A Sandinista, a Liberal and a businessman walk into a club in Washington, D.C…
Ten years ago, that would have been the opening line to a bad joke. Today, it’s the lede to a news article—and a reminder of how much Nicaragua has evolved in a short time.
Since the 1980s, Nicaragua has gone from being a complete economic basket case to becoming Central America’s fastest-growing economy after Panama. And no one is more surprised by that progress than Nicaragua itself.
“In 2006, when I talked to other leaders of the business sector, no one at that moment expected that we would be where we are today; no one thought that the private sector would have the role we do today,” said José Adan Aguerri, president of COSEP, the Nicaragua’s association of business chambers.
Speaking at a Nicaragua panel discussion hosted by the Council of the Americas at Washington’s National Press Club last week, Aguerri noted that Nicaragua’s economy over the past eight years has gone from the slowest growth rate in the region to the highest. “Today we talk about how a 4.5-percent growth rate is not sufficient,” he said. “That’s a good problem.”
Retired Gen. Alvaro Baltodano, President Daniel Ortega’s delegate for investment promotion and trade facilitation, listed Nicaragua’s economic achievements in greater detail. He noted that Nicaragua’s has outpaced the rest of Central America in foreign investment growth, while at the same time leading the region the region in export growth —up 130%— under the U.S.-Central American Free Trade Agreement (CAFTA).
Baltodano credits the government for laying the groundwork for that growth.
“You can’t have economic development without energy,” he said, noting that Nicaragua has made huge strides to wean the country off its oil dependency and switch to renewable energy sources. In addition, Nicaragua has increased electrification from 50% to 80% over the past eight years, he said.
Baltodano acknowledged that Nicaragua still has the highest energy costs in the region, and said the next battle in its energy revolution is to lower costs for homeowners and businesses.
The key to moving forward, he said, is for the country to continue to work in alliance between the government and the private sector. That partnership, recently codified in Nicaragua’s new constitution, has already led to a new era of consensus between COSEP and the Sandinista government, Baltodano noted.
It’s not a perfect marriage, but it’s working better than the old arrangement from the 1980s, Aguerri said.
“We already paid price of political confrontation in the 1980s, when we had negative growth and the lowest per capita income in the region,” he said. “In 1990, we only had $300 million in exports, $2 million in international reserves, and inflation was in measured in thousands.”
Today, the COSEP president says, Nicaragua is a new country where the private sector works with the government and the Sandinista politicos “no longer decide for us.”
“Now the economy is totally different, and the private sector plays a determining role,” he said. “No longer are laws decided unilaterally.”
That’s a slightly simplified version of Nicaragua meant for a Washington, D.C. crowd. The Sandinistas have shown that they’re not afraid to legislate unilaterally when they think COSEP is being intransigent or unreasonable in its demands. It’s also worth noting that the “consensus” touted by Baltodano and Aguerri doesn’t extend to all sectors of society, or even members of Nicaragua’s increasingly irrelevant opposition parties. Still, the Sandinista-COSEP alliance is working, Aguirre insists; of the 81 economic laws passed by Ortega’s government, 77 have been in consensus with COSEP.
The result is a new era of economic stability, investment and growth.
“Before, we weren’t on the radar and we were in last place in every economic category,” Aguerri said. “Now we are on the map again and we are competing again. Its not just us saying that, its World Bank with all its indicators.”
The goal now, Baltodano said, is to take the next leap and get Nicaragua to a place where it can grow 7-8% annually. And the way to do that is with the $50 billion interoceanic canal project, Baltodano said.
“The great canal of Nicaragua will convert us into logistics and distribution center for the world, giving us the infrastructure we need to develop and have impact on world trade,” the general told an audience of several dozen people in Washington, D.C.
Economic advance, political slide
Not everything is heading in the right direction in Nicaragua, however. Former opposition lawmaker and ex-Foreign Minister Francisco Aguirre, the third member of the Nicaraguan panel in D.C., said governability should be understood as a process with three components: economic, quality of life, and political.
He says Nicaragua is making strides in the first two categories, but moving backwards in the third.
“It’s no secret that Nicaragua representative democracy is in decline,” he said. “A lot that was achieved between 1990 and 2007 has been turned back in recent years.”
Aguirre says Nicaragua’s lack of transparency, clean elections and judicial security are all conspiring to prevent the country from growing at more accelerated clip.
Still, he said, issues of democracy are not the “fundamental preoccupation for Nicaraguans.” Most people are still more concerned with the cost of living, finding employment and assuring the wellbeing of their families.
In the orchestra of concerns, democracy plays second fiddle. But the political class is learning how to get along better, and that’s progress, Aguirre said.
“I don’t want to kill my political adversaries, and I don’t think they want to kill me,” he said. “I think that is sign that we have evolved a lot.”
The former lawmaker added, “We are far from being perfect state, but interesting things are happening in Nicaragua.”