Nicaragua Economy Worse After Chamorro’s 1st Year

When Dagoberto Perez landed a job sketching performance charts for the new Sandinista government’s Construction Ministry in 1980, most of the lines he drew pointed upward.

Soon came the Contra war and the hard times, but on his $200-a-month salary, Perez still managed to buy a truck while supporting his growing family in a squatter shack. Then, a year ago, he hitched his dream of a decent home to Violeta Barrios de Chamorro’s election and her promise that peace, democracy and aid from the West would reverse the revolution’s slide into poverty.

Today, the 45-year-old father of four is out of work and out of hope, a victim of national sacrifice that has yet to pay off.

“Everything is going downhill like a car without brakes,” Perez said bitterly, plying his empty pickup in search of odd delivery jobs. “A year without war, a year without a huge army to maintain, a year of great friendship with the United States--what good has it brought us?”

Many Nicaraguans are asking the same question. Since President Chamorro ended its bloodiest conflict, Nicaragua is a freer, more civil place. Yet by every economic measure, its 3.8 million people are worse off than they were on the day of her inauguration last April 25.

The gross national product shrank by 5.7% in 1990, while inflation, defying the new government’s pledge to tame it within 100 days, hit 13,500%. Both indicators represent backsliding from the dismal record of Sandinista President Daniel Ortega’s last year in office.

Thousands of Contras and Sandinista soldiers came home from battle to swell an army of unemployed now embracing nearly half the work force. A chaotic scramble for choice farmland has sparked bloody property feuds that contributed last year to a 25% drop in cultivated acreage, a severe blow to Nicaragua’s agrarian-based economy.

Visiting exiles cruise the streets of Managua in gleaming new vehicles, pondering whether to return for good. But Sandinista-led labor unrest and resistance to the exiles’ attempts to reclaim confiscated property have scared off the productive investment that was expected en masse with the change of regimes.

At the other extreme of a widening income gap are the 70% of Nicaraguans who, according to a U.N.-financed study, live in poverty. They have lost price subsidies for basic foods such as rice, beans and tortillas. The average daily calorie intake has dropped to 1,550, well below the 1,850 that nutrition experts consider adequate.

A measles epidemic claimed 605 young lives last year, and public hospitals ran out of 303 of the 327 types of medicines that international health agencies say every country should have. Budget cutting closed dozens of free clinics.

Like her Sandinista predecessor, Chamorro spends much time traveling to donor countries, hat in hand, trying to scrape through the crisis of the moment. Economic woes will be high on the agenda this week during her first official visit to Washington.

“I imagine they are going to ask, ‘What have you done in this first year?’ and I will say with great pride that I stopped a war, reconciled everyone, gave an amnesty so Nicaraguans can return home and a free press so everyone can say whatever he wants,” Chamorro said in an interview. “I would love to have a wand of virtue and solve (the economic problem), but I don’t. We have to advance little by little.”

Rapping her knuckles on a gray cardboard blotter, the 61-year-old president added: “I’ll keep knocking on the doors of friendly countries to see if they can help.”

Nicaraguans are puzzled, frustrated that their little country, the focus of Cold War rivalry and military largess that nearly destroyed it, has been eclipsed in peacetime by the needs of Eastern Europe and the Persian Gulf. Postwar aid from Japan and the West has not offset what was lost from the Soviet Union, Cuba and other socialist benefactors of the Sandinistas.

“It’s sad and disheartening to see how the international community has forgotten us,” said Foreign Minister Enrique Dreyfus. “If we could get just one half-hour’s worth of what was spent on the Gulf War, our problems would be solved.”

The U.S. Agency for International Development has delivered $195 million of the $541 million the Bush Administration pledged to Nicaragua for 1990 and 1991. Disbursements were held up late last year when the Chamorro team fell behind schedule in devising an economic stabilization plan. The Nicaraguans have pleaded with Washington for more flexibility.

“This is as flexible as it gets,” a U.S. official countered. “Our only conditions are the targets in their own economic plan. I can’t write them a check and say, ‘Here’s the money, go have a good time.’ ”

Chamorro, during her Washington visit, must also overcome political reservations about helping a government in which Sandinistas control the army and can veto any economic plan with labor unrest.

The war-battered Sandinistas left Chamorro a mere $3 million in cash reserves, a $13-billion foreign debt and an economic morass whose depth took months to become fully evident. The state-owned banking system, it turned out, had $50 million in equity but, with 15,000 employees, costs almost as much to operate in a year. Most of the 400-odd state-owned companies are parasitic white elephants.

“As an economics teacher, I designed models for how to destroy an economy in every possible way,” said a Western diplomat. “Well, what we did in class was nothing compared to what happened here. Nobody has any concept yet how much it will take to put it back together--$500 million might be barely enough to keep it afloat.”

Not the least of Chamorro’s obstacles in designing a recovery is the specter of violent, crippling strikes like those staged by Sandinista unions last May and July to resist layoffs, wage cuts and moves to sell off state companies. But patient negotiations with Sandinista leaders have defused the conflict somewhat.

Sandinista leaders, who have discovered capitalism for themselves, agreed recently to accept privatization of banks, foreign trade and profitable state companies--a cornerstone of Chamorro’s economic policy.

Then, last month, after a new round of strikes, Sandinista unions swallowed a sharp reduction in real wages under her long-awaited stabilization plan. The government devalued its new currency, the gold cordoba , by 80%, from $1 to 20 cents, promising to eliminate inflationary deficit spending without further layoffs and to maintain that exchange rate for the rest of this year.

The unions accepted a truce until May 22. “We realized that confrontation hasn’t led to favorable results for either side,” said former Sandinista Planning Minister Alejandro Martinez Cuenca.

Antonio Lacayo, the president’s son-in-law, chief minister and architect of her reconciliation policy, called the agreements with the Sandinistas a solid basis for settling the economy this year so it can grow in 1992.

“We have been criticized for being soft,” Lacayo said in an interview. “But we are implementing the toughest stabilization plan in Central America, and there have been no supermarkets looted, no violent demonstrations in the streets, no deaths, no prisoners.”

The plan won the endorsement of international financial institutions last month. If it stays on track, Lacayo said, Nicaragua can expect enough donations and bridge loans at a 15-nation donors conference in Paris next month to pay its $360 - million debts to the World Bank and Inter-American Development Bank and gain massive project assistance from those lenders by year’s end.

“I have enormous faith that I will get that money,” Chamorro said in the interview, surrounded in her office by images of Pope John Paul II and the Virgin Mary.

Her optimism is unshaken by a partial breakdown of the labor truce. On Sunday, bank workers ended a 25-day strike that threatened to hold up credits for spring planting by announcing that they will return to work today. Sandinista-run universities are on strike to protest budget cutbacks, and crippled Sandinista war veterans seized the state television station one day last week seeking bigger disability pensions.

Faith in the government has been undermined by its inability to enforce the rulings of a five-member board named by Chamorro that has reviewed and overturned nearly 1,000 Sandinista property seizures. No more than 300 of those houses, farms and factories have been physically returned to former owners.

“I get tired of repeating this, but the government has to demonstrate that it can govern,” said Vice President Virgilio Godoy, one of Chamorro’s most outspoken critics. “It has to show that it can resolve the situation once and for all instead of spending six days out of seven at the negotiating table.”

Nicaragua’s biggest hope for recovery is its continuing emotional pull on thousands of exiles to come home and work through the conflicts to get the country back on its feet.

Sergio Boffelli, 33, is one. A former Sandinista, he quit his job as a diplomat and left the country in 1982, disillusioned with the revolution’s course. He settled in Miami and started a family, working as a chauffeur, a security guard and a messenger.

Today, he is sales director of the state television, selling enough advertising to make the station profitable for the first time in a decade. His $1,300 monthly salary and sales commission is half what he earned in Miami, so he’s trying to wean his three children off corn flakes, hot chocolate and other U.S. consumer habits that are too expensive here.

“If I were interested only in material comfort, I’d return to the United States,” he said. “But I came to contribute my grain of sand. Leaving Nicaragua was a mistake. We simply let the Sandinistas do what they wanted, and look what a mess they made. Now it’s going to take everybody’s help to recover what our country had.”