua’s new luxury hotels. Will Bolaños be able to break through this and other stigmas of a government in which he spent over four years as vice president? He may not be Alemán, but the excess of arbitrary and authoritarian power that Alemán is exhibiting as he winds up his term tars Bolaños and his proposals with the same brush. If he wins, how much leadership will he have in a party controlled by a caudillo and in so many government institutions branded by the pact?

The Conservative script

On June 18, the Supreme Electoral Council (CSE), defying the opinion of many national jurists and international pressure of all kinds, satisfied President Alemán’s desire to prevent José Antonio Alvarado, founder and expelled dissident of the party Alemán now controls, from running for Vice President on the Conservative ticket. The "judicial argument" the CSE used to deny his eligibility—and signaled by Alemán late last year—related to details of the procedure by which Alvarado had recovered his Nicaraguan nationality. Theoretically the government should have checked all of that before appointing Alvarado minister of government, then of education, then of defense over the past five years, since one’s citizenship also needs to be in order to serve in those posts.

It took the CSE two weeks to decree the prohibition because the three CSE magistrates from the FSLN refused to grace any session with their presence, thus preventing a quorum. Their action was billed as a show of protest against the anticipated decision, but the real goal was to legitimize the FSLN in the public’s eyes as the "defender of institutionality and pluralism." It was also an opportunity to do some muscle flexing with the Liberals to gain new maneuvering room in the ongoing bi-party pact negotiations.

During all this electoral arbitrariness, exclusions and attacks on pluralism by the parties to the pact, the Conservative Party (PC) has faced an ongoing dilemma: should it compete with the same damaging weapons used by the other two parties or help break the vicious circles that pact created? Its historical trajectory and its current reality—little relationship with the grassroots and just as little organization—have not prepared the PC to tackle this dilemma with any bold strokes.
Up to the point that Alvarado was prohibited from running, the Conservatives had opted for the first choice: excluding, polarizing, encouraging short-term visions and putting a priority on the personal interests of the party elite. But the suppression of Alvarado’s candidacy, one of the most notable exclusions of the electoral process, triggered the start of a truly surprising, albeit late, mutation.

The PC chose Sandinista academic Carlos Tünnermann as Noel Vidaurre’s new running mate. Tünnermann had joined the Group of 12, formed of well-known intellectuals and businessmen in 1978, to raise international support for the overthrow of Somoza and function as a bridge between the Conservative opposition to Somoza and the then-revolutionary FSLN. During the years of the revolution, he served first as minister of education and then as ambassador to the United States.

Choosing him sent a message of refreshing boldness on the PC’s part and generated new expectations. With polls showing that between 20% and 30% of the voters are still undecided, his candidacy injected a breath of fresh air into a sector of those electoral fence-sitters who are not Conservatives but feel politically corseted by the pact. Tünnermann might have represented a first step in the creation of a pluralist anti-pact option that included representatives of civil society, non-Alemán Liberals and non-Ortega Sandinistas. While he is an elite with limited popular charisma, he has gained renewed recognition with civil society in recent years at the head of a watchdog coalition of NGOs and individuals called Ethics and Transparency (ET to the cognoscenti). Building such a multi-striped alliance would have meant withdrawing the weapons of the pact and opting for the tools of a new political culture: openness, flexibility, long-term vision, contact with reality instead of a cult of images, and even humility. Alvarado, who remained on the street in front of CSE headquarters day and night for 15 days in anticipation of the CSE’s decision, where he received demonstrations of popular support, was named the PC campaign chief. It was another sign of hope that the PC might shake off its narrowness and become a party for all seasons.

Another script red-inked

It was not to be. The traditional script of the political class won out over innovation. The old PC structures and leaders put up resistance, with those already comfortably ensconced on the legislative slate of candidates making it particularly clear that they were not about to step aside for new allies, especially Sandinistas. But that was only part of the problem. The national and Central American business interests that had pledged financial assistance to the PC’s campaign exerted ferocious pressure, and the US government, which cares about little other than preventing the FSLN from winning, applied the strongest pressure of all. It wants the PC either to withdraw from the elections or to ally with the Liberals, or at the very least to sign on to an anti-Sandinismo that blurs the necessary distinctions between the FSLN and genuine Sandinista values and visions. All that pressure drove the last nails into the coffin of a third-way alliance. The PC will run with its own script, whose only green part comes not from a fresh and budding proposal but from the color of its traditional banner. Nicaragua, a country already in evident economic bankruptcy, and with a political class determined to add moral bankruptcy to its burdens, is yet again the big loser.

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