Under the Volcano:

Neoliberalism Finds Nicaragua

by Kevin Baxter

The Nation magazine, April 6, 1998


Forget the reinforced military bunker beneath Loma Tiscapa, from which the Somoza family dictatorship long ruled this country as if it were their personal hacienda. Forget the lakeside Plaza of the Revolution, from which Sandinista leader Daniel Ortega regularly rallied his followers during the darkest days of Ronald Reagan's contra war.

Today, eight years after Nicaragua bowed to the U.S. government's relentless military and economic battering by voting the Sandinistas out of power, the nerve center of this city has shifted about a mile south down the old Avenida de las Naciones Unidas. There, along a stretch of once-abandoned fields, the fruits of free-market counterreform - expensive restaurants, exclusive shopping centers and elegant hotels-are on display.

Fittingly, the area is also crisscrossed with active earthquake faults; it's here that the wide ruptures in what, a decade ago, was Central America's most egalitarian society are most visible. It's here, for example-in the middle of a country where about half the population is malnourished and a growing number of people can't read Spanish-that armed guards protect the franchises of U.S. restaurant chains adorned with English-language signs that ask patrons to "Please Wait to Be Seated."

It's here, in a country where 80 percent of the people live in poverty, in a capital beset by housing shortages, that homeless squatters are forcibly removed to make room for the Mercedes Benzes and Land Cruisers of the faithful, who each Sunday fill the outrageously kitschy cathedral bankrolled directly by Domino's Pizza king Tom Monaghan. After the Sandinistas left office, crime and unemployment skyrocketed while per capita income plummeted. Diseases once cured have returned with a vengeance, and the number of suicides set a record in 1997.

For anyone who remembers the feeling of hope and confidence that blanketed Nicaragua in the eighties, the pessimism that pervades the country's poor and middle-class neighborhoods today is sobering. Indeed, many of those Nicaraguans who voted out the Sandinistas in 1990 believing they would be rewarded with unfettered peace and prosperity are finding out they were duped.

Villa Miguel Gutierrez, a sprawling working-class barrio of concrete-block dwellings on the eastern edge of the capital, is a typical Managua neighborhood and one I've visited often over the past few years. Several of its streets are unpaved, the water and electricity are shut off frequently and without warning, and many of its households are headed by single women. Buses, the sole transportation for most residents,, are always overcrowded and on the verge of breaking down. A recent investigation found that more than a third of the city's fleet shouldn't be on the roads at all.

But the bus service, a cooperative enterprise, survives as one of the few big companies that have not yet been dismembered, restructured or cannibalized. In the past year ENEL, the state electric company; ENABAS, which manages production and distribution of the country's basic grains; TELCOR, the mail and communications service; the telephone company; and the main government bank have been wholly or partly privatized. The restructuring cost thousands of jobs, leaving close to two-thirds of the nation's workers without steady employment, a grim prospect in a country without even the pretext of a social safety net.

The country's once-socialized health care system, the subject of lavish praise by the World Health Organization during the Sandinista years, has been largely dismantled. Patients now are frequently expected to provide their own medicine, and doctors are without the most basic implements, such as stethoscopes and scalpels. Even education isn't always affordable; many students have to pay teachers for paper and pencils and to photocopy relevant sections from each class's few textbooks, leaving the poor parents of large families with no choice but to pull their children out of school. In a country where primary education is supposedly universal, the Catholic Church says more than 60,000 children spend their days in the streets begging or selling worthless trinkets in order to eat.

"The great impending theme in Nicaraguan politics is social justice," says Social Christian politician Luis Humbato Guzman, a forma president of the National Assembly. "And we're not going to alleviate poverty by accident. We have to have direct programs."

Of the twenty-six families along one of the typically narrow residential lanes in Miguel Gutierrez, nearly a quarter rely on remittances from relatives in the United States. And they're not alone: Last year Nicaraguans received $300 million from family members living abroad, mostly in the United States. Not even coffee exports accounted for a greater share of the country's economy. It's ironic that the nation that spent hundreds of millions to destroy Nicaragua a decade ago now inadvertently provides the final defense against total anarchy, an irony that explains why the government of conservative President Arnoldo Aleman last fall pressed the Clinton Administration to grant special status to undocumented Nicaraguans living in the United States: Mass deportations would not only have overwhelmed Nicaragua's sagging job market but any decline in the amount of money flowing south from the United States would have devastated the country's economy.

Gunshots often echo through Miguel Gutierrez after dark, though no one knows who's doing the shooting or what For anyone who remembers the hope that once they're shooting at. Armed vigilantes, paid for by the residents, patrol the unlit streets each night, as they do in most neighborhoods. Nicaragua's national police force is hopelessly understaffed and its resources so limited that traffic police work their beats on foot, relying on the good will of motorists to stop and retrieve their own driving tickets. As a result, few patrols ever enter the barrios; rent-a-cops make up one of Nicaragua's new growth industries.

Yet the crushing poverty, worse now than during the final years of the Somoza regime, hasn't scared away foreign investors; U.S. companies like Motorola and Bell South, the Canadian mining firms Greenstone Resources and Triton, and large Taiwanese enterprises have all rushed in to tap one of the hemisphere's cheapest labor markets, pouring $100 million into communications, mining and hotels. Additional millions in tourism projects have been invested by U.S., Guatemalan, Salvadoran and various European companies. Indeed, the government's harsh austerity measures and slashing of social spending were enacted primarily to lure this sort of foreign investment. And the man behind the policies is Aleman, a Somoza wannabe who resembles the dictator even down to his corpulent build.

The son of a Somoza-appointed judge, Aleman was jailed for nine months by the Sandinistas in 1980 before becoming director of the powerful national coffee growers' association. Elected as mayor of Managua in 1990, running under the banner of a splinter of the old Somocista Liberal Party, Aleman posed as a populist, pushing through some minor public works projects, constructing fountains and lining major downtown boulevards with Christmas lights during the holidays. But he also ordered workers to whitewash dozens of the city's priceless revolutionary murals and pushed the restoration of pre-insurrection names to neighborhoods and public buildings named for Sandinista martyrs.

In his run for president, an office he assumed fourteen months ago, Aleman promised his moneyed supporters and financiers- including a contingent of right-wing Cuban-Americans-a neoliberal wish list, pledging to convert Nicaragua into a business-friendly paradise. Some economic indicators do suggest a limited business revival. The country's increase in basic production led Central America in 1997, and its 9 percent inflation rate was among the region's lowest.

But average Nicaraguans hasten to say that Aleman's much touted economic accomplishments don't trickle down to them. Nicaragua remains the hemisphere's second-poorest country, and its $6 billion external debt is the region's largest, while per capita income is still below what it was in the late eighties. Even the professional class suffers steady decline. The average teacher's salary is about $70 a month, meaning it would take two months' pay to rent a room for one night at Managua's refurbished Hotel Intercontinental. No surprise, then, that recent polls found that just one in four Nicaraguans believes the country is stable politically and economically. And a recent study by the Universidad Centroamericana predicts that unemployment will more than double in the next two years if the government continues to pursue its current strategy.

The neoliberal reform "doesn't change anything for those of us who ride the bus, who are barely getting by," says Edgard Jimenez, 32, a Red Cross worker. "We can look in the windows of the new restaurants and new hotels and see how nice they are. But it would take half my monthly salary to go in and order a meal." As Isabel Armijo, a lawyer in the provincial capital of Somoto, a bumpy three-hour ride from Managua over uncertain roads, puts it, "The situation in Nicaragua now is one of despair."

For his part, Aleman shrugged during ceremonies in December for the signing of a free-trade agreement with Mexico: "We know that to move forward and confront the future, we have to take bitter medicine," he said. But the social consequences may not prove so easily dismissible. "There's a growing difference between the richest and poorest sectors of the country," former Sandinista diplomat Carlos Tunnerman told the journal Tiempos del Mundo. "And this is very dangerous for a society because it creates a feeling of social injustice, of frustration, a feeling that the actions of the government aren't correcting this inequality."

It wasn't supposed to be this way. Implicit in the U.S. government's anti-Sandinista rhetoric was the promise that once a leader to Washington's liking was installed in Managua, massive economic aid would flow as a reward. While some estimates suggest the United States spent nearly $1 billion to destroy Nicaragua in the eighties, Washington says it spent $1.2 billion in funding the repairs in the nineties. But nearly $300 million of what Washington counts as assistance is nothing more than an erasure of debts, which were run up during the Somoza years.

Senator Jesse Helms has succeeded in stopping or at least delaying many aid requests by insisting that the Nicaraguan government resolve the thousands of claims U.S. citizens have filed for the return of property seized following the revolution. It's an impossible task, of course, a fact the Aleman government appeared to concede last year by inviting the heirs to the Somoza fortune to file for the return of assets that were largely stolen from the Nicaraguan people in the first place. The negative emotional response to that proposal in Managua suggests that either the government made a huge miscalculation in judging the mood of its people or that it staged the whole thing as a message to Washington that Helms's campaign had gone too far. Most likely, an arrogant President Aleman didn't care about public response.

But discontent with the regime's policies has done little to boost the popularity of the Sandinista National Liberation Front, now the main opposition. Armijo, who was once mayor of Somoto, was never a Sandinista, although she supported the party and shared many of its goals. But now, like many Nicaraguans, she and her husband, Arturo, say the Sandinista leadership has abandoned the revolution and betrayed its followers.

"The revolution killed the hope of the people," Arturo says. "if the leaders had only stayed true to their promises. When this started, the solidarity and the enthusiasm were incredible."

Indeed, the party that brought the revolution to power in 1979 and Id off the United States for a full decade is today in disarray. The red-and-black Sandinista banner, which once flew from every street corner in Nicaragua, is now hard to find outside the souvenir shops and artisans' kiosks that cater to tourists. Bamcada, the party's once-respected daily newspaper, recently closed after sinking hundreds of thousands of dollars into debt and failing to pay its politically committed staff back wages. That, in turn, produced a highly publicized hunger strike that cast the once mythic Sandinista commander Tomas Borge-who had taken over management of the paper's just one more callous employer.

Internationally known Sandinista intellectuals such as writer and former vice president Sergio Ramirez and former Minister of Culture Ernesto Cardenal have publicly renounced their affiliation with the party, charging its leadership with selling out the revolution, betraying its democratic foundations and pursuing political power at the expense of the Nicaraguan people.

"Daniel Ortega and all those people now, they only care about power," says poet and novelist Giaconda Belli, once an important figure in the Sandinista leadership. "That's why I'm so angry at what's going on. When you have so many people that have died for an idea, for a cause, you cannot betray it."

Disillusioned sympathizers charge that the Sandinista leadership was too adamant in asking followers to make sacrifices it was unwilling to make itself. And since their 1990 electoral defeat, the Sandinistas have greatly muted their revolutionary program but also become ever less democratic in the party's internal structure. The result has been a mass desertion of the rank and file. Still, the Sandinistas remain the most powerful opposition force in the country, and the leadership has promised to flex those muscles if the government continues to ignore the needs of the people. In January, for example, party activists participated in a series of strikes and marches involving teachers, medical workers, court employees and farmers that lasted four days, crippling some sectors of the economy.

"In 1998, we'll see the Frente Sandinista fighting alongside the people in the streets," says Ortega, the party's general secretary and former Nicaraguan president. "I don't see any other alternative. Only the idiots and the cowards won't go to the streets to protest. The people will be committing suicide if they don't protest."

But Ortega's ability to lead has been greatly compromised by charges of sexual abuse leveled against him by his stepdaughter. Party militants were quick to denounce the accusations, although Ortega himself has not as yet publicly denied them. The scandal seems certain to dominate the Sandinista congress this May, in which many young party members are expected to seek Ortega's ouster. A deepening of the schism between the old guard and the party's less dogmatic younger members appears inevitable.

Among those who questioned Sandinista leadership even before the scandal broke is Miguel Castro, 33, a former Sandinista soldier who once spent his weekends patriotically volunteering to help bring in the coffee harvest. Last year he was fired from his job at ENABAS after thirteen years and replaced by an Aleman supporter, and weeks after that he was beaten and nearly killed by a group of bandits as a crowd of neighbors looked away. The experience convinced him that it was time he started sacrificing only for himself.

"The Sandinistas wanted everyone to be equal. But the Sandinistas didn't practice it," he tells me over dinner at a newly opened Pizza Hut as Bob Marley's activist anthem "Get Up, Stand Up" plays in the background.

While the elan that drove the Sandinista revolution has evaporated, the social conditions that made rebellion necessary are reappearing in the countryside. Certainly, the revolution had many fathers, but the rebellion was able to sustain itself in the verdant mountains for more than a decade because the heavily exploited campesinos were ripe for insurrection. And though their lot temporarily improved under the Sandinista government, they are once again subject to the same abuses suffered during the Somoza dictatorship.

In the northern mountains near Somoto, Matagalpa and Esteli, farmers suffered a pair of deadly blows last year. First a severe drought, attributed to El Nino, shrank crop yields by as much as 30 percent; then short-term loans they were encouraged to take out under the first post-Sandinista government came due January 1. Only about half the loans were paid back on time, leaving hundreds of thousands of acres of rich farmland subject to seizure by the banks. If the seizures take place, the confiscated land will undoubtedly be resold and the displaced farmers will wind up unemployed and homeless or, if they're lucky, as low-paid seasonal workers toiling for large agricultural firms on their old farms, just as they did before the revolution.

"They're trying to erase the Sandinista years," says Jimenez, the Red Cross worker. "All those people who sacrificed and fought and died-it was for nothing."


Kevin Baxter is a news editor for the Calendar section of the Los Angeles Times.

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