from envio, september 2006:
Bolaños has borne major respon-sibility for this issue for no fewer than ten years and his legacy to his successor is totally negative. His “excuse” for the August blackouts is an apt epitaph for his administration: “It was my fault for getting so enthusiastic about foreign investment to generate jobs that I never thought about how the energy demand would rise.” When Bolaños announced on taking office that he hoped to be remembered as “the best President in Nicaragua’s history,” the country would have been forgiven for expecting something more than this disingenuous myopic oversight and unbridled enthusiasm for energy-guzzling free trade zones.
(...) Montealegre has announced that he will “sow fuel,” extending the cultivation of African palm and sugar cane to produce biodiesel and ethanol, projects already initiated in the country by private enterprise. He has also promised to push through the small renewable energy projects that the outgoing government ignored together with the gigantic Copalar dam, an environmentally destructive mega-project that would evict thousands of people from their communities and towns. Postponed since Somoza’s times, the project has recently been revived by foreign investors and their national partners, who reportedly include bankers, leaders of the ALN, FSLN and PLC, and even top army brass.
(...) [growth:] As the chart below shows, the last two years of Alemán’s government showed a growth blip due to post-Mitch aid, but in Bolaños’ first year the accumulated problems mentioned above took their toll. In the past three years, it has recovered a modest but sustained growth rate, which is ex-pected to continue this year for six different reasons.
First, exports have increased significantly and the prices of coffee, sugar and beef—still the country’s main exports—have improved. This government is also responsible for an important growth in Korean, Taiwan-ese and US investments in the tax-free assembly plants for re-export, known as maquilas, ormaquiladoras, most of which assemble and export garments.
(...) Moreover and unlike anybody else, Bolaños included the total value of the exports from maquiladoras operating in Nicaragua. The rest of the world only counts the value added by the maquila in the country, not the raw materials imported tax free for assem-bly. Doing things correctly, we would end up with $1.1 billion in exports.
(...) That’s not to say that exports haven’t grown or that we haven’t achieved some diversification in our traditional export products. In addi-tion to the traditional coffee we’ve been exporting for a century, we’re now beginning to export organic coffee and gourmet shade-grown coffee, and these new products fetch better prices. Nicaragua is also exporting dairy products, especially to El Salvador, and is beginning to export beans. For all that, however, we’re still mired in the export of raw materials, with little or no value added.
(...) [trade deficit] While export earnings grew, so did import spending, especially in the past couple of years, thanks in part to the rise in oil prices. Even accepting Bolaños’ asser-tion that we exported $1.6 billion in 2005, we imported $3 billion, nearly twice as much. This trade deficit is more or less the same as at the end of the Sandinista government in propor-tional terms. The largest in Latin America, it shows no sign of shrinking, and in fact keeps growing every year in absolute figures.
(...) Emigrants’ remittances resolve many family problems and help stabil-ize the economy, but they also express the misfortune of a country that is expelling so many citizens because it doesn’t offer them jobs or a decent standard of living. Surveys taken in recent years consistently show an incredibly high percentage of Nicara-guans who say they would leave in search of work somewhere else if they could. The Bolaños government’s economic policy, which favors big capital and banks, has increased the emigration of small businesspeople and workers whose only option is to go work hard in some other country and send a little back home.
(...) [credit] The clouds also hang very dark over the credit expansion, another of the factors that have contributed to the economy’s growth and dynamism. The vast bulk of that new credit has financed upper-middle-class housing construction, commerce and above all high ticket consumer items such as vehicles and major household appliances. A full 60% of the loans provided by the country’s banks go for such items, while the entire agricultural sector only gets 10% of the credit supply.
(...) The combined portfolio of all members of Nicaragua’s Association of Micro-Financing Institutions (ASOMIF) is now nearly US$200 million, and 300,000 people have access to that service. But even then, only 32% of these micro-credits get to the rural sector.
(...) [MAQUILAS:] We’re in the situation we’re in because the development strategy is perpetuating and exacerbating the in-equalities. The National Development Plan, with its six or seven “clusters,” is a strategy geared to creating what is fondly called a “business climate” to attract major foreign investors to Nicaragua. Unfortunately, most of the modest number this government has attracted are maquiladoras. Bolaños’ tenacious and sustained orientation has excluded all Nicaraguans linked to small and medium urban and rural businesses, even though they are the majority and generate the majority of productive jobs.
(...) We’re in the situation we’re in because the privileged actors in this story are in the financial system and because the bulk of the remaining investments have gone into improving the infrastructure for foreign investors. The clearest case is investment in free trade zone infrastructure, in other words the maquila industrial parks. Thanks to Bolaños’ strategy, the free trade zones have highways and ports to move their products while peasants don’t even have access roads to get their harvests out to the rural highways.
(...) It’s pathetic to think that the magnet attracting maquila investors to Nicara-gua isn’t even all the tax exemptions and infrastructure they demand of governments, but rather that Nicara-gua offers them its “competitive advan-tage” of the lowest paid labor force in Central America. And now that we’ve signed the Central American Free Trade Agreement, they are guaranteed not only profitability with low salaries but preferential access to the US market.
(...) With his peculiar triumphalism, President Bolaños recently inaugur-ated a huge free trade zone for a new US investment that, in his words, will “revolutionize” the maquila industry in Nicaragua. A very powerful textile group decided to bring its entire blue jeans production to Nicaragua. The maquila will even produce the cloth in Nicaragua, which is a major step up given that maquilas traditionally import all production inputs, cloth included, tax free and only sew the garments here. In addition to producing its entire line of jeans locally, this maquila will thus also foster the resurrection of cotton production in northwest Nicaragua, which is currently in its second year of pilot cotton crops. This new factory expresses the change of strategy of the North’s textile industry in response to Asian compe-tition. There’s nothing new in moving to Nicaragua to slash costs by paying low wages, wresting tax exemptions from the government and then export-ing back to the US market, also tax free, to sell their line to the US consumer at a handsome mark-up, even though the production cost is a fraction of what it would be in the States Such offshore maquila production began in Mexico even before NAFTA. The “revolution” consists of creat-ing an integrated chain from agricul-tural production through to the export of the manufactured product for the first time in history. And it’s no accident that it’s being applied to heavier pieces such as jeans, which would have uncompetitive costs if they had to be transported from China or even if the bolts of denim had to be shipped down from the States. The industrialists of this new strategy say that they’ve already spoken with all presidential candidates and have nothing to fear from any of them. Daniel Ortega dedicated a good part of his opening campaign speech to these investors and lauded the benefits they will bring to Nicaragua.
(...) [overall indicators] The estimated average annual population growth rate since the 1995 census was 2.6% annually, but with the 2005 census, it was discovered to have dropped to 1.8%, presumably ex-plained by the hemorrhage of emi-gration and greater access to and use of birth control methods by women of fertile age. Even with this significant drop, however, the 3.7% projected economic growth for 2006 isn’t nearly enough to generate sufficient jobs and opportunities for all the young people who enter the restricted job market each year and are often forced to leave the country at the first chance.
(...) The estimated average annual population growth rate since the 1995 census was 2.6% annually, but with the 2005 census, it was discovered to have dropped to 1.8%, presumably ex-plained by the hemorrhage of emi-gration and greater access to and use of birth control methods by women of fertile age. Even with this significant drop, however, the 3.7% projected economic growth for 2006 isn’t nearly enough to generate sufficient jobs and opportunities for all the young people who enter the restricted job market each year and are often forced to leave the country at the first chance.
(...) Latin America has the greatest wealth distribution inequalities in the world, and Nicaragua is competing for first place according to the Gini Co-efficient, which measures inequality. On the Gini scale of 0 to 100, in which 0 is absolute equality, Nicaragua has a coefficient of 55, greater than the Latin American average of 52 and nearly double China’s 30. Nicaragua’s official income distribution data show that the wealthiest 20% of households hoard 60% of the national income, while the poorest 20% try to get by on 3%. There’s no way in the world to reduce poverty with this income distribution.