Nicaragua: Between revolution

and democracy

CEPAD, October 2010Felix Maradiaga-Blandon

Overview

• Nicaragua is the largest country in Central America– 130,373 km2 (about the size of New York

State)– Nicaragua's Bosawas Biosphere Reserve

protects 1.8 million acres of Mosquitia forest (almost seven percent of the country's land mass) making it the largest natural reserve to the north of the Amazon.

– 8 % of the country is covered by water,

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A legacy of volatility and conflict

• Between 1856 and 1990, Nicaragua experienced more than 70 violent political upheavals. (Montalvan, 2002)– US Intervention: 1909 - 1933– Somoza Dictatorship: 1936 - 1979– The Nicaragua Revolution: 1979 – Civil War: 1980 - 1990– Democratic Transition: 1990– The Imposition of “Orteguism”

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The Open Wounds of a betrayed Revolution

• According to conservative estimates, 150,000 lives were lost in Central America (1980 – 1989).

• In Nicaragua, the exact toll has never been officially revealed by authorities, but objectively speaking it can probably be calculated at around 35,000 dead.

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• Recently, a declassified secret report of the now extinct East German Stasi secret police revealed that Sandinista authorities had reported 19,000 victims between 1980 and 1986.– the country was only three million inhabitants

at the time. – It is equivalent to the United States losing

over 4 million lives in a single war.

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DEMOCRATIC TRANSITION AND POST-CONFLICT RECONSTRUCTION

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Peace Agreements and Disarmament

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10

20

30

40

50

60

70

80

1990 1992 1994 1996 1998 2000 2002 2004 2006

Defense Expenditure: 80% reduction

Gasto Militar (en dólares) Gasto Militar (% del PIB)

Fuente: SIPRI (www.sipri.org), a partir del 2002 cálculos propios

(en porcentaje)(en unidades monetarias)

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Nicaragua’s Economic Evolution (1970 – 2006)

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1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

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4,500,000,000

5,000,000,000

197019721974197619781980198219841986198819901992199419961998200020022006

Total GDP Agricultural GDP

Total and Agricultural Real GDP during Different Administrations(USD of 2000)

Source: World Development Indicators, World Bank

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AGR GDP / TOTAL GDP (1970-2004) = 23.5% Average.

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External Debt as % of GDP (1970 – 2006)

0%

200%

400%

600%

800%

1000%

1200%

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003Source: World Development Indicators, World Bank

AVERAGE DEBT AS % of GDP (1970-2004) = 242.69%

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Foreign Direct Investment (1970 – 2006)Net Inflows, Current USD

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

197019731976197919821985198819911994199720002003Source: World Development Indicators, World Bank

AVERAGE FDI (1970-2004) = 58.8 Million USD

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Conservative Reforms

• Open Economy

• Reestablishment of private property rights

• Legislature ratified DR-CAFTA 2005

• Resumed IMF-required PRGF reforms

• Reached highest level of exports since 1979

• Agricultural exports increased significantly 2006

• Maintained fiscal discipline (particularly 2002 -2006)

• Reached highest level of foreign reserves in history

• Second safest country in Latin America.

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Challenges to Economic Development

• Massive public debt resulting from confiscations• Government still paying for successive banking

crises– Public debt servicing rose from 17% to 20%

total spending• 800,000 children cannot attend elementary

school due to inadequate funding• Highly vulnerable to external shocks (natural

disasters, commodity prices)• Constitutional Reforms of 2000• Corruption

Less than 3% poverty reduction in 16 years of systematic conservative reforms

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Social Indicators

• Nicaragua is still catching up with its neighbors– Lowest per capita income; estimated 48% below poverty line (2005)

– Among the lowest literacy rates in the hemisphere

– Weak infrastructure

– Lagging health indicators

1 Source: World Bank Estimates

Indicator BelizeCosta Rica

El Salvador Guatemala Honduras Panama Nicaragua

GNI per capita (Atlas method US$) 2004 est. 3,940 4,670 2,350 2,130 1,030 4,450 790

Literacy (15+ years) 77 96 80 69 80 92 77

Life expectancy (years), 2003 71.2 78.6 70.4 66.1 66.1 75 68.8

Infant mortality rate (deaths/1,000), 2003 33 8 32 35 32 18 30

Access to improved water source (% population) 91% 97% 82% 95% 90% 91% 81%

Telephone lines: fixed & mobile (per 1000), 2003 317.3 274.4 292.0

134.7(2000) 72.4 389.5 122.5

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Agricultural Products

Hospitality and Tourism

Fishing and Fishing Products

Processed Food

Jewelry, Precious Metals and Collectibles

Transportation and Logistics

Communications Services

Other

Nicaragua Exports by Cluster, 1997 - 2003 ($mm)

$104.3

$26.4

$33.9

$35.4

$56.3

$86.2

$324.8

$150.7

Source: Institute for Strategy and Competitiveness

Agricultural products are Nicaragua’s biggest exports

Democracy and Institutions

• Nicaragua’s position on the 2006 Economist Intelligence Unit’s Democracy Index was 5.68, on a scale of one to ten, placing it 89th among the 167 countries evaluated and making it, according to The Economist a “hybrid regime.”

• The other three nations in the Americas that fell in this category were Ecuador, Venezuela and Haiti.

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High Corruption and Low Legitimacy

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The Aleman and Ortega “Pact”

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Higlights of the Ortega Administration

• Elected in November 2006 with 38% of the vote

• Reforms of Law 290

• Alliance with Venezuela– Over $420 million/year “off-budget” aid

• Electoral Fraud of November 2008

• Attacks against Civil Society

• Re-election

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The Imposition of “Orteguism”

• Two independent political parties were declared “illegal”

• Article 147 of the Constitution declared “unconstitutional”

• Imposition of Executive Decree 3-2010– Appointment of Justices and Magistrates via

presidential order without Legislative consent

• “De facto” legislative blockade

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DEMOCRACY UNDER FIRE

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News coverage of the current political crisis

El País (España) . 21/04/2010– http://www.nytimes.com/aponline/2010/04/20/world/AP-LT-Nicaragua-Congress-

Protests.html?_r=1&ref=americas

Washington Post:– http://www.washingtonpost.com/wp-dyn/content/article/2010/04/20/

AR2010042004296.html– http://voices.washingtonpost.com/postpartisan/2010/04/

leftist_thugocracy_in_nicaragu.html 

El País (España) . 21/04/2010– http://www.elpais.com/articulo/internacional/control/poder/judicial/agrava/crisis/

Nicaragua/elpepuintlat/20100421elpepuint_14/Tes

El Heraldo – Honduras– http://www.elheraldo.hn/Mundo/Ediciones/2010/04/21/Noticias/Simpatizantes-de-

Ortega-atacan-sesion-opositora

La Prensa Libre - Guatemala• http://www.prensalibre.com/internacionales/Oficialistas-atacan-oposicion-

Nicaragua_0_247775280.html

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Is There Any Hope?

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DEMOGRAPHIC BONUS

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Civil Society is playing a central rolein pushing for democratic reforms

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Thank you!

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