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  • A woman walks past murals of Nicaragua's President Daniel Ortega (R)

    A woman walks past murals of Nicaragua's President Daniel Ortega (R) | Photo: Reuters

Published 19 August 2016
What Nicaragua's right-wing is uncomfortable with is the challenge to their free market ideology from the economic democratization of President Daniel Ortega’s government.

Among the wreckage of Nicaragua’s right-wing political opposition to Nicaragua’s Sandinista government, it is hard to make out anything resembling a coherent political and economic program independent of clearly bankrupt U.S. imperialist ideology. The academic and former Nicaraguan ambassador to the U.S. and Canada, Arturo Cruz, tried to dignify that failure with some vestige of intellectual rigor back in 2013 in an essay whose title translates to “Political reform in Central America: Is Democratic institutional rule at risk?” Recently, Cruz has revived his arguments in a series of lectures whose overall title translates as “Government's petty cash in trouble.”

Nicaragua: Profit, Phony News Media and Political Power

In a nutshell, Cruz' argument explains the widely acknowledged success of the Sandinista Government as a result of its ability to combine sound macro-economic free market policies with the capacity to satisfy the ever growing demands of both the Sandinista grassroots as well as the demands of many Nicaraguans who previously supported the liberal right-wing parties, in a scheme Cruz labels “responsible populism.” However, Cruz argues, with the virtual collapse of Venezuelan aid due to the economic crisis and the fall of oil prices, the Sandinista government today lacks the “petty cash” needed to make the system work which may herald a period where its hold on political power will be put to test. Cruz has to make mighty omissions to make this case. He might better have called his series of lectures “Whistling in the dark.”

Cruz’s argument serves as an apology for Nicaragua’s capitalist class and its political right-wing expression in a historical period during which the impoverished and excluded popular classes have emerged as economic as well as political and ideological subjects. In 200 years of independent history, Central America’s capitalist elites have been incapable of formulating a sovereign political project of their own, depending mostly on imperial networks of political and economic influence. Now Nicaragua’s political right-wing needs arguments against the emergence of Nicaragua as a sovereign revolutionary society. Cruz’s arguments offer an unconvincing alibi for that historic political and intellectual failure. His view of Nicaragua’s impoverished majority is elitist, a mass of “clients” with little sense of citizenship and no strategic consciousness of their needs. This is part of what Cruz wrote back in 2013:

“Today, Nicaraguans' consumption expectations are undoubtedly low (which should facilitate the task of distributing scarce goods), but they are also immediate, anchored in the present, with little attention to the future, unable to reach a minimum of abstraction. The client – as opposed to the citizen, who expects a lot from government, except from what he can afford with his family income – is focused on the most basic, such as a pound of beans or a galvanized roofing sheet, convinced that the government's main role is to serve him as a crutch.” Clear? It’s hardly important that impoverished families live in dehumanizing immiseration, the important thing is that they look beyond their hunger and their leaking roofs and behave like true citizens. Cruz’s argument goes a long way to explaining why support for right-wing political parties in Nicaragua’s has collapse.


What Cruz does is rehash the long discredited distortion of Nicaragua’s use of development funding as a member of the Bolivarian Alliance of the Americas (ALBA). That development funding for Nicaragua is precisely not some kind of petty cash slush fund but rather a well regulated framework for solidarity based fair trade. Part of the framework means half of Nicaragua’s oil imports from Venezuela get paid up front while the rest is paid back over 20-years at a concessional interest rate, thus freeing up resources to combat poverty. Even the IMF had to concede that Nicaragua’s ALBA development funding does not increase Nicaragua’s sovereign debt obligations. ALBA’s funding to Nicaragua has been structured in a way equivalent to a program of deficit spending impossible under traditional Western dominated aid and debt mechanisms.

Academic ideologues like Arturo Cruz, perhaps deliberately, fail to acknowledge that Nicaragua’s current complex socialist redistributive strategy of poverty reduction is a project aimed at strengthening the country's economic foundations and national income. It has created a steadily growing domestic consumer market for Nicaraguan businesses at the same time as much needed investment in production, for example, investment to end the country's dependence on oil for electricity generation. Most likely, Cruz knows all this very well, and the sections of the Nicaraguan elite he represents, which have profited from these policies, know it too. What they are uncomfortable with is the challenge to their busted capitalist free market ideology embodied in the fundamental strategy of economic democratization implemented by President Daniel Ortega’s government. Hence the comforting, self-justifying but ultimately forlorn right-wing appeal to a phony distinction between clients and citizens.

Nicaragua’s right-wing opposition take perverse comfort from the intractable difficulties Venezuela is facing thanks to the dramatic drop in oil prices, imperial economic warfare and home-made mistakes (discussed here for example) which are no secret to anyone. However, in Nicaragua's case a policy priority of the Second Phase of the Sandinista Revolution after 2007 was precisely to diversify trading and development relationships. That policy drew on experience of the problems derived from the U.S. economic boycott of the 1980s, for example excessive dependence on support from the Soviet Union and its allies. Committed to the principle of a nascent multi-polar world, President Daniel Ortega, from the start of his second presidency in 2007, fostered independent relations with a very diverse array of nations willing to promote development projects in the country. That policy also created export markets the business classes never had before.

But the most important omission about Nicaragua's real existing economy made by people like former ambassador Cruz is its democratization, the role played by ordinary people organizing economically at the grassroots. In spite of losing political power in 1990, the First Phase of the Sandinista Revolution achieved a historically very significant economic impact on the country. Not only did the Revolution eradicate the debilitating economic tumor of the Somoza family's empire, but also effectively and dramatically redistributed wealth. Neither the loss of political power in 1990 nor the subsequent period of dysfunctional neoliberal governments between 1990 and 2007 could roll back those historic revolutionary achievements. Under Somoza’s regime, properties of 50 acres or more made up over half of total arable land. Today, that figure is only 18 percent, the rest being in the hands of small farmers and cooperatives of both Sandinista and former Contra supporters.

The family, associative and cooperative economy in Nicaragua, referred to as a “popular, non-capitalist economy,” is a major actor in the country’s economy, contributing about 53 percent of production-based GDP (and above 60 percent of disposable income-based GDP), as well as employing over 70 percent of the workforce. In Nicaragua, where 90 percent of consumed foodstuffs are of domestic origin, 85 percent of the food is produced by cooperatives. In the service sector, activities such as public transportation are totally managed by cooperatives. With 50,000 associates, the cooperative bank CARUNA has become an important financial resource, independent of the private banking sector. In retail commerce, the country's popular markets are the main distributors of imported goods to the population. In these markets, organized shop owners work hand in hand with the authorities and they concentrate most of the money from family remittances which Nicaraguan migrants send to their relatives in Nicaragua, making a reality of the old revolutionary slogan “Only the People Saves the People.”

Venezuela, Cuba, Nicaragua—Permanent Media False Positives

As Nicaraguan social scientist Orlando Núñez says, “if Socialism is defined as the associated producers’ control over the economy, then Nicaragua counts on a strong base to undertake the path” of building such a social order. Such are the realities right-wing academics like Arturo Cruz ignore when they talk about the prospects of Nicaraguan economy. They skim over the strategic failure of Nicaragua’s right wing political opposition derived from the self-evident reality that capitalist free markets exclude the impoverished majority. For the moment, Nicaragua’s business classes are following the money and supporting the Sandinista government’s successful program of inclusive domestic economic democratization, more diverse overseas trade and sustained investment in infrastructure of every kind. Cruz's arguments are essentially a lame apology for the policies that destroyed Nicaragua’s economy for 17 years until Daniel Ortega took office for a second time in January 2007 and turned the country around. Now, along with its ALBA partner Bolivia, Nicaragua is consistently among the best performing economies in Latin America.


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