Envío Digital
Central American University - UCA  
  Number 20 | Febrero 1983




Envío team

Several factors have contributed to our decision to present a detailed account of the progress of the Nicaraguan Revolution.
An evaluation of the continuing aggressive policy of the U.S. government towards Nicaragua, right up to and including the "Big Pine" joint U.S. Honduran military exercises, calls for data which allow us to measure the increase of U.S. attacks against Nicaragua.
Moreover, the meeting in Managua of the Coordinating Bureau of the Non aligned Movement, with the participation of more than 100 countries and national movements, marks a milestone, the greatest, in the history of Nicaraguan foreign politics and in the history of international solidarity toward Nicaragua. The NOM meeting was not an impromptu occurrence. It was the result of a long process and arose out of an international and regional situation in which the Nicaraguan Revolution has been a prime factor. This also merits further analysis.

Finally, the upcoming Papal visit to Nicaragua and Central America also makes it necessary to look at the most relevant events which have happened in these three and a half years in the area of Church State relations.

This synthesis of the most relevant and significant events of these three and a half years of revolution should help us to better understand the present situation, and at the same time, clarify current trends of the Nicaraguan process itself.

The chronology, taken from a document prepared by Revolutionary Christian sectors, is divided into six month periods. The facts and events which have been noted can be classified as follows:

1. U.S. Nicaraguan Relations. (The emphasis is placed more on U.S. foreign policy toward the revolution rather than vice versa.)
2. Situation of Central Region.
3. International Politics. (Includes the most relevant aspects of Nicaraguan foreign policies as well as international political events which have affected the Nicaraguan revolution.)
4. Nicaraguan Economic Policy.
5. Developing New Institutions. (Includes those events that are shaping the new government and the development of new institutions which this entails.)
6. Relations between the Revolution and the Private Sector.
7. Relations between the Revolution and Grassroots Organizations.
8. Relations between the Church Hierarchy and the Government. (Reference is made only to the Catholic Church--because of its greater social importance--and principally to events in which the hierarchy is involved.)


1. U.S. Nicaraguan Relations. It was the end of the Carter administration: his popularity was low and his position was weak. (Crisis of the hostages in Tehran) Attempts were made to implement a neutral policy towards Nicaragua. Signs of distrust towards Nicaragua could be seen but did not dominate. Carter met with Daniel Ortega. Some economic emergency aid was granted through AID.

2. Situation of the Central American Region. Coup d’etat in El Salvador and formation of the first junta of a reformist nature. Torrijos (Panama), Carazo (Costa Rica) and members of the Salvadoran Junta visited Nicaragua. Relations with Honduras began to cool but were not yet conflictive.
3. International Politics. Nicaragua began to diversify its international relations. A good number of new embassies were opened in Managua, including those of socialist and non aligned countries. Nicaragua joined the Non aligned Movement and participated in the 6th Summit Conference, which took place in Havana. Daniel Ortega addressed the UN and defined the new framework of Nicaraguan foreign policy: non alignment, diversification of diplomatic and economic relations, and support for self determination of nations. The crises of Tehran (U.S. hostages) and Afghanistan exploded.
4. Nicaraguan Economic Policy. A post war emergency situation. A food for work plan was implemented while the bankrupt economy of the country (13,500,000 of monetary reserves in July 1979) was being restructured. The implementation of the planned mixed economy was begun, and the 1980 Economic Plan was prepared. The foreign debt inherited from the Somoza years was recognized, and a strategy was begun to renegotiate the debt in order to meet payments. A patriotic tax was created and imposed upon real estate so that the government could receive the initial minimum resources to get the collapsed economy going. The Central Bank took away legal tender from bills of the highest denomination, and gave 48 hours to change them in the banks so that the fortunes which Somocistas took out of the country in Nicaraguan money would lose their value.
5. Developing New Institutions. The reconstruction of the government apparatus was begun. New ministries were created: Economic Planning; Culture; Commerce, divided into Domestic and Foreign. The Nicaraguan Institute of Agrarian Reform was created (INRA). The Popular Sandinista Army and the Sandinista Police were created, in order to transform the guerrilla military apparatus into a professional and regular army and police force. The future chart of the government apparatus and autonomous institutions (Nicaraguan Energy Institute, Nicaraguan Water Works Institute, Nicaraguan Insurance Institute) was sketched out. The banks were nationalized, and a policy of rationing and financial concentration was implemented. The Local Government Juntas were created, which replaced the municipal government structures and strove for less bureaucracy and greater popular participation. Special Courts of Justice were formed to try the Somocista prisoners, and the death penalty was abolished.
6. Relations between the Revolution and the Private Sector. The government called on the private sector, except the Somocista fraction, to join in reconstruction efforts. Also, they were encouraged to invest, and the government offered financial aid for industry, trade and agriculture. A patriotic tax was implemented.
7. Relations between the Revolution and Grassroots Organizations. The basic objective was to go beyond anarchy, a product of the war, and to bring about basic order. The grassroots organizations began to grow. The Sandinista Block Committees were consolidated in this period, organizing the people for urgent tasks: health, street cleaning, reconstruction. Autonomous groups of armed civilians were disbanded and were encouraged to become part of the reconstruction. Efforts were made in the nascent structures of the army or police. The Farmworkers Association, created years earlier, experienced an accelerated growth and matured in its organizational capacities.

8. Relations between the Church Hierarchy and the Government. Just before the revolutionary triumph, Bishop Obando traveled to Caracas as a member of a commission to negotiate the conflict. The meeting was sponsored by the Christian Democrats. The day of the victory it was Bishop Salazar, bishop of Leon, who spoke to the people in the name of the Church. At the end of July, the bishops wrote a pastoral letter which was very cold compared to the existing jubilant spirit. The apostolic nuncio Montalvo, who was very identified with Somoza, left the country, and a charge d'affaires, Pietro Sambi, arrived from the Vatican with experience in revolutionary situations in Algiers and Cuba. In November, the bishops published a pastoral letter of great theological value and in open support for the Nicaraguan revolution. The traditional holidays, the "Purisima" (December 8) and Saint Dominic, were celebrated in unprecedented splendor.


1. U.S. Nicaraguan Relations. Carter began to harden his policy towards Nicaragua. A $75 million credit was granted but strong pressures were put on it to be directed especially toward the private sector. Strong debates took place in Congress on Nicaragua, in which different alternatives for imposing conditions on aid to Nicaragua were discussed. Reagan and his advisors publicly expressed their hostility toward the government of Nicaragua.
2. Situation of the Central American Region. The first Junta in El Salvador was overthrown. The second Junta was formed by less progressive sectors of the army and the Christian Democrats. The internal crisis in El Salvador accelerated; the guerrillas increased their power; Mons. Romero was assassinated. In Guatemala, the massacre at the Spanish embassy took place, revealing to the world the genocidal nature of the Lucas Garcia regime. As the repression in Guatemala increased, the Lucas Garcia regime became more isolated. In Costa Rica, the economic crisis worsened when the colon was devalued.
3. International Politics. The Polish crisis began. The foreign policy of Lopez Portillo in Mexico began to have an impact on Central America. One hundred thousand refugees left Cuba seeking asylum in The United States.
4. Nicaraguan Economic Policy. Economic reactivation of the country began. The harvest of export crops was a success. In Mexico, Nicaragua's foreign debt was renegotiated with all countries that had granted loans to Somoza. The inflation and unemployment rates lowered noticeably. The Literacy Campaign began, which, besides being a huge national effort at all levels, implied a redistribution of the economy both in the urban as well as the rural areas which benefited the country. In general, a normalization of economic activity was observed, which later showed evidence of being premature.
5. Developing New Institutions. The Economic Coordinating Committees were created. The process of setting up cooperatives in the countryside was begun. The Council of State, a legislative body with representation from diverse social and political forces, began its sessions. The National Production Councils were created by item (cotton, coffee, cattle, etc), so that the formal organizational chart designed in the previous 6 month period began to operate by sectors and in an interinstitutional way.
6. Relations between the Revolution and the Private Sector. Alfonso Robelo and Violeta Chamorro resigned from the Government Junta. This was the first political crisis in the process. It was resolved by incorporating two new members to the Junta who came from the private sector and the traditional political parties, Arturo Cruz and Rafael Cordova Rivas. The private sector was granted considerable financing from the government for its economic operations, although investment continued to be weak. Broad sectors of private enterprise applauded the 1980 Economic plan. Internal conflict in the newspaper "La Prensa" gave rise to the formation of "El Nuevo Diario", which supported the process while "La Prensa" continued to adopt positions more and more critical of the revolution.
7. Relations between the Revolution and Grassroots Organizations. The Literacy Campaign absorbed the grassroots organizations’ energies and furthered their consolidation. The process of developing cooperatives in the countryside, by which credit was channeled toward small producers, helped to consolidate the organization of the rural sector. The government came into conflict with ultra leftist organizations (the Worker's Front, the Maoists and their armed branch, the Milpas), which held extremist positions contrary to political pluralism and national unity. The grassroots organizations began to present their own claims and set up their own tasks and thus functioned more independently of the government.
8. Relations between the Church Hierarchy and the Government. The bishops published a letter supporting the Literacy Campaign, but not without some reticence. Daniel Ortega and Violeta Chamorro participated in the Theological Congress in Sao Paulo (Brazil). CELAM began to make a public demonstration of its interest in the Nicaraguan situation and set up a project supporting the Nicaraguan hierarchy. In a political speech, Robelo denounced the Literacy Campaign as anti Christian indoctrination. In May the bishops unilaterally declared that the state of emergency had ended and that those priests with positions in the government should resign. Mons. Obando y Bravo expressed his support for "La Prensa". The so-called "apparitions" of the Virgin of Cuapa to a campesino in Chontales began, and right from the start, the incident was politicized.


1. U.S. Nicaraguan Relations. Carter further hardened his posture toward the Nicaraguan revolution. The pre electoral period in the U.S. continued, and documents prepared by Reagan's advisors became known in which hostile plans toward Nicaragua were expressed. The Somocista ex National Guards began training in military camps located in Miami. The polemic on U.S. economic aid for Nicaragua continued: AID for it, the CIA against it. Reagan triumphed in the November elections.
2. Situation in the Central American Region. In El Salvador, U.S. economic and military aid to the Duarte regime increased. Six FDR leaders were assassinated. There was a pre insurrectional atmosphere. The isolation of the Guatemalan regime continued because of its repressive nature. Honduras held elections for a Constituent Assembly. In Panama, Torrijos went through a period of unpopularity because of the internal crises in the country. His popularity in Central America also suffered.

3. International Politics. Belaunde assumed the presidency in Peru. In Bolivia, the military involved in drug trafficking carried out a bloody coup d'etat. Bolivia broke relations with Nicaragua. The members of the IRA in Ireland began their dramatic hunger strikes. The Polish crisis erupted, the Gdansk agreement was signed; and the trade union "Solidarity" was created. The U.S. successfully campaigned against the candidacy of Cuba for the United Nations Security Council. Preparation began for the Cancun Summit Conference (North South dialogue).
4. Nicaraguan Economic Policy. Financial setbacks contributed to a rise in inflation. Decapitalization because of the attitude of certain groups of the private sector. This benefited the black market for foreign exchange, causing more financial problems. The 1981 Economic Plan was shaping up and was becoming more austere than that of 1980. Foreign aid and soft credits diminished. The government continued granting significant credits to the private and public sectors with low interest rates similar to a type of subsidy. Problems of efficiency could be found in the public sector.
5. Developing New Institutions. The Ministry of Commerce (MICOIN) expanded considerably with the creation of neighborhood stores which guaranteed subsidies of basic food products. The Popular Sandinista Militia was created, a volunteer organization which reinforces the professional army. In this way, people were able to participate in defense tasks, and they signed up in the Militia in large numbers.
6. Relations between the Revolution and the Private Sector. Various members of the non Somocista private sector were found to be implicated in armed conspiracies against the government. Commissions of production were created for each item of production, with extensive participation of the private sector. Part of this sector began to exhibit great distrust in the process and to become involved in armed counterrevolutionary activities. The government took a firm stand in the face of these attitudes
7. Relations between the Revolution and Grassroots Organizations. The Literacy Campaign ended with great success. For continuity, the Popular Education Collectives were formed, with the participation of the people, to further adult education. The process of setting up cooperatives in rural areas continued spreading to different zones. The CDS took on the task of supplying basic products. The National Farmers and Cattle Raisers' Union was created, grouping together small and medium sized rural farmers.
8. Relations between the Church Hierarchy and the Government. The bishops did not attend the massive closing celebration of the Literacy Campaign. The FSLN published a communiqué in which it presented its position on religion: that of respect and liberty. The Bishops' Conference answered with a very critical document. Church¬-State relations cooled considerably, and polemics began between Christian groups and the hierarchy. Bishop Obando's attitude toward the process became more and more critical. There were divisions in the clergy, but for the most part support for the process predominated. A new nuncio arrived as the conflicts between Church and State increased.


1. U.S. Nicaraguan Relations. Reagan became president. The State Department published the "White Book" in which Nicaragua was accused of being a bridge for supplying arms to the Salvadoran guerrillas. After a few days in the presidency, Reagan suspended the remaining $15 million still pending from the $75 million grant made by the Carter administration. Both Reagan and Haig were becoming publicly more hostile toward Nicaragua. In March, Reagan suspended credit for the sale of wheat to Nicaragua.

2. Situation of the Central American Region. In El Salvador, the guerrilla general offensive began January 10. The North American government became more involved in the Salvadoran war with considerable military and economic aid and the sending of advisors. The U.S. put out a hand to the discredited Guatemalan government. Washington began to increase its aid to the Honduran government and to direct their politics toward the creation of a civil democracy. Costa Rica declared bankruptcy because of the serious economic crisis. Carazo's influence in the region declined.
3. International Politics. Mitterrand took power in France. The crisis between the IRA and the Thatcher government worsened. Thatcher expressed more support for the rightwing policies of Reagan. There was an assassination attempt against the Pope in May. In Europe, the U.S. actively promoted its Central American policy.
4. Nicaraguan Economic Policy. The 1981 Economic Plan was begun with emphasis on austerity and efficiency. Standard Fruit, the transnational company responsible for production and commercialization of Nicaraguan bananas, threatened to withdraw from the country. The government put out a law decree in which strong penalties for hoarding and speculation were imposed. COSEP (Highest Council of Private Enterprise) strongly opposed this measure. The economy began to experience extreme difficulties due to the lack of foreign financing and because of the international economic crisis aggravated by Reagan's economic policy. The process of regionalization was begun in the hopes of stabilizing the economy and achieving greater efficiency. The First Popular Health Campaigns were carried out, in which economic policies based on grassroots participation and organization were revived.
5. Developing New Institutions. The National Food Project was launched, which sought a more rational production and commercialization of basic grains and initiated a strategy of self sufficiency that would eventually enable Nicaragua to export corn and beans. In February, counterrevolutionary attacks began which the Popular Militia and the Army repelled. The Government Junta was restructured: it was reduced from 5 to 3 members. Daniel Ortega was named Coordinator. The other two members were Sergio Ramirez and Rafael Cordova Rivas.
6. Relations between the Revolution and the Private Sector. The first confrontations occurred with the newspaper "La Prensa", the medium which represented the opposing interests of the private sector. COSEP was becoming more defined by its political and economic opposition to the revolutionary process. Technicians identified with COSEP's positions abandoned their posts in the government. Several political parties in support of the process created, with the Sandinista Front, a forum in which national problems could be discussed and minimum agreements could be reached in order to benefit national unity. Participating in this project were the following parties: the Popular Social Christian Party; the Independent Liberal Party; the Nicaraguan Socialist Party; as well as the following opposition parties: the Nicaraguan Democratic Movement (Alfonso Robelo) ; the Social Christian Party; the Social Democrat Party and the Constitutionalist Liberal Movement.
7. Relations between the Revolution and Grassroots Organizations. There was growing participation in the Militia and the Popular Health Campaigns. The National Farmer and Cattle Raisers' Union (UNAG) promoted the interests of small and medium agricultural producers within the basic framework of the revolution. The existence of UNAG created conflicts in the coffee zones of Matagalpa between the large coffee producers and the small and medium ones, who were now independent and received financial backing from the government. The Miskito population was relocated from the Honduran border for security reasons.
8. Relations between the Church Hierarchy and Government. Heated ideological debates on religious themes with political overtones were carried out in the newspapers. Christian groups who supported the revolution publicized a document in which they openly addressed the challenges which the revolution presents to Christians. In June, the bishops wrote an ultimatum calling for the priests who hold public posts to abandon them. The document generated massive demonstrations in support of those priests in the government. Famous international theologians wrote supporting the priests and criticizing the bishops' decisions. The Archdiocese of Managua began to remove priests it judged as "Sandinistas" from pastoral activities. The Archbishop of Managua increased his contacts with opposition groups and increased his public protest to the process.


1. U.S. Nicaraguan Relations. The Reagan administration pressured Mitterrand not to sell arms to Nicaragua. In the OAS meeting in Santa Lucia, Reagan pressured Latin American governments to withdraw their aid to Nicaragua and then threatened to invoke the Rio Treaty. In December, the U.S. government approved a plan to carry out covert actions against Nicaragua with the aim of overthrowing the government. The plan, to be carried out by the CIA, was appropriated $19 million. The joint military exercises, "Halcon Vista", were carried out by U.S. and Honduran armies. Growing activity of Somocista ex National Guard occurred along the Honduran Nicaraguan border. Minister of Foreign Affairs, Miguel D'Escoto, had serious confrontations with Haig in Santa Lucia, and with the U.S. ambassador to the United Nations, Kirkpatrick, in a program televised in the U.N. Thomas Enders visited Nicaragua and rejected any type of bilateral negotiation.

2. Situation of the Central American Region. Torrijos, a man of dialogue capable of confronting Reagan's policies, died in an accident, which was never explained satisfactorily. In Mexico, a Franco Mexican statement was published recognizing the FMLN and the FDR as politically representative bodies and urging a negotiated solution to the conflict in El Salvador. The FSLN continued its action militarily. In the Honduran elections, Suazo Cordova became the first civilian president after years of military regimes. General Alvarez, named Chief of the Armed Forces, was the strong man in the government. Costa Rica elected Monge of the PLN, a social democratic party.
3. International Politics. Sadat was assassinated in Egypt. There was a reorientation of international politics in the Middle East. The Polish crisis worsened to the point that "Solidarity" was suspended and marshal law was decreed. An intense ideological struggle was unleashed between the East and West because of the Polish case.
4. Nicaraguan Economic Policy. The Law of Agrarian Reform was enacted: idle or underused land was confiscated, while properly used land was left untouched, regardless of its extension; individual titles were handed out, but cooperative titles were still preferred. The Law Against Decapitalization was announced and was applied to some industries. Difficulties in obtaining foreign credit increased. The parallel market was legalized for changing the dollar (official change: 1 dollar = 10 cordobas; parallel change: 1 dollar = 28 cordobas), and strong measures against the black market were announced. The Law of Social and Economic Emergency was decreed: foreign exchange was controlled, restrictions were placed on the importation of luxury items, budget costs were frozen, labor agreements were promoted, strikes were temporarily prohibited, and strong controls were put on the flight of capital and decapitalization

5. Developing New Institutions. Special courts and Regional Committees of Agrarian Reform were established to promote the Agrarian Reform Law, to facilitate its implementation and to coordinate production.
6. Relations between the Revolution and the Private Sector. Through the Agrarian Reform, an alliance was formed with the agrarian private sector, since it respected their well exploited lands and guaranteed financing for productive improvements. Members of COSEP and the Communist Party were arrested for violating the Law of Emergency. The first group was accusing the government of genocide, and the second group accused it of pro imperialism. The confrontations became worse between the most politicized sector of the private sector and the government. "La Prensa" was closed on 5 occasions.
7. Relations between the Revolution and Grassroots Organizations. The second Health Campaign took place. The Ministry of Commerce extended its action by means of a network of grocery stores in the rural areas. Militia battalions began to be mobilized toward conflict zones, as the quantity and quality of counterrevolutionary attacks increased. The Agrarian Reform program began to be implemented, thereby strengthening the UNAG.
8. Relations between the Church Hierarchy and the Government. Pax Christi International visited Nicaragua. The report was very positive toward the revolutionary process. CELAM sent a delegation to prepare a report on the Church in Central America. CELAM 's report was very negative about the process. The bishops did not participate in the celebrations of the Revolution's 2nd anniversary. The Vatican resolved the problem of priests in the government: they could stay in their positions, but could not celebrate mass. Nevertheless, it was clear that this was not a canonical sanction. In the Archdiocese of Managua, pressures and limitations continued for priests and religious who were "Sandinistas". The events provoked demonstrations and protests from the Christian communities. Archbishop Obando was decorated by the Venezuelan government in a celebration which COSEP and "La Prensa" were accused of politicizing excessively. Bishop Bosco Vivas was named assistant bishop of Managua


1. U.S. Nicaraguan Relations. The misinformation campaign against Nicaragua heightened, with some cases getting world attention: e.g. the false photographs in "Le Figaro" and the Tardencillas case, in which he made statements contrary to those expected by the Department of State. U.S. economic and military aid to the counterrevolutionary groups increased and talk about the possibility of an imminent invasion of Nicaragua began. There was an attempt to blow up the Managua refinery and cement factory and the explosion of two bridges occurred in northern Nicaragua.
2. Situation of the Central American Region. The tension between Honduras and Nicaragua increased as Honduras systematically continued denying the presence of the counterrevolutionary camps in its territory and the armed attacks against Nicaragua being carried out from there. El Salvador held elections for a Constituent Assembly in which the Christian Democrats came out losing. Fraudulent elections were held in Guatemala, and 15 days later a coup d'etat brought General Rios Montt to power with an increase in the repression. In February, the four political military organizations in Guatemala formed the URNG, and famous Guatemalans from diverse sectors of the population formed CGUP.
3. International Politics. War in the Falklands broke out, and Nicaragua staunchly supported the Argentinean claims. The balance of power in Latin America was altered as the U.S. supported England. Israel invaded Lebanon. Secretary of State Alexander Haig was replaced by George Schultz, who was more worried about the Middle East problems than those in Latin America. The U.S. faced strong opposition from Europe on the Siberian pipeline.
4. Nicaraguan Economic Policy. The Law of Foreign Investment and a policy of economic incentives to the responsible private sectors entered initial stages, but the National Emergency Law obliged the government to set aside larger sums of money for defense. The 1982 Economic Plan was changed. In May, storms caused the greatest floods in Nicaragua during this century; they affected the Pacific Coast, the most productive area. The losses were estimated at $360 million (Nicaragua's budget = $700 million). Economic planning was changed because of military attacks and the floods. The immediate consequences were unemployment and inflation.
5. Developing New Institutions. The emergency situation forced the government to give priority to defense. The National State of Emergency was declared; censorship was instituted.
6. Relations between the Private Sector and the Revolution. In the most critical moment of the emergency, Eden Pastora came out publicly in Costa Rica making statements against the Revolution. Alfonso Robelo left the country and sided with Pastora. Once these things happened, part of the private sector formed an opposition front which appealed to the U.S. for aid and called for an armed struggle. This group was joined by an important part of the private sector which had already left the country after decapitalizing their businesses. Another private sector group sided with the Somocista National Guard. The COSEP leaders were freed before completing their sentence. Investment dropped. The government kept up the principles of the mixed economy and financial support to the private sectors which continued to invest in the country.
7. Relations between the Revolution and Grassroots Organizations. The Sandinista Defense Committees were strengthened because of the emergency situation. More people¬ joined the Militia, and the grassroots organizations reached their highest level of participation.
8. Relations between the Church Hierarchy and the Government. Bishop Obando went to the U.S. on invitation of the Institute for Religion and Democracy, a recently founded organization of the "new right". The bishops published a statement harshly criticizing the government for the resettlement of the Miskitos from the border to the interior of the country. The government made an urgent appeal to the nuncio and published a statement harshly criticizing the bishops' position. In the Archdiocese of Managua, pressure continued against "Sandinista" priests and religious. For the third time a delegation was sent to the Vatican to begin negotiations. The naming of new bishops was part of the answer: Bishop Barni was transferred to Leon; Bishop Santi was named for Matagalpa and Bishop Vilchez was named Prelate of Jinotega.


1. U.S. Nicaraguan Relations. Counterrevolutionary attacks occurred in Puerto Cabezas and Corinto. Evidence of U.S. participation in the coordination, training, supplying, financing and control of the counterrevolutionary forces became more and more obvious. U.S. Congress passed the Symms Amendment, which empowered the President to send troops to Central America and the Caribbean in case of an emergency. A rapid increase was seen in U.S. military aid to the Honduran armed forces. U.S. news sources leaked news of plans for a U.S. intervention in December. The U.S Congress softened a bill which would have prohibited covert actions against Nicaragua and passed one which only prohibited CIA actions to overthrow the government of Nicaragua. Nicaragua was elected to a United Nations Security Council seat left vacant by Panama. The joint U.S. Honduran military exercises scheduled for December were postponed. In November, a Military Emergency was decreed in one-fourth of the country.
2. Situation in the Central American Region. On the first anniversary of Torrijos's death, Royo renounced the presidency of Panama. The Panamanian National Guard was strengthened. Pro U.S. tendencies in Panama's government were accentuated. Costa Rica President Monge began to take a more aggressive stance towards Nicaragua. The U.S. made Costa Rica the democratic spokesperson in the region. Hostility towards Nicaragua grew in Honduras. Ariel Sharon visited Honduras and signed a military agreement with General Alvarez. The FMLN in El Salvador began a major offensive in October. The internal differences between the Salvadoran political parties in the government were accentuated: notably those between D'Aubuisson and Gracia. The genocide against the indigenous population continued in Guatemala. Reagan's visit to Central America strengthened U.S. influence in the area aimed at destroying the Salvadoran guerrillas and defeating the Sandinista government.
3. International Politics. The PLO abandoned Lebanon after massacres there by the Israeli army were repudiated throughout the world. Felipe Gonzalez, a Socialist, won the Parliamentary elections in Spain. Helmut Kohl, Germany's new Chancellor, gave clear support to Reagan's policies in Europe. The financial crisis in Mexico worsened. The Mexican peso was devalued, and the banks were nationalized. De la Madrid assumed the Presidency in Mexico.
4. Nicaraguan Economic Policy. Nicaragua experienced a tremendous shortage of foreign exchange, and because of the growing crisis in the Central American Common Market, there was a serious crisis in the industrial sector. This was evidenced by an increase of unemployment and a rise in inflation. After the floods, there were three months of drought. Now regions were drawn up and administration was decentralized. The reshuffling of the economy continued due to the situation of military emergency.
5. Developing New Institutions. The country was divided into regions (6 regions and 2 sub regions) for administrative, military, governmental, etc., activities to facilitate decentralization, to gain greater government efficiency and to stabilize the public sector's activities. The crisis caused by the constant attacks had an impact on the state and forced a more efficient coordination of the state institutions in order to halt the bureaucracy.
6. Relations between the Revolution and Private Sector. The lack of investments continued except in one part of the private sector, which collaborated with the process and showed economic progress. In November, discussion on the Political Parties Law was reopened with the active participation of the Revolutionary Patriotic Front and the Ramiro Sacasa Coordinating Committee (both are coalitions of political parties: the former is with the revolution, the latter is in opposition).
7 Relation between the Revolution and Grassroots Organizations. Sub regional offices of Agrarian Reform were established to implement the law at the local level. The people were mobilized to harvest coffee. Because of the constant attacks, participation in the Militia and the reserve battalions remained high. The number of deaths (civilians, militia and army members) increased as a result of the border attacks by the counterrevolution.
8. Relation between the Church Hierarchy and the Government. The Pope wrote a letter to the bishops on the theme of church unity. The government temporarily prohibited its publication. Christians committed to the revolution studied it and made constructive criticisms. Archbishop Obando transferred Mons. Arias Caldera, who was committed to the revolution, from his parish; people demonstrated. A scandal around Fr. Carballo, spokesperson for the Archbishop, created tensions. In Masaya, a pro government youth demonstration was attacked by persons in the Salesian High School. The month of August was the most critical point in Church State relations since July 1979. A statement by the FSLN, which repeated its principles of respect toward religion, was the beginning of the truce. Meetings were held between the FSLN and the bishops. According to U.S. press reports, the apostolic nuncio had said to the government that the Pope's visit to Nicaragua in 1983 was dependent upon the priests in government posts renouncing these positions. The hierarchy promoted the Consecration to the Virgin which the more traditional sectors tried to use for political purposes. The hierarchy published a statement on the right to a Catholic education. The Pope's visit programmed for March of 1983, became a focal point of conflict between the more conservative sectors and those aligned with the process.

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