Under the Volcano:
Neoliberalism Finds Nicaragua
by Kevin Baxter
The Nation magazine, April 6, 1998
Forget the reinforced military bunker beneath Loma Tiscapa,
from which the Somoza family dictatorship long ruled this country
as if it were their personal hacienda. Forget the lakeside Plaza
of the Revolution, from which Sandinista leader Daniel Ortega
regularly rallied his followers during the darkest days of Ronald
Reagan's contra war.
Today, eight years after Nicaragua bowed to the U.S. government's
relentless military and economic battering by voting the Sandinistas
out of power, the nerve center of this city has shifted about
a mile south down the old Avenida de las Naciones Unidas. There,
along a stretch of once-abandoned fields, the fruits of free-market
counterreform - expensive restaurants, exclusive shopping centers
and elegant hotels-are on display.
Fittingly, the area is also crisscrossed with active earthquake
faults; it's here that the wide ruptures in what, a decade ago,
was Central America's most egalitarian society are most visible.
It's here, for example-in the middle of a country where about
half the population is malnourished and a growing number of people
can't read Spanish-that armed guards protect the franchises of
U.S. restaurant chains adorned with English-language signs that
ask patrons to "Please Wait to Be Seated."
It's here, in a country where 80 percent of the people live
in poverty, in a capital beset by housing shortages, that homeless
squatters are forcibly removed to make room for the Mercedes Benzes
and Land Cruisers of the faithful, who each Sunday fill the outrageously
kitschy cathedral bankrolled directly by Domino's Pizza king Tom
Monaghan. After the Sandinistas left office, crime and unemployment
skyrocketed while per capita income plummeted. Diseases once cured
have returned with a vengeance, and the number of suicides set
a record in 1997.
For anyone who remembers the feeling of hope and confidence
that blanketed Nicaragua in the eighties, the pessimism that pervades
the country's poor and middle-class neighborhoods today is sobering.
Indeed, many of those Nicaraguans who voted out the Sandinistas
in 1990 believing they would be rewarded with unfettered peace
and prosperity are finding out they were duped.
Villa Miguel Gutierrez, a sprawling working-class barrio of
concrete-block dwellings on the eastern edge of the capital, is
a typical Managua neighborhood and one I've visited often over
the past few years. Several of its streets are unpaved, the water
and electricity are shut off frequently and without warning, and
many of its households are headed by single women. Buses, the
sole transportation for most residents,, are always overcrowded
and on the verge of breaking down. A recent investigation found
that more than a third of the city's fleet shouldn't be on the
roads at all.
But the bus service, a cooperative enterprise, survives as
one of the few big companies that have not yet been dismembered,
restructured or cannibalized. In the past year ENEL, the state
electric company; ENABAS, which manages production and distribution
of the country's basic grains; TELCOR, the mail and communications
service; the telephone company; and the main government bank have
been wholly or partly privatized. The restructuring cost thousands
of jobs, leaving close to two-thirds of the nation's workers without
steady employment, a grim prospect in a country without even the
pretext of a social safety net.
The country's once-socialized health care system, the subject
of lavish praise by the World Health Organization during the Sandinista
years, has been largely dismantled. Patients now are frequently
expected to provide their own medicine, and doctors are without
the most basic implements, such as stethoscopes and scalpels.
Even education isn't always affordable; many students have to
pay teachers for paper and pencils and to photocopy relevant sections
from each class's few textbooks, leaving the poor parents of large
families with no choice but to pull their children out of school.
In a country where primary education is supposedly universal,
the Catholic Church says more than 60,000 children spend their
days in the streets begging or selling worthless trinkets in order
"The great impending theme in Nicaraguan politics is
social justice," says Social Christian politician Luis Humbato
Guzman, a forma president of the National Assembly. "And
we're not going to alleviate poverty by accident. We have to have
Of the twenty-six families along one of the typically narrow
residential lanes in Miguel Gutierrez, nearly a quarter rely on
remittances from relatives in the United States. And they're not
alone: Last year Nicaraguans received $300 million from family
members living abroad, mostly in the United States. Not even coffee
exports accounted for a greater share of the country's economy.
It's ironic that the nation that spent hundreds of millions to
destroy Nicaragua a decade ago now inadvertently provides the
final defense against total anarchy, an irony that explains why
the government of conservative President Arnoldo Aleman last fall
pressed the Clinton Administration to grant special status to
undocumented Nicaraguans living in the United States: Mass deportations
would not only have overwhelmed Nicaragua's sagging job market
but any decline in the amount of money flowing south from the
United States would have devastated the country's economy.
Gunshots often echo through Miguel Gutierrez after dark, though
no one knows who's doing the shooting or what For anyone who remembers
the hope that once they're shooting at. Armed vigilantes, paid
for by the residents, patrol the unlit streets each night, as
they do in most neighborhoods. Nicaragua's national police force
is hopelessly understaffed and its resources so limited that traffic
police work their beats on foot, relying on the good will of motorists
to stop and retrieve their own driving tickets. As a result, few
patrols ever enter the barrios; rent-a-cops make up one of Nicaragua's
new growth industries.
Yet the crushing poverty, worse now than during the final
years of the Somoza regime, hasn't scared away foreign investors;
U.S. companies like Motorola and Bell South, the Canadian mining
firms Greenstone Resources and Triton, and large Taiwanese enterprises
have all rushed in to tap one of the hemisphere's cheapest labor
markets, pouring $100 million into communications, mining and
hotels. Additional millions in tourism projects have been invested
by U.S., Guatemalan, Salvadoran and various European companies.
Indeed, the government's harsh austerity measures and slashing
of social spending were enacted primarily to lure this sort of
foreign investment. And the man behind the policies is Aleman,
a Somoza wannabe who resembles the dictator even down to his corpulent
The son of a Somoza-appointed judge, Aleman was jailed for
nine months by the Sandinistas in 1980 before becoming director
of the powerful national coffee growers' association. Elected
as mayor of Managua in 1990, running under the banner of a splinter
of the old Somocista Liberal Party, Aleman posed as a populist,
pushing through some minor public works projects, constructing
fountains and lining major downtown boulevards with Christmas
lights during the holidays. But he also ordered workers to whitewash
dozens of the city's priceless revolutionary murals and pushed
the restoration of pre-insurrection names to neighborhoods and
public buildings named for Sandinista martyrs.
In his run for president, an office he assumed fourteen months
ago, Aleman promised his moneyed supporters and financiers- including
a contingent of right-wing Cuban-Americans-a neoliberal wish list,
pledging to convert Nicaragua into a business-friendly paradise.
Some economic indicators do suggest a limited business revival.
The country's increase in basic production led Central America
in 1997, and its 9 percent inflation rate was among the region's
But average Nicaraguans hasten to say that Aleman's much touted
economic accomplishments don't trickle down to them. Nicaragua
remains the hemisphere's second-poorest country, and its $6 billion
external debt is the region's largest, while per capita income
is still below what it was in the late eighties. Even the professional
class suffers steady decline. The average teacher's salary is
about $70 a month, meaning it would take two months' pay to rent
a room for one night at Managua's refurbished Hotel Intercontinental.
No surprise, then, that recent polls found that just one in four
Nicaraguans believes the country is stable politically and economically.
And a recent study by the Universidad Centroamericana predicts
that unemployment will more than double in the next two years
if the government continues to pursue its current strategy.
The neoliberal reform "doesn't change anything for those
of us who ride the bus, who are barely getting by," says
Edgard Jimenez, 32, a Red Cross worker. "We can look in the
windows of the new restaurants and new hotels and see how nice
they are. But it would take half my monthly salary to go in and
order a meal." As Isabel Armijo, a lawyer in the provincial
capital of Somoto, a bumpy three-hour ride from Managua over uncertain
roads, puts it, "The situation in Nicaragua now is one of
For his part, Aleman shrugged during ceremonies in December
for the signing of a free-trade agreement with Mexico: "We
know that to move forward and confront the future, we have to
take bitter medicine," he said. But the social consequences
may not prove so easily dismissible. "There's a growing difference
between the richest and poorest sectors of the country,"
former Sandinista diplomat Carlos Tunnerman told the journal Tiempos
del Mundo. "And this is very dangerous for a society because
it creates a feeling of social injustice, of frustration, a feeling
that the actions of the government aren't correcting this inequality."
It wasn't supposed to be this way. Implicit in the U.S. government's
anti-Sandinista rhetoric was the promise that once a leader to
Washington's liking was installed in Managua, massive economic
aid would flow as a reward. While some estimates suggest the United
States spent nearly $1 billion to destroy Nicaragua in the eighties,
Washington says it spent $1.2 billion in funding the repairs in
the nineties. But nearly $300 million of what Washington counts
as assistance is nothing more than an erasure of debts, which
were run up during the Somoza years.
Senator Jesse Helms has succeeded in stopping or at least
delaying many aid requests by insisting that the Nicaraguan government
resolve the thousands of claims U.S. citizens have filed for the
return of property seized following the revolution. It's an impossible
task, of course, a fact the Aleman government appeared to concede
last year by inviting the heirs to the Somoza fortune to file
for the return of assets that were largely stolen from the Nicaraguan
people in the first place. The negative emotional response to
that proposal in Managua suggests that either the government made
a huge miscalculation in judging the mood of its people or that
it staged the whole thing as a message to Washington that Helms's
campaign had gone too far. Most likely, an arrogant President
Aleman didn't care about public response.
But discontent with the regime's policies has done little
to boost the popularity of the Sandinista National Liberation
Front, now the main opposition. Armijo, who was once mayor of
Somoto, was never a Sandinista, although she supported the party
and shared many of its goals. But now, like many Nicaraguans,
she and her husband, Arturo, say the Sandinista leadership has
abandoned the revolution and betrayed its followers.
"The revolution killed the hope of the people,"
Arturo says. "if the leaders had only stayed true to their
promises. When this started, the solidarity and the enthusiasm
Indeed, the party that brought the revolution to power in
1979 and Id off the United States for a full decade is today in
disarray. The red-and-black Sandinista banner, which once flew
from every street corner in Nicaragua, is now hard to find outside
the souvenir shops and artisans' kiosks that cater to tourists.
Bamcada, the party's once-respected daily newspaper, recently
closed after sinking hundreds of thousands of dollars into debt
and failing to pay its politically committed staff back wages.
That, in turn, produced a highly publicized hunger strike that
cast the once mythic Sandinista commander Tomas Borge-who had
taken over management of the paper's just one more callous employer.
Internationally known Sandinista intellectuals such as writer
and former vice president Sergio Ramirez and former Minister of
Culture Ernesto Cardenal have publicly renounced their affiliation
with the party, charging its leadership with selling out the revolution,
betraying its democratic foundations and pursuing political power
at the expense of the Nicaraguan people.
"Daniel Ortega and all those people now, they only care
about power," says poet and novelist Giaconda Belli, once
an important figure in the Sandinista leadership. "That's
why I'm so angry at what's going on. When you have so many people
that have died for an idea, for a cause, you cannot betray it."
Disillusioned sympathizers charge that the Sandinista leadership
was too adamant in asking followers to make sacrifices it was
unwilling to make itself. And since their 1990 electoral defeat,
the Sandinistas have greatly muted their revolutionary program
but also become ever less democratic in the party's internal structure.
The result has been a mass desertion of the rank and file. Still,
the Sandinistas remain the most powerful opposition force in the
country, and the leadership has promised to flex those muscles
if the government continues to ignore the needs of the people.
In January, for example, party activists participated in a series
of strikes and marches involving teachers, medical workers, court
employees and farmers that lasted four days, crippling some sectors
of the economy.
"In 1998, we'll see the Frente Sandinista fighting alongside
the people in the streets," says Ortega, the party's general
secretary and former Nicaraguan president. "I don't see any
other alternative. Only the idiots and the cowards won't go to
the streets to protest. The people will be committing suicide
if they don't protest."
But Ortega's ability to lead has been greatly compromised
by charges of sexual abuse leveled against him by his stepdaughter.
Party militants were quick to denounce the accusations, although
Ortega himself has not as yet publicly denied them. The scandal
seems certain to dominate the Sandinista congress this May, in
which many young party members are expected to seek Ortega's ouster.
A deepening of the schism between the old guard and the party's
less dogmatic younger members appears inevitable.
Among those who questioned Sandinista leadership even before
the scandal broke is Miguel Castro, 33, a former Sandinista soldier
who once spent his weekends patriotically volunteering to help
bring in the coffee harvest. Last year he was fired from his job
at ENABAS after thirteen years and replaced by an Aleman supporter,
and weeks after that he was beaten and nearly killed by a group
of bandits as a crowd of neighbors looked away. The experience
convinced him that it was time he started sacrificing only for
"The Sandinistas wanted everyone to be equal. But the
Sandinistas didn't practice it," he tells me over dinner
at a newly opened Pizza Hut as Bob Marley's activist anthem "Get
Up, Stand Up" plays in the background.
While the elan that drove the Sandinista revolution has evaporated,
the social conditions that made rebellion necessary are reappearing
in the countryside. Certainly, the revolution had many fathers,
but the rebellion was able to sustain itself in the verdant mountains
for more than a decade because the heavily exploited campesinos
were ripe for insurrection. And though their lot temporarily improved
under the Sandinista government, they are once again subject to
the same abuses suffered during the Somoza dictatorship.
In the northern mountains near Somoto, Matagalpa and Esteli,
farmers suffered a pair of deadly blows last year. First a severe
drought, attributed to El Nino, shrank crop yields by as much
as 30 percent; then short-term loans they were encouraged to take
out under the first post-Sandinista government came due January
1. Only about half the loans were paid back on time, leaving hundreds
of thousands of acres of rich farmland subject to seizure by the
banks. If the seizures take place, the confiscated land will undoubtedly
be resold and the displaced farmers will wind up unemployed and
homeless or, if they're lucky, as low-paid seasonal workers toiling
for large agricultural firms on their old farms, just as they
did before the revolution.
"They're trying to erase the Sandinista years,"
says Jimenez, the Red Cross worker. "All those people who
sacrificed and fought and died-it was for nothing."
Kevin Baxter is a news editor for the Calendar section of
the Los Angeles Times.