The Nicaraguan Revolution of 1979 remains an inspiration for much of the left. The regime established by the ruling FSLN is held out as a model of “democratic socialism”. But ten years on, the regime is carrying through massive attacks on the working class and poor peasants. Dave Green looks at Nicaragua’s economic disaster and argues for a working class solution to the crisis.
The Sandinista’s government’s austerity package means a serious attack on the living standards of the mass of the population. In its economic plan for 1989, the government has slashed 48 per cent of Nicaragua’s state budget. This means unemployment for around 17 per cent of the public sector workforce, 35,000 out of 210,000 workers. It means cuts in education and health, plus a 40 per cent cut in the budge~ of the Ministry of the Interior. And these cuts in jobs and services follow a steep decline in workers’ living standards since 1981. Over the last eight years, real earnings have, fallen to less than a tenth of their former level and now Nicaraguans face hyper-inflation, estimated at around 12,000 per cent.
In addition to the cuts, the Sandinistas have imposed a virtual moratorium on state investment and have increased indirect taxation. Credit will now be granted only to the heads of capitalist-firms and to those producers who can guarantee repayment to the hanks. Small producers, and in particular, small farmers and peasants, will be hit hardest. The background to these attacks is a severe economic crisis.
Hyper-inflation
Revenue from Nicaragua’s exports has halved since 1981. The large producers who control the land on which the main crops are grown for export have demanded, and received, subsidies from the state amounting to 10% of the country’s gross domestic product. On top of this Nicaragua’s debt to the imperialist banks tops $6.7 billion. The interest payments on this debt alone exceed the value of the nation’s exports. In order to meet these subsidies and payments, and to sustain the cost of the Contra war, the FSLN have resorted to printing money, causing hyper-inflation.
The main portion of the blame must be laid at the door of the principal exploiter of the whole of Latin American-US imperialism. Prior to the 1979 revolution Washington backed Somoza and exerted control over the key sectors of the Nicaraguan economy.
The FSLN’s aim to develop the national economy relatively independently of the US provoked a reaction from the new Reagan administration in the early 1980s. 1981 saw the USA pushing for a financial boycott of Nicaragua, which by 1985 reached the level of an economic blockade. All aid was cancelled, trade was frozen and loans to Nicaragua were vetoed due to US domination in the Inter-American and World Banks.
Not content to rely on economic muscle alone; Reagan also launched the Contra war in 1982, with counter-revolutionary armies established and funded by the CIA. Unable militarily to overthrow the FSLN, the USA aimed to put the Nicaraguan economy under a never increasing strain through the war, exhausting and demoralising the masses and therefore undermining the support for the Sandinista regime. The cost of the war in economic terms has been devastating, exceeding the value of the country’s exports for more than fifteen years. The economy was also dislocated by damage inflicted by Hurricane Joan in 1988.
But the crisis is not simply a result of external aggression and natural disaster. It is rooted in the continued existence of capitalism in Nicaragua. 60% of the economy remains in private hands. Organised in COSEP (The Superior Council of Private Enterprise), the employers have exerted considerable control over the government. They seek to roll back the post-1979 gains of the masses and to undermine the continued expressions of working class and peasant organisation, independence and militancy. In 1979 the FSLN established a junta including leading industrialists and bourgeois figures. Although the formal makeup of the government has altered, the FSLN have always regarded the bourgeoisie as an essential part of the nation and a commitment to the preservation of private property is written into the nation’s 1987 constitution. The bourgeoisie demands the subsidies for wealthy capitalist producers which have fuelled the massive deficits and hyper-inflation.
The bosses take, but put little back. The 60% of the economy in private hands provides the source for only 20% of investment. Vast sums of money are spirited out of the country leading to the removal of $1.7 billion from Nicaragua since 1977. And of the vast subsidies paid to capitalists in 1987, around $500 million resulted in no production whatsoever.
In accommodating to the national bourgeoisie, and to imperialism through the continued re-payment of the national debt, the FSLN have sought to make the working class, poor peasantry and urban poor pay for the economic crisis.
Minister of the Interior Tomas Borge has already admitted that the FSLN has sacrificed the working class in favour of the economy, or to put it more accurately, in favour of the bosses.
The Sandinistas justify these policies as a necessary part or socialist development. Speaking on the recent austerity drive, Borge recently stated,
“The theory of scientific socialism has gone beyond the idea of associating market relations only with capitalism… We could go back to Lenin’s NEP and other historical instances to show that the market and monetary relations are objective conditions.”
The NEP (New Economic Policy) was an attempt by Lenin and the Bolsheviks to re-build the Soviet economy through the limited re-introduction of market mechanisms. But it was never seen as a strategic alternative to planning and state ownership, rather as a short term emergency. The FSLN however sees the continued existence of the capitalist class as essential in Nicaragua for the future. Another difference lies in the fact that the NEP was an experiment within a workers’ state. The Bolshevik Party held political power and Lenins intention was that the party should lead the re-building of soviets and workers’ control. The Sandinistas have deliberately gutted the workers’ committees.
The Sandinista Defence Committees which arose out of mass mobilisations in the course of the revolution have been relegated to a merely consultative role. On top of this the predominance, of government delegates in the committees ensures they act merely as vehicles for the transmission of FSLN policy into the ranks of the workers and peasants. The state in Nicaragua is not under the control of the -working class; private property dominates the economy; the economic policy of the FSLN offloads the capitalist crisis onto the workers themselves. In short, Nicaragua is a capitalist state and no amount of “Leninist” phraseology from Borge and co can alter this fact.
Unity
In essence the austerity drive in Nicaragua is similar to those in progress across the Latin American continent. In response to these attacks, the working class needs unity against imperialism and its local agents. But as an integral part of their alliance with the bourgeoisie, the FSLN has abandoned support for the struggles of the revolutionary masses in Latin America. On the insistence of imperialism the FSLN closed all the offices of the El Salvadorean FMLN, despite their ongoing civil war against the right wing and their death squads.
In Venezuela this year, despite a massive social explosion in response to an austerity drive, Nicaraguan president Daniel Ortega offered solidarity to the Venezuelan president Carlos Andres Perez!
The Nicaraguan masses have shown a willingness to fight austerity – like the San Antonio sugar workers who protested last year against inflation and the fall in value of their wages. But in defending their interests the working class will have to break from its political support for the Sandinistas. In November last year, the FSLN minister Jaime Wheelock told a mass meeting of workers in San Antonio:
“Anyone who raises the banner of the strike will have his or her hands cut off…”
If the Nicaraguan masses take the road of struggle against austerity, they will soon discover who their friends are. They must forge an alternative to the bourgeois nationalism of the Sandinistas – a revolutionary working class party. Such a party would have to wage Ii consistent fight against imperialism and the national bourgeoisie, to defend, extend and make permanent the gains of 1979.
• Cancel all debts to imperialism Iii» For an immediate price freeze and a sliding scale of wages and hours.
• Nationalise all companies declaring redundancies, under workers’ control and with no compensation.
• Seize the estates and plantations and place them under the control of the workers employed on the land.
• Stop decapitalisation. For committees of workers and consumers to inspect the books of all enterprises as a guard against corruption and economic sabotage. For a state monopoly of foreign trade.
• For the building of genuine councils of workers’ and peasants’ delegates. For a workers’ and peasants’ government resting upon those mass organisations.
• Solidarity with the masses of Latin America. Restore full support for the FMLN.
• For a workers’ revolution in Nicaragua a Socialist Federation of Central America.