Nicaragua Network

1. Government presents proposal for Social Security “adjustment”
2. Poll shows desire for more and better paying jobs, continued support for government
3. New financing for projects announced
4. DR-CAFTA pushing pork producers out of business
5. NYC mayoral frontrunner attacked for past Sandinista support
6. Army halts illegal logging and business group calls for “certified wood” sales
7. Nicaragua advances against child labor
______________________________________________________________

1. Government presents proposal for Social Security “adjustment”

On Oct. 3, the government announced its proposals for what was called an “adjustment” to the nation’s Social Security system, rather than a major “reform,” evidently taking into account economic instability in the United States and financial crises in Europe along with the recent drop in the prices of Nicaragua’s principal export crops.  With the proposed measures, government spokespeople said that the economic viability of the National Social Security Institute (INSS) would be assured for another 22 years, that is, until 2036.  The government’s seven proposals were 1) an increase in the employer’s portion of the social security tax of 3% (from 16 to 19%) over a period of three years; 2) an increase in the maximum taxable earnings from US$18,000 (per year) to US$35,000; 3) a yearly payment by the government of US$11.6 million (2% of US$580 million) to begin paying off a historical debt to Social Security that dates back to the time of the Somozas; 4) adjustments in the formulas for setting the amounts of new pensions and 5) yearly increases; 6) the creation of a system for voluntary retirement savings; and finally 7) a commitment to continue policies leading to a growth in permanent, formal sector jobs.

Presidential economic advisor Bayardo Arce explained that, under the government’s proposal, pensions would not increase according to increases in the minimum wage but rather according to increases in the average salary.  He pointed out that since 2005 the average salary has increased by 93% while the minimum wage has risen by 237% (about 12% per year).  [This would appear to indicate that Nicaragua is moving gradually toward greater equality, away from its traditional extreme economic inequality.]  Arce said, “That is to say that the yearly raise in the pensions is going to be less; they will receive less.”

Business and labor groups had 30 days in which to make counter proposals to those of the government.  Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP), said, “This proposal responds to the request that we made for the costs to be shared.  We also commit ourselves to continue generating more formal sector jobs in order for the number of workers paying into Social Security to grow by 7% yearly.”

On Oct. 5, twenty-one unions and union federations signed a proposal which, while it accepted many of the proposals made by the government, differed in some important respects.  The workers want the government to begin paying off its debt to Social Security at a rate of over 4% instead of 2%, maintain the current method of calculating new pensions for low wage workers, and establish that yearly increases take into account an inflation rate of 5%.  Gustavo Porras, leader of the National Workers Front (FNT), said, “We are saying, ‘Save us from inflation’ so that our pensions aren’t devalued.  The INSS says that the increases in the minimum wage are a pressure so we agree to go with the average salary.”

Manuel Israel Ruiz, an expert in Social Security matters, said that the debt to the INSS should be paid off more quickly.  However, former Central Bank president Mario Arana said that the government’s proposal is reasonable because the funds with which the debt will be paid will be coming from the annual budget.  He said, “What we give to the pensioners will be competing with expenditures in health, education and poverty reduction.”  INSS president Roberto Lopez noted that in Nicaragua there are 10,000 people who earn between US$18,000 and US$450,000 (per year) and nearly 2,000 who earn over US$480,000. Ruiz pointed out that raising the maximum taxable earnings to US$35,000 would not affect those who earn the highest salaries and, in light of that, he suggested that the maximum could be raised even higher than US$35,000. Porras agreed saying, “Those who earn more should pay more.”  (Informe Pastran, Oct. 3; El Nuevo Diario, Oct. 3, 5; Radio La Primerisima, Oct. 4)

2. Poll shows desire for more and better paying jobs, continued support for government

CID Gallup released the results of its most recent poll on Oct. 1, saying that “all is the same” with a continued feeling that the country is heading in the right direction but also with a continuing concern about the need for more and better paying jobs.  Those surveyed noted that the inability to cover basic needs still propels family members to emigrate in the hope of earning more money. What did not appear on the list of concerns were health care and cost of public utilities, possibly due to the government’s health programs and energy subsidies for poor families. Informe Pastran noted that, in the period since the last poll, the cost of the basic basket of consumer goods had not increased but people perceived that it was harder to stretch money for the goods they needed, leading one to suspect that people’s expectations were increasing.  CID Gallup polled 1,222 people age 16 and older between Sept. 6 and 13.

The Sandinista Party has the support of 52% of those polled with support among all social groups and all ages.  Only 6% said they supported the Constitutional Liberal Party; 3% supported the Independent Liberal Party (PLI) and 1% supported other parties.  CID Gallup analysis noted, “Nicaragua is becoming a one-party political entity if the current situation continues. The FSLN receives the support of a united and constant group, in the face of an opposition ever more disunited, which assures one way or another continued Sandinista stability.” The figure with the highest level of popular support continues to be Aminta Granera, head of the National Police, with 81% approval.  President Daniel Ortega is second with 56% and former presidential candidate Eduardo Montealegre is third with 43%.  Of those polled 48% classified as “very good” the performance of Ortega, 25% said “so-so” with another 25% saying “very bad.”  While a large majority said there was corruption in the Ortega government, a similar majority also said the government was efficient.

On Oct. 7, a report from Vanderbilt University in Nashville, TN, by Prof. John Booth entitled “Democratic Political Culture in Nicaragua” was released.  It stated that 80.1% of adult Nicaraguans participate in general elections, 4% higher than the average for Latin America with men and women participating equally.  Nicaragua ranks fourth in Latin America in community participation, according to the report.  Those who protested were motivated by what they felt was discrimination by the government and the report noted that important factors here were the political polarization in the country and complaints about the last two electoral cycles.  The communications media and the Army tied with highest approval ratings of 69%. The evangelical churches had an approval rating of 64.4% and the Catholic Church 62.7%.  President Ortega received a 60.9% approval rating, followed by the Police at 60.5%, and then, in descending order, the Supreme Court, the National Assembly, the Supreme Electoral Council and the political parties. (Informe Pastran, Oct. 1, 7)

3. New financing for projects announced

EU Commissioner for Development Andris Piebalgs announced on Oct. 7 that the European Union was allocating a total of US$275 million for assistance to Nicaragua for the period 2014-2020. President Daniel Ortega said that the aid would help Nicaragua raise its productive capacity.   Piebalgs said that the aid would be focused on education, economic and commercial development, and adaptation to climate change.  While in Nicaragua, Piebalgs also met with the ministers of agriculture, education, and industry.

Piebalgs also signed an agreement with the National Police that would provide €10 million (US$13.4 million) for a project to support security on the Caribbean Coast entitled “Prevention and Control of Organized Crime and Drug Trafficking.”  Among the projects planned in both the North and South Autonomous Regions, according to National Police Chief Aminta Granera, are Youth Formation Centers similar to the one in Managua. Piebalgs noted that EU collaboration with the Nicaraguan Police had begun with a forensic laboratory that was inaugurated in 2012.

Leon de la Torre, Ambassador of Spain in Nicaragua, announced that Spain is leading a fund that will provide US$300 million in financing to Nicaragua for water and sanitation projects in towns that have never had potable water systems.  De la Torre said that, while Spain was providing the largest part, also collaborating were the European Union, the Inter-American Development Bank (IDB), the European Investment Bank, and other individual nations.  The duration of the project was not clear, but the efforts would logically take a number of years.

And finally, the Central American Bank for Economic Integration (BCIE) announced that it was providing US$200 million in backup fiscal support which, according to BCIE representative in Nicaragua Silvio Conrado, could help with any liquidity problems the government might have and increase confidence in the country’s fiscal and monetary stability. Nicaraguan Central Bank President Alberto Guevara explained that the slow recovery of the world economy and a deterioration in the prices of Nicaragua’s principal export crops could cause a liquidity problem for the Bank.  This is the fourth renewal of this line of credit from the BCIE, according to Guevara.  “Thank God we haven’t had to use it,” Guevara said, adding that “We wouldn’t vacillate in using it if the day came when we needed it.”  Conrado said, “Nicaragua’s policies have enabled it to maintain stability even in the adverse conditions of the international economy and that shows prudence and responsibility when you have had the resources available but not used them.” (El Nuevo Diario, Oct. 1, 7; Radio La Primerisima, Oct. 6, 7; La Prensa, Oct. 6)

4. DR-CAFTA pushing pork producers out of business

Each year the amount of pork that the United States can send to Nicaragua free of tariff charges increases by 10%, based on the 2005 trade agreement between the United States and the countries of Central America plus the Dominican Republic, known as DR-CAFTA.  As a result, more Nicaraguan pork farms are being forced out of business. Milton Arcia, president of the National Association of Hog Farmers, said that of 56 large producers, eight had gone under.  He stated, “The government there [in the US] provides incentives for the growers of sorghum. So there the price is about US$11 per hundredweight while here is US$16.” He added that the pork from the US is frozen and of lower quality but it is sold cheaper and people buy it.  He explained that he used to have 6,000 sows but now has only 3,500 because he is expecting to close his business.  “We have survived because I grew my own sorghum,” he said.  Antonio Sujo, who runs a slaughterhouse, expressed the hope that the price of US pork would rise because of a virus that had lowered the number of piglets born in the US.  “This broke the cycle of production… and is modifying the prices,” he explained. Sujo said that through the Zero Hunger Program the government was improving the nation’s pig herd and swine fever had been eliminated but that exports of pork and hogs on the hoof were still stalled.  He did, however, have hopes that exports to El Salvador could begin in earnest soon.

There are products that can enter Nicaragua tariff-free currently but their volume has not been great enough to disturb the market, according to a report in El Nuevo Diario.  Among them are fish and seafood, sweet corn, squash, okra, sugar cane, and liquors.  However, there is some fear that when the tariffs come off peanuts, pineapple, peanut butter, fresh vegetables, cabbages, some cooking oil and others there will be more impact.  Carlos Abaunza, who produces peanuts for export, said that he is not worried about problems with competition from US peanuts because Nicaraguan consumption of peanuts is very low.  He said that only 1% of Nicaragua’s peanut production is consumed nationally.  Most of it is exported to Mexico, Europe, Canada and the other countries of Central America.  However, growers of pineapple are more concerned.  Antonio Marenco said, “We destine almost 90% of our production for the national market and if pineapple comes in from the United States without paying anything it could lower our prices here.” Other products classified as “sensitive,” including beef, sugar, coffee, beans, rice, honey, cacao and some cooking oil, will have to wait another 8 to 13 years before they will be allowed to enter Nicaragua tariff free.  (El Nuevo Diario, Oct. 1, 7)

5. NYC mayoral frontrunner attacked for past Sandinista support

Former Nicaragua solidarity activist Bill de Blasio, a Democrat, is the frontrunner for election as New York City’s next mayor. His main Republican opponent, John Lhota and right-wing New York media [in particular the New York Post] have launched a negative campaign against De Blasio (52 years old) based on his support as a 26 year old for the Sandinista Revolution. The New York Times called him a “child of the Left” and Lhota said his strategy for “class struggle” in New York is “straight out of the Marxist handbook.” De Blasio describes himself as a social democrat and says while he admires the Sandinistas he has strong critiques as well. De Blasio has defended himself, denying that his support of the Revolution was a “sin of youth” but rather that he was part of a movement opposed to President Ronald Reagan’s contra war and policies against Nicaragua. Former NYC mayor Rudolph Giuliani, was the latest to attack De Blasio, calling him “anti-police.” The election is Nov. 5. (El Nuevo Diario, Oct. 3)

6. Army halts illegal logging and business group calls for “certified wood” sales

The Army has ordered a halt to logging within 15 kilometers of the border with Honduras in the Department of Nueva Segovia, even of species authorized by the Ministry of the Environment and Natural Resources and the National Forestry Institute. The ban on logging is based on Law 749 which designates the border to be a protected zone.  Enforcement of the law protects 41,200 hectares of forest in the municipalities of Dipilto and Jalapa. Col. Alcides Garmendia Cruz, flanked by Nueva Segovia prosecutor Holman Matamoros Artola at a press conference in Ocotal, explained that the Madesa company was discovered to have cut 31,000 cubic meters of pine in the zone. Col. Garmendia also said the army maintains surveillance in all protected areas in the region which are in a fragile state due to incessant logging, including Miraflores and the Somoto Canyon.

Meanwhile, the Nicaraguan Union for Socially Responsible Business (UNIRSE), called for logging companies to “better relate to the environment” by meeting the criteria for “certified wood” which will open larger markets in Europe and the United States. UNIRSE is comprised of 80 Nicaraguan companies. Out of about 4,000 Nicaraguan wood shops, only about a dozen use certified wood and there is only one environmentally managed tree farm producing timber.  Marvin Centeno, president of the Nicaraguan Council of Forest Certification said that the other certified farms are not yet producing. In the past year Nicaragua exported US$7.3 million in processed wood, US$5.8 million in wood products, US$2.9 million in sawn timber, US$1.9 million in paper products, and US$1.5 million in furniture. (El Nuevo Diario, Oct. 3; La Prensa, Oct. 6)

7. Nicaragua advances against child labor

Last week the International Labor Organization (ILO) recognized Nicaragua for its campaign to eliminate child labor, a priority of the Sandinista government. Alba Luz Torres, Minister of Labor (MITRAB), said that so far this year the ministry has conducted 2,496 inspections and found 1,854 children employed in violation of the law. MITRAB has also signed 2,065 agreements with coffee farmers not to employ children in exchange for multi-agency support in the areas of education, security, health, and sports and recreation.

The Federation of Organizations of Local Development (FODEL) reported that Nicaragua has the third highest number of child laborers in Central America with 238,827.  But, FODEL predicted that within three years eight Nicaraguan municipalities will be “child labor free”.  FODEL concentrates on getting child laborers into the school system. Supported with a small grant from Holland, FODEL is working to eliminate child labor in the municipalities of Jinotega, Matagalpa, Condega, Leon, San Marcos, La Libertad, San Pedro de Lovago, and El Rama. (El Nuevo Diario, Oct. 3; La Prensa, Oct. 4)