Nicaragua: From 2007 to 2018, Daniel Ortega Had the Support of the IMF and Conducted Policies Favourable to Big National and International Capital

Part 5

5 November by Eric Toussaint


Demonstration against the Ortega government in Managua on 28 April 2018

The principal detonator of the protests that began in April 2018 in Nicaragua was the imposition by Daniel Ortega’s government of neoliberal measures that impacted social protection, and in particular retirements. These measures were the result of pressure from the IMF, with which Daniel Ortega has maintained excellent relations since his return to the presidency of the country in 2007. As a matter of fact the IMF congratulated his government for its achievements in a statement published in Februrary 2018 : “Economic performance in 2017 was above expectations and the 2018 outlook is favorable (…). [IMF] Staff recommends that the INSS reform plan secures [sic] its long-term viability and corrects [sic] the inequities within the system. Staff welcomes the authorities’ efforts to alleviate INSS’ financing needs [...]” [1]

The Left is divided when it comes to assessing the policies of the Ortega government from 2007 to today and determining the attitude that should be adopted towards the social protests and the regime’s repression.

A segment of the Left feels that the Ortega government is a progressive government that has conducted policies that benefit the popular sectors in a difficult international context, despite certain errors. That part of the Left considers that the major capitalist powers, starting with Washington, and their allies in the region are largely responsible for the destabilisation of the situation in this Central-American country of nearly seven million and that a dominant sector of the movement is directed and/or manipulated by the reactionary Right. They recognize that repression exists, but consider suspect or false all the reports claiming that the country’s authorities are largely responsible for the hundreds of deaths that have resulted from the dramatic events that have impacted the population.

Some have claimed that mercenaries who destabilized the Maduro regime in Venezuela were sent to Nicaragua to perpetrate their criminal activities following a script that has been perfected by Washington and its lackeys. That being the case, they say, an overthrow of the Ortega government should be avoided. That is also more or less the position of some of the Latin American Left-wing parties who make up the Forum of São Paulo, which met in July of 2018 in Havana and adopted a resolution in support of the Ortega government. [2]

According to Ortega and his supporters / those who defend him [defenders], the protest movement constitutes an attempted coup and participants in the movement are either accomplices of the putschists and terrorists or themselves terrorists and putschists.

The arguments I outlined above are not corroborated by the facts. Ortega and his advocates have not managed to demonstrate that there is in fact an attempt at a coup d’état. The overwhelming majority of demonstrators do not use terrorist methods. Ortega has not succeeded in exhibiting a single foreign mercenary. Moreover in an attempted coup, a sector of the army usually takes part in the plot against the sitting government. But Ortega has never pointed to any putschist sector within the army. By all appearances, the army has remained loyal to the regime in place – at least until now.

According to several intellectuals of the Left, one should avoid denouncing the Nicaraguan government; at most it can be criticized for certain serious errors. Leftist intellectuals who vindicate the Ortega government refuse to analyze the class content of the policies it has applied since 2007. They avoid the issue of how pleased the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
, the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, big capital and the major capitalist economic powers are with the measures taken by Daniel Ortega. And yet generally, they don’t hesitate to denounce other governments for their complicity with the international financial institutions, with the major capitalist powers – starting with the United States – and with big national and international capital.

In this article, we shall explain the ways in which the policies of Daniel Ortega and those who govern with him are favourable to big capital, institutions like the IMF and the other international financial institutions (IFIs) – the World Bank, the Inter-American Development Bank (IADB) etc. We shall also see how these polices reinforce the debt system and the extractivist-export-oriented model, which is based on exploitation of small producers – be they labourers, artisans or peasants – and on the abandonment of sovereignty over the country’s natural wealth and over a part of its territory. And don’t forget that Daniel Ortega’s government has introduced radically regressive measures against abortion. In a future article we will again discuss the chronology of the protest movement that began in April 2018 and how the systematic repression organized by the Ortega government reached dramatic proportions within six months.

We shall also explain why the government’s policies, which seemed to have had positive economic results in terms of growth, had been in a crisis before the events that began in April 2018.


The model Daniel Ortega applied before resorting to massive repression

In 11 years the government of Daniel Ortega has conducted no structural reforms whatsoever, despite the fact that it has a comfortable majority in the National Assembly – no nationalization of the banks, no new agrarian reform, whereas land ownership is greatly concentrated in the hands of large landowners, no urban reform favourable to the working classes, no tax reform favourable to increasing social justice; the regime of free zones has been extended (more than 100,000 people work in these zones under conditions of particularly stark exploitation), there has been continued recourse to external and internal public debt that is favourable to creditors thanks to the interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. they collect and the influence it gives them as lenders for applying policies that benefit them, continued repression against women who seek abortion, adoption of a fundamentalist, obscurantist religious discourse, and more. Nicaragua remains a country known for its very low wages. The official agency for promoting the country to investors, ProNicaragua, proudly states on its Web site that the minimum wage is “the most competitive in the region,” making Nicaragua an ideal country for setting up labour-intensive operations. Precarious labour conditions have / The precarity of the workforce has / greatly increased; whereas the informal economy accounted to 60% of jobs in 2009, that percentage rose to 80% in 2017.

Despite economic conditions that have been particularly favourable, no progress has been made in reducing social inequalities, and the number of multimillionaires in the country has increased. This clearly means that the increase in wealth produced over a period of eleven years has not been distributed to the popular sectors since big capital, nationally and internationally and with the complicity of the government, has grabbed the lion’s share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. . What’s more, Daniel Ortega and his entourage, in particular members of his family, have gotten rich.


2007 – 2016: Favourable economic conditions internationally have benefited the Ortega government

Since his return to the presidency of the country in 2007 and until late 2016, Daniel Ortega had the benefit of favourable economic conditions, one of whose expressions is the annual growth rate of the GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
, which was in the neighbourhood of 4%. It allowed him to conduct two types of policies in parallel: Developing the entente with international and national big capital, on the one hand; and at the same time, developing and maintaining certain “assistance-oriented” “social” programmes that afforded his government a certain degree of popular support.

The economic picture was favourable to Ortega’s policies because 1. the prices of raw materials exported by Nicaragua remained high, 2. the level of foreign investments was high thanks to the gifts the government was handing out, 3. the level of funds sent home by Nicaraguans living abroad was also high and 4. interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
for refinancing debt were historically low internationally. Added to these are two other favourable factors: 1. very strong financial and commercial support from the Venezuelan government – approximately 500 million dollars per year – from which the capitalist export sector benefited, for example with exports of meat to Venezuela and 2. the maintenance of very good relations with the IMF due to the Ortega government’s promise to continue making neoliberal structural reforms and maintain strict budgetary discipline (meaning of course reduced public expenditures). [3]

All this was formulated in IMF and World Bank Newspeak: the neoliberal structural reforms were carried out under cover of the struggle to reduce poverty. In the dialect of the Daniel Ortega government, it reads “Nicaragua: Christian, Socialist and In Solidarity.”

The social programmes developed during the presidency of Daniel Ortega are called: Hambre Cero (Zero Hunger), Plan Techo (installation of zinc roofs that stand up to tropical rains), Usura Cero (a micro-credit programme), Merienda Escolar (meals for schoolchildren), Bono Productivo (credit granted for the most part to poor women in rural areas), Bono Solidario (solidarity bonus for low-income workers), and Casas para el Pueblo (Houses for the People). [4]

Note that these programmes are fully compatible with the policies supported by the IMF and the World Bank. To a certain extent, they even coincide. For as long as the government of a country continues opening it up to foreign investments, facilitates flexibility of the labour market (meaning layoffs and increasingly precarious work contracts), signs free-trade treaties, increases privatizations of companies and publics services, and so on, according to the IMF and the World Bank it can and must develop measures to accompany and support the poorest citizens. [5] The IMF and the World Bank will congratulate such a government. The two institutions also insist on “actively involving the poor in solving the problems affecting them” – a phrase the governments then repeat. We are fully familiar with this type of discourse, which is applied both in the North and the South of the planet. Government leaders must help the poor find solutions to “their” problems. Unemployed persons must be helped to find a job by “enabling” them. The only structural solutions that are mentioned consist in increasing worker flexibility and fundamental training for jobless persons. The structural causes of poverty and unemployment are never actually confronted, since that would be in complete contradiction with the real motives of institutions like the World Bank and the IMF. The poor must be helped to take charge of their situation by granting them aid that is targeted and often conditioned, and easily used within a patronage system (where the poor receive aid if they support the party in power or the sitting government).


The legitimisation of public debt and the continuation of budgetary policies in conformity with IMF requirements

When Daniel Ortega was elected to the presidency in 2007, with 38% of the vote, [6] the program then in force between the Rightist government and the IMF had come to an end. In addition, in 2006-2007, Nicaragua was granted a significant debt reduction by multilateral creditors as part of the initiative for Heavily Indebted Poor Countries Heavily Indebted Poor Countries
HIPC
In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia.
(HIPC). Concretely, the IMF cancelled 206 million in debts in 2006. The World Bank and the Inter-American Development Bank (IABD) also cancelled Nicaraguan debts in 2007 during the first year of Daniel Ortega’s term.

It was in this very specific context that Daniel Ortega wanted to convince the IMF to embark on a new programme, at a time when the Washington institution saw no need for it since it considered Nicaragua’s debt to be bearable. Ortega’s government insisted on a new program on the grounds that it would reassure the foreign investors it wanted to attract.

The IMF finally accepted, but demanded as guarantee that the Nicaraguan government extend the neoliberal reforms that had been underway for 17 years (1990-2007) and apply fiscal austerity in order to achieve a primary budget surplus. Concretely, the IMF lent Nicaragua approximately 120 million dollars between 2007 and 2011 – that is, 78 million Special Drawing Rights (SDRs – for an understanding of what SDRs are, see: https://www.imf.org/fr/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Rights-SDR, and for the evolution in US dollar-SDR parity, see http://www.imf.org/external/np/fin/data/rms_sdrv.aspx). The value of a SDR fluctuates at around 1.50 USD. Regarding repayment, Nicaragua paid the IMF approximately 145 million dollars between 2011 and 2018 (see the table, in SDRs, of FMI payments and repayments made by Nicaragua here: http://www.imf.org/external/np/fin/tad/extrans1.aspx?memberKey1=720&endDate=2099%2D12%2D31&finposition_flag=YES).

We should add that in 2009, the IMF lent the government of Nicaragua a very large amount of money to help it face the international economic recession caused by the major banking crisis that began in the US in 2007-2008. That shows the extent of the IMF’s support for the government of Nicaragua through and beyond April 2018.

Note that Nicaragua must still repay part of the capital and interest in the future. The amount of Nicaragua’s debt to the IMF stood at 207 million dollars in the first quarter of 2018.

Conclusions: 1. Whereas Ortega’s government could have done without new IMF credits since the preceding program had ended and the IMF had cancelled 206 million in debts, it sought a new agreement anyway. That shows clearly that Ortega was willing to continue the neoliberal policies recommended by the Fund in the service of big capital and the major powers, the USA and European Union first among them. Beginning in 2007, with the new program, the IMF has made great political gains at the expense of the Nicaraguan people, for a fundamental reason: it can dictate policies that favour big private capital and the interests of the countries who direct the institution. As for the government who enters into an agreement with the IMF, it is provided financing and can put responsibility for the unpopular measures it takes on the IMF. [7]

2. Daniel Ortega and his government have refused to take the path taken during the same period in Ecuador by the government of Rafael Correa, who was also elected in late 2006 and whose term of office began at the same time as Ortega’s. Rafael Correa and his government created a commission to conduct a complete audit of the debt then being demanded of Ecuador. This commission was made up mainly of delegates from the social movements. Based on the work of the audit commission, in November 2008 Ecuador’s government unilaterally suspended repayment of a portion of the debt that had been identified as illegitimate and illegal, and in so doing won a victory over the creditors by greatly reducing the debt. [8] Daniel Ortega chose to take another path. He refused to challenge the legitimacy of the debt contracted by earlier governments, and refused to associate social movements in an audit of the debt. He adopted an attitude of complicity with the creditors.

From the start, criticism of this policy was expressed by the social movements, who demanded the abandonment of neoliberal policies and wage increases in sectors that had been excluded (for example health and education; there were many others). Between 2006 and 2012 the CADTM published on its Web site, in Spanish, several articles by the Nicaraguan economist Adolfo Acevedo Vogl, former advisor to the Sandinista Minister Henry Ruiz during the 1980s, and who was a close ally of the social movements. [9] Starting in late 2006, a few days before Daniel Ortega took office, Vogl stated clearly that accepting the demands of the IMF would have disastrous consequences, because the government would be required to achieve a permanent primary budget surplus in order to repay the debt. That would make it very difficult to make the needed wage adjustments, and increases in social spending would be all but impossible within the fiscal constraints imposed. The IMF also demanded cuts in the budget for higher education. Municipal budgets would also lose a great deal of their autonomy. [10]

The social-protection system would be undermined. In fact, from the start, the IMF constantly insisted on a counter-reform of the social system, and in particular the retirement system. The implementation of this policy demanded by the IMF was one of the main components of the social rebellion that broke out in Nicaragua beginning 18 April 2018. This was no accident, nor was it the result of a poor decision made by the Daniel Ortega government; it was the continuation and extension of the policies the same government had been conducting since 2007.


Daniel Ortega’s government increased the number of free trade agreements

The free trade agreement with the United States was adopted in 2005. Although the SNLF’s parliamentary group voted against ratifying it in October 2005 when they were in the opposition,* several dissident Sandinistas like Monica Baltodano criticized the SNLF under Ortega for having put the agreement’s ratification on the agenda of the National Assembly. Indeed, at the time René Nuñez Telléz, MP for the SNLF, was Speaker of the National Assembly and had a direct influence on its agenda. Monica Baltodano also blames Daniel Ortega for then having voted in favour of laws enabling its implementation. On 1st November 2006 she wrote, http://www.rebelion.org/noticia.php?id=40447: “Worse still, the laws which enabled the implementation of the CAFTA were only passed thanks to the votes of 36 MPs of the SNLF, as the liberal MPs of Alemán’s CLP (in conflict with President Bolaños) voted against”. Bernard Duterme wrote: "(On the eve of the 2006 elections,) Daniel Ortega once again made numerous gestures of goodwill Goodwill The difference between the assets on a company’s balance-sheet and the sum of its tangible and intangible assets. When one company takes control of another company, the acquiring company generally pays a price that is higher than the value of the net assets. Goodwill generally consists of intangible elements, such as brands, which are evaluated subjectively. in the direction of major Nicaraguan employers, the International Monetary Fund and the United States. He was bent on reassuring them about the “reasonable” nature of his forthcoming policies, and guaranteeing – in contradiction with the public discourse of Sandinista organizations and trade unions – that the commitments made by his predecessors would be honoured, especially regarding the liberalization of markets” (Bernard Duterme, Toujours sandiniste, le Nicaragua ? (Is Nicaragua still Sandinista?) - CETRI, Centre Tricontinental, 2017, https://www.cetri.be/Toujours-sandiniste-le-Nicaragua-4475). Once in power in 2007 Daniel Ortega’s government made no attempt to abrogate the free trade agreement with the US superpower. It was yet another u-turn in the orientations of the SNLF – previously, he had accused President Enrique Bolaños’s government of delivering Nicaragua up to the economic interests of Washington. Other free trade agreements have been approved with the support of the SNLF: one with Taiwan (implemented in 2008), one concerning Central America and Mexico (2011) and another between Central America and the European Union (2012).


Daniel Ortega opened up Nicaragua even more to the interests of foreign companies

In the areas of agro-business, the mining industries and fisheries, Daniel Ortega’s government has increased the exploitation of the country’s natural resources by big transnational capital, following on from his predecessors (see the article: http://www.cadtm.org/Nicaragua-The-evolution-of-the-regime-of-President-Daniel-Ortega-since-2007). In August 2018, it granted a new concession to the company B2Gold, whose headquarters is in Canada. The company, that was already active in Nicaragua (http://www.b2gold.com/projects/nicaragua/ ), was attributed a new concession over a surface of 18 000 hectares, with direct repercussions on the living conditions of a dozen communities. [11]

Under Daniel Ortega’s presidency, there has been an increase in the privatization of the energy sector and thus of Nicaraguan natural resources, to the profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. of multinationals, especially those in which Ortega holds investments.


The interoceanic canal

This two-century-old project that has been getting considerable attention since the end of the 19th century was reactivated by Daniel Ortega’s government. On 14th June 2013, Nicaragua’s National Assembly approved by 61 votes against 28 a law granting a concession for a period of fifty years, renewable, to the Chinese consortium HKDN Nicaragua Canal Development.

Nicaragua’s Great Interoceanic Canal is undoubtedly the most gigantic construction project to have seen the light of day in Central America in recent times.

In red the projected route of the interoceanic canal

This megaproject was combined with older projects such as the Plan Puebla Panama, now renamed the Plan Mesoamérica. The idea was to prepare and optimize the region’s adaptation to economic partnerships with the United States or the European Union. [12]

It turns out that no less than fifteen companies— registered in Beijing, Hong Kong, the Netherlands, the Cayman Islands and Nicaragua – were associated with the canal construction project. Finally, the project was abandoned in 2017. The official explanation was that the private Chinese investor who had obtained the concession for a century and who had promised to invest 50 billion dollars in the project had gone bankrupt. A complementary or alternative explanation is plausible. The Chinese authorities used the prospect of the construction of the interoceanic canal via Nicaragua as a means of pressuring the Panama government into giving them concessions. [13] They had their way: Panama accepted the conditions of the Chinese who were then able to withdraw their (non official) support from the private Hong Kong company, HKDN Nicaragua Canal Development.

Even though the megaproject was abandoned when the Chinese pulled out, there are already related projects (especially single-crop development and tourist facilities amid tremendous property speculation) which threaten the farmers and communities living alongside the canal itinerary. The damage is done. The sharp increase in property speculation has led to attacks on the rights and living conditions of the populations concerned, still mainly indigenous peoples who get their living from the land and the water.


Reactions when the project was abandoned

On 11 August 2013, the lawyer Mónica López Baltodano (daughter of the former guerrilla commandante Monica Baltodano and Julio Lopez Campos, former Sandinista leader), announced that she was going to file an appeal contesting the constitutionality of the concession of Nicaragua’s interoceanic canal. The appeal was filed in direct relation with the movements that had protested against the megaproject. Baltodano declared:

“Dear Citizens of Nicaragua,
My name is Mónica López Baltodano, I am 29 years old. I am a barrister and a solicitor, I hold a Master’s degree in Political Science and I am an expert on climate change. I have studied in detail every known legal instrument on the concession of the interoceanic canal by Nicaragua. It is on this basis that on Monday 12 August (at 11 a.m.) in my capacity as a citizen, I shall file an appeal contesting its constitutionality against the President of the Republic, Daniel Ortega Saavedra, and against the National Assembly, for having approved the Law 840 and the framework agreement relating to the concession of the canal. This legal action not only makes reference to Law 804 (and its 25 articles), but also scrutinizes the details of the clauses that constitute the 120 pages of provisions of the framework convention and accompanying documents. It is a full appeal from the point of view of its legal analysis. It covers 103 pages in which I expose in detail the violations of more than 40 articles of the Constitution and I analyze with particular attention unlawful activities connected to the administration of natural resources which constitute our national heritage, and management of the environment.”

Monica Baltodano summarized some of the reasons for this appeal: "

  1. The concession of the canal must be analyzed in the light of the clauses of the framework agreement. In the appeal, we expose how these clauses do not comply with the laws of the Republic, even though Law 840 mentions legal provisions from that body of law 56 times. The agreement was then underwritten by civil servants with no legal authority in order to prevent knowledge of it from reaching Nicaragua’s citizens or the rest of its civil servants.
  2. The framework agreement stipulates that constitutional reform be carried out within 18 months in order to legalize its provisions, with a view to adapting our Magna Carta to the commercial interests of big capital.
  3. All documents in English or unknown to the public (such as the Act of Cooperation, the share-holders’ pact or the statutes of the HKND) are to be part of the canal concession. I clearly contest them as they are unconstitutional.
  4. According to the Constitution and to Nicaraguan law and jurisprudence, this law must be declared unconstitutional as it was passed without the requisite concertation with trade unions, associations, collectives or people’s organizations. Only ten members of a professional association (AMCHAM and COSEP) were consulted. And there was gender discrimination: no woman was consulted.” [14]

In 2014, the economist Adolfo Acevedo Vogl declared to the press: “One might wonder why, in the concession agreement made with HKND, there was both a mechanism of accelerated expropriation with no right to recourse, and a method of assessing the value of the land for compensation – based on land registry value-; and what is going to happen about the great area of Nicaraguan land that will be handed over to the concessionary company?” [15]

Indeed, in the case of the Chinese concessionary, as stated by this economist, “the compensations granted were not only tiny, but totally inadequate to enable the evicted people to maintain a standard of living comparable to what they had been used to. They had the security of being allowed to use their plot of land to survive. From available information, it appears that only a small fraction of the funds destined for compensation was actually given to the evicted people.”

“The millions of hectares thus obtained were then sold to property speculators at prices several times, even hundreds of times, higher than he amounts paid out in compensation.”


Environmental hazards

In the Nicaraguan daily El Confidencial on 8 July 2016, Salvador Monténégro (a member of the Nicaraguan Academy of Science) commented on the social and environmental impact report of the Nicaraguan canal, a report produced by Environmental Resources Management for the Chinese concessionary HKND ( http://hknd-group.com/ ), which had been published in November 2015.

Detail of the dredging project necessary for the construction of the canal

The documents that are still accessible show the design that the HKND consortium has conceived for the construction of this project worthy of the Pharaohs, including the excavation of a trench through the bed of the Great Lake of Nicaragua (Cocibolca). The proposed trench to be dredged will stretch some 105 kilometers (65 miles) – from the mouth of the Tule river across to the Las Lajas river – with a depth of some 30 meters and a width that varies from 300 to 500 meters, some 3-5 city blocks.

The franchise agency declares proudly: “The project would include the greatest earth-moving operation in history, since it would require the excavation of approximately 5 billion cubic meters of material (p. 104 vol. 1). As part of this, it assures us that it will excavate some 750 million cubic meters (about 18 million mining trucks, each carrying 40 tons full of rocks, sand and mud) from the bottom of Cocibolca to allow passage of the largest shipping vessels in the world, much larger than those that can currently pass through the widened Panama Canal.
The technical difficulties and environmental and social impacts that this initiative, protected under Law #840, would bring to the territory around Rivas and to the Caribbean have prompted a justifiable clamor of denunciation among the affected populations. However, besides this, the possible consequences for Lake Cocibolca, Nicaragua’s most important natural resource, warrant an objective examination of HKND’s expectations regarding the weakest and most vulnerable link in the project’s engineering.

These paragraphs then, refer solely to HKND’s absurd proposal for the disposition of the material to be dredged from the bottom of Cocibolca. I’d like to focus interest and public attention on our foreknowledge of the grave environmental, social and economic risks that such bad engineering could have on the national interests, causing irreversible damages. [16]


The mobilizations against the canal project

The peasants’ anti-canal movement, organized through the National Council for the Defence of the Lands, Lakes and the Sovereignty, was created in reaction to the call of the peasants in the regions where it is projected that the canal will pass through. Their lands will be expropriated and they have been promised compensation / an indemnity at land registry values. The tension and anger was aggravated by the arrival in the areas of Chinese surveyors. The peasants started to organize and to study the details of the concession with the help of organizations such as Monica Baltodano’s Popol Na and others. Monica Baltodano’s daughter, a jurist, has accepted to advise the National Council for the Defence of the Lands, Lakes and the Sovereignty. The leader of the movement from the beginning is Mme Francisca Ramirez (Mme Chica), who has organized over 100 marches demanding the abolition of the concession (law 440).The degree of organization and awareness in the movement that is principally made up of an indigenous peasant population grew and spread from the defence of their lands, which is sacred for peasants, to the lake, which is essential for them and for national sovereignty.

Francisca Ramirez, leader of the anti-canal movement

Before the events of 2018 tens of thousands of peasants took part in these marches that were prevented, by police and army repression, from entering Managua. They were victims of harassment, persecutions and repression in their home areas that have only produced greater cohesion in the movement. Until April 2018 it was the biggest, best organized and most coherent of social movements. It was also the most repressed.

The movement established statutes that limited mandates on the coordination council to one term only. Although Dona Chica retained her moral leadership because of the role she had played, Medardo Mairena, another prominent person, was elected as the movement’s main spokesperson.

Medardo Mairena, leader of the anti-canal movement


Convergence between the popular movement against the canal and the April 2018 movement

When demonstrations exploded in the cities, in reaction to the indignation caused by the killing of students in April 2018, the indigenous peasants’ movement against the canal announced their solidarity and took part in the first national marches.

When the government wanted to resume the dialogue with the corporation through the mediation of the Episcopalian Conference the movements brought to attention that the protesters were not represented in the discussions, and in any case, all the interested parties should be represented. The Bishops’ Conference then chose representatives from different sectors including the students. Although there was nation-wide pressure to include Dona Chica to represent the peasant movement Medardo, as council coordinator, was chosen.

When the regime stepped up the repression during May and June the populations of Masaya and other towns erected barricades. The peasant movement - led by Medardo and Dona Chica, who joined the Articulation of Social Movements - called for the erection of barricades on the main highways leading to their regions. Other towns and villages followed the example. The peasant movement thus became a principal element of this struggle, of which, Medardo and Dona Chica have become the symbols.

Medardo Mairena, after his arrest and accusation of terrorism


Conclusion

From its beginnings in 2007, the Ortega government has favoured the interests of capital — Nicaraguan as well as foreign capital. It had the support of the IMF, the World Bank and other financial institutions that are dominated by imperialist powers. In no way did the government’s social policies change the nature of the capitalist system. In fact, they helped to further the neoliberal agenda while at the same time developing clientelism between the ”poor” and the political parties in power.

After 11 years of apparent success and stability, the system went into open crisis when the population began protesting against new measures concerning retirement pensions. The students’ protests in mid-April 2018 echoed the pensioners’ and spread to other movements, including the movement of opposition to the inter-ocean canal. The extremely violent campaign of repression launched by the Ortega government against these movements has caused widespread reactions at all levels of society and even the employers’ organizations have distanced themselves from the regime.

Those on the left who continue to support Daniel Ortega refuse a class analysis of the foundations of the government’s policies. They also refuse to denounce the many Human Rights violations committed by the brutal Ortega regime. There is a fundamental need to denounce the repression of the social movements. Of course, all interference by the United States or other foreign powers in Nicaraguan internal affairs must be opposed.

National Indigenous Congress - San Cristóbal de las Casas, Chiapas (14 Octobre 2018) with Francisca Ramirez on the tribune at the far left of the photo.

“Marichuy” María de Jesús Patricio Martínez (leader of the National Indigenous Congress -CNI-, pre-candidate for the presidency of Mexico in 2018 with the support of the Zapatistas of the EZLN) and Francisca Ramirez (delegation of Nicaraguan social movements) in October 2018 in Chiapas.


Translated by Snake Arbusto, Mike Krolikowski, Vicki Briault and Chistine Pagnoulle


See others parts:
1- Nicaragua: the story of the Daniel Ortega-Rosario Murillo regime
2- Nicaragua: The evolution of the regime of President Daniel Ortega since 2007
3 - A Brief History of the Relations between the World Bank, the IMF, the US Government and Nicaragua



Footnotes

[1Nicaragua: Staff Concluding Statement of an IMF Staff Visit, 6 February 2018, http://www.imf.org/en/News/Articles/2018/02/06/ms020618-nicaragua-staff-concluding-statement-of-an-imf-staff-visit

[2Maurice Lemoine, “La voix dissonante du Forum de São Paulo” - Mémoire des luttes, 27 July 2018, http://www.medelu.org/La-voix-dissonante-du-Forum-de-Sao (in French) http://www.medelu.org/La-voix-dissonante-du-Forum-de-Sao. From the official site of the Sao Paulo Forum, the Spanish text of the Final Declaration: http://forodesaopaulo.org/declaracion-final-del-xxiv-encuentro-del-foro-de-sao-paulo-15-al-17-de-julio-de-2018/ with this paragraph on Nicaragua: “Rechazamos de forma enérgica la política intervencionista de los Estados Unidos en los asuntos internos de la Nicaragua sandinista, país en el que se está implementando la fórmula que viene siendo aplicada por el imperialismo norteamericano a los países que no responden a sus intereses hegemónicos, causando violencia, destrucción y muerte mediante la manipulación y la acción desestabilizadora de los grupos terroristas de la derecha golpista, que boicotean la búsqueda del diálogo, el cual constituye el mejor camino para superar la actual crisis y alcanzar la paz, lo que es indispensable para la continuación del proceso de transformaciones sociales impulsado por el FSLN desde el gobierno presidido por el Comandante Daniel Ortega y que ha reducido de manera notable la pobreza y la desigualdad social en ese hermano país.”
English translation: “[We] strongly reject the interventionist policy of the United States in the internal affairs of Sandinista Nicaragua, a country that is implementing the same formula used by US imperialism in countries that do not respond to its hegemonic interests, causing violence, destruction, and death through the manipulation and destabilizing action of terrorist coupist Right groups, which boycott the pursuit for dialogue that constitutes the best way to overcome the current crisis and achieve peace, which is essential for the continuation of the process of social transformations promoted by the FSLN of the government headed by Commander Daniel Ortega, which has significantly reduced poverty and social inequality in this fellow country.” See a critique of the position of the Sao Paulo Forum (in Spanish) https://correspondenciadeprensa.com/2018/08/20/nicaragua-la-canallada-del-foro-de-san-pablo/
If you read French, see Ernesto Herrera, “L’infamie nicaraguayenne du Forum de Sao Paulo”, Inprecor no. 655/656, September-October 2018, p. 6-8.

[3IMF Press Release: Statement by Anoop Singh, Director of the IMF’s Western Hemisphere Department, in Nicaragua, 20 December 2006, http://www.imf.org/en/News/Articles/2015/09/14/01/49/pr06292

[4I use the list drawn up by Maurice Lemoine, who stresses the positive sides of these programmes in the article: Maurice Lemoine, “Le Nicaragua sous dictature… du double standard et du copier-coller” – published 29 November 2016 on the site Mémoire des luttes, http://www.medelu.org/Le-Nicaragua-sous-dictature-du (in French).

[5The Letter of Intent sent by the government of Daniel Ortega to the IMF in August 2007 reads: “The government has developed a new approach to social policy. This approach encompasses: (i) providing capital to the poor to help them realize their potential as producers, and so moving beyond the previous approach that was more assistance oriented; (ii) implementing policies on free access to and direct subsidies for the main services provided by the government to the most vulnerable sectors; (iii) promoting financial mechanisms and instruments that favor small producers in rural areas; (iv) aligning external cooperation toward priority sectors, and reducing the fragmentation of external support; (v) formulating programs and projects that ensure that the MDGs are met; and (vi) actively involving the poor in solving the problems affecting them.” in Nicaragua: Letter of Intent, Memorandum of Financial and Economic Policies, Technical Memorandum of Understanding, August 24, 2007 - 082407.pdf http://www.imf.org/external/np/loi/2007/nic/082407.pdf

[6We should recall that Daniel Ortega had struck an agreement with the neoliberal Right leader Arnaldo Aleman which led in 2000 to the amendment of an article of the constitution of 1995. The amendment allowed a presidential candidate who led the polls and obtained more than 35% of the vote in the first election round to be declared winner without a second round if he or she led the closest other candidate by 5%. In 2006, Daniel Ortega was able to win the presidency with 38% of the vote because he had a lead of 9% over his closest rival. The latter had won 29% of the vote.
And that in exchange for Aleman’s support for the 2000 amendment of the constitution, a few years later Ortega granted him an “amnesty” from a 20-year prison sentence for corruption.

[7The OECD has published a manual intended for governments who wish to conduct anti-popular policies in which the author recommends that the countries justify their actions to the people by claiming that the IMF has forced them to apply the measures. The OECD adds that the government can say that the IMF demanded even harsher measures and they negotiated and succeeded in having them made less harsh. In short, recommendations for forcing the bitter pill of austerity down. See Éric Toussaint, “Comment appliquer des politiques antipopulaires d’austérité”, http://www.cadtm.org/Comment-appliquer-des-politiques (in French)

[8“The Ecuador debt audit, a seven minute summary” (video) http://www.cadtm.org/Video-The-Ecuador-debt-audit-a
Eric Toussaint , Benjamin Lemoine, “From Dashed Hopes to Success in Ecuador: the examples of South Africa, Brazil, Paraguay and Ecuador” http://www.cadtm.org/From-Dashed-Hopes-to-Success-in

[9Adolfo Acevedo Vogl, Cuales son les principales exigencias del FMI ?, 21 December 2006, http://www.cadtm.org/CUALES-SON-LAS-PRINCIPALES

Adolfo Acevedo Vogl, 7 February 2008, LA APROBACION DEL PRESUPUESTO : UN POSICIONAMIENTO Y UNA PROPUESTA. SE APUNTA USTED A RESPALDARLA ??? http://www.cadtm.org/LA-APROBACION-DEL-PRESUPUESTO-UN

Adolfo Acevedo Vogl, Nicaragua : La Carta de Intencion al FMI y la « sobre- recaudacion » fiscal. Una propuesta ciudadana. 20 septembre 2008, http://www.cadtm.org/Nicaragua-La-Carta-de-Intencion-al

Adolfo Acevedo Vogl, Nicaragua : el «congelamiento» del salario real de los maestros, 19 novembre 2009, http://www.cadtm.org/Nicaragua-el-congelamiento-del

Adolfo Acevedo Vogl, ¿Usted sabe cuál será el impacto en la población de lo acordado por el gobierno nicaragüense con el FMI?, 10 décembre 2010, http://www.cadtm.org/Usted-sabe-cual-sera-el-impacto-en

Adolfo Acevedo Vogl, Nicaragua : ¿Porque es necesario transformar el sistema tributario?, 1 novembre 2012, http://www.cadtm.org/Porque-es-necesario-transformar-el

[10All of this is set down in detail in one of the articles mentioned above, published 21 December 2006: “Adolfo Acevedo Vogl, Cuales son les principales exigencias del FMI ?”, http://www.cadtm.org/CUALES-SON-LAS-PRINCIPALES

[12Hélène Roux, Adolfo Acevedo, “L’Amérique centrale à l’épreuve perpétuelle de sa géographie”, (Central America perpetually at the mercy of its geography), Revue Outre-Terre 2015/2 (N° 43), in French only : https://www.cairn.info/resume.php?download=1&ID_ARTICLE=OUTE1_043_0393

[13Oscar René Vargas, Les nouvelles « routes de la soie » chinoises, le Panama et l’Amérique latine, (Panama and Latin America : the new Chinese “silk roads” »). In French: http://www.cadtm.org/Les-nouvelles-routes-de-la-soie-chinoises-le-Panama-et-l-Amerique-latine or Spanish: China: La “Ruta de la Seda”, Panama y America latina, http://www.cadtm.org/China-La-Ruta-de-la-Seda-Panama-y-America-latina

[14Mónica López Baltodano, Canal Interoceánico: 25 verdades, 40 violaciones a la Constitución, Revista Envío, January 2014, http://www.envio.org.ni/articulo/4805 (English version: Truths about the canal concession all Nicaraguans should know).

[15Adolfo Acevedo Vogl, “Modelo” chino en confiscación canalera - Nicaragua Hoy, 22 October 2014, https://www.nicaraguahoy.info/modelo-chino-en-confiscacion-canalera/

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

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