The Lessons Ortega Learned from the Eighties

Limit public expenditures, control the repressive apparatus and the justice system, all while increasing his family’s wealth

By Melba Castillo  (Confidencial)

HAVANA TIMES – There are all kinds of hypotheses circulating to explain the position of the Ortega-Murillo government in facing the pandemic that is taking the lives of thousands of Nicaraguans and sinking the country into a crisis of enormous proportions.

The Arias foundation [in Costa Rica] noted: “the regime is taking advantage of the COVID-19 pandemic to bring about a genocide through their criminal negligence.” That, in my judgement is a result. Terrible, horrifying, but a result, a consequence.

A consequence of the actions and the omissions of the government faced with the pandemic. The question is – Why are they behaving that way? These reflections are aimed at delineating the causes of their negligence, which – given the magnitude of the pandemic and the enormous number of lives affected – amounts to a genocide.

The economic crisis that we Nicaraguans experienced in the decade of the eighties due to the poor management of the economy and above all the enormous quantity of resources put into the war effort, left some lessons for Ortega that are worth highlighting.

First, the need to control the public expenditures. During these 13 long years from 2007 – 2020, making up the three terms of the Ortega-Murillo government, controlling public spending has been one of the fundamental principles for the management of the public finances.

After [the civic rebellion] April 2018, when the GNP fell around 5% and with it the tax revenue, the government’s option was to increase tax rates, knowing that the measure would cause further deterioration of the fragile economy and also to his already shaky relationship with the business world.

The other option, the sale of bonds, hasn’t given him much result. However, they haven’t stopped trying it, according to the reports from the Ministry of Finance and Treasury.

The public budget for 2020 is, in general terms, a balanced budget, and for that reason they haven’t wanted to earmark resources to prevent, mitigate or prepare for the pandemic, which, obviously, wasn’t included in the plans, but whose consequences they know perfectly well. The resources earmarked for health come from previously committed external resources.

In the profusion of information that the world has produced about the novel Coronavirus pandemic, the data, maps, and indexes of what the governments of the world are doing to confront the pandemic can be fully analyzed.

In the chart, you can see the data for all the countries of Central America, including Belize and Panama. This index shows which countries have implemented a greater number of measures and which have applied fewer, as in the case of Nicaragua.

Here in Nicaragua, they didn’t close the schools as a large majority of the countries in the world have done, despite the fact that the majority of students aren’t attending classes. No moratorium has been put on tax collection, nor on payments for public utilities. On the contrary, the rates have gone up.

There have also been no arrangements with the banks to facilitate a moratorium on mortgage debts. There’s no curtailment of labor, trade or industrial activities, nor any mobilizing of extraordinary resources to attend to the needs of the pandemic, or alleviate the problems of affected workers, knowing full well that over 80% our country’s economy is made up of the informal sector, and that poverty afflicts over 50% of the population.

Ortega knows that external resources are an excellent source of resources to avoid compromising the fiscal balance. But also, for obtaining wealth, because that’s the second great lesson that Ortega learned: the importance of increasing his wealth.

His numerous offspring and the ever-present name-juggling tactics have made possible the organizing of many businesses to participate in the bidding processes required for the execution of foreign loans. Thanks to them, he can divert resources to increasing his personal income.

There’s a very well-known phrase in Mexico, attributed to Carlos Hank Gonzalez, a Mexican politician and influential businessman: “A politician who’s poor is a poor politician.”  Ortega had good advisors who lived and worked in that country, so he’s been careful to adopt the lesson as his own and to be true to it.

It’s no coincidence that the Venezuelan cooperation money – valued at over 500 million dollars a year from 2007 to 2015, the last year that data was available – has gone, as if by magic, into Ortega’s pockets. It’s said that the total reached 4 billion dollars. I say, “by art of magic”, because a reasonable explanation has still not been found, among other things, for how Petronic [which markets gasoline, diesel and other fuel products] which was a public company, suddenly appeared as a private company belonging to the Ortega-Murillo family.

That’s the other reason why he hasn’t taken any initiative that could put at risk the economic activity: that’s where another of his sources of power lies. He’s no longer a poor politician. A stoppage in economic activity wouldn’t only bring a drop in the taxes that allow him to maintain the repressive apparatus, but also in his income as an energy and fuel tycoon.

That’s why there’ve been no preventive measures taken that could alter the direction of the economy. Ortega knows that the remittances, the main way that poverty is contained in our country, are going to lessen as a result of the pandemic, and that this will have consequences in economic activity. It’s also known, and Ortega knows it, that world trade may fall some 27% this year, according to the UN Conference on Trade and Development. That will affect our country as well.

That’s the reason behind their promotion of all kinds of fairs, excursions, sporting events and activities of all kinds with the aim of increasing consumption, and thus move the economy along while it’s still possible. Knowing fully that this will increase contagion and the number of mortal victims, even among his followers. The latter has never been a concern for Ortega. Let’s recall the eighties, and the fifty thousand dead on his and the other side, all of them Nicaraguans, left by a civil war that could have been avoided.

The other option. soliciting external resources from the international organizations to confront the pandemic, is going to meet with hard opposition from the government of the United States and their weight in said organizations. It would also bring as a counterweight the need for adjustments to the budget in order to destine more resources to the area of health – resources currently allocated for the repression. That he can’t accept, because it was the other great lesson he learned: the control of the repressive apparatus and the justice department to legitimize and validate repression.

With those elements on his side, he feels secure that he will remain in power. That’s his bet and his thesis with a citizenry, today in confinement, but always thirsty for freedom and hope, fully confident that sooner than later we’ll be able to have a country with democratic institutions, subject to the law and public scrutiny.