Envío Digital
Central American University - UCA  
  Number 105 | Mayo 1990



Low Intensity War and Revolutionary Maneuvering

Envío team

The US “low-intensity war” and its disastrous economic results dominate as the root cause in interpretations of the Sandinista's electoral defeat in February. But that isn’t enough; all revolutions in this century have been under siege by US imperialism although only Cuba and Grenada were as close as Nicaragua to the besieger’s door. Given that US aggression is an inevitable challenge from the outset, a major contribution to future revolutions is to understand the inadequacies of the FSLN's strategic and political response, which gave the revolution's enemies more tools with which to win support than they otherwise would have had. While of necessity brief and incipient, we hope this synthetic critique will be one such constructive contribution.

The problem, in our view, lies in the ways the FSLN dealt with the contradictions of its model of political, social and economic transformation. It implemented a state-dominated economic transformation project and an alliance with the bourgeoisie that alienated the popular sectors in rural and urban areas. The advance in representative democracy through elections moved faster than the democratization of participation within the popular organizations or in their relations with the state and the vanguard party.

Pursuit of the revolution's uncompleted agenda would be seriously endangered by a belief that popular support for the FSLN can be recovered and consolidated without first making every effort to overcome these contradictions. One of the chief accomplishments of the revolution was the recovery of sovereignty; with it, people express their just aspirations in unexpected ways. The electoral results demonstrate the risk of thinking that the equation FSLN = people is an unalterable historic fact.

We suggest that the popular alliance necessary for a victory over imperialism could have been strengthened by redistributing Somocista land and/or capital to the popular sectors earlier. Foreign aid could have been directed to them, orienting the state towards the development of a more popular-based economy. Given such material conditions, popular organizations could have been given autonomy to defend their interests, stimulating their democratic participation in the FSLN.

For purposes of analysis, the evolution of the Sandinista project can be divided into three areas: (1) the relation between international and national alliances; (2) the economic transformation project; and (3) the political democratization process. In each case, these areas underwent adjustments about halfway through the decade, and in the economic project again in 1988.

Basis of alliances: Representative democracy and mixed economy

Other revolutions in this century have defended their sovereignty against the inevitable flash with a counterrevolution by constructing a "dictatorship of the proletariat” or, more generally, a one-party system with restricted civil liberties. Faced with US aggression, the FSLN did not abandon its principles of a mixed economy, political pluralism and non-alignment; on the contrary, it furthered their theory and practice, affirming the unique socialist orientation of this third-world revolution. Sandinismo opted for representative democracy and national unity as the basis of international negotiations to gain legitimacy and contain the US “low-intensity” aggression. This legitimacy opened up broad possibilities for foreign aid, crucial for survival and development.

1979-1984. The 1984 elections, though boycotted by the Reagan Administration's candidate Arturo Cruz, enhanced international support for the revolution. But they did not improve relations with the US, which just months later declared its economic embargo. Nor did they discourage the US decision to support a military defeat of the FSLN.

1985-1989. Domestically, bourgeois support for the 1984 election boycott led to a certain radicalization within the FSLN, both rhetorically and in its management of the mixed economy. They were difficult years for relations with the bourgeoisie: reimposition of the state of emergency, lifted for the elections—the shutting down of La Prensa; and a new, stronger agrarian reform law.

Why, after the 1984 experience, did the FSLN accept the challenge of the 1990 elections, reiterating its commitment to representative democracy? The reasons revolve around the bleak perspective of a prolonged war with a strategically defeated but not demobilized contra force versus the possibility of a regional negotiation of the deadlocked Central American conflict through Esquipulas. Negotiations became ever more urgent as the economy continued eroding and the risk grew that aid from the socialist countries would dry up. Military spending could not be radically reduced as long as the war lasted.

Given this regional possibility, the revolution chose, at the beginning of 1988, to promote significant changes in Nicaragua's political and economic order. Political pluralism and mixed economy took on new significance in the domestic scene. The stakes the FSLN hoped to win were contra demobilization, a reopening of the multilateral lending agencies' credit windows, lifting of the embargo and Nicaragua's commercial reentry into the Central America market.

The economic project: Without the people

The ideals of the Sandinista model of a mixed economy were to overcome underdevelopment and eventually construct socialism. The model was based on three fundamental points: 1) moving the key economic links—banking, natural resources, foreign and part of domestic trade—to the state and creating a productive state agriculture and industry sector; 2) transforming the productive structures through state investments, using capital and technology from both developed capitalist countries and the socialist bloc; 3) an alliance between the state and the national bourgeoisie.

The changes that took place in the last years to assure the country's economic survival did not radically depart from this original strategy; they just changed the rules for assigning resources and distributing the social surplus. The constant has been an economic package without the support of people other than the professionals employed by the state and the industrial and agricultural proletariat. The people—peasant producers and urban artisans—were to be beneficiaries of a social subsidy, but not agents of economic development.

1980-1984. The initial economic reactivation policy after the triumph was statist, modernizing and subsidized by considerable foreign aid. The state's economic management had two focuses: 1) administer the subsidy and assign it to producers, consumers and investors; and 2) fix and control prices, credit and salaries. The latter distorted Nicaragua's economy in relation to the world market.

The greatest beneficiaries of the subsidies were the state enterprises, known as the Area of People's Property (APP). Large capitalists were financed somewhat less, though the price system favored the export products—cotton, sugar and basic grains—on the large farms in the Pacific. Cattle and basic gains from small peasant farms in the interior were also subsidized, permitting incipient economic development.

Economic reactivation in this first period was relatively successful: national economic activity, which had fallen by 25% due to the insurrection against Somoza, recovered about 15% in the 1979-1983 period. But the policy reached its limits after a few years. The fiscal deficit grew from 9% of the Gross Domestic Product in 1981 to 23% in 1984; exports dropped from $500 million in 1981 to $385 million in 1984; and the foreign debt grew by 70% in just four years.

1985-1988. In this period national production went into a prolonged decline. Exports were even more affected; the US trade embargo forced Nicaragua to sell to new markets at less favorable prices. Even so, construction of huge agroindustrial projects like the Sébaco and Timal complexes continued, absorbing the majority of production subsidies. The FSLN resisted reducing the disproportionately large state bureaucracy.

In 1985, the model was modified, but the adjustments were limited to reducing the consumer's subsidized basic market basket, urban transport, health and education. Given increased military spending and reduced foreign aid, this was not enough to keep the model functioning. The state had to cover the growing deficit by printing money, which began an inflationary process that taxed the whole society. The inflation made price administration and resource assignment a veritable nightmare and encouraged currency speculation.

The war forced the incorporation of peasants into the original economic model, although for political reasons as more than as part of a new economic strategy. Many peasants demanding land now received it, but were encouraged to form Sandinista Agricultural Cooperatives (CAS), to transform part of the peasant community into a new subject of economic development with the same technological pattern as the APP and the bourgeoisie.

In contrast, the urban popular sectors were further marginalized. Small industry and small-scale producers suffered a shortage of raw materials, which were being assigned to the large private and state enterprises. Small urban commerce—selling goods or services on the street—became the primary refuge for them, although the state occasionally cracked down on this burgeoning unlicensed activity. Migration to the US became another way to escape the crisis.

This huge unproductive sector in the cities was not used throughout this period. The state could have supported its incorporation into small production of quality goods and services (textiles, shoes, food, agricultural tools, etc), thus empowering this human technical capital. The “innovators” movement in large industry, supported by the state, should have been extended to small industry and peasant production.

By the end of 1987, the economic strategy based on subsidies financed with foreign resources and an inflation-tax on the population had unravelled. Foreign aid dropped from $772 million in 1984 to $384 million in 1987, while exports stayed at less than $300 million annually. Inflation reached 1,347% in 1987. With a black market exchange rate 100 times the official rate, speculation and general shortages flourished.

Changing the agents of economic development in the cities and the countryside earlier and more evenly would have broadened the economy’s capacity and permitted a more gradual and less recessive adjustment to the shrinking foreign funding. The low-intensity war could have thus been confronted in more favorable conditions.

1988-1989. A monetary reform in February 1988 initiated the revolution's adjustment and stabilization program. The program attempted to modify the economic scheme by reintegrating the Nicaraguan economy into the world market; exports once again became the axis of development. Market laws now played a more crucial role than the state in assigning resources. But it was the same model with new conditions.

The alliance between the state and the bourgeoisie was redesigned with the explicit goal of getting the bourgeoisie to participate in the economic reactivation. The implicit goal was to encourage renewed foreign funding and the lifting of the embargo. In exchange for investing their capital, the big capitalists were offered future property security, the return of some confiscated agricultural and industrial units, as well as the promise that marketing of nontraditional exports would not be monopolized by the state foreign trade ministry. Nicaragua's reinsertion into the Central American market formed part of regional political negotiations.

Both domestically and internationally, the implementation of the adjustments encountered serious limitations. Less foreign aid was arriving in cash, government spending was not reduced as radically as planned given resistance by the state bureaucracy and the armed forces to the dangers of an economic recession and probable social cost; and, bereft of export subsidies, state and private oligopolies—sugar, among others—passed the adjustment costs to the rest of society in higher domestic market prices.

The results were mixed. Inflation exploded to more than 30,000% in 1988, although it was reduced to 1,300% in 1989. The deficit, still more than 20% of the GDP in 1988, dropped to only 7% the following year. Economic activity contracted significantly both years (-8 % and -4% respectively). For the first time since 1983, however, exports rose by 25% in 1989, stimulated by the restructuring of relative prices. Economic resources were assigned better, reducing waste in the use of imported goods and forcing economic agents to be more efficient in accord with national interests.

Those with fewer resources lost income rapidly, as did those who produced for the domestic market and thus did not benefit from the export advantages. Unemployment, underemployment, decapitalization, migration to the US, a return to tenant farming and even malnutrition resulted. The poorest peasant producers of basic grains, small industry that could not compete with Central American imports (clothing and shoes, for example) and small urban trade were affected most. Even some bourgeois sectors suffered, particularly those oriented to the domestic market, like rice, poultry and sorghum growers.

Those with greater resources and those oriented towards exports prospered. Large coffee and cattle growers especially profited, as did those industries that could still compete in the Central American market. Some peasants in the Pacific flatlands were able to shift to producing sesame for export, and thus also did well.

In this context of increasing social differentiation, the state limited its role to giving out subsidized food packages to complement the low salaries of state workers, cancelling the debts of peasant basic grains producers and exempting small industry from taxes. Its effort to make the productive apparatus more efficient was partial and unequal; after years of encouraging imported technology and subsidies, the call to look for technological alternatives and economically viable markets was met with suspicion.

Incomplete democratization: War and economic crisis

Sandinista democracy is characterized by two distinct aspects: 1) participatory democracy within the popular movement, which establishes the relation between the people, mass organizations and the vanguard party and state; and 2) representative democracy which defines the space for the pluralism of politic parties.


In the first years, pluralism pressed through the participation of various political sectors in the power structure and through the massive organization of different popular sectors. Mass organizations were conceived of as an instrument of FSLN and state policies, distributors of the social subsidies. Although they also served as a channel for the sector's demands, their autonomy was limited by this political support role; democratization efforts lost force. The growing impact of the war and economic crisis weakened popular support for the revolution and people gradually dropped out of the mass organizations.

Political pluralism also suffered with the advance of the Sandinista project and the first signs of the US policy to destroy the revolution. Leaders of the non-Somocista bourgeoisie and members of opposition political parties gradually resigned from their government positions.

The 1984 elections were, in part, a strategy to rebuild national unity in the face of the intensifying US confrontation. The first institutionalization of representative democracy was the formation of the Supreme Electoral Council and the National Assembly, a new legislative body with directly elected representatives.


A renovation process in this period aimed at democratizing the popular movement did not profoundly change the dynamic of popular participation. The incipient mechanisms of representative democracy developed in 1984 took on more importance, culminating in the 1990 elections.

As the war tapered off from its 1985-86 peak, it became possible as well as necessary to shift the focus of popular mobilization and organization. The new focus stressed the demands of each social sector. Mass organizations dealt more with local power structures and needs, and the state gave the organizations' leadership a greater role in defining and implementing its policies.

This process began in the Atlantic Coast and interior of the country, where the war was aggravating the social contradictions most seriously. On the Atlantic Coast, the autonomy process was begun in early 1985. It implied greater regional participation and the decentralization of certain areas of power to local ethnic leaders. Many issues remained unresolved, such as economic organization and the destination of economic surplus.

In the countryside, the National Union of Farmers and Cattle Ranchers (UNAG) moved in two directions at once. It strengthened relations with the small rural bourgeoisie—and occasionally even large “patriotic” growers—by assigning resources to them, and it reactivated land demands by poor peasants—one of the largest sectors in the countryside. The agrarian reform advanced more in 1985-86 than in the six previous years. CAS cooperatives were still encouraged, but peasant demands for individual land parcels were partially accepted and cooperativization was expanded to small landholders through new forms such as Campesino Stores.

By including such a broad array of sectors, and even representing the better-off ones with force, UNAG sought to maintain the status quo rather than lead a struggle for the demands of the rural majority. Agricultural cooperatives, far from becoming a movement for peasant activism, continued as a passive recipient of subsidies. In the case of the Credit and Service Cooperatives, there was not even much cooperation.

In the cities, the Sandinista Defense Committees (CDS) were restructured between 1986 and 1987. Slowly dropping their role as conveyor belts of FSLN policy and government supplies, they again became structures organized for community development. Local leaders called communal elections to reaffirm or replace those formerly appointed by the FSLN. The process did not manage to remove the taint of "partyism,” however, and membership did not return to the peak of the first years.

The Luisa Amanda Espinoza Women's Association (AMNLAE) continued its earlier emphasis on supporting demands by the mothers of those mobilized in military defense. In 1987, it also began to raise issues more directly related to the concerns of all women.

The Farmworkers Association (ATC) and the Sandinista Workers' Confederation (CST) emphasized the struggle against decapitalization, for worker participation in state factories and improvement of the workers' social salary. Even after 1987, the CST continued to promote the national objective of maintaining production levels more than salary demands. With such low state salaries, workers continued their considerable exodus towards the informal sector.

While this renovation process gave new life to the mass organizations at first, it did not end most leaders' alienation from the base or address the structural roots of the organizations' stagnancy. Questioning of the state or FSLN remained limited to elite levels and local sectoral interests remained subordinated to national tasks. The middle class working in the state and party bureaucracy consolidated its power and continually quashed the economic and organizational options that would have encouraged autonomy and a more popular base.


During the prolonged state of emergency, political pluralism had been found more in the National Assembly than in freedom of the press or other political rights. In 1987, with the signing of the Esquipulas accords, new spaces were opened for the opposition. The FSLN began to renegotiate the rules for representative democracy at the same time it was proposing economic agreements to the bourgeoisie. Bit by bit, at a legal and practical level, a new pluralism was created, symbolized by and culminating in the electoral process.

Even with the laws of the market now definitively replacing the mass organizations as the mechanism for distributing resources, the popular movement failed to make use of the chance to be an important negotiating force in the new talks with the bourgeoisie and the implementation of the economic adjustment program. The bourgeoisie was not so timid; it used every mechanism offered to press its demands.

UNAG demanded compensatory measures to the adjustment. Little more than demands for the old subsidies, it pushed for preferential credit policies, restructuring or cancelling of debts, subsidized interest rates and a pricing policy for basic grains that favored the technified CAS and small producers.

For the first time in 10 years, UNAG fought hard for the cooperative movement, particularly the CAS. But at bottom, this was only a power struggle with the state bureaucrats involved in agricultural production; both shared the dream of returning to a subsidized economy. The CAS sector did not succeed in democratizing internally or extricating itself from the readjustment in its production system imposed by the new economic conditions. The struggle for parcelization and agricultural diversification based more on the family work force was blocked by many base leaders, supported by UNAG professionals committed to the old ideas of collectivism and technification. UNAG did not push for new decentralized structures that would encourage greater peasant participation in issues beyond supply.

The ending of the fixed-salary policy forced the ATC and CST to fight to protect drastically falling wages. Struggles included the temporary takeover of farms and factories to pressure for collective bargaining. Results were minimal, however, because the state bureaucracy feared endangering the new economic agreement with the bourgeoisie. The most they could defend was a basic food basket that barely represents minimum family survival.

The CDS did reach a new stage of democratization and independence from its party label. CDS communal projects, implemented in conjunction with local mayors, reactivated some neighborhoods. But community development did not address the economic interests of the enormous poor urban informal sector.

AMNLAE did not manage to overcome its lack of autonomy. A sector of the AMNLAE leadership tried to push a more radical profile, but the FSLN frustrated the process by forcing a change of leadership.

The popular movement’s challenge:
Broaden popular democratic space or negotiate at the top?

UNO's economic project follows the FSLN’s predominant tendencies of the last few years—transition from a modernizing, paternalistic and subsidized state economic model to one without subsidies, an alliance with the agroexport bourgeoisie and a silent privatization, a search for new funding sources, the lifting of the economic embargo and reinsertion into Central American trade. The FSLN project was adjusting to the advancing tendency of neoliberals, reconstructing a solid economy so as to later deepen revolutionary tendencies.

Recognizing this, one alternative now would be to formalize negotiations between the FSLN and UNO leaderships—the focal point of which would be the continuation of the economic reactivation project that had marginalized the grassroots sectors. The difference is that now the bourgeoisie would be negotiating from state power and would want a coalition government, in fact though not in form. The bourgeois project needs the support of FSLN technocrats and militants for its social pact, for example in union negotiations. In this alternative, the FSLN could become an intermediary that mollifies the popular movement in exchange for power in the state sector. The party would maintain control over the mass organizations, preventing democratic and autonomous development.

In this scenario, the FSLN could recover power in the 1996 elections. But this would not necessarily mean a return to an alternative popular project. The FSLN could well return to power and prolong the same alliance with the “modern” bourgeois fraction.

A second alternative would be for the FSLN to restructure its link with the people. The focal point of this would be democratization within the popular organizations and construction of an alternative economic project. A new organic relationship between the popular sectors and the FSLN would permit the democratic expression of each organization's interests in the party. An even more profound change would be to consider the mass organizations autonomous. As such, they would be able to choose which party best expresses their class, ethnic, gender and other interests. In a society as stratified as Nicaragua's, the majority popular sectors should be socially hegemonic, although this may mean risking a confrontation with the small manufacturers and merchants, wealthier peasants and the like, and alienate a fraction of the radicalized intellectuals and technocrats.

The material base of this new mass line would an economic transformation that recognizes the concrete obstacles to developing the popular economy and trusts that popular technology can overcome them. Listening more to the grassroots sectors, understanding their reality and potential and designing a political program based on their participation would truly join the people to the FSLN so it could get on with the incomplete agenda of its revolution. The FSLN’s share of government representation won in the elections and the constitutional inheritance that it forged are tools it would have to defend and use for this popular project.

By deepening the popular character of this revolutionary alternative, the FSLN would gain more clout in negotiating political, economic and cultural space for the popular movement. It is not a short-term perspective, but one that can take place in or out of government. Careful and intelligent pursuit of this option would give full meaning to Daniel Ortega’s call just days after the election to “govern from below”.

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On the Verge of Peace, or Civil War?

Whither Central America? Coopted Negotiation or Participatory Democracy?

The Monroe Doctrine and the End of Torrijismo

Costa Rica
Showcase for Democracy and Economic Reformism?

Low Intensity War and Revolutionary Maneuvering

El Salvador
Forcing Negotiation

Neoliberalism Unopposed

Challenges to the Military Model

Final Reflections
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