Nicaragua Network

1. US Embassy announces end of property waiver regime
2. Senate approves new US ambassador to Nicaragua
3. Tumarin object of speculation, again
4. Central Bank makes changes; trade deficit rises
5. Nicaraguan team wins bronze at Boys Baseball World Cup in Taiwan
6. Rural families convert from wood to biogas cooking

1. US Embassy announces end of property waiver regime

The United States Embassy in Managua issued a press release on August 5 announcing that the US government was removing the requirement that the State Department issue each year what was known as “the property waiver” certifying that Nicaragua had made progress in resolving property disputes involving US citizens from the 1980s in order for US aid to the country to continue and for the US to vote to approve multilateral assistance from the international lending agencies. The communique said that between July 2014 and July 2015, thirty property claims were resolved, including the remainder of registered cases that met the requirements of Section 527 ofthe Foreign Relations Authorization Act for 1994 and 1995. The statement said that the US government expects that the government of Nicaragua will make further efforts to resolve claims that do not qualify under the law and “maintain its commitment to protect the private property rights of all US citizens in Nicaragua.” The Embassy added that the US recognizes and appreciates the determination shown by the government of Nicaragua in recent months to resolve the pending claims in an expedited and satisfactory fashion for all parties concerned.

While the 1994-95 Foreign Relations Authorization Act does not explicitly say so, the law was interpreted to allow people who were Nicaraguan citizens at the time their property was confiscated and who obtained US citizenship later to be retroactively considered US citizens in order to claim compensation under the law. Property was taken for different reasons under the Sandinista revolution of the 1980s. Members of the Somoza family, its closest personal, political, and business associates, and the National Guard all had their property confiscated; owners who had mortgaged their property before the revolution and fled the country with the money with no intention to pay the mortgage had their property foreclosed upon; people who decapitalized and abandoned their property had that property confiscated; and other underused property was expropriated for use under land reform. Informe Pastran cites former Agriculture Minister Jaime Wheelock as reporting that under Sandinista agrarian reform nearly four million acres of farmland were distributed to approximately 80,000 families. After the Sandinistas lost the 1990 elections, many of the property owners who had become US citizens appealed for redress under a 1961 anti-Cuba law.  Section 527 of the 1994-95 Foreign Relations Authorization Act, first proposed by Sen. Jesse Helms, formalized the prohibition of US aid to any country that had confiscated US citizens’ property and established the system by which the US president could waive that prohibition. Every year since then the US has issued a waiver indicating that Nicaragua has made progress in resolving property claims and that aid could continue. The payments, however, burdened the country with bonds that added to the national debt and some people who had lost their property to legitimate foreclosure had it returned to them. Some first received compensation and later got the property back!

Alfredo Cesar, president of the Conservative Party, told Informe Pastran that, “The end of the property waiver is positive for the country because it closes a long and costly chapter for Nicaragua. Successive governments have indemnified with more than US$1.3 billion the owners of properties confiscated in the 1980s, many of them US citizens and we Nicaraguan citizens are the ones who have paid that amount with our taxes.” Business leaders and former government ministers agreed that while all the Nicaraguan governments since the law was put in place have worked on this issue, particular credit for its final resolution had to be given to current President Daniel Ortega, Attorney General Hernan Estrada, former Ambassador to the US Arturo Cruz Sequeira and current Ambassador to Washington Francisco Campbell, COSEP president Jose Adan Aguerri, along with current US Ambassador to Nicaragua Phyllis Powers, who businessman Cesar Zamora said “finishes her term with a gold medal.”

Central Bank President Ovidio Reyes said, “We have no doubt that news such as this, added to all the other positive news items that have been coming out, will have its impact on the confidence that private investors have in our country.” He added that the drop in the issuing of indemnification bonds will help reduce the national debt. Juan Fernando Salduendo, International Monetary Fund representative in Nicaragua, said that the decision by US authorities is a reflection of all the recent international news that points toward Nicaragua’s favorable economic prospects. (Among those recent news items was the removal in February of Nicaragua from the FATF-GAFI “grey list” of countries with deficiencies in their system of preventing money laundering and the July upgrade by Moody’s Investors Service from B3 to B2 with a note of “positive changes” in the economy.)

Aguerri of COSEP said that there are still just over 100 claims by US citizens [which evidently did not meet the requirements of Section 527] that will be resolved through the system of mediation and conflict resolution of the Chamber of Commerce. He added that the next challenge is the “financial transparency waiver” which he said is “a subject that must be discussed by the governments of the United States and Nicaragua.” This waiver was first denied Nicaragua in 2012 and has not been issued since then based on what the US perceives as a lack of transparency in the accounting of ALBA and Petrocaribe funds in the national budget and on questions about the 2011 elections. The amount of aid that Nicaragua fails to receive is small and recently some Petrocaribe funds, including those used for the supplementary payments to low income government workers, have been included in the national budget which may affect US analysis. (Informe Pastran, Aug. 5, 6, 7; El Nuevo Diario, Mar 12, Aug. 6, 7)

2. Senate approves new US ambassador to Nicaragua

On July 15, The United States Senate approved President Barack Obama’s nomination of Laura Farnsworth Dogu to be the next ambassador to Nicaragua as Phyllis Powers finishes her three years in Managua. There were no challenges to the nomination but Senator Marc Rubio, chair of the committee, asked the nominee about the proposed shipping canal across Nicaragua and the pending property issue. Farnsworth Dogu said with relation to the canal that she was following the issue and was concerned about transparency and the lack of funding so far for construction of the canal. With relation to the property issue she said that good progress was being made and that the process of resolving claims was close to an end. Farnsworth Dogu is a career diplomat who has worked at State Department posts inEl Salvador, Turkey, Egypt, and twice in Mexico, as well as in Washington DC. In her statement before the Senate Foreign Relations Committee, she said that she would “work to promote a Nicaragua with transparent democratic institutions and values and a commitment to human rights, that is more economically integrated with other Central American countries, and that collaborates effectively with us on a growing range of issues.” (Informe Pastran, Aug. 6; El Nuevo Diario, Aug. 7; http://www.foreign.senate.gov/hearings/nominations-07-15-15;   http://www.foreign.senate.gov/imo/media/doc/071515%20Dogu_Testimony.pdf)

3. Tumarin object of speculation, again

Last week some economists and businesspeople were questioning whether the Tumarin hydroelectric project was dead because of a corruption and money laundering scandal in Brazil involving Petrobras of which Queiroz Galvao is the international arm.  Queiroz Galvao along with Electrobras formed the company CHN that holds the concession for construction of the Nicaraguan dam project that was first approved in 2009. The web based outlet CentralAmericaData.com noted, “In the view of the private sector it is essential to know what will happen to the project in the future, but at the same time some entrepreneurs say that if in the end the dam is not built, the effects on the country's energy matrix would not be so serious. Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP), commented that “In Nicaragua under current conditions the country would not be majorly affected if the Tumarín project is not eventually built. The conditions have changed.” The report also quotes Cesar Zamora of IC Power as criticizing the Brazilian investors who, he said, should have completed the project by now and as saying that “[Tumarin] is very expensive for the country; it is a project that today makes no economic sense.” Economist Adolfo Acevedo said that the projected cost per kilowatt hour of electricity produced by Tumarin would be far above the regional average for hydroelectricity.

CHN released a statement on Aug. 7 that said the company was continuing with the program it had laid out in February of this year for the project and has already invested US$60 million in acquiring the necessary land and building a road from San Pedro del Norte to the dam site on the Rio Grande de Matagalpa in the North Caribbean Autonomous Region. The communique added that the hydroelectric project is of vital importance for Nicaragua’s economic development given that it will generate 4,000 direct and 3,000 indirect jobs and is also a key part of the country’s efforts to produce over 75% of its electricity from renewable sources. The technical feasibility study and the environmental and social impact study have been completed and found to be in compliance with the terms of reference laid out by Nicaraguan authorities. The project was revised in 2012 and again in 2014 based on the engineering studies. The project, which will produce 253 megawatts of electricity, is projected to cost US$1.2 billion and, after 26 years of commercial operation, will become the property of the government of Nicaragua at no cost to the country. (Informe Pastran, Aug. 5, 7; El Nuevo Diario, Aug. 8; La Prensa, Aug. 2; CentralAmericaData.com, Aug. 7)

4. Central Bank makes changes; trade deficit rises

Arguments have been flying about whether economic statistics issued by the Central Bank are accurate with economist Adolfo Acevedo saying that the way imports for the Free Trade Zones were registered in the balance of payments but not in the national accounts beginning in 2006 resulted in a larger gross domestic product in the years following. The problem was discovered last year by the International Monetary Fund. IMF representative Juan Fernando Zalduendo said, “We had identified that there was a discrepancy…. And we asked them to harmonize the statistics of the balance of payments with the national accounts.” He added that, as a result, possible discrepancies will be corrected and GDP growth measures will be more accurate. Central Bank President Ovidio Reyes said that while in the first years there were not significant differences, “with the passage of time discrepancies were generated.” In an Aug. 6 communique, the Bank stated that it has received technical assistance to implement the Regional Project on Harmonization of Statistics of the Regional Center for Technical Assistance of Central America, Panama, and the Dominican Republic. Zalduendo added that an IMF mission will visit Nicaragua in October and noted that there were “positive indicators like the high level of [foreign currency] reserves and sound fiscal management.”

Reactions to these revelations and explanations were generally positive. Juan Sebastian Chamorro, director of the Nicaraguan Foundation for Economic and Social Development (FUNIDES), said he was satisfied with the explication by the Bank and the IMF and noted that henceforth the contribution of the Free Trade Zones to the national economy will be measured more accurately. Earlier in the week, Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP) had said that the questioning of the accuracy of government statistics was appearing now because the country is entering an election season which polarizes positions. He noted that the Central Bank has made changes in the measurement of several economic indicators with the advice of the IMF based on international norms. He said that there had been no attempt to manipulate official figures.

In related news, the Central Bank reported that the country’s trade deficit had increased by 7.4% when compared to the same period last year as a result of a drop in exports and an increase in non-petroleum imports, especially industrial machinery, food products, and medicines. In the first half of the year, exports dropped by 2.4%. The volume of gold exported dropped by 13% while, in the case of sugar, there was a reduction in its price on the international market of 20.9%. On the other hand, the international prices for coffee and peanuts rose. (La Prensa, Aug. 7; El Nuevo Diario, Aug. 6, 7; Nicaragua News, Aug. 7; Informe Pastran, Aug. 5, 6)

5. Nicaraguan team wins bronze at Boys Baseball World Cup in Taiwan

On Aug. 5, the 17 members of the Nicaraguan boys’ team returned to an ecstatic welcome at the Managua airport after winning the bronze medal at the World Baseball-Softball Confederation U12 Boys Baseball World Cup in Taipai, Taiwan. Gold and silver were won by the United States and Taiwan. Cuba, Venezuela and Japan placed fourth, fifth, and sixth in the twelve team competition. Lester Medrano, who pitched in the games against Japan and Venezuela, said that he was proud to represent Nicaragua in the World Cup. He said, “I am going to remember the games against Japan and Venezuela.” The first Medrano won but in the second the Nicaraguan team lost in extra innings. Medrano added, “But, what the grownups couldn’t do—that is beat Cuba—we did!” Elian Rayo, considered the best hitter on the team, said that “Winning against Cuba for the bronze was beautiful and will go down in history!” The boys were taken in a caravan to the Luis Alfonso Velasquez Park where they placed a wreath at the monument to Roberto Clemente and then had lunch with their families at a restaurant in the park.

Nemesio Porras, president of the Nicaraguan Federation of Associated Baseball (FENIBA), said that since 2009 the Nicaraguan government has supported the sport with training and the building of baseball diamonds and stadiums for little leagues around the country. Nicaraguan youngsters won the gold at the Pan American games in Mazatlan, Mexico, earlier this year which earned them a spot at the Taiwan World Cup. El Nuevo Diario asked Porras, “What will happen to these children? Will they get follow-up?” The answer, “Yes, FENIBA is convinced that support should increase, not just for these young ones who reached for the sky and won the bronze, but for all categories including those over 18.” Also watching the boys play was Priscilla Cisneros, representative of Major League Baseball (MLB) in Nicaragua. Cisneros said that FENIBA and MLB will be opening a new program to develop talented players which will be open to boys over 14 years of age. Meanwhile, FENIBA will continue to work with the twelve-year-olds who won bronze in Taiwan. (El Nuevo Diario, Aug. 4, 5)

6. Rural families convert from wood to biogas cooking

During the past two months, an average of two rural families a day have switched from cooking with wood to methane thanks to a  government program to subsidize the initial cost of installing a biodigester. The Nicaragua Biogas Program (PBN) also provides training and technical assistance as part of the Sandinista government’s commitment to decrease the number of families cooking with wood by 10% by 2020. Currently, 45.8 percent of households cook with wood. Biodigesters turn animal waste, most commonly from cows and pigs, into methane gas. Improved health for women and young children is one of the top benefits from cooking with biogas as wood smoke causes many respiratory diseases. But, cooking with methane also saves the family money that would have been spent on firewood, decreases deforestation, and the end product of the process is a rich fertilizer. The PBN program is a US$6.2 million effort in partnership with the Dutch Development and Cooperation Service and the Inter-American Development Bank. (Nicaragua News, Aug. 10; El Nuevo Diario, Aug. 6)