TUESDAY, JULY 10, 2012

Nicaragua News Bulletin (July 10, 2012)

1. President signs bill creating Canal Authority
2. National Assembly approves Family Economy Ministry
3. High level government officials attend July Fourth celebration at US embassy
4. IDB says Nicaragua on right track
5. Death of police officer mars Repliegue
6. Concerns raised about Nicaragua's endangered species
7. Economic briefs on growth in formal sector employment, foreign investment, call centers, and internet access

1. President signs bill creating Canal Authority

On July 3 the National Assembly approved a bill authorizing the construction of a shipping canal across Nicaragua connecting the Atlantic and Pacific Oceans and, on July 7, President Daniel Ortega signed it into law. The vote in the National Assembly was 85 votes in favor, zero opposed and two abstentions. The canal would be built over a period of ten years at an estimated cost of US$30 billion. The Nicaraguan state would own 51% of the canal company, offering 49% to investors who could be other nation states, international organizations, corporations or individuals. In signing the bill, Ortega noted that the canal had been a dream of national hero Augusto Sandino. National Assembly President Rene Nuñez said that it had been studied by Nicaraguan authorities since 1833. [Another study put the first feasibility study for a canal even earlier, saying it was ordered by King Philip II of Spain in 1567.]

Noting the continued increase in international shipping and the probable benefits to the Nicaraguan economy, opposition deputies in the Assembly supported the bill. Liberal Party Deputy Wilfredo Navarro said, “I don't know if we will get the funds for this canal but it is a hope.” Former vice-presidential candidate Edmundo Jarquin, however, said the president was “selling illusions about the future to mitigate the difficulties of the present.”

The new law created the Grand Inter-Oceanic Canal Authority to carry out environmental studies and feasibility studies of the six possible routes, and to seek investors. At the moment, conversations have been held with Brazil, China, Russia and Venezuela. Venezuelan Ambassador to Nicaragua Maria Alejandra Avila told a Managua television station that the canal was “a manifestation of sovereignty” and Venezuela was interested in investing. Belgian investors also expressed interest. Nicaraguan authorities said that the canal would be complementary and not competitive with the enlarged Panama Canal. They also said that property owners along the route of the canal would be compensated for the loss of their property. Vice-Minister of Foreign Affairs Manuel Coronel Kautz said that preliminary studies had already been done and a decision would be made as to the best route in about four months.

One of the possible routes for the canal would be using the San Juan River and because the southern bank of the river forms the border between Nicaragua and Costa Rica, the Costa Rican government said that Nicaragua had to get its opinion about the project. Jaime Incer Barquero, presidential advisor for the environment said, however, that while Costa Rica could make observations, it could have no role in decision making about the canal because the river belongs in its entirety to Nicaragua. There were no reports of statements from environmental organizations in the news this week, but previous statements have noted that [as happened in Panama], because water is so essential to the functioning of a canal, preservation of the rain forest becomes by necessity a matter of top national interest. (Informe Pastran, July 4, 6, 9; Radio La Primerisima, July 3, 4, 5; La Prensa, July 4)

2. National Assembly approves Family Economy Ministry

The National Assembly on July 6 approved the creation of a new ministry with the full title of Ministry of the Family, Community, and Cooperative Economy. The new ministry will seek to strengthen micro, small and medium businesses, which together produce 40% of Nicaragua's Gross Domestic Product. President Daniel Ortega explained that the ministry will serve small scale producers in urban and rural areas, adding that this sector generates 70% of jobs in the country. The vote in the National Assembly was 63 votes in favor (all the deputies of the Sandinista bench), 17 opposed, and one abstention.

Opposition deputies in the National Assembly criticized the new ministry. Eliseo Nuñez said that it would promote “sectarianism” while Pedro Joaquin Chamorro called it a “white elephant” and questioned how it would function with 37 groups that will have a consultative role in the ministry. Maria Eugenia Sequeira and Carlos Langrand called it a “mechanism to control the family.” Former vice-presidential candidate Edmundo Jarquin said the new ministry seemed to be a good idea but it could also serve only to increase bureaucracy.

The new Family Economy Ministry (as it will be called for short) will absorb the Rural Development Institute (IDR) and the Nicaraguan Institute for Small and Medium Businesses (INPYME) as well as Zero Hunger and Zero Usury and be dedicated to promoting cooperatives and food sovereignty through the transfer of new technologies and encouraging sustainable productive practices, according to government sources. The programs of the ministry will be funded by a total of US$83.2 in national monies and donations and loans from the United Nations Development Program, the Inter-American Development Bank, and the government of Switzerland. Among the beneficiaries will be 6,139 micro businesses, 180 groups of young people, 150 medium scale export businesses, 29 tourist farms, and numerous other projects, including women's cooperatives and agricultural cooperatives. (Radio La Primerisima, July 4. 6; El Nuevo Diario, July 7; La Prensa, July 6; Informe Pastran, July 6)

3. High level government officials attend July Fourth celebration at US embassy

The list of high level Sandinista government officials who attended the July Fourth celebration at the US Embassy had analysts buzzing about a possible warming in relations between the two governments after the deep freeze produced by the announcement by the US that it would not issue a waiver certifying that Nicaragua had complied with US rules on budgetary transparency in order to receive US$3 million in aid. Ortega had indicated in reply that he was studying the possibility of not allowing so-called “democracy promotion” assistance to non-governmental groups if USAID would not be aiding government health and education programs. Still pending is the “property waiver” which requires that the U.S. government refuse aid to countries that expropriated U.S. citizen lands, unless the President provides such countries with a waiver. Nicaragua has complied with U.S. demands on this issue, resolving 60 cases in the past year.

Heading the delegation to the July 4th festivities was Vice-President and former head of the Army Omar Hallesleven who was accompanied by Central Bank President Alberto Guevara, presidential economic advisor Bayardo Arce, Trade Minister Orlando Solorzano, Energy Minister Emilio Rapacciolli and numerous others.

The Informe Pastran reported that, “Contrary to what might have been expected, at the Embassy residence there was no atmosphere of tension but rather one of relaxation and cordiality, where they spoke about the necessary relationship between the two countries and the property waiver. In the majority of the conversations it was a given that the waiver would be issued without difficulty because the Nicaraguan government has over complied” with the technical requirements for the waiver.

In the speeches, however, one could hear a reflection of the issues that still divide the two countries. Ambassador Phyllis Powers spoke of the struggles of the United States from the Revolutionary War to the Civil War to the struggle for civil rights. She said, “Nicaragua is also taking its own road. In a little over 30 years, the Nicaraguan people have overthrown a dictator, fought a civil war, and planted the seeds for a democratic society. This transformation cannot occur from one day to the next. The people of Nicaragua can only complete this road if institutions that are democratic, independent and transparent prosper.” For his part, Hallesleven also spoke of the struggle of the United States for independence which could only be achieved by force of arms. He added that history shows that oppressed nations whose dignity has been violated will seek their self determination with the same honor that the people of the United States showed.

Alberto Novoa, who was in charge with complying with the property waiver requirements under President Enrique Bolaños (2001-2006), was not hopeful about the granting of the waiver. He said, “The United States always demands transparency and governability. You can resolve all the cases but if you don't stick to the rules of the game that they demand, you are not going to get the waiver.”

The US law setting up the property waiver mandates that if the waiver is not granted, not only will US aid to the government of Nicaragua be withheld, but the US must vote against assistance to Nicaragua from the multilateral financial institutions as well. In 2011 the United States donated US$21 million to the Nicaraguan government and US$31.5 million to the private sector. The World Bank provided the government with US$61.7 million in loans and donations; the Inter-American Development Bank US$157.7 million, and the International Monetary Fund US$17.8 million, according to the Central Bank of Nicaragua.

Florida Republicans have been lobbying the State Department asking Secretary of State Hillary Clinton not to grant the property waiver. Rep. Ileana Ros-Lehtinen said last week, “Aid should not go to the dictatorship of Daniel Ortega who is taking away all the rights of his people.” However, supporters of the waiver have not been silent. Informe Pastran reported [from last week's Nicaragua News Bulletin] that John Ballard at the Nicaragua Desk at the State Department told the Nicaragua Network and ALBA-USA that he has been receiving calls and e-mails in favor of the waiver and forwarding them to Assistant Secretary of State for the Western Hemisphere, Roberta Jacobson. For information about how you can participate in the campaign in support of the waiver, visit www.nicanet.org. (Informe Pastran, July 4, 5; La Prensa, July 8, 9)

4. IDB says Nicaragua on right track

Mirna Lievano, representative of the Inter-American Development Bank (IDB) in Nicaragua, said last week that Nicaragua is “on the right track” with its anti-poverty programs. The IDB has provided US$579.4 million in loans to Nicaragua between 2008 and 2012. Lievano said that the funds have been carefully used in the programs for which they were allocated and that adding up the results permits her to catalog Nicaragua as one of the countries with the highest efficiency and fulfillment of goals. Among the areas funded by the IDB have been energy, transportation, water and sewage, health care, the needs of children, the environment, production, and fiscal sustainability. She said that the Bank considers Nicaragua “a strategic member.” In 2007, the IDB cancelled US$1.172 billion in debt that Nicaragua had with the organism and in 2010 lowered the interest rate by 50% on 15 of Nicaragua's loans. (La Prensa, July 6; Informe Pastran July 6; El Nuevo Diario, July 5; Radio La Primerisima, July 5)

5. Death of police officer mars Repliegue

The death from a heart attack of one of the police officers in President Daniel Ortega's security detail marred this year's reenactment of the “tactical retreat” from Managua 33 years ago in the middle of the final offensive against the Somoza dictatorship. Aminta Granera, head of the National Police, told reporters that the officer was Capitan Elias Antonio Talavera who was only 45 years of age and had been serving in the police force for 28 years. President Ortega led the walk from Managua to Masaya that began with a rally in the afternoon of July 9 and ended the next morning in Masaya, a distance of 32 kilometers. Ortega said that he was proud of the participation of youth in the Repliegue and he said that he wanted to dedicate this year's walk to Fernando Lugo, recently overthrown as president of Paraguay.

The retreat on June 24, 1979, involved moving 5,000 people, mainly civilians, from Managua where they were being killed in the neighborhoods controlled by Somoza, to Masaya where they could be trained as militia. They later marched into Managua on July 19, 1979. (Radio La Primerisima, July 9)

6. Concerns raised about Nicaragua's endangered species

The death in the Galapagos Islands of “Solitary George, the last Chelonoidis Abingdoni species of tortoise, has raised the issue of endangered species in Nicaragua where there are 128 animal species listed as in danger of extinction and 62 as threatened. These include all Nicaragua's species of monkey and felines, as well as the Great Green Macaw and the Yellow Naped Parrot, among others. There is a total ban on killing or capturing these and the other species on that list. There is also a partial ban with relation to 62 species that are threatened, including the Green Iguana and the boa constrictor. These lists only contain animals that have commercial value. Experts say there are likely endangered species that have not yet been cataloged and those with no commercial value. Environmental authority René Castellon said, “There is tangible evidence that the species are disappearing from our planet and in the majority of cases the cause is actions of human beings.” (El Nuevo Diario, July 7)

7. Economic briefs on growth in formal sector employment, foreign investment, call centers, and internet access

Formal sector employment grew by 8.6% in January through May compared to the same period last year as measured by enrollment of workers in the social security system. Analysts said that the increase was due to growth in economic activity and government programs to promote social security enrollment. On the other hand, the buying power of workers' salaries fell by .6% compared to a growth of .2% last year in spite of the fact that the National Minimum Wage Commission (composed of representatives of government, unions, and employers) in February approved an increase in the minimum wage of 6.5% for the first half of the year. That increase excluded farm workers and Free Trade Zone workers from the adjustment as their wages are agreed to through separate negotiations. (Radio La Primerisima, July 7)

According to a UN Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in Nicaragua grew by 91% in 2011, leading the countries of the region. UNCTAD representative Nicole Moussa said that despite having a small economy, Nicaragua has shown itself to be much more attractive than other countries if you take into account “the level of direct foreign investment with respect to its Gross Domestic Product.” Last year, FDI in Nicaragua reached a record of nearly US$1 billion and analysts expect a similar level this year. (Informe Pastran, July 9)

The state agency ProNicaragua is working to increase Nicaragua's attraction as a “service provider” competing with India and the Philippians for Call Center jobs. Currently twelve Call Centers provide 4,500 jobs for bilingual Nicaraguans, jobs which pay US$500-$700 per month. In a country with high under-employment and unemployment, Call Center jobs are considered good jobs. Xavier Chamorro, director of ProNicaragua, said that Nicaragua has enormous potential due to proximity to the United States and its location in the same time zone. Call Centers require little investment and Chamorro hopes to attract many more given that Nicaragua is the safest country in Central America. One company, Sitel, has 1,000 employees and is preparing to add another 1,500. In 2013 it plans to open new Call Centers in Leon and in Bluefields on the Caribbean Coast. (Radio La Primerisima, July 4; El Nuevo Diario, July 5)

Nicaragua last year more than doubled (113%) the number of homes connected by wide band to the internet, the fastest growth rate in Central America. Costa Rica continues to enjoy the highest percentage of internet wired homes with 33.5% versus 15.3% for Nicaragua. In Honduras, 13% are connected; in El Salvador, 16.3%; and in Guatemala, 17.5%. There are more than 1,056,000 households in Nicaragua of which 704,000 have electricity. Of those, 108,000 now have an internet subscription. In addition, an estimated quarter of a million Nicaraguans regularly use internet cafes or school computer labs to access the internet. (El Nuevo Diario, July 9; Radio La Primerisima, July 9)
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