Envío Digital
Central American University - UCA  
  Number 322 | Mayo 2008



The Sea, the Ship And the Uncertain Course

The international seas are rough and our ship, its compass out of line, is on an uncertain course. The figurehead at the bow is battered. Does the crew even realize it?

Nitlápan-Envío team

The relentless rise in international oil and food prices is a constant item in the agitated sea of international news. Many people around the world are perishing every day in the resulting shipwrecks.

Nicaragua depends on oil derivatives for 80% of its energy system while 70% of its population keeps going on little more than sheer will. The unending price rises are battering our fragile ship and testing the course set by the FSLN government’s helmsman and the few crew members with any say over what is happening. It’s also testing those of us lucky enough to eat, work and even think in these times of crisis.

A super-generous agreement

The day after taking over the ship of state in January 2007, President Daniel Ortega wasted no time in signing Nicaragua up for the Bolivarian Alterna-tive for Latin America and the Caribbean (ALBA) project promoted by Venezue-la’s President Hugo Chávez. In response, Chávez pledged to provide us all the oil we need “for the next hundred years.” Three months later, Chávez and Ortega signed the ALBA Energy Agreement, which guarantees Nicaragua an annual 10 million barrels of crude, refined products and liquid gas, all of which we need to move our economy.

The agreement established that the actors in this deal will be Petronic, Nicaragua’s state oil company, and ALBANISA, a newly created affiliate of PDVSA, the Venezuelan state oil company. Venezuela has 60% of the shares in ALBANISA and Nicaragua 40%, while Nicaragua has the majority shares in PETRONIC after an agreement finalized with the transna-tional company Glencore a few months ago in the strictest secrecy.

Under the ALBA Energy Agreement, Nicaragua is buying Venezuelan oil at market prices and selling it all over the country. The main advantage is the payment facilities: Nicaragua pays 50% in 90 days at 2% annual interest and the other half in 23 years with the same rate of interest and 2 years grace. According to the agreement, the ALBA Fund, administered by Nicaraguan government officials, will receive 25% of this extremely concessionary credit payment, to be used to finance “infrastructure works and social and other projects” in Nicaragua, while the other 25% “is assumed by the Republic of Nicaragua.”

A gigantic parallel
budget with no oversight

The Nicaraguan government is controlling the money generated by the sale of the Venezuelan oil and neither the government institutions nor society as a whole has any idea how or for what it is being used. Because it comes from a credit, the oil operation with Venezuela generates public debt for Nicaragua, and because that credit operation is international, it, like all credits and donations, is legally required to be recorded in the national budget so it can be scrutinized by parliament and the public. Thirdly, because the agreement was signed by two Presidents, it’s supposed to be ratified by the parliaments of both countries.

The agreement was indeed approved by Venezuela’s Legislative Assembly shortly after it was signed, but President Ortega hasn’t even presented it to Nicaragua’s National Assembly. Nothing referring to the oil operation is recorded in the Nicaraguan budget, not the payments for the petroleum, not the use the ALBA Fund is making of the 25% earmarked for infrastructure and social works, and not the destination of the 25% corresponding to the government.

In fact, Venezuela has allowed the Nicaraguan government to manage a multi-million dollar “parallel budget,” and the higher oil prices soar, the more that budget grows. This year it could reach $225 million in net available funds after the purchase and resale of the crude.

What’s it being used for?

Due to the state’s lack of storage capacity, not all the Venezuelan crude agreed to was shipped in 2007, but that problem was resolved through a legal maneuver by the Ortega government that forced the Esso refinery in Nicaragua to cede its unused tanks. So far this year a daily average of 27,000 barrels of Venezuelan crude have been coming into the port of Corinto.

All Nicaraguan sectors, from rich to poor, are now suffering the effects of the continually rising prices for oil products, which are higher than in any other Central America country because the government taxes are higher. That unrest has put the beneficial ALBA Agreement at the center of the debate both in the media and on the streets.

Questions are now being voiced about the Venezuelan oil deal that go beyond the issue of price rises. How is the agreement benefiting the country and its people? What are the millions derived from the oil operation being used for? What should they be used for? Who’s administering the ALBA Fund and with what criteria? To whom are they answerable? What “infrastructure works, social and other projects” is the government financing with this fund and why aren’t they more visible? Are they the priorities the country needs right now or are they geared to party interests? Or perhaps only to family projects?

Mutiny on board:
Control oil prices

Another question constantly heard in the streets is: If Venezuela is so generously sharing a few drops of its sea of petroleum with us, why isn’t our government controlling the sale price of gasoline, diesel and gas? Didn’t Ortega promise oil relief in his electoral campaign? Where’s the tangible advantage of Chávez’s support?

At what point will local oil prices have to be frozen, and for how long? There are strong demands on the government to use palliative measures like those of the Honduran government, which in early April decided to freeze fuel prices for three months with the help of a Venezuelan credit line.

Those most energetically demanding a price freeze are the taxi companies, cargo companies and passenger transport companies. In fact a work stoppage by interurban passenger vehicles was launched on May 5, just as this issue was going to press, and threatened to spread quickly to taxis and local city buses. If not quickly and successfully negotiated, this strike will further damage the economy. The national economic situation is so critical that other mutinies will surely follow, severely testing the capacity for dialogue and leadership skills of our ship’s captains. Even people without vehicles are demanding a solution to the oil price rises because consumer prices are following and sometimes even outstripping fuel prices.

It’s not easy for the Nicaraguan government to respond to these demands, but at the very least it could give clearer explanations about the benefits of the agreement. It could also join up with private enterprise to launch a sustained and massive energy savings campaign.

To quote the director of the Nicaraguan Human Rights Center, “The Ortega government is entering a test period. Before, during the Liberal governments, he [Ortega] organized and controlled the conflicts and social protests. But now, given the size of the economic crisis, he has evidently lost that control. This is his moment of truth; it’s time to demonstrate his support for the poor sectors he claims to represent.”

Secrets in the hold

On various occasions President Ortega has responded that thanks to Venezuela the country has electricity and we don’t have to return to the 8-hour daily electricity rationing of mid-2007 because the state is subsidizing the electricity generating companies. He also says that thanks to Venezuela bus fares in Managua are frozen at 2.50 córdobas (roughly $0.15), although that subsidy actually began during the Bolaños government when there was no agreement with Venezuela. Ortega also talks about investment in streets and highways being financed with the oil resources.

But even though the ALBA Energy Agreement has been in effect for over a year, there’s still no way to prove what these resources are really being used for, how effectively, or even whether they’re being squandered. Where there’s discretion and lack of transparency, there’s always corruption. While all figures remain hidden under tarps of secrecy deep in the hold, President Ortega labels all those inquiring about it brazen enemies of the people.

The man who administers what goes in and out of that hold is Francisco López, vice president of ALBANISA, manager of PETRONIC and the FSLN’s treasurer. This man of many financial hats is known to be very close to the governing couple and the treasures he guards and administers are among the most worrying expressions of the state-party confusion, made official policy by the current government.

They manage, they wheel and
deal and they hide big bucks

The government secrecy surrounding everything related to the Venezuelan funds has led to constant questioning by the media, national opinion-makers, international cooperation and even the International Monetary Fund. Finally, on April 24, the Comptroller General’s Office announced it would audit PETRONIC to answer some of these questions.

Shortly before this decision, Roberto Courtney, executive director of the civil society watchdog organization called Ethics and Transparency, alerted the citizenry with the following words: “We’re faced with a party in government that manages, negotiates and hides a large amount of resources without being accountable to anyone. This is unheard of; it’s worse than the bad management of discretionary funds institutionalized during former President Alemán’s term. At least those funds were included in the budget and it was known how many millions there were, even if we had no way of knowing what they were spent on and suspected they were being used for all kinds of illicit actions. Now we don’t know anything…”

Will the Comptroller General’s Office uncover those secrets? Doing so would suggest a degree of independence hard to imagine in an institution that was one of the first to have its top posts divvied up between the PLC and the FSLN as a result of their pact.

Eating’s getting very expensive

The rising price of oil threatens to capsize the ship taking us through this complex moment in our history. It could even drive us aground in a far port from which there is no return.

The world rise in food prices is the result of a combination of factors, among them the rising standard of living of the enormous populations in China and India—countries that together house a quarter of humanity. Another factor is that extensive areas dedicated to corn and other basic grains are now producing biofuels. The rise in oil prices itself also contributes, since a large part of the foodstuffs shipped from north to south and west to east in this globalized world requires oil. And of course the droughts caused by climate change in important productive areas of the planet also weigh heavily.

Aggravating the problem even more is the migration of food-producing peasant farmers to the cities in recent decades. Abandoned without agrarian reforms, technical support or credit access, they have left the countryside, adding to the uncontrolled urbanization and the blind faith in the invisible hand of the market and the globalizing steamroller. This is being felt particularly in Latin America, where political writer Eduardo Galeano’s image of our continent as a place of men without land and land without men is becoming ever more apt.

All these critical factors are present in Nicaragua. The rise in oil prices is making everything we eat more expensive by the day; everyone’s pocketbook is feeling it. For more than a decade and a half now, government after government has left the peasantry, the countryside and agricultural production to their fate. Although no areas dedicated to maize or other grain crops are being converted to biofuel production in Nicaragua so far, there has been a notable rise in the price of bread—as much a part of poor Nicaraguans’ diet as tortillas—because Nicaragua doesn’t produce wheat and its production in the United States and other countries has been cut to produce biofuels.

We were already hungry

The United Nations has called the world rise in food prices a “silent tsunami.” It calculates that indigence and hunger will affect 100 million more human beings on the planet, 1 million of whom will be Nicaraguans.

This ever-worsening crisis caught Nicaragua at a dramatic starting point. According to the UN Food and Agriculture Organization, 27% of our population was already suffering some degree of malnutrition. In the case of children under three years old, chronic malnutrition, including that which only hits during certain seasons, puts their brain development at risk. This malnutrition has not been caused by any scarcity of basic food, but by unemployment and lack of opportunities; people simply can’t afford to buy food. World Bank figures show that 45% of Nicaragua’s population survives on less than $2 a day and nearly 15% on only $1 or less. How much food can that buy?

The combination of this pre-existing situation, plus the current food price rises, plus general inflation—over 15% last year and already at 5% in the first quarter of this year—will make it increasingly impossible for a growing number of people to eat three times a day. The average national minimum wage only covers 23% of the value of the basket of 53 basic food, clothing and household maintenance products right now, and rural minimum wages only cover 11%.

Opportunity for whom?

Crisis is a Greek word whose etymology has an open meaning: something critical could end up very badly or could trigger the emergence of a positive end.

President Ortega and the few public officials who say anything publicly put a positive spin on today’s crisis; together with a few analysts and business people, they claim it’s opening a great opportunity for Nicaragua, which has a lot of land, a large rural labor force and a traditional agrarian culture. It can thus increase production, ensure national food sovereignty and even supply food to the whole of Central America and, Ortega adds, Venezuela—a country that, resting on its oil laurels, imports almost everything its population eats.

Is our ship heading off to take advantage of this great productive and export opportunity? Its log doesn’t suggest so all that clearly. In February, the government drafted a five-year plan for 2008-2012 grandiloquently titled “Revolution in the Agricultural, Forestry and Rural System.” The supposition behind this extensive document, which was distributed only in restricted circles, is that the “revolution” will be guaranteed by the civic power incarnated in the Councils of Citizens’ Power run by First Lady Rosario Murillo.

Why no agrarian reform?

On top of that ideological illusion, the paper’s assessment ignores essential elements. Perhaps the main one has to do with land tenure and access to land. Although there is indeed a lot of unexploited productive land in Nicaragua, two of every five rural families have no access to it. Where are they supposed to produce? What is the government’s response to this problem? The five-year plan doesn’t mention agrarian reform. Does the government think that Cardinal Obando’s peace and reconciliation commission is going to resolve the country’s latent property problems?

An official Ministry of Agriculture calculation in 2006-2007 indicated that 434,000 hectares potentially apt for agriculture are being underutilized or even lying idle. Nicaragua needs another agrarian reform. Despite the different stages of the Sandinista agrarian reform of the eighties, Nicaraguan land is again very unfairly distributed after the piñatas and the counter-agrarian reform initiated in the nineties: 75% of the rural landowning families have only 20% of the productive land.

Short-term charity assistance

The five-year plan’s compass needle is pointing in a different direction. The text states that “the Zero Hunger program is the main tool for capitalization, economic growth with justice and equity, and the formation of an inclusive, sovereign and active state.” Isn’t it a bit exaggerated to attribute such possibilities to a program that barely alleviates hunger and that the FSLN would have qualified as paternalistic charity had it been implemented by the Bolaños government?

So far, Zero Hunger has provided productive packages—and not always complete ones—to 13,000 families in different parts of the country. It was hoped that women beneficiaries would organize agro-food production cooperatives and in-kind repayment of the credit received (i.e. chicks, piglets, calves, seeds) so the program could keep extending the number of families receiving the package. But that isn’t happening.
Furthermore, this program only benefits those with property, not the landless families most trapped in their poverty. A good part of the latter can’t become producers not only because they have no land but also because they are single mothers, abandoned by irresponsible men who both materially and emotionally “aborted” the children they engendered. These impoverished women and men who are ineligible for Zero Hunger will find it increasingly impossible to buy food.

The Social Protection Network promoted by the Bolaños government was at least subsidizing such people so they could study and eat. The FSLN government scoffed at that program, labeling it “short-term charity assistance,” and did away with it. Instead it opted for Zero Hunger, which could lead to exactly the same, although the government presents it as the principal tool of “revolutionary change.”

And the producers?

There are several crucial land-related problems to which the government is giving no answers. One has to do with the land apt for basic grains that is now largely used for pasture in a still very irrational and inefficient cattle policy.

And what about the people who would make the land produce? The traditional rainy season is about to begin but those at the helm have yet to announce the official course charted to enable producers to exploit the “good” food prices and realize that recurring dream of once again making Nicaragua the “granary of Central America.” Only roughly one in every three farmers has access to credit to be able to produce.

The opportunity certainly exists, is welcome and will be taken advantage of by some—i.e. the third that has access to credit and other conditions—to provide relief for their families. “Among those who have land, we’re seeing real enthusiasm to work because they’re well aware of the high food prices,” explained a source from one of the few national micro-financing institutions that grants credits to peasant producers. “They’re looking for credit wherever they can and at whatever price to get in on this beneficial situation. Those we support with credits are gearing up to produce more.”

So who’s at the helm
in this stormy sea?

In this fragile national situation, the ship’s helmsmen are behaving in a very worrying way. There’s no sign of any desire to head the ship toward the safe port of national consensus. Despite having come to office with an electoral minority of 38%, Ortega is determined to believe and try to convince everyone else that Nicaragua is living a “revolution.” He views the majority opposition as “counterrevolutionaries,” qualifying as “conspiracies” both their criticism and any constructive proposals.

Out of these illusions comes the voluntarism with which he intends to make the CPCs lead actors in continual confrontation with anyone who expresses a different opinion, claims spaces or points out errors. That hostility is our daily bread, the fuel the government uses to move its sympathizers. These tendencies, combined with the “judicializing of politics” to punish adversaries and the vote-buying way he administers public resources, are further stirring up the sea around the ship he’s steering.

Patience with the
sectarianism is wearing thin

“The government’s behavior is very sectarian,” says Social Christian legislator Agustín Jarquín, a proven ally of Daniel Ortega for years now. Other allies from the FSLN’s Convergence alliance as well as grassroots sectors that had been making progress in participation arenas now closed to them also complain of sectarianism.

Even one of the FSLN’s longest-serving militants and a politician once extremely close to President Ortega is critical. “The FSLN has changed a lot,” says Managua Mayor Dionisio Marenco. “It has lost the capacity for internal dialogue.”

Liberal legislator Francisco Aguirre Sacasa, a bridge between the PLC and the President in recent times, argues that “the government should name ministers who are not only loyal but capable.” Following the dismissal of several ministers and other experienced people in important posts as punishment for not demonstrating unconditional loyalty, those who remain are now lethargic and dare not offer any initiatives, which is aggravating the crisis even more.

“The President doesn’t see things as all that drastic, which is jeopardizing us all,” says one of the thousands of women who will lose their jobs in the Taiwanese maquilas that are closing their operations in Nicaragua in two months.

Distrust, exhaustion
and surprise

Representatives of the community of governments that provide foreign cooperation to Nicaragua are showing signs of distrust, exhaustion and surprise in response to the government’s inappropriate treatment of them. They complain of a lack of both tact and information and note that the poor are the main losers in this combination of centralism, abuse and procrastination.

As members of ALBA, we Nicaraguans can only wonder whether this government would behave as rudely and indifferently to national society and international cooperation if it didn’t have Venezuelan solidarity—those resources that may be strengthening the national ship but just as likely are filling party or personal warehouses.

Emergency and urgency

While the great world ship continues plowing the seas, Nicaragua seems resigned to its fate. We’re all responsible for that resignation, that resistance to reflecting then acting.

The political language of the analysts who shuffle through the variables of Nicaragua’s misery has lost its intensity. In the interminable morning television interviews, the voices of both analysts and politicians sound hollow, opaque, absent. The political cartoons are also losing their mobilizing edge, morphing into grotesque snapshots of what we’ve become.

We’re in an emergency situation and urgently need measures that will allow us to deal with it. We all have to do something. The sea looks tempestuous and agitated as far as the eye can see and the ship’s course is uncertain. Will the helmsmen become conscious of their huge responsibility right now? Are they worried? Do they even care? Or are they counting on Nicaraguans’ legendary capacity to survive one shipwreck after another, turning their fate over to God’s providential will?

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