Envío Digital
Central American University - UCA  
  Number 278 | Septiembre 2004



Alone and Weak, But Oh So Sure of His Shaky Ground

“I am neither alone nor am I weak,” said President Bolaños, sounding a little too cocky. This month showed him not only alone, but isolated, and not only weak, but debilitated. Most worrying is the optimistic way he is treading on what is actually very shaky ground.

Nitlápan-Envío team

This last month the country found itself again “overlook-ing the abyss,” facing a “monstrous political crisis” and “institutional chaos.” Is it just the routine hyperbole of the actors in Nicaragua’s political theater, or are things really worse than usual?

Without ignoring the roots of the chaos we’re living through, which run so deep they’ve disappeared from sight, there is a need to put things in perspective. The month was just one more chapter—and nowhere near the final one—in the shortsighted and destructive power struggles among the three dominant economic-political groups.

The Parmalat ruling

The interpretation and application of “the law” is increasingly defining the chapters of our recurring crisis. And the control that judges and justices close to the Sandinista National Liberation Front (FSLN) have begun to exercise systematically and provocatively over the judicial system, in complicity with their Constitutionalist Liberal Party (PLC) counterparts, helps us make some sense of them. Saying that, however, should not suggest that Nicaragua’s judicial system was ever free of the influence and meddling of those who have traditionally hoarded economic power, as Attorney General Alberto Novoa so rightly reminds us in this issue of envío.

One of the most recent judicial scandals began on August 11, when Haroldo Montealegre, former head and majority stockholder of the failed Banco Mercantil (Bamer), was judicially appointed official receiver for Parmalat-Nicaragua, the local operations of the scandal-ridden Italian dairy transnational. The “justification” for this unusual sentence can be traced back to a suit Montealegre filed years earlier against Roberto Zamora, chief stockholder of Bancentro, which absorbed the assets of the bankrupt Bamer. Montealegre charged Zamora with failure to pay over US$6 million for 60% of Bamer’s assets in 2000—a contract reportedly signed between the two on a napkin in a Miami fish restaurant.

As Bancentro acquired 49% of Parmalat-Nicaragua’s assets in the wake of the international crisis affecting its mother company, Montealegre maneuvered to get a judge to let him squeeze the alleged debt out of Zamora by naming him the receiver of the Nicaraguan company. What makes the ruling so important is that Parmalat is one of the largest, best-organized companies in Nicaragua, virtually monopolizing the collection and sale of milk and milk products at a national level. It buys over 600,000 liters of milk a day from dairy farmers, provides employment to 70,000 people in its plants and milk collection and storage network, and supplies 50,000 liters of milk plus other dairy products to 14,000 house-front grocery stores all over the country.

More on banks and bankers

A month earlier in another unusual judicial decision, the Supreme Court had annulled the state’s intervention of BECA, another failed bank, siding with an action brought eight years earlier by the bank’s founder and head Álvaro Robelo. Following that decision, Robelo sued Bolaños and several ministers and threatened additional suits to get back the millions of dollars he claimed he had lost along with his bank.

Financial groups with political ties came into play in both sentences. Bamer and BECA are only two of the eight banks that went under in a prolonged crisis resulting from corrupt and incompetent banking practices that began after President Chamorro privatized the banking system in 1991 and hopefully culminated in 2000. FSLN leader Bayardo Arce was on Bamer’s board and Robelo’s ties to both the FSLN and Haroldo Montealegre are public knowledge. Another major stockholder of Bancentro at the time of the Bamer buyout was Eduardo Montealegre, currently secretary of the presidency and tipped to succeed Bolaños as President and provide continuity to his economic and political project, if all goes well with US designs.

Up against the wall

Already reeling over the possibility of having to cough up some $20 million to reimburse Robelo, the executive branch was further rattled by the Parmalat decision. A good part of the financial system and large private enterprise—which felt as powerless and indignant as Bolaños himself—argued that the precedent would scare off foreign investment by foreshadowing similar decisions against other companies. With that Daniel Ortega chimed in, declaring that he had nothing to do with the judge’s decision while using the limelight to call private enterprise a “hotbed of corruption” and its business owners and bankers “vultures.”

Six days after the Parmalat sentence, yet another judicial decision—this time linked to Arnoldo Alemán’s PLC and to elements in the Convergence, an ideologically wide-ranging group allied to the FSLN—pinned Bolaños up against the wall politically. The judge sentenced Alejandro Fiallos, Managua mayoral candidate of the Alliance for the Republic (APRE), the new multi-flavored “party” Bolaños and friends concocted to ensure continuity, to 21 months in jail and prohibited him from holding any public office for a year. The charge? Apparently fabricated irregularities committed while director of the Institute of Municipal Promotion (INIFOM). The judge, spurred to action by a poll showing Fiallos pulling 11% of early voting intentions, which could split the rightwing vote enough to give this key mayor’s office to the FSLN, processed the charge with lightning speed and admitted five other suits against Fiallos while he was at it.

Swinging like a pendulum

For two weeks, President Bolaños seemed lost. While never abandoning the posture of self-assured conceit with which he has directed the nation during the first half of his term, he swayed like a pendulum. He wouldn’t respect the Parmalat and BECA sentences… Well, yes, he would, but the money to pay for the decisions of judges he referred to as “bank robbers” would have to come out of the taxpayers’ hide. He would take drastic measures against the FSLN/PLC-run judicial branch… Well, no, he wouldn’t; it was society’s job to take on what he grandiosely but convolutedly called the task of “lighting the torch of a civilist and civilized social spiral so that together we can break the ring of caudillismo and corruption that is trying to consume all Nicaraguans.” He would immediately announce forceful measures to the nation… but the days passed and the President never announced anything.

He did, however, toy with a number of radical options. After meeting twice with his security Cabinet, Bolaños suspended his trip to attend the inauguration of the Dominican Republic’s new President. There was talk of intervening in the judicial branch’s affairs, of reforming it de facto by executive decree, even of dissolving it. All those ideas, based on skirting the legislative branch, turned out to be unconstitutional, technical “coups d’état” that had to be abandoned.

Next he turned his attention to Parlamat, discussing the possibility of decreeing an “economic emergency” to justify declaring it “of public utility” and recovering it. But he couldn’t do that either; it would give the wrong message following his optimistic declaration only days earlier about how well the economy was moving. Talk of turning to the army got no further; the head of the armed forces quickly declared that he saw no substantial threat to the country’s stability, and what he did see didn’t merit military intervention. There was even talk of invoking the Organization of American States’ Democratic Charter, requesting international aid because governability and democracy were under threat.

But in the end, President Bolaños’ only decision during this crisis was to order Attorney General Alberto Novoa to investigate the process that had led to the sentence—and the previous ones that had also scandalized the executive—to identify any irregularities and anomalies they might contain and proceed against the officials who committed them. The order does not imply the possibility of reversing the decisions, which cannot be legally appealed.

The mission Novoa was assigned sparked indignation among the Supreme Court justices and members of the Association of Judges and Magistrates, who considered it a violation of the judicial branch’s autonomy and independence. The presidential measure thus helped further isolate the executive from both the judicial branch and the PLC and FSLN, the two parties exclusively represented by the Supreme Court justices. On September 2, the Court declared Bolaños’ order to Novoa “unconstitutional.” That same day, however, European Union ambassadors and USAID officials, meeting with the UN resident representative at his headquarters in Managua, publicly warned the Supreme Court that the economic aid earmarked for its modernization will be suspended if it does not sort out the various contradictory judicial career bills and push the law through as fast as possible.

Tante Grazie, Italia!

The thousands of families that depend on Parmalat could have cared less what measure the government took, as long as they continued being paid for their milk production.

The ranchers’ leaders were divided over the issue. The majority of them, led by president of the pro-Sandinista National Cattle Ranchers’ Commission (CONAGAN) Daniel Núñez, openly backed Montealegre. They were joined by Alemán’s wife, who said she sells Parmalat a thousand liters of milk a day from their ranch. Only a minority of producers, most of them loyal to the government, questioned Monte-alegre, forecasting that milk collection and payments would go downhill.

With no maneuvering room, Bolaños was saved from outside once again. On August 24, 13 days after the court order, the Italian government’s extraordinary commissary for Parmalat-Italia and the Italian ambassador to Nicaragua sternly warned Montealegre that he would have to resign the post he had been judicially granted. The commissary referred to the judicial order itself as a “confiscation,” the same word Bolaños had used.

Bolaños breathed a sigh of relief. Later that same day, Fiallos was released on bail. More relief. Days later, on September 2, the Italian govern-ment’s commissary forced Montealegre to resign his new post and the judge to rescind her judicial order. It was clear that Italy was not endorsing Monte-alegre’s maneuver or Bancentro’s voracious relation to Parmalat.

Following the Italian govern-ment’s warning, but before being forced to resign, Montealegre visited Cardinal Obando. “I wanted to explain the situation to him and hear his opinion,” said Montealegre, “because the cardinal is the most qualified person in Nicaragua to reflect on any issue. We discussed the importance of a dialogue between the Italian partners and myself to resolve this situation... We also discussed philosophy, because we’re both knowledgeable on the subject.”

Fraud and bankruptcies

The international backdrop of the Parmalat case provides certain clues that help explain the conflict played out in Nicaragua. Aldo Camorani, Parmalat-Nicaragua’s executive president, belonged to the intimate circle of Calisto Tanzi, the mother company’s founder, currently in an Italian jail on corruption charges. Like the earlier Enron scandal in the United States, the Parmalat fraud was headline news all over the world last year. Although those two scandals differed in amounts, the methods were similar. Tanzi and his family altered the company’s financial statements, which enabled them to build up a level of indebtedness beyond the company’s capacity to pay. The scheme they had cooked up became public when they could no longer cover the loans.

At that point, Camorani took US$5 million out of the Nicaraguan subsidiary’s account to help Tanzi ameliorate the international crisis he was facing. This, of course, decapitalized Parmalat-Nicaragua, which was immediately embargoed by two banks, but the Lafise-Bancentro financial group gallantly came to the rescue with US$5.8 million—in exchange for 49% of its shares.

By the time Montealegre was named, Camorani had already left Nicaragua. Montealegre used his friendship with him to justify his new appointment, arguing that Camorani would soon be returning to Nicaragua and that he backed the judicial intervention, which was untrue, or at least irrelevant, since the Italian state has been administering Parmalat-Italia since the scandal broke and Camorani has no voice in the company. So what do Italy and Nicaragua have in common? The immediate answers are corruption, bankruptcies, fraud and dirty dealers.

“I’m neither alone nor weak”

Bolaños appeared publicly on August 23 to try to put an end to the uncertainty that had hovered around him for two weeks due to the Parmalat case. He spoke more confidently and self-assuredly because had had just learned that the following day Italy would be throwing him a lifejacket. He had been “more than willing,” he admitted in his speech, to use forceful measures to resolve the problem, but had resisted “the temptation.” The speech was marked by the continued use of extremely aggressive and biting language against the judicial branch’s judges and justices and against the caudillos of the FSLN and the PLC.

It was also the speech in which he tried to calm the country—or perhaps himself—by insisting that “I am not alone nor am I weak.” There’s an old saying that goes, “Tell me what you boast of and I’ll tell what you’re lacking.” Could this apply to our President? The Parmalat case and Bolaños’ vacillating reactions revealed him to be not only alone, but isolated within the country, and not only weak, but debilitated. Beyond this particular moment, however, is President Bolaños actually alone and weak in a more fundamental sense?

The starting point

The Parmalat sentence was handed down at a time when Nicaragua’s economy was showing more vigorous signs of recovery than even the government expected. Any talk of more long-lasting recovery, however, must include certain data. When Bolaños received the presidential office from Arnoldo Alemán in January 2002, he inherited a disastrous public finance situation along with it. The previous year, election year, the country had strayed from the second three-year International Monetary Fund program, signed in 1998, and the plunging world coffee prices were a major worry. The year before that, however, Nicaragua had experienced a relative bonanza: current income was higher than current spending and public investment—largely financed with the foreign aid that poured in after Hurricane Mitch—was very high, equivalent to 11.7% of the Gross Domestic Product.

What brought about the change? Not only the fall in coffee prices, but also three major bank collapses and the immediate need to deplete an important part of the Central Bank’s international reserves to guarantee their deposits—replenished in part by the issuing of bank-bailout bonds known as CENIs. Then there was the fact that 2001 was Alemán’s last year to empty the government coffers and several countries froze loans and donations due to his in-your-face corruption. Already that year, income no longer covered current spending, much less investment spending, which caused the deficit to shoot up to levels only known during the war years of the eighties. Because the IMF would not sign a new three-year agreement until Nicaragua put its financial house back in order, Bolaños took office without being able to count on the bilateral loans that depend on the IMF’s green light. The IMF’s most basic criterion was the current spending deficit, so Bolaños had to cut public investment to a drastic 8% of the GDP.

Bolaños also inherited a drastic drop in economic growth. In 2000, agricultural growth had been a spectacular 15.7%, a reflection of the still-high coffee prices in 1999 and a 7.3% growth in cattle ranching. There was also a boom in private and public construction thanks to the post-Mitch funds. But by election year, and even more so in Bolaños’ first year, the situation had turned around. Only the cattle sector continued to show a growth that was higher than the skimpy national rate.

The paradox

Not until last year did the government succeed in covering current expenses with current income or force the deficit down some and begin to recover the public investment level, all thanks to new foreign aid flows. With the new IMF agreement signed, the international community began to back the Bolaños administration enthusiastically, trusting in its capacity to establish order in a country considered irredeemable. All things considered, Bolaños’ most strategic “economic investment” was to go after Arnoldo Alemán, ferret out his “stashes” and finally get him to court. This won him enormous international respect, which translated into economic aid.

The fight against corruption also won him national backing, with the obvious exception of the country’s extensive Liberal sector. But just as the macroeconomy began to fall back in order in 2003, the fight that had so elated a sizable sector of the population the previous year began to be perceived as one-sided, aimed only against Alemán. At that point, a paradox appeared that has since come to characterize the Bolaños government: strong international support but increasing national erosion; international accompaniment but national isolation; international strength but national weakness. The most recent example of this was provided this August 30, during President Bolaños’ trip to Copenhagen. Upon signing an agreement for a three-year, US$160 million donation for education, infrastructure and the environment, the Danish prime minister praised the Bolaños administration for its fight against corruption and for having recovered Nicaragua’s credibility with the international community.

Optimistic but fragile growth

The national economy is finally beginning to show a very respectable growth rate: over 4% in the first half of this year. The figure is even more impressive given the palpable increase in international oil prices.

This growth is due to an important resurgence in export income, partly due to a recovery in coffee prices and to better than expected dairy and meat exports. It is also due to an equally important recovery in the construction industry, thanks particularly to the government’s road and highway plans.

The executive branch’s optimism is understandable but could well be ill founded, as the growth is built on very shaky ground. One of the most serious and ongoing problems, which shows no sign of changing significantly in the medium run, is the balance of payments; that is, exports vs. imports. The projection for 2004 is to export some $600 million, similar to the value exported four years ago in 2000. But while this side of the equation is relatively static, the other side, the import bill, keeps growing. As a result, the balance of payments deficit currently stands at US$1.1 billion.

Both remittances from emigrants and foreign aid—including both donations and loans—help correct the imbalance. But this is where the ground really gets shaky, because now that Nicaragua has reached the culmination point of the initiative for Highly Indebted Poor Countries (HIPC), the tendency, ironically, is toward increased loans and a drop in donations. Donations have already dropped significantly as an effect of the pardoning of a large part of Nicaragua’s foreign debt this year, because the international community began to view Nicaragua as eligible for more multilateral bank loans. The country will now find itself increasingly dependent on loans from the World Bank, Inter-American Development Bank, etc., for its external financing.

Is Nicaragua really viable?

According to the IMF and World Bank, a country is financially viable when its debt is equivalent to 150% of its GDP. In this respect, the HIPC effect has increased Nicaragua’s viability since its remaining foreign debt has dropped to 85% of the GDP. But that’s not the country’s only debt. It also has a staggering domestic debt of well over US$1.5 billion made up largely of indemnification bonds issued during the Chamorro government to compensate people whose property was confiscated by the Sandinista government and the above-mentioned CENIs issued by the Alemán government, both at very attractive interest rates. And this debt just keeps on growing, with no equivalent of HIPC to bail it out.

Adding the internal debt to the foreign debt, Nicaragua’s indebtedness level represents 125% of its GDP, which once again puts it very close to the maximum permissible. It is an alarming sign of the fragility of our economy in the medium term, understanding “medium” as sooner than would be the case in countries with more consolidated economies.

Unreal and irresponsible

The optimism of Bolaños’ team is a trusting reflection of the IMF projections—cobbled together in air-conditioned offices far from reality—that economic growth will remain stable at around 4-5% annually, foreign investment will grow at a sustained rate and exports will grow 6-7% annually. But outside of those offices, these projections reek of fragility. It would take nothing more than a new dip in international coffee prices to recreate the crisis from which the country is only now beginning to recover. The foreign investments on which the forecasters are counting nearly blindly—which amount to little more than sweatshop investments in any event—have held back with the delay in the ratification of the Central American Free Trade Agreement (CAFTA). Exports, meanwhile, still rely heavily on Nicaragua’s traditional offerings, whereas significant growth can only be achieved by means of an important diversification in export products, a very notable recovery in coffee production or, least likely of all, stunning growth in the export of beef and dairy products, none of which is in sight. On top of all this, the consequences of the rise in international oil prices are beyond national control.

The IMF is projecting that Nicaragua will hit an annual growth rate of close to 5% in 2008, and that it will top 4% as soon as next year. And the IMF projects that Nicaragua will be able to sustain its debt payments based on these optimistic suppositions.

This lack of realism borders on irresponsibility. The projections are based on stability and therefore irresponsible both because they don’t reflect the real situation of such an unstable country and because they foster a “hope-for-the-best” inertia among government officials. To pick just one example, it is hard to believe that either national or foreign investment will come anywhere close to projections or that growth rates will be as high as predicted in 2006, a predictably tense and very polarized presidential election year.

An old pattern with
little change likely

Nicaragua’s economic growth pattern alone gives us reason to doubt the IMF’s projections. What is reasonable to expect, even with the most positive vision? There will likely be an expansion of services and commerce, both of which are favored by family remittances. In the agricultural sector, CAFTA could offer new opportunities, but only in the vegetable and fruit production sectors, in which Nicaragua has neither culture nor tradition. It could be that the coffee crisis has hit bottom and that things will only improve. Dairy and meat cattle will probably maintain their good growth rhythm and CAFTA could open more spaces for export. But that’s about it.

In the case of foreign investment, the level has hovered around US$200 million annually. The government calculates a good part of its economic growth projections on the premise that CAFTA will lead to a noticeable increase in this level, making the perception of a good investment climate in the country indispensable. The Parmalat shenanigan is the worse propaganda that the government could have imagined.

A recent World Bank analysis recognized that for some time now the Nicaraguan economy’s growth was the result of two exceptional situations: Hurricane Mitch, which provided a strong injection of foreign resources, and the productive re-colonizing of extensive rural areas abandoned during the war. The trouble is that these two situations have already provided all they had to give. The extraordinary response to Mitch is over and the huge extension of abandoned land is now in use again to a greater or lesser degree. From here on out, economic growth will depend on increasing productivity and diversifying exports.

Together with foreign investment, the other important factor that helps cancel out deficits and expand commerce in Nicaragua is the family remittances sent home by our emigrants, recently pegged at US$800 million annually by the Inter-American Development Bank. That is twice the figure in 2000, when it had already exceeded foreign donations. Today remittances are greater than donations and loans combined. This is a dramatic and surely irreversible structural change. Nicaragua depends increasingly on its emigrants, despite our arrogant government officials’ failure to acknowledge them in speeches, choosing instead to laud their own efforts and their capacity to manage and stabilize the economy.

Given today’s realities and the opportunities that can be glimpsed on the horizon, no significant improvements in the economy are likely in the medium run. In fact, despite HIPC having written off a significant part of the foreign debt, Nicaragua’s debt burden is still greater than it can bear, given the huge debt run up with commercial banks inside the country. With IMF knowledge and complicity, the government has prioritized payment on that domestic debt over poverty reduction programs and other social spending, and is even diverting to that purpose the interest payments saved with the pardoning of the foreign debt, which were specifically earmarked for the health and education budgets. All this sacrifice notwithstanding, there is a real danger that we’ll need another HIPC in about four more years.

Having all the economic projects built on such shaky ground weakens Bolaños and his team. It also weakens the continuation of his project, as seen in the political arena on a daily basis.

No explaining,
but a lot of feigning

The IMF has made its own projections for the domestic debt. One of its objectives is for the country to increase its tax collection, not only to cover the government’s current spending and public investments, but also to significantly lower the domestic debt. As of 2005, the Central Bank must begin to pay out on the long-term property indemnification bonds, at the same time that it is canceling the shorter-term CENI issues, largely bought by the private banks.

Offering no explanations but doing a lot of feigning, Enrique Bolaños is trying hard to obey this objective, despite strong criticism from organized civil society for seriously shortchanging social programs to honor the debt with the banks. His government has paid a high political price for this, which has weakened and isolated him even more.

Continuing to prioritize payment to the banks can only produce incredulity when this government can’t even maintain the “glass of milk” program for the poorest public school pupils. It is particularly perplexing when the banks have received one privilege after another, the most scandalous being the generous income tax exonerations granted by the two previous governments. The few banks that have survived all the scandals of recent years have even managed to perpetuate that exoneration with the current government, over strong objections from the citizenry.

Myopia and rigidity

Everything indicates that Nicaragua is at great risk of falling into insolvency again, and economic reasons are not the only explanations. The ongoing political instability could, for example, trigger a collapse in tax collection, which would pull the rug out from under all the optimistic calculations that fuel the permanently self-satisfied official declarations.

The three power groups that dominate the national stage are constantly maneuvering, conspiring and machinating on this fragile and shaky ground. Between them, the PLC and FSLN control three of the four branches of state along with other institutions. They use the legislative branch to pass laws that weaken the Bolaños group or otherwise serve their exclusive interests, then turn to the judicial branch to uphold their new legislation. They have not incorporated the macroeconomic challenges into the logic of their actions, calculating their agreements and wars exclusively on the crude shortsightedness of their political and personal interests.

The third group—that of big productive and financial capital, represented by the executive branch—is at the other extreme. Its representatives have so rigidly incorporated the macroeconomic framework that they are locked into its cold statistics, stored in their “mental Power Point,” and can’t communicate politically with the real country. They are unshakably confident that their international backing—which indeed remains solid—will bolster their weaknesses and provide solace in their isolation.

Yet another call for a
“national dialogue”

The month produced no end of maneuvers and machinations by all three and against each other. In a continuous and hardly civilized spiral, new schemes were cooked up around the Parmalat case, further widening the chasm between the President and both the judicial branch and numerous social sectors. The isolation and weaknesses displayed by Bolaños and his team when caught off guard by the Parmalat case encouraged several groups to float yet again the recurring idea of a “national dialogue.” The big surprise was that one of the first to mention this “solution” was the papal nuncio in Nicaragua, Jean Paul Gobel, who has been showing up on the political stage increasingly often.

Other voices also joined the pro-dialogue chorus. On the PLC side, the idea revolved, as always, around Arnoldo Alemán, still in hospital after several fingers were operated on two months ago. According to his loyal followers, any real dialogue would have to include the participation of what they term “political prisoners.”

The most articulate voice in the chorus came from Liberal leader René Herrera, now back on Alemán’s good side after having been repudiated by him last year. His argument was the following: “It has been demonstrated that having Arnoldo a prisoner produces neither the stability nor the change that the government expected, much less the situations that Bolaños imagined. I think that what is happening in the end is what happened at the beginning of the nineties, when Violeta Chamorro, faced with a similar situation because she couldn’t deal with the Sandinista Front, frequently had to back down and generate alternative amnesty options, something believed improbable but that was shown to be possible. What they counseled Bolaños to do did not produce the fruits anticipated, and the country has been the big loser. If we don’t seek an amnesty, we’re going to remain trapped in this game, because there’s no possibility of the PLC abandoning Arnoldo.”

Cardinal Miguel Obando added his own voice to the chorus in three public declarations, with identical, albeit tacit, allusions to the “reconciliation” that led to the amnesties of the nineties. FSLN leader Daniel Ortega’s alliance with the cardinal has survived over two months now, and continues to be publicly expressed. Ever since it became public, all political analyses agree that the alliance not only includes the cardinal’s “pardon” of the FSLN for its past sins but also augurs a pardon for Alemán’s present sins, which will thus end up going unpunished.

The old familiar smell of a pact

Meanwhile, other maneuvers were being cooked up in the legislative body, where the PLC and FSLN benches are large enough for them to pass or block anything they agree on, including constitutional-rank legislation. This time they came together to wrest power from the executive branch. Their maneuvers included reforming the law on the Attorney General’s Office, creating a Superintendence of Public Services and shifting the appointment of the Social Security executive director from the presidency to the National Assembly. Politicians in Bolaños’ APRE saw the maneuvers as a “de facto parliamentary system” aimed at reducing Bolaños to a “decorative President, with a sash on his chest, but without any power.”

The PLC and FSLN also agreed to turn their full attention to this year’s municipal electoral process, postponing until next year potentially divisive appointments for important posts. These include the already overdue appointment of the special human rights defense attorney and deputy attorney and the superintendent of banks, plus another 15 that will come due for rollover in 2005, among them 4 comptrollers and several magistrates from the Supreme Electoral Council and the Supreme Court. They will also postpone until 2005 debates over other bills that they believe will spark “unnecessary controversies” in this pre-electoral period, when in their civic-minded opinion the country should be preparing for a healthy and thoughtful election process.

Everything still reeks of a pact. Bolaños has no control over the PLC legislators, who have repeatedly proven their loyalty to Alemán. He also has no control over the FSLN, which he has publicly begun to offend with greater frequency. And we will not know how much real strength APRE, his new electoral vehicle, has until the results of the municipal elections are in. Bolaños is indeed alone, and politically weak. All the buttressing from afar can’t change that, particularly since hardly anybody inside the country seems to care very much, given his off-putting style.

With a modicum of unity...

With a modicum of unity as a nation, we could request a more far-reaching HIPC. We could also probably renegotiate the domestic debt so we could begin to shift the priority to health and education. This is of the utmost urgency because if we continue much longer with the current malnutrition and illiteracy levels, we will have already mortgaged our future, including that “bright future” that official propaganda says is waiting for us on the other side of the CAFTA “bridge.”
With just a little unity, we could provide creative responses to the land tenure problem facing small and medium farmers. We could seriously, institutionally and legally, not to mention educationally, begin to deal with the cultural machismo that finds a daily expression in violence, sexual abuse and rape. Currently going unpunished for the most part, this commonplace behavior is having its own disastrous consequences both today and for our future.

But which of the three power groups are thinking about any of this? They are all absorbed with the correlation of forces that will be revealed in the November municipal election results. And as soon as those results are in, they will immediately shift their attention to the maneuvers that will accompany the presidential elections.

...and a maximum of confidence

The struggles unleashed within Nicara-gua’s political class in its merciless dispute over power and its attributes—salaries, vehicles, trips and other perks—are having increasingly negative consequences for national development. The economy may be growing, at least for now, but we’re not developing. In only a few more years we will be able to see the result of all this. And although virtually no one recognizes it, this is the genuine “monstrous crisis.”

Having set itself up in the theater of legality, the political class is rapidly losing credibility, legitimacy. Its smiles, allegations, statistics, speeches and public appearances do not inspire confidence. All we can do is wait for this crisis of confidence to lead the population, society, men and above all women to increasingly trust in themselves, in their own potential, their own capacity, even their own dreams. With confidence in ourselves, we will be able to begin going forward.

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