Nicaragua: End of All Business Chambers Worsens Climate
“It’s a negative message for foreign investment, unless they only want Chinese, Russian, Iranian investment,” says former chamber president.
By Ivan Olivares (Confidencial)
HAVANA TIMES – The decision of the regime headed by Daniel Ortega and Rosario Murillo to cancel the legal status of 151 trade organizations will further degrade the business climate and affect the attraction of new foreign investment. The increase in country risk deteriorates Nicaragua’s image as a favorable place to do business, five professionals who requested anonymity told CONFIDENCIAL.
On August 22, 2024, the Ministry of the Interior issued Ministerial Agreement 39-2024-OSFL, published in the Official Gazette La Gaceta, which cut down what was left of the country’s trade union ecosystem, including several bi-national chambers (the US AmCham, as well as the Spanish, German, French, Italian, Costa Rican, Uruguayan, Mexican and Panamanian), plus dozens of departmental agricultural, commercial, industrial, forestry, livestock, etc. entities.
Closing all these chambers -especially the binational ones- “is a totally negative message for foreign investment and legal security, because what confidence is an investor going to have to invest in a country where businessmen are not even allowed to organize and associate to promote their businesses? It is a totally contrary signal to the Government’s intention to attract foreign investment, unless they only want Chinese, Russian, Iranian investment”, said the former president of a chamber affiliated to the now extinct Superior Council of Private Enterprise (Cosep).
“What surprises me is that they had waited so long since they eliminated the business chambers, and especially that it took them so long to prohibit the binational chambers. They closed them all! The European ones, the regional Central American ones…”, he added.
“They’re going to wipe out all forms of organization because they know it’s a way to access resources beyond their control. They’ll eradicate any remnants of autonomy, independence, or any degree of freedom. They’re going to crush every possibility,” added the former director of another chamber that was also outlawed.
The issue of authoritarianism is also present in the opinion shared by a professional who worked for another of these chambers, stating that “basically there is a very clear message, and that is that the Government does not admit any space that escapes its control, even if it is not of a political nature, and this has been reflected in the most recent publications, where hundreds of organizations, from religious to business organizations, are being closed”.
Business, repression and bribes
The former director believes that as of Thursday, anyone who wants to invest in Nicaragua will think “I’m not even going to get involved, because if I don’t have a relationship with the Government, if I’m not one of the few privileged who have the permission to generate wealth, I’m not going anywhere”. He says this assuring that in the country a model has been established in which “whoever is with me and lets me do as I want, I guarantee to generate wealth”.
In any case, he warns that stability is not guaranteed either, because “if they want to, they can hit him with a tax issue, a real estate issue, an injunction, etc.”. Although he defines it as a ‘eat and let’s eat’, he values that in that circle “there is only room for their allies, and I do not believe that there is anyone so brave and so irresponsible, that wants to lose their money in that system of cronyism and subjugation”.
By eliminating the last vestiges of associativity in the country, “we will probably see some groups of Sandinista businessmen opening new organizations taking advantage of the legislation they are promoting, but there will only be people related to the regime, willing to do business under the protection of influence peddling, corruption, etc.”, said the former president.
This situation increases the level of risk because it increases legal insecurity, while “it hinders the possibility of converging in spaces of a business nature in which to responsibly discuss circumstances or cases, and makes it difficult to bring messages in a unified way to society and the authorities, which could use them as input not only technical and statistical, but also to assess the stability that the country needs,” said the professional.
His criterion is that regardless of how the decision to close the American Chamber is approached, the result is a damage to the country’s image, with all that this entails.
This damage is even greater, because “this is a setback for the organization of civil society. They are copying the Chinese model, which seeks economic development, with zero freedoms,” says the former executive. He adds that this model is not functional, ‘because the economy develops when there is freedom to contract, to associate, and to think. If we continue like this, we will be left with this model of ’much for few’, threatening to cut off the hand of anyone who raises it in protest, seeking to guarantee 65 years in power, as in Cuba”.
Unraveling the productive fabric
A former advisor to sectoral NGOs from exile believes that these decisions will have a negative effect on several sectors of the economy, “because there is no leadership” on the part of a Government that was already incapable, “and worse now that the institutions are so politicized”, he reflected.
He explains that this lack of leadership, which was also observed in previous governments, encouraged the emergence and consolidation of many NGOs that made up for this leadership when they promoted economic, social and trade union activities, “and this has an impact on production”.
The Constitution grants the Government the role of guiding institution, in charge of leading productive, social and economic sectors. “What happens is that they see everything as political, ideological, negative… and they think that the organizations can undermine their capacity to remain in the Government”, he contrasted.
He is of the opinion that when the communication between the trade union leaders and the authorities of the Central Bank, the Ministry of Finance or Agriculture ceased, the Government fell into the temptation of “inventing figures” and “falsifying reality”, although he admits that this lack of information “can be made up for with surveys that can be commissioned, but it is not the same as having the data from the productive trade unions”.
The existing communication between public and private entities made it possible to raise the problems and hope that there would be good will to solve them. “All these elements helped to attract investments, especially small-scale investments. The lack of leadership of the previous governments, and worse that of this Government, will affect more the economic activity of the productive sectors”, he valued.
When going deeper into the effect of these measures, he believes that “they have a very serious effect on society and especially on the social and productive sectors of the country”, because by eliminating these organizations, the communication link between the social and productive sectors (especially medium and small) and the Government, which were used to improve and perfect sectorial policies, in view of the leadership failures of the official institutions, is destroyed.