…from a Safe Distance
“The private sector and investors are watching carefully what might happen in the next two weeks, in order to decide their course of action for the rest of the year.”
HAVANA TIMES – The Superior Council of Private Enterprise (Cosep) demanded the liberation of presidential candidates Cristiana Chamorro, Arturo Cruz, Felix Maradiaga and Juan Sebastian Chamorro; in addition to Jose Adan Aguerri, former president of the Council, Violeta Granera, and Jose Pellais, They expressed their support of the independent media and all those detained for political reasons. This statement was issued amidst the climate of fear currently reigning in the business community.
As of press time, the regime had imprisoned eleven prominent figures, including presidential candidates, political and social leaders, and former employees of the Violeta Barrios de Chamorro Foundation. In addition, the police continued their ongoing legal siege of independent journalists, who are threatened with jail.
Confidencial spoke with five company owners, managers and business association leaders. These experts work in accounting, banking and finance, retail sales, exporting, and agricultural production. They all asked to remain anonymous. All five foresee further international sanctions on Daniel Ortega and his circle. They also expect an abrupt halt on new national and foreign investment. Further, most expressed concern about the risk of being expelled from Cafta, the Central American Free Trade Agreement.
“We were already expecting this, but we thought it would be harsher, and were expecting even worse than what’s happened,” one source stated. “For that reason, we haven’t seen a strong stance from the private sector like what happened in the eighties.”
The source confessed that, given the unequal forces: “we’re just going to keep our noses to the ground.” He defended the premise that “a national strike isn’t the solution” and noted that “the cordoba [national currency] and the flow of family remittances are strong.”
However, he also noted that, in the medium term, the economy may no longer count on income from the Free Trade Zone exports. That’s because Nicaragua’s continuance in the Free Trade Agreement with the US and Central America (Cafta) is in doubt, as is the country’s ability to remain in the Association Agreement with Europe.
The United States is the main recipient of Nicaragua’s exports. In 2020, Nicaraguan exports to the US totaled 1.4 billion dollars – 47.5% of the total value of all Nicaraguan exports. The slice of the Nicaraguan export market held by all the Cafta countries together, rises to US $2.046 billion dollars, 69.3% of the country’s export earnings. Exports to European countries accounted for around US $270 million dollars.
The business expert believes that, even if all other economic factors were strictly constrained, “they [the government] could continue subsidizing transportation and electricity with the Venezuelan money. That’s useful in an electoral year. That money could last for one or two years, and Ortega knows it.”
Fear and uncertainty
“The uncertainty generates concern,” stated a source from the export market. “Investors measure uncertainty, and any social, political and economic environment that causes uncertainty, as cause for concern.”
“This has been so rapid and so recent, and is still unfolding, which generates great confusion,” considered an executive from the upper echelons of the national banks. The banking expert recalled: “political instability doesn’t propitiate a good business climate. That’s a fact in Nicaragua, as in any country of the world, with all our characteristics and complexities.”
Another theme that’s palpable in the conversations with managers and owners is fear. “Everyone’s afraid they’ll be next. If I were a financier, I wouldn’t invest a cent here. Uncertainty is the worst enemy of any economy, because it stops everything. There’s a climate of fear here, and of uncertainty.” Those were the words of a manager of a multinational retail corporation.
Sources agreed that the overall position of the business sector at this time is to remain attentive to what the national, international and multilateral political and economic entities do in the next two weeks.
Despite what could happen, “we don’t have any plans to leave, because our investments are here. Nor do we have plans to close our businesses. But what’s coming is a pandemonium for everyone, but more for them,” the manager asserted, in reference to the possibility of more sanctions being leveled on Ortega’s inner circle.
“He says he doesn’t care, but he does care. He’ll use the prisoners as hostages, to negotiate the suspension of sanctions,” the source predicted.
“The private sector and the investors are watching carefully what happens in the next two weeks, to decide what they’ll do for the rest of the year. These first five months have been positive economically, but the next 15 days are key, because they’ll indicate the tendency,” the source informed Confidencial.
Even before those two weeks are up, sources affirmed, there are investments that are on pause, waiting for “the fog to clear”.
“Up until a week and a half ago, the crisis was eminently political. But now, it has leapt into socio-political terrain, and could have economic implications. I know of an energy-generating project that’s been paused because international funding was stopped, and of real estate developments that are also halted,” they explained.
Recalling times in the past, when the private sector exerted some influence on the crisis, sources consulted were pessimistic. “This will never be like before. That boat sailed a while ago, and isn’t coming back. There’ll eventually have to be some kind of understanding, so that the country doesn’t go under, but maybe in 2022, depending on what happens with the elections.”
The November elections
With regard to the electoral process, sources were equally uncertain. “We don’t know if there’ll be elections, and what kind of clown show they’ll be, if there are any elections at all. Ortega holds the upper hand, because he’s the one to decide who can be in the elections and who can’t.”
Michael Healy, COSEP president, demanded the right of all Nicaraguans to hold a valid identity card. The government withholds or forestalls issuing ID cards to many citizens in areas that are not considered pro-Ortega so they can’t vote. He also demanded that the lists of eligible voters be cleaned up, made current, and verified. Finally, he’s asked for the presence of international organisms to observe the electoral process, something Ortega has flat out denied.
“We need to be able to freely choose our leaders. (…) We’re entitled to demand and to assure that the voting process is conducted with all due transparency,” Healy stated.