Arce: Nicaraguans need to invest in Nicaragua

Part I in a III part series on the current and future challenges of Nicaragua’s economy

MANAGUA, Nicaragua—Comandante Bayardo Arce is an old-school Sandinista from the pre-pastel days of red-and-black revolutionary politics.

As head economic advisor to the president, Arce is the last Sandinista comandante who remains loyal to Daniel Ortega. As such, his revolutionary credentials are solid enough that he doesn’t have to kowtow to the ubiquitous first lady, or give echo to her eccentric faux-hippie tautological tartuffery.

Indeed, some of the new Sandinista boilerplate seems to confuse Arce’s tongue.

“Christian, socialism, how is it? Socialist, Christian and solidarity, right?” Arce told me with a dismissive laugh during an interview last year. 

Arce doesn’t pay much mind to the official narrative about Nicaragua moving towards socialism; instead, he defends Nicaragua’s free-market economy. He also doesn’t agree that the three governments previous to Ortega’s return to power were a complete “neoliberal nightmare.” 

Indeed, Arce doesn’t even buy the Sandinista myth about ALBA being some sort of infallible catholicon for all that ails Nicaragua. Instead, he says Nicaragua needs to diversify its markets and shouldn’t “put all its eggs in one basket” with Venezuela.

Arce is also particular among the ruling coterie in that he doesn’t abide by the first lady’s law of omerta. Arce—to his credit—is one of the very few administration officials who will actually talk to journalists and is unafraid to answer questions. Then again, he’s also one of the few officials in the Sandinista government who actually has anything thoughtful or worthwhile to say.

Bayardo Arce is calling on Nicaraguans to step up and get involved (photo/ Tim Rogers)

The former comandante is also charismatic and unmistakably Nicaraguan in his waggishness. During a recent talk to an overflow crowd at a business luncheon organized by Nicaraguan-American Chamber of Commerce (AMCHAM), Arce had most of the crowd eating out of his hand with his candidness and snarky sense of humor.

In his speech, in which he projected sustained 4% economic growth over the next few years, Arce told Nicaraguan business leaders that everyone needs to work together to build consensus, invest in the economy and move the country forward. Investing in Nicaragua is not just the work of foreign capitalists, Arce challenged.

“Foreign investment is welcome here, but we Nicaraguans can’t just let them pass us by. We have to get involved also; Nicaragua’s wealth can’t just be in the hands of foreigners—our pockets and investment banks need to collect money, too,” Arce told investors at the end of his speech. “We need to be involved in all opportunities, because this is a country of opportunities.”

After Arce’s speech, I had a chance to sit down with him and press him a bit on what he meant by his parting admonishment to the local business community.

The concern, Arce explained, is that Nicaraguan investors are not keeping pace in a country that saw a monstrous 91% growth in foreign direct investment last year. He says an estimated 190 Nicaraguans have personal fortunes each worth more than $30 million, yet many wealthy Nicaraguans are reluctant to invest in their own country.

“In my opinion, Nicaraguan business leaders are still a bit conservative; they need extra assurances to invest here,” Arce told The Nicaragua Dispatch. “I tell them, ‘There are things here you aren’t seeing but the foreigners are, so try to open your eyes!”

Arce says the Sandinista government is “happy that foreign investment is coming” to Nicaragua, but adds, “We want national investment to develop also; we wish it were further advanced.”

The presidential advisor does, however, see some encouraging signs that Nicaraguan investors are starting to get in the game. He notes that just in the past few weeks, local investors have spoken to him about new $30 million African Palm plantation, a $30 million sugar-refinery expansion, and a $100 million investment in an old coffee plantain.

All of those investments are encouraging indications that Nicaraguans aren’t letting the train pass them by, Arce says.

‘We are not nihilists’

The fervid rhetoric peddled from the flowery podium of officialdom is that the Sandinista government returned to power through a divinely enlightened electorate (and a cherubic electoral official, for that matter) to assume the holy task of protecting Nicaragua from “the darkness of the 16 year neoliberal nightmare.”

Arce, however, takes a slightly more tellurian approach to politics and the economy. He says the Sandinista government has offered continuity to many of worthy initiatives started by previous administrations, as nebulously neoliberal as they may have been.

“It was a 16 year nightmare, but there were good things that happened,” Arce says, trying his best to give some lip service to the party line. “We don’t have a nihilist vision that some of the opposition sectors have, in particular several media outlets, such as La Prensa, which is nihilist in their policy that nothing we do is good. Nothing. Nothing. Nothing.”

In contrast, Arce says, the Sandinistas have tried to improve upon many existing initiatives without destroying everything to start anew.

“Violeta’s government did positive things, especially in stabilizing the macro-economy,” Arce said. “The Alemán government did positive things in terms of infrastructure and work in the countryside, even though Alemán had problems managing funds.”

Even the Bolaños government, which Arce claims was the least worthy of continuity, wasn’t all bad.

“We didn’t fall into the same pattern that previous governments did—which we think was an error—of coming into office and erasing everything that our predecessors did,” Arce says. “Even though they were governments elected under the same party flag, every five years they would start all over again. Instead, we continued from where we picked up.”

Arce says that continuity has been part of the Sandinistas’ secret to success in managing an economy that has averaged 4.6% growth over the past two years. This year, the Nicaraguan economy could grow as high as 5% (a whole percentage point higher than official estimates), according to projections released this week by the Economic Commission for Latin America and the Caribbean (CEPAL).

“We think there are positive things that the previous administration did and they need to be preserved and even improved upon,” Arce says.

Arce pooh-poohs concerns that the Sandinista government has failed to give continuity to the institutionalization of Nicaragua’s democracy. Critics claim that many of the institutional gains achieved under the previous governments have been rolled back aggressively by the Sandinista government.

Arce’s answer to those concerns is a dismissive comment about how “there’s always room for perfection.”

Room enough to fall back and punt, some might argue.

Megaprojects for mega-egos?

Part of the Sandinistas’ effort to offer continuity to the plans of yore is to promote Nicaragua’s aging megaproject dreams of building an inter-oceanic canal, a railway, an oil refinery, a deep-water port on the Caribbean, and other will-o’-the-wisp that have been discussed in Nicaragua for decades.

“These projects are old dreams, but they have matured under the Ortega administration,” Arce insists.

Arce says some people may be inclined to mock the government for woolgathering, but he insists the megaprojects are the type of game-changers that Nicaragua needs to really develop and get out of the slough of poverty that have held the country back for centuries.

People who don’t believe in the megaprojects are naysayers who don’t want Nicaragua to succeed, he says.

“This goes back to nihilism,” Arce says. “If another country does this, everyone says ‘marvelous’ and ‘perfect,’ but when we want to do it, everyone says, ‘No, it won’t work—there is no reason to try’.”

“If we keep echoing this type of thought, we will continue to be a poor country, eating beans and tortillas. And we don’t want to keep being like that, we want to think that the next generation, our children and grandchildren, will live in much better conditions,” Arce said.

Next: Part II: Nicaragua’s megaproject dreams—Canals and ports and satellites (oh my!)

  • Rolando

    Although I don’t agree with everything Arce says, I do like overall what he has to say. We could use more pragmatists and independent thinkers with real credentials like him in Government. The problem, in Nicaragua, are scourages like Danielismo, Arnoldismo, etc and party loyalty being put above the interests of the country because thats the only way people can see themselves getting their loaf of bread.

  • jimmycoffee

    I have a lot of respect for Sr. Arce. In a political class of yes men and flatterers, he stands out as both a pragmatist and realist, when it comes to Nicaragua´s situation in the 21st Century. I truly believe he sees the difficult linear pattern that can be both testing and benevolent, taking Nicaragua forward over the next years. there are no easy solutions and there are no quick fixes. Thankfully, he is not wrapped in his own self esteem or afraid of stating the politically obvious. Nicaragua could fly forward with more men like him. Bravo sir.

  • Abu Sharif

    “new $30 million African Palm plantation, a $30 million sugar-refinery expansion”: this says it (nearly) all: growth in Nicaragua is sustained by unsustainable activities which depend on irrational foreign demand for veggie fuel, which more and more is internationally recognized as a completely wrong step in the wrong direction, destroying Nicaragua’s natural wellbeing at the same time, water, soil, forests, and doing nothing but fill rich people’s pockets, who don’t care about Nicaragua’s future, like Pellas, Ortiz, Arce.

  • Abu Sharif

    … and livestock and gold … the same story: dangerous, degrading Mother Nature, Ortega’s favourite propaganda person, and making future for the coming generations a lot more difficult.

  • SAD

    “eccentric faux-hippie tautological tartuffery”

    That line deserves to be repeated.

  • Abu Sharif

    Yes, SAD, you are right, but that does not mean that Arce is right nor the opinion about him. As far as I heard, he is paid by the Chinese to get them more into Nicaragua, and when the Chinese investments are a lot bigger than Taiwan’s, then they change diplomatic relations from Taiwan to Beijing (like before the other liberal free market country Costa Rica did). These are real reasons, just getting richer, and not some patria and so on-stuff, which surely are not on Arce’s agenda. He is not pragmagtic in the interest of Nicaragua but just greedy in the interest of his wallet.

  • SAD

    Abu I think the author was referring to Mrs Ortega with that quote. Im not sure what you are talking about.

  • http://GemmaDesignCorporationBWW Gloria H Mallorca Von Kremer

    Everything that is good for Nicaragua is good for the Economy of Nicaragua ,I believe former CommanderArce has done the best he could for Nicaragua in the name of the Revolutionary ideas,he confronted a a hostile environment after the war ,they themselves created and directed by Cuba ,there were damages death and disasters on both sides,Nicaragua was a blood stream of different lineage of blood-lines of the Nicaraguan families who until this day mourn the death of their beloved ones ,on both sides ,and to some there are some who were also never found, until this day others were send to Cuba for imprisonment without a follow up ,because no accountability was given to the Hague Court ,doing anything at any time because of fear to the new Regime,and to Cubas retaliation ,or for becoming in consequence victims after the war. Like he said President after President carrying the same flag with the Sandinistas Regime behind them and or an Army controlling the Government we see different men as Presidents which reflects the different economic crisis and economies rising up or down in a politlcal atmosphere created by this same Political thought. In 1958 we see all these guerillas destroying mountains and populations as well as farming and cattle industries for 25 years , and affecting the agriculture sites of the Country and production, guerillas had taken over the Farms and Farming of Owners that were a mixture of Liberals and Conservative.Citizens of Nicaragus lost their controll to their Farms as they were takened over by the Guerillas Movement We see the death of Former Gral Somoza Garcia and the influence of Cuba and Chamorros leading the country toward a radical leftist Government until they destroy his Government of 45 years of Liberalism with mix Conservative figures that also reach the Presidency ,then and before we see the more than 100 years of Government of only the Conservative Party !! something is rarely written or spoken also due to retaliations .In all of them we see the reflections of such economies War after War coffee agriculturals farming as a basic income of the GNP of Nicaragua.We see the destruction of highways and all that Somozas did to construct the Country destroyed, then we see the term of Presidency of Chamorro a mix economy with the affluents wealthy capital of the Chamorros family invested all over Nicaragua in TV Medias Newspapers ,even Barricada(formerly Diario Novedades ) taken over ,and global investments and in laison with Daniel Ortega Saavedra ,secure capitals as the Pellas Trust Foundation producing sugars anddifferent Rums for Nicaraguas economy,and so on like the Beer Trust of Nicaragua , and the World . but there are errors of misconceptions.Conservatives believe Liberals were handled money direct from the Somoza Family for Woods Manufature Industries ,for Concrete Manufaturing companies,Real Estate private Farms inherited from the 1879 and around those times ,they confiscated all and destroy or overtooked it all,an error in the political views. Somozas never handle to anyone pennies and or millions they were investors themselves intelligent people capitalist ,Republicans Style , they paid wages to labors ,but never handle money to anyone as the Sandinistas believe , and allied of their investors in their own land.We must understand the Chamorro Family wanted to be in Power again controlling all of Nicaragua,I believe when they met young humble Daniel they had their own questions of aristocracy, elite money how would they survive in a world that was completely Cuban in its structure and form ,now he is married to the upper class of Nicaragua bringing Families in his deals as Pellas and many others far away from his reach or expectations when he was born! in 1979 all was damage and they took Nicaragua to a from a destroyed land and atmosphere to a better quality control theatre and ambiance base upon the principles of the Revolution,and their Victory it was a mixture of intimidation ,new investments from abroad and all Europe came to the table of the investment deal.but not all was allright investors wanted a free Democracy and not a Cuban
    Revolution !!!! Chamorros Government had key figures as Gral Joaquin Cuadra ,who was a key figure against the Contras Revolution with the military and logistics support , of the Generals from Cuba ,as a result of so many deaths!!! bu the contra was just an instrument for Chamorro to come to power !again the economy was in crisis and many confiscated properties huge acreages of coffee plantations ,were being actively worked under their own liasons control ,for many it was an economy of a double coin face ,one with the Revolutionary loyalty, and the other before the capital of the elite Families production the same closed circle ,like it was the times of the Spanish Conquistadores,capital and revenues for them alone !All this time talking against Somoza and they they were doing exactly what they so called Dictatorship and Abuse of Power ,even against its own families members !later Tourism was introduced at that time in a very powerfull aggresive way bringing good news for the people ,and the Government !Former President Bolanos offered a moderate peaceful Political Structure and a better economy.Aleman introduces releases of confiscation allowing many liberals to negotiate but under a threatfull ambiance allways control by the Sandinistas,so foreign and liberals could not work peacefully in their farms and or Industries!!! There we see again Ortega in power allways in controll by the principles of the Revolutions, and directed by Cuba not being himself and with a mix Economy again requesting loans to the United States of America ,and Europe requesting a percentage from Iran, Cubas interests in Nicaragua,and sharing it all with Former Commanders loyal to the Revolution and others. Actually the Projects that he writes of Palm projects,and other Investments Projects as in the Sugar Refineries perhaps of the Pellas family,interests on African Palms -Oils production in the Areas of the Atlantic Coast,and a future coffee project producing 100 more millions of income for the increase of GNP of Nicaraguas coffee are all great ideas but the investors that will come there will be investors, that the Ortega Regime will respect,and or mix with the most important Families of Nicaragua as in a Venture capital with the Pellas and Chamorros and Ortegas oherwise it will not work !,only in liason with these families otherwise they will be jeopardyze .Any other will risk is highly risky for their investments as usurped confiscation will follow,just as in the times of the Oil refineries of Mexico where all capital and investments were confiscated and became part of the State Wealth supposely for the people of Mexico like Kuwait ,yet in difference to Kuwait not all oil revenues of Mexican oil goes to the poors improvement but to the very wealthy deals of different parties in Mexico .Such is the economy of Nicaragua.A difficult task for the Government and even Nicaraguans very wealthy Families ,evn for those that are not Conservaive but Liberals .No one in its right mind would invest just to be confiscated later on, and his investment becoming part of the wealth of the State .

  • Carlos Briones

    Gee…Can anyone explain to Gloria the meaning of a “comment”?

    They say the devil is the details. Arce argues that nicaraguans miss a great opportunity for wealth growth by failing to invest in their own country. He cites banking as one of those opportunities. This could not be further from the truth. It is still fresh in many the rampant fraud that bankrupt most of the banking industry in the 90’s of the last century. There is no FDIC to insure your deposits in Nicaragua. And, unless you are a foreigner who can take the government to an arbitration/mediation court outside of Nicaragua, you can kiss your savings goodbye.

    Notwithstanding this minor omission to Arce’s economic views, is the issue of prolific fraud involving the real estate market; the insider’s trading within the Nicaraguan elite regarding “predictable disasters;” and of course the patently absent rule of law that engulfs the country.

    Not long ago I read a U.S. embassy’s wiki leaks comment that only an idiot would invest in Nicaragua with such instability. I concur with that assessment.

  • Alberto

    its easier for foreigner to open a business than a nicaraguan. the reason there is so much foreign investors, is because of the incentive of exoneration and less beurocratic process… i wish they did that for every nicaraguan too.

  • AguaMan

    Mr. Bayardo Arce is one between the Sandinista organized force that understood that Nicaraguans we didn’t want such an economic system that had been in Cuba in the year 1979.

    Now fortunately Mr. Arce and Mr. Ortega have lived the opportunity and they have been convinced that the ability of the capitalist system in practice is more effective than the theories: marxist-Castro and marxist-leninist that perhaps each of the two believed, and were also its inspiration in the struggle against Somoza.

    Mr. Arce has found in his life the difference between theory and practice. Changed his way of thinking when he was a university student and journalist of the press and radio. With the way he think and act in the present that participates in the changes in the Nicaraguan economy.

    However there is much to be desired in human rights and corruption in Nicaragua