Nicaragua - Reports

Nicaragua Election Briefing

October 2001

This briefing is an update on information in articles in Central America Report Autum 2001.

“The international circumstances growing out of the global development of neo-liberalism mean that Nicaragua is governed from the outside, like the other countries of the south”. Aldo Díaz Lacayo, historian and FSLN activist, Envío, August 2001.

Voters going hungry

In the lead up to the November 4 presidential and National Assembly elections, many Nicaraguans are suffering the devastating consequences of draught and the coffee crisis. A draught during the first part of the rainy season has caused crop failure in the northen Nicaragua, leading the United Nations World Food Program to estimate that starvation threatens 32,600 families. And it is not only drought that is to blame. Floods have destroyed crops in the Atlantic Coast, with La Prensa reporting on August 29 that, in one community, half of the children were suffering such as fever and diarrhoea.

Furthermore, the plunge in world coffee prices to around US$46 per hundred pounds - about half of the cost of production – means that thousand of coffee workers in the northen areas have lost their jobs as producers go bankrupt. And while the government has announced thatit will give coffee producers $25 credit for every hundredweight sack, only 15 percent of growers had reportedly benefited from this by July, due to strict eligibility criteria. This has led to accusations that the programme is little more than an election tactic. Under these circumstances Fair Trade coffee at $120 per hundred pounds is quite literally a lifeline for the limited number of small producers exporting through this scheme.

US terror attacks aggravate economic downturn

”We have seen the human toll of recent attacks in the United States… but there is another toll that is largely unseen and one that will be felt in all parts of the developing world, specially Africa. We estimate that tens of thousands more children will die… world-wide about 10 million more people are likely to be living below the poverty line of $1 per day…” James Wolfessohn, president of World Bank. This dramatic situation starkly highlights the inadequacies of palliatives such as the HIPC iniciative and the urgency of total debt cancellation for Nicaragua and many other countries in the South.

As we report in the Autum issue of Central American Report, two prominent Nicaraguan economists, Nester Avedaño and Damarys Cortés Pereira have calculated that the outgoing government willleave Nicaragua in a technical state of bankruptcy. The economic situation is likely to deteriorate further more in the wake of 11 September, in the line with the rest of the world. Layoffs have already been reported in free trade zones. Taiwanese owners at the Free Trade Zone Presitex Plant, which was recently opened in Sebaco, Matagalpa, told union members that the workforce must be reduced by half because of a fall in US demand directly related to the attacks. And on a wider scale, many Nicaraguan families are reportedly concerned that relatives working in the US, on whose remittances they depend, will lose their jobs.

FSLN deals with political fallout

The attacks on the World Trade Centre and the Pentagon are having political, as well as economic ramifications. The Senate ratification of the appointment of John Negroponte as US Ambassador to the United Nations suggests that other controversila nominations will follow. The one of greatest concern is that of Otto Reich, a right wing Cuban American, to the post of Secretary of State for Western Hemisphere Affairs. Prior to the attacks, the Bush Administration made it clear that it would not welcome an FSLN victory in November’s elections. After 11 September is using the pretext of a clampdown on international terrorism as an excuse for settling old scores.

In Nicaragua, the Constitutionalist Liberal Party (PLC) leapt on the tragedy as a way of discrediting th FSLN, even though party leader and presidential candidate Daniel Ortega had been quick to condemn the attacks on the World Trade Centre and the Pentagon, and to send a message of condolence. The Nicaraguan Resistance Party (PRN), a political grouping of ex-contras, unfurled banners aound Managua bearing the message “Nicaragua doesn’t want a president who´s a friend to terrorists”. The reference was clear since US officials had attempted to remind the world the week before that Ortega had recently visited Libya. The FSLN responded by pointing out that the current government maintains full diplomatic relations with several states on the US’s “Terrorist” list, including Libya, and that prime suspect Osama Bin Laden was not only “the creation” of the US, but had supported the contras themselves.

There were also ominous words froma meeting of Central American presidents, who issued a “ Central American Declaration Against Terrorism”. It contained a call for “all political organisations that maintain relations with terrorist structures to end them forthwith”, with El Salvador’s president, Francisco Flores, pointing to the FSLN as one such group. Alemán celarly alluded to Ortega and the FSLN when he said: ”There are people in Nicaragua who boast of having relationships with these lords of terrorism. All I can say is that Nicaragua must never again become a sanctuary for terrorists as it was in the past”.

Even more ominous developments followed in the first week of October. The PLC hung banners around Managua stating “ Daniel is our Taliban” and Nicaraguan foreign minister Francisco Aguirre met with US Secretary of State Collin Powell. The US Embassy in Nicaragua then issued a statement which reiterated that the US would “respect the results of a free and fair vote that reflects the will of the Nicaraguan people” but then went on to accuse the Sandinistas of confiscating property without compensation, destroying the economy and maintaining links with those who support terrorism. Daniel Ortega responded: “The US should not interfere. Reservations also exist about how the current US government came to power. These matters belong to the past. It’s as if we were talking about Oliver North, convicted by the US government itself. And the Iran-contra scandal, imagine if we were to bring that up”.

Ortega still ahead in the polls

Despite all this sabre-rattling, it appears that FSLN presidential candidate, Daniel Ortega, is still ahead in the polls – though only just. The latest poll conducted on September 22 put Ortega on 39.9% and PLC candidate Bolaños on 38.2% so outcome is much too close to call. There are indications that the gap between the parties may be wider in elections for the National Assembly where more than 90 seats are up for grabs. The latest poll indicates the FSLN have a clearer lead with 38 percent against 34 percent for th PLC.

Concerns about electoral fraud and PLC corruption

During a visit to Nandaime, Granada, with a group from the International Republican Institue (IRI), Daniel Ortega asked the international representatives to help prevent manipulation of the Supreme Electoral Council by president Alemán. That request came amid fears that PLC is preparing to carry out “electronic fraud” through the use of teleports (mobile satellite exchanges) to manipulate data, as reportedly ocurred in the 1996 elections. The FSLN is also worried about Gabriel Solorzano, head of the main national verification organisation Etica y Transparencia, is showing personal learnings towards the PLC. In addition, the party is concerned that the involvement of new right-wing personnel could lead to bias within the organisation. Extremely strong criticism of the PLC came from an unexpected source at the end of September when International Republican Institute spokesperson Steve Johnson characterised Alemán as a “Throwback to the values of the Somoza dictatorship” and as “exhibiting monarchic inclinations”. He went on to express grave concerns about PLC corruption.

Nicaragua and its Maquilas / Export Processing Zones

A Worker's Story

"You're sitting down all day on a wooden bench with no back. The lighting isn't very good, and by the end of the day, you can't see anything, not even the hole in the needle. But still they don't want you to lose even one minute."

- Auxiliadora Abarca, ex-Fortex worker, Las Mercedes Free Trade Zone

Maquilas: lawless and union-free

"It's not that unions aren't allowed...the problem is that there’s no place in the world where unions are allowed in free trade zone. A union would mean shutting down the free trade zone because, quite simply, investment doesn't come in where there are unions..."

- Carlos Zúniga, Nicaragua Zona Franca Corporation

"Of primary concern to Nicaraguan lawmakers is the 60 percent unemployment rate. Because of this, free trade zone operators enjoy laws that provide them with maximum freedom and benefits."

- Nicaraguan private free trade zone website

Las Mercedes Free Trade Zone

The majority of Nicaragua’s maquila are found in the Las Mercedes Free Trade Zone on the outskirts of Managua, the capital city. Most of the maquilas are foreign owned, financed by US, Taiwanese or Korean capital. All produce clothing for export, mainly for the North American market. Large US retailers, like Wal-Mart and Sears, contract production to factories in the Las Mercedes Free Trade Zone.

Investment in the free trade zone is facilitated by government tax breaks and concessions, including exemptions on import and export tax, custom taxes on machinery and equipment, municipal tax and a total exemption of income tax for the first 10 years of operation.

Labour conditions in the Las Mercedes Free Trade Zone

Other Issues

Eighty percent of the workers in the Las Mercedes Free Trade Zone are women between the ages of 15 and 27. Verbal and physical abuse by company supervisors and officials is common. Sexual harassment of female employees has been reported.

Many factories in the free trade zone have poor health and safety conditions. In 1997, a worker was fatally electrocuted as a result of faulty washer equipment. In 1999, 200 workers in the Chentex factory in Las Mercedes suffered intoxication as a result of a gas leak in the factory. In 1999, 40 workers in Nicaragua’s maquilas died in work-related accidents.

Although there have been a few successes, many union organizing efforts failed or have been met with continued repression as well as firings of union leaders and members.

Labour Legislation

A new labour code, passed in 1997, prevents companies from dismissing workers who have applied to the Ministry of Labour to form a legally recognized union. However, the labour code leaves many loopholes which favour employers. There are very few health and safety regulations in Nicaragua.

In 1998, after a long lobbying campaign by the Movement of Working and Unemployed Women, Maria Elena Cuadra (MEC), the Nicaraguan government endorsed a code of conduct for companies operating in the free trade zone. The code has clauses prohibiting violence and discrimination in the workplace, and defines the rights of pregnant women, the right to paid, voluntary overtime and social security benefits, and the right to a safe workplace.

History of Garment Production in Nicaragua

The Las Mercedes Free Trade Zone was first established in 1976, and attracted 11 companies, largely US garment plants. After the 1979 Sandinista Revolution, foreign companies left the free trade zone, and the site was used by state-run factories. Las Mercedes reopened in 1992 after the election of a right wing government. Las Mercedes remains the only state-owned free trade zone in Nicaragua, although a smaller private free trade zone was opened in 1996. Plans have been approved for several other zones. The sub-contracting of clothing production from maquilas to smaller workshops is reported to be very extensive. Foreign investment in garment production in Nicaragua is expected to increase with the passage of the US CBI enhancement bill.

Maquila is the short form of the word maquiladora. It was originally associated with the process of milling. In Mexico it became the word for another kind of processing -- the assembly of imported component parts for re-export.

The maquilas in Mexico began as a border phenomenon over 30 years ago. With the support of the Mexican government, US firms set up assembly plants on the Mexican side of the border. They were allowed to import components and raw materials duty-free and reexport the finished product to the US. Now maquilas are in many parts of Mexico and Central America. The lure of the maquilas is low wages, a lack of environmental or labour regulations, low taxes, and few if any duties. Products produced include apparel, electronic goods, auto parts, etc. You’ll find additional information about Maquilas and Free Trade Zones http://www.maquilasolidarity.org