Nicaragua Network

1. IMF urges reform of social security system
2. Three police chiefs removed in RAAN
3. Family Economy Ministry off to successful start
4. Are mutated mosquitoes responsible for dengue fever epidemic?
5. Nicaragua prepares for disasters
6. Central American women seek refuge from violence in Nicaragua
7. Better Work Program highlights free trade zones
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1. IMF urges reform of social security system

Last week, Miguel Savastano, the Deputy Director for the Western Hemisphere Department at the International Monetary Fund (IMF), visited Nicaragua to prepare the ground for discussions of a new agreement scheduled to begin in September.  Savastano said at a press conference that Nicaragua had completed its last program with the IMF in 2011 and noted that, “The fundamental reason that there has not been a program since then is because the macroeconomic situation of Nicaragua is solid and for that reason there has not been an urgent need for a program.”  He added that, while there is no program in effect, there have been ongoing conversations between Nicaragua and the IMF.  The new IMF representative in Nicaragua, Przemek Gajdeczka, was welcomed by Nicaraguan Central Bank President Alberto Guevara who said, “For Nicaragua the relationship with the IMF is very important and the government of Comandante Daniel Ortega has made the IMF a strategic ally.” 

Savastano and Gajdeczka noted that on the pending agenda for an IMF program with Nicaragua is a reform of the country’s social security pension system. While the social security system currently has a surplus, Savastano said that within a decade the system would be in difficulties.  The IMF proposes that Nicaragua increase the retirement age from 60 to 65 years of age and double the number of years that a worker must pay into the system from 14.4 years to 28.8 years. 

Both of the IMF proposals have been rejected by Nicaragua’s unions and were also rejected on Aug. 8 by the president’s economic advisor Bayardo Arce who, while he did not comment on any increase in the percentages contributed by employers and employees, said that the retirement age would not be raised nor would the number of years of contributions be changed.  He promised that the government’s proposal would be released in the second week in September. 

Meanwhile, the nation’s unions are divided.  The National Workers’ Front (FNT) led a coalition that included federations and confederations of varied political affiliations (both Sandinista and anti-Sandinista) best known by their acronyms CUS, CUT, CAUS, CGT, CSD, CNTD, ANDEN, FETSALUD, and ATC, among others.  This coalition rejected any increase in the percentage of their salaries contributed by workers. But FNT leader Gustavo Porras criticized a meeting that Roberto Gonzalez of the Sandinista CST had held with the IMF while Luis Barbosa of the CST-JBE criticized Porras for his proposal that employers should carry the entire burden. Barbosa stated, “It’s easy to be a populist and say no, no, no, but what has value is when you take a written proposal to the table.”  Barbosa’s proposal is for both employers and employees to increase their contributions by three percent, raising the employer’s contribution from 16% to 19% and that of the employees from 6.25% to 9.25%.  He explained that, under the CST-JBE proposal, contributions would rise by 0.33% yearly over nine years. 

In related news, seniors who had not paid into social security for the minimum number of years began to receive the small pensions promised by President Daniel Ortega at the recent July 19 celebration.  Rosa Hernandez, who worked for seven years for two different bottling companies washing bottles and attaching labels, picked up her minimum pension of US$50 at a bank branch in Managua. “I wish it were a little more,” she said, adding that she was going to try to get some other benefits such as eyeglasses. (Radio La Primerisima, Aug. 6, 8; La Prensa, Aug. 7, 9; Informe Pastran, Aug. 7, 12; El Nuevo Diario, Aug. 4, 6, 8)

2. Three police chiefs removed in RAAN

In one week, the head of Nicaragua’s National Police, Aminta Granera, replaced three local police chiefs in the North Atlantic Autonomous Region (RAAN).  Granera first removed the chief of Mulukuku, followed by the chiefs of the two mining towns of Bonanza and Rosita.  So far this year there have been 15 homicides in this small region with only three suspects detained along with many complaints from the population about abuse of power, increased drug activity, and a wave of other crimes.  On Aug. 9, Granera travelled to Rosita to meet with citizens in a local church and promised to send 29 more officers to the town to clear up crimes and keep order.  Residents of Rosita told Granera that there were bands of delinquents operating in the area who have murdered members of the Sandinista Party based on old political resentments.  Citizens also complained that drug dealers had invaded the town and liquor was being sold to minors.

In Nicaragua as a whole the crime rate has been declining, including in the RAAN and the RAAS.  But in July, a crime wave exploded in the mining towns and Mulukuku.  According to Juan Ramon Gradiz, inspector general of the Police, 200 officers will be sent to the region to put a brake on the wave of crime and violence. Gradiz said that the goal is to detain those suspected of committing crimes and bring them before the courts but that their most important task will be to strengthen the Nicaraguan policing model of working with the communities, which has led to high levels of security in the rest of the nation.

The head of the Army, General Julio Cesar Aviles, said that his forces would back up the work of the Police in the mining area.  He said that the Ecological Battalion composed of 500 soldiers remains permanently in the area to protect rain forest reserves from illegal activities.  He called the upsurge of violence in the region “very painful” and added that a major cause is past rivalries and past differences where people take the law into their own hands. (El Nuevo Diario, Aug. 10; Radio La Primerisima, Aug. 10; La Prensa, Aug. 9)

3. Family Economy Ministry off to successful start

The new Ministry of the Family Economy held a fair beginning Aug. 1 with more than 2,600 micro-vendors. The fair proved so popular with over 69,000 attendees and over US$1.6 million in sales that it was extended an extra week, according to Family Economy Minister Pedro Haslam. The fair is housed in a new permanent structure on the road to San Isidro de Bolas which cost US$2.7 million. Vendors are selling a variety of items including vegetable fiber crafts, prepared food, assorted agricultural products, leather goods and footwear, furniture, jewelry, and clothing at low prices. The fair is part of the Ministry’s effort to open economic spaces for poor families, including access to export markets. The family, or small business, economy produces 70% of the country’s goods and services and 35% of its exports. Government spokeswoman Rosario Murillo announced that the next step would be a national study involving all the agencies of government, national and local, as well as youth, universities, and social movements. The study will determine what training is needed for the different sectors of labor within the family economy in order to accelerate development with social justice. She emphasized the importance of preserving Nicaraguan culture in the process, noting the increased demand for shoes and the traditional men’s shirt known as the guayabera, both produced for export in small family-owned shops.

In related news, Minister of the Family (a different ministry from that of the Family Economy), Marcia Ramirez, announced that, with the help of the World Bank, the government is starting a new program called Family Scholarships. “This program is directed toward families with ‘at-risk’ children in the Love Program and will insure a family income.” The first phase of the program will be in urban areas based on a completed census that determined the most vulnerable families. The families in the program will have children aged 12 and younger who have been contributing to their family’s income and will include accompaniment, social attention, parent training, and economic assistance to create conditions which will allow the children to go to school. The scholarship program will initially serve some 20,000 families in 23 municipalities in the departments of Chinandega, Leon, Jinotega, Madriz, Esteli, and Matagalpa. (El Nuevo Diario, Aug. 6; Radio La Primerisima, Aug. 7, 10)

4. Are mutated mosquitoes responsible for dengue fever epidemic?

Dr. Ricardo Aguilar, a specialist in Integral Medicine in Chinandega, told El Nuevo Diario that he suspects the mosquito that transmits dengue fever to humans has mutated. He said he was surprised by the aggressiveness of the mosquito and medical studies have shown that it can fly five kilometers, greatly increasing the area it can affect. Apparently the mosquito has developed a resistance to Cypermethrin mixed with diesel fuel, which is the standard mosquito abatement treatment.

On the average between 450 and 650 new cases are reported weekly in the 13 municipalities of the Department of Chinandega. In one 24 hour period last week, 27 new cases of dengue fever were admitted at the España Hospitalospia in Chinandega and 22-year old Johana Berrios was diagnosed with hemorrhagic dengue, the often fatal form of the disease. There have been five deaths in the Department of Chinandega from the disease. (El Nuevo Diario, Aug. 6, 8)

5. Nicaragua prepares for disasters

As part of a continuing training program to prepare for natural disasters, multiple State agencies participated in an earthquake preparedness drill in Managua and a simulated volcanic eruption drill in the Department of Granada and on Ometepe Island. Serendipitously, while carrying out the latter drill, the navy caught drug traffickers smuggling drugs and guns across Lake Cocibolca (Nicaragua). In Managua’s B-15 neighborhood northeast of the airport, 300 residents participated with personnel from Civil Defense, the municipal government, Municipal Committees for Prevention and Response to Disasters, and others to simulate response to a 6.5 Richter scale earthquake. “This included searching for and locating victims in order to save the injured,” said Lt. Col. Andres Rizo of the army’s Civil Defense unit. Reyna Rueda, secretary of the Managua Council, said that Managua has 14 vulnerable neighborhoods and thanked the Spanish Aid Agency for helping with the simulation.

In Granada some 1,000 people, including 700 residents, participated with the army and municipality in a simulated response to an eruption of the Concepcion Volcano on the island of Ometepe. The training exercise included two vessels of the Nicaraguan Navy which patrol inland waters, primarily Lake Cocibolca. The two hour exercise included evacuations by boat and the simulated treatment of 40 injured people attended by the Red Cross, firefighters, nurses and doctors at different locations along the lake shore. During the exercise the navy captured two boats carrying two bags of drugs and two AK47 rifles. Six people were arrested and handed over to police who were also participating in the training exercise. On Ometepe Island itself, 1,200 residents participated in the drill which included evacuation to the mainland on 60 boats including both civilian and military craft. (El Nuevo Diario, Aug. 8, 10; La Prensa, Aug. 9; Radio La Primerisima, Aug. 7)

6. Central American women seek refuge from violence in Nicaragua

An increasing number of women from other Central American countries are coming, usually with young children, to Nicaragua for refuge. An estimated eight women each day are seeking refugee status in Nicaragua from Honduras, El Salvador, and Guatemala, the so-called Triangle of Violence.  “Francisca,” a 38-year old mother of three, fled to Nicaragua after her small businessman husband was killed by gangs demanding protection money. She came to Nicaragua where “my children will be protected by the State, something that won’t happen in my country,” she said. She also said that in Nicaragua she can get good work and free healthcare and education for her children. While most of the refugees are women between 25 and 55 years of age, there is also an increase in the number of unaccompanied juveniles entering the country. Assistance is provided by the government and by the Nicaraguan Council of Protestant Churches (CEPAD), which is the agency in Nicaragua affiliated with UN High Commission on Refugees (UNHCR).    (Radio La Primerisima, Aug. 12)

7. Better Work Program highlights free trade zones

The Better Work Program of the International Labor Organization (ILO) held a forum in Nicaragua last week at which international brand representatives could meet with representatives of the Nicaraguan Association of the Textile and Clothing Industry (ANITEC), the trade unions with affiliates in the free trade zones, and the governmental National Commission on Free Trade Zones (CNZF) and learn about Nicaragua’s pioneering tri-partite agreement on wages signed by management, labor and government.  The most recent agreement established minimum wages in free trade zone factories until 2017.

Although Walter Bastian, Deputy Assistant Secretary for the Western Hemisphere at the U.S. Department of Commerce, in a recent visit to Nicaragua said that Nicaragua’s garment industry could compete with or without Trade Preference Levels (TPLs—which allow apparel made of certain fibers to enter the U.S. duty free if it is assembled in Nicaragua, regardless of the origin of the fabrics), ANITEC estimates that without TPL, Nicaragua’s costs of production of garments could increase by some 40%, affecting employment levels.   ANITEC president Dean Garcia said that his organization would continue to ask the United States for an extension of TPL benefits.  Currently there are 215 free trade zone factories in Nicaragua in 49 industrial parks.  Exports from the FTZs in 2012 hit US$2.377 billion with garment exports producing US$1.507 billion of that. 

In a series of articles on the free trade zones, El Nuevo Diario highlighted some of the issues surrounding the factories, including their benefits for the nation, given that they are able to operate without paying any taxes for 15 years.  In defense of the benefits of FTZs, Carlos Vargas, general manager of the Saratoga Complex of factories, stated that for each dollar the sector does not pay in taxes, it generates US$3.50 in other income for the nation.  Jose Adan Aguerri, president of the Superior Council on Private Enterprise (COSEP), said, “What has the greatest weight is the number of jobs created by these investments; these businesses provide 20% of the total formal sector jobs in the country; they contribute more than US$50 million annually to the social security system and US$4.2 million to the National Technology Institute.” According to ANITEC, the 103,652 formal sector jobs in the FTZ sector generate 310,956 indirect jobs.

Alvaro Baltodano, technical secretary of the National Corporation of Free Trade Zones, said that, if the TPL benefits are not extended, Nicaragua does have a Plan B.  Twelve thousand Nicaraguan workers are currently making auto parts for the Japanese company Yazaki, he said, while another 1,000 are making auto chassis for the German company Draexlmaierwith other factories beginning to make motorcycle mufflers and LED lights.  4,500 people are employed in call centers making over US$500 per month.

Meanwhile, workers in more factories are represented by unions and the Minister of Labor has a mobile unit which visits industrial parks throughout the nation to advise workers, receive complaints, and distribute material on labor rights.  The minimum wage has gone up from US$70 per month in 2006 to US$150 today.  Women still make up 54.5% of FTZ employees and Miguel Ruiz, general secretary of the CST-JBE, said that collective bargaining agreements have improved wages and health benefits for women workers. However, Sandra Ramos, director of the Maria Elena Cuadra Women’s Movement, said that it is lamentable that most of the women still are working as seamstresses with very few being promoted to technicians.  “They learn quickly but they need to be trained,” she said. (Informe Pastran, Aug. 2, 6; El Nuevo Diario, July 29, Aug. 1)