TUESDAY, JULY 03, 2012
Nicaragua News Bulletin (July 3, 2012)
1. Central American nations meet, sign agreement with EU2. IMF gives seal of approval
3. Court condemns Costa Rica on San Juan River road
4. Opposition undecided about participation in local elections
5. Nearly 3,000 women to receive micro-loans
6. FAO initiates new food education program
7. Reforestation programs ongoing
8. Housing construction on the rise in Nicaragua
1. Central American nations meet, sign agreement with EU
Meeting in Tegucigalpa, Honduras, the presidents of the Central American countries and Panama signed an Accord of Association (AdA) with the European Union on June 29 at a meeting of the Central American Integration System (SICA). The presidents emphasized the benefits that they expected from the lowering of trade barriers between the two regions. EU trade commissioner Karel de Gucht said, “The negotiation of this accord has taken much time and effort as well as resources, but this is not the end of the process. Before it can go into effect, it will have to be approved on both sides by our legislatures.” He told a meeting of business people that the AdA is expected to increase the Gross Domestic Product of Central America by €2.5 billion yearly (approx. US$3.164 billion). Previous Free Trade Agreements have shown, however, that an increase in GDP does not translate into an improved standard of living in countries that adhere to neoliberal economic prescriptions. Indeed, populations displaced by cheaper foreign production are usually much worse off.
The presidents agreed to incorporate Panama into the Secretariat for Central American Economic Integration (SIECA) and include that country in the agreement with the EU. Nicaragua had demanded that, in order to participate, Panama had to submit to all the conditions required of the other countries and, because it was incorporated into the talks later, will thus begin its participation later. The trade portion of the AdA will not go into force until 2013 at the earliest, depending on when the European Parliament and the legislatures of the Central American countries ratify the agreement. The agreement between the EU and each country will go into effect at the time each ratification takes place.
Mario Amador, president of the Nicaraguan Chamber of Industry, said that Nicaragua could benefit in spite of the economic problems of Europe. He noted that Nicaragua produced food and said, “You can stop buying clothes but you can't stop eating.” Trade Minister Orlando Solorzano said, “We have the great advantage that this crisis is financial and our capacity is in agro-industry. What we need to do is produce food of higher quality. We are already exporting to that market and we have 37 plants certified, but we need to certify more.” In 2011, Central America exported US$4.2 billion to the EU. On the day the agreement goes into force 91% of Central American products will enter the EU tariff free and 69% of European industrial exports and fish will enter Central America freely. Some sensitive products such as tuna fish, textiles and plastic will be protected longer.
At the beginning of the meeting, President Daniel Ortega took over the office of president of SICA for a one-year term. The 36 point declaration emitted at the end of the meeting, which was the 39th SICA summit, noted that “it is necessary to deepen [Central American] integration in order to maximize the social and economic development of the region.” The presidents also agreed that social programs “demand more attention” from governments because they “are directed at achieving higher and better levels” of wellbeing for their countries' populations. Civil society groups that organized forums at the event noted that the greatest challenge to the tranquility of the region was drug trafficking because Central America, as a result of its geography, is the channel through which the drugs pass from their source in the south to the consumers in the north.
Upon his arrival in Tegucigalpa, Salvadoran President Mauricio Funes proposed a regional statement of rejection of the legislative coup in Paraguay and said that El Salvador would not recognize the new government. The proposal did not progress, however, perhaps because an even more blatantly illegal coup had taken place exactly three years before in the very city where the meeting was taking place. Costa Rican President Laura Chinchilla deliberately avoided greeting President Ortega, making evident the disagreement between them over the San Juan River at the border between their two countries. (La Prensa, June 29; El Nuevo Diario, June 29; Radio La Primerisima, June 29; Informe Pastran, June 29, July 2)
2. IMF gives seal of approval
The Executive Board of the International Monetary Fund approved Nicaragua's progress under the Extended Credit Facility program signed with the institution in 2007 adding that it was prepared for the negotiating of a new agreement that would be signed in December of this year. The announcement was made by Central Bank President Alberto Guevara who said, “These results are a reflection of the prudent management of our economic policies. The IMF valued the fact that in an adverse world environment we have reinforced stability and macroeconomic sustainability.” He pointed out that for 2011 the IMF had predicted a growth rate of 3% for Nicaragua and, he said, “We grew 4.7%” adding that the state had a budgetary surplus instead of a deficit. He pointed out that Nicaragua has worked on a model to “give the poor the capacity to get out of poverty with programs clearly oriented toward providing capital in the countryside and in the city to these poor families.”
Guevara said that he did not yet know what type of program Nicaragua might be negotiating with the IMF. The Extended Credit Facility is part of the Poverty Reduction and Growth Trust and, according to the IMF, part of a reform “to make the Fund's financial support more flexible and better tailored to the diverse needs of Low Income Countries” with protracted balance of payments problems. With the progress Nicaragua has made, it may come under a different type of program. Guevara added that Nicaragua has fulfilled all its obligations to also renew programs with the World Bank and Inter-American Development Bank which were completed at the end of last year.
Businessman Enrique Zamora celebrated the news saying that it was especially important that the government negotiate a new accord with the IMF, based on its fulfillment of the conditions of the last agreement, in order to carry forward its projects. He said an IMF agreement was an open door for new investment, showing that Nicaragua had maintained economic and monetary discipline, although the country needed to strengthen institutionality somewhat.
Meanwhile, Guevara announced that talks between the Ortega administration and business and labor sectors on the issue of tax reform had started. He said, “We have advanced talks going on with business sectors and with workers.” However, Jose Adan Aguerri, head of the Superior Council of Private Enterprise (COSEP) said that his group was awaiting a call from the government to begin talks on July 2 or 9. He said that the goal of tax reform should be to be neutral, “enlarging the base of taxpayers while keeping Nicaragua competitive.” (El Nuevo Diario, June 28; Informe Pastran, June 29; La Prensa, July 1, 2)
3. Court condemns Costa Rica on San Juan River road
On the morning of July 2, the Central American Court of Justice (CCJ) issued a unanimous ruling finding that Costa Rica had built the road along the southern banks of the San Juan River “without the studies and analysis demanded within the obligations imposed by regional and international law, avoiding the collaboration, mutual understanding and communication among the nations party to those agreements that should exist in matters of the environment and sustainable development.” The southern bank of the river forms the border between Nicaragua and Costa Rica. The Court called the road a “high risk project” which was “environmentally dangerous” and repeated its January 17 order that work on the road be stopped and the damage repaired. The CCJ noted that 160 kilometer long road put at risk the Central American Biological Corridor that maintains the “ecological equilibrium of flora and fauna that the State of Costa Rica is obliged to respect as the patrimony of all humanity.”
Costa Rican President Laura Chinchilla immediately announced that her country rejected the ruling as “spurious and illegitimate” given that Costa Rica does not recognize the Court. She went on to say, “We have every right to doubt the objectivity of this court because it is located in Nicaragua and the presiding judge is Nicaraguan.” [The court's location and presidency rotate every six months.] The CCJ is one of the organisms of the Central American Integration System (SICA) of which both Costa Rica and Nicaragua are members. Costa Rican officials indicated that they may consider the possibility of leaving SICA.
Nicaraguan environmentalist Kamilo Lara, leader of one of the organizations that brought the suit, said after hearing of the ruling, “We will be widening the breadth of our demands when we quantify the damages,” adding, “Costa Rica must pay” for destruction of the ecosystem in the zone. Meanwhile, another bridge spanning a San Juan River tributary collapsed on June 30th, the second collapse in ten days along the road.
The Costa Rican Administrative Environmental Tribunal began its investigations of environmental damages caused by the road in a visit to the area. The National System of Conservation Areas presented its reports on the damage to streams and biodiversity on the Costa Rican side of the river caused by the chopping down of trees. The San Jose newspaper La Nacion also reported that the companies that received the contracts to build the road owned no machinery and had no public works experience. (El Nuevo Diario, July 2; Radio La Primerisima, June 29, July 1, 2; Informe Pastran, June 27, July 2; La Prensa, July 2)
4. Opposition undecided about participation in local elections
To participate or not to participate (in the November municipal elections), that is the question for the opposition political parties. The elections are four months away and the Independent Liberal Party (PLI), which came in second after the Sandinista Party in last year's presidential elections, has not yet decided. PLI president Indalecio Rodriguez said that the party's executive council must decide by August 20 and if the decision is not to participate, party leaders will call for an assembly to put that decision to a vote. Rodriguez protested what he said was imbalance in the recent naming of heads of local electoral councils by the Supreme Electoral Council (CSE) with Sandinistas named to the top post in the largest municipalities.
But the principal issue for the opposition and for other sectors is the issue of the expired terms of the magistrates of the CSE and the demand that the sides negotiate which of them will be reelected and which will be replaced. Managua city council member Luciano Garcia said, “While those corrupt magistrates are there, obviously we will have to think hard [about whether to participate] since the vote of the people is involved.” Jose Adan Aguerri, head of the Superior Council of Private Enterprise (COSEP) said that his organization has a permanent campaign to demand that the magistrates be changed but he said that the decision is up to the politicians. Carlos Tunnerman of the Movement for Nicaragua [a group funded by USAID] said that the National Assembly should elect new magistrates before they go on vacation in the middle of July.
Meanwhile, the political alliance led by the Sandinista Party will not announce its candidate for mayor of Managua until August. Informe Pastran cited party sources who said that the FSLN is polling its base to see who would be the best candidate. Agustin Jarquin of the Christian Democratic Union, a member of the Sandinista alliance, has not hidden his desire to run for the post, using social networking to promote his candidacy. (El Nuevo Diario, June 30, July 2; La Prensa, June 29; Informe Pastran, June 27, 29)
5. Nearly 3,000 women to receive micro-loans
The Nicaraguan government will make 2,892 new micro-credit loans to women-owned small businesses organized into 541 solidarity groups in 46 municipalities. The loans are part of the Zero Usury program to integrate more women into economically productive activities. The small, low-interest loans help women build their businesses and improve the quality of life of their families. To qualify, women must organize themselves with other women into solidarity groups. The solidarity groups allow the micro-credit recipients to receive help and encouragement from other women in their area and provide a platform through which skills training and business seminars can be conducted to improve the recipients' chances of business success. (Radio Primerisima, July 2; Informe Pastran, July 2)
6. FAO initiates new food education program
The UN Food and Agriculture Organization (FAO) Nicaragua Representative Gero Vaagt, praised Nicaragua for reducing malnutrition from 52% to 19% in recent years. He announced that FAO is initiating a new program to educate students and teachers about the “management and production of their food, protecting the environment, and the creation of school gardens” as part of the government's efforts to achieve food sovereignty and sustainability. The World Food Program in Nicaragua benefits 150,000 students with a ration of hot food 150 days of the year. Vaagt also said that Nicaragua achieved the UN's Millennium Development objective for malnutrition reduction last year. (Radio La Primerisima, June 29; Informe Pastran, July 2)
7. Reforestation programs ongoing
The Hemco mining company will reforest over 1,000 acres in the buffer zone around the Bosawas Nature Preserve this year with half a million trees including mahogany and teak as well as other native species. The project, which is part of a 20 year effort to reforest 18,000 acres in which they will invest $US2.7 million annually. So far, 5,000 acres have been planted. According to the company, the project will focus on restoring areas of the forest that have been converted to cattle ranching, which has a lower economic value than precious hardwood logging. The reforestation work is taking place in the Municipality of Siuna in the North Atlantic Autonomous Region and is being touted as a development project which will provide jobs and training for local residents as well as create a buffer against expansion of the agricultural frontier into the Bosawas..
In related news, the Sandinista Youth environmental organization, Guardabarranco Environmental Movement, recognized Nicaragua's Arbor Day by identifying and marking trees in Managua that are over 100 years old. That project will now expand to the rest of the country starting on July 4. They will also identify diseased trees and continue their work to raise the environmental consciousness of people. Young environmentalist Nestor Pineda said that they will help people see the value of the forest as more than a source of firewood and furniture. They will educate people to see it as a valuable source of oxygen and animal habitat. Beginning on July 6, Guardabarranco volunteers will begin planting 1.5 million saplings nationally. (El Nuevo Diario, June 28; Radio La Primerisma, June 29)
8. Housing construction on the rise in Nicaragua
Alberto Atha, president of the Chamber of Developers, the construction sector is expected to grow between 12 and 15% this year, with the most growth predicted in residential construction. It is estimated that by the end of this year come there will be 45 housing development projects under construction that will take four years to complete. The total from these developments could reach 25,000 units, with 4,500 homes loans annually. Atha stated that at the moment, the housing construction sector generates 15,000 permanent direct jobs and an average of two indirect jobs for each direct job. Also, construction of affordable housing has increased 29.7% nationally. (Radio La Primerisima, July 2)
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