Politics in Nicaragua: The Bad

“I know whose going to win the election. I even know by how much,” he said as he sipped on a large bowl of meat soup. It was October 22nd, 2011; two weeks before the Nicaraguan Presidential elections. By that point, it wasn't surprising to hear someone claim to know who was going to win (most people, even in the opposition, accepted the undeniable popularity of the incumbent, Daniel Ortega), but it was the first time I’d heard a Nicaraguan say that he knew what the actual results would be. “Ortega will win with at least 56% of the vote,” he said with a picaresque smile.

I didn't know this at the time, but my friend hadn't just picked the 56% mark by chance. It was the percentage the Sandinista party needed to achieve an absolute majority in the National Assembly. (Voters were expected to vote for a Presidential candidate and a representative in the Assembly; but it was widely understood that most voters voted strictly down party lines.) My friend was a Sandinista, but a pragmatic one, well aware of the current power dynamics in his country. Another friend, a more devout old-school Sandinista, had, a year earlier, expressed his concerns about the possibility of a landslide Sandinista victory in the Presidential elections: “I’m going to start to worry if Daniel gets more than 60%,” he had said.

Politics in Nicaragua: The Good

In 1990, Nicaragua was shocked to find that the Frente Sandinistas de Liberacion Nacional (FSLN), the Marxist-Leninist party that had been in power since their triumph in the popular revolution of 1979, had lost in the first free and fair Presidential election in that country’s history.  The Sandinistas received 40% of the vote, while the loose conglomeration of opposition forces precariously held together by Doña Violeta Barrios de Chamorro, widow to a famous martyred journalist, got 54%.

In the following two decades, while remaining a powerful force in Nicaraguan politics, the Sandinistas failed to win a single presidential election. Daniel Ortega ran and lost three consecutive times.  Support for the party seemed to hover, and remain stuck, around the 40% mark (in 1996 they got 38% of the vote; in 2001 it was 42%). People began to talk about an entrenched minority of diehard Sandinista supporters:  “the 38%” they were called.  Then in 2006, Ortega ran again, and again he got 38%, only this time he won! (The opposition vote was split in two and the runner-up party ended up with just 28% of the vote.)

At last, after more than 15 years, the Sandinistas were back in power.  And since then (curiously or predictably, depending on how you see it), Sandinista support has appeared to skyrocket.  In 2008, the party easily, and controversially, won a majority of the seats in the municipal elections, and in the 2011 presidential elections, Ortega cruised to victory with over 60% of the popular vote. The election monitors found certain irregularities in that last vote, but they did not question the overall results. A year later, Sandinistas now talk of polls that show 80% support countrywide.

Their public support is probably not at 80%, but there is, without question, a growing support for the current government.  Where is this new support coming from and why?  And what are the views of “the 38%”? Why are they so loyal to the Sandinistas?

Politics in Nicaragua: The Scene

Today I start a series on the political environment of present-day Nicaragua.  I begin with the description of an everyday scene that is emblematic of its current political culture.

People had begun to gather at the park since the early hours of the morning.  Mostly women—mothers who, like rocks, had withstood life’s erosions to the point of achieving an ageless quality—dressed in plaid straight skirts and depleted plain-colored v-neck shirts: campesino women.  They assumed their regular pragmatic, cross-armed stance, as they stood waiting in front of and glaring at the town’s alcaldia.

At the entrance of the alcaldia stood two four-foot high jumbo speakers, that now begun playing music at a deafening decibel level.  It was a playlist of around six or seven songs, that would loop round and round for hours and hours until, mercifully, it would be turned off and discontinued at the end of the day.  The songs included an old revolutionary song, the new Sandinista campaign song, and the famous 1990 campaign song celebrating Daniel Ortega as a razorblade-wielding cockfighting gallo. (Eeeeese es Daniel, Daaaniel Orteeega, Es el gallo enavajado que ya tiene preparado el pueblo trabajador.) Groups of volunteers, wearing the newest edition Sandinista party t-shirts (no doubt collected at the last national rally), sat on the steps of the building or on the bed of the pick-ups parked along the street.

The alcalde (mayor) soon arrived from Managua to deliver a loud, rambling, defensive speech to the cheerfully enthusiastic volunteers and the stone-faced waiting women.  The alcalde reminded the crowd of why they were there, which party had made it possible, and how much the government cares about the poor and struggling.  It could easily have been a cheesy, feel-good speech had it not been for the alcalde’s habit of screaming into the microphone, his aggressive gesticulations, and his overall threatening tone.  Once finished, he got back into his Toyota HiLux and drove off.

Finally, the anticipated materials arrived: sheets of zinc used for roofing.  Volunteers helped unload the cargo from the pick-up trucks, while others started taking the names of the women in line and scanning to see if they appeared on the official list.  Groups of bystanders walked by, some whispering to each other: “Look at how they reduce those poor people to public humiliation,” and “They only give the zinc out to people of their own party.”  Throughout the day, the zinc was distributed to the neediest in the community.  “A lot of those people sell them off after they get them,” one bystander says.  But for many, it is a Godsend.  They can now remove their old, crumbling, leaky tile home roofs, and ensure protection against the elements particularly during the intense thunderstorms of the rainy season.

This scene, of poverty-stricken women being given a helping hand while Sandinista propaganda is shoved down their throats, represents Nicaragua’s current political environment.  It is the hallmark of the current populist regime of Daniel Ortega.

In the next post, I will examine the arguments given in support of the Sandinista government.

My Favorite Posts

In honor of reaching my fiftieth post, I've decided to compile a list of some of my favorite writings so far.  Enjoy:

1. my post-modern summer job - When pretending to work becomes work.

2. Game Theory and Tardiness - Something to read while you are waiting on someone.

3. Nicaragua: Names - Why are Nicaraguan names so strange?

4. Valparaiso - Life in a city of squatters.

5. Mexico City - Life in a city of mystics.

6. Bureaucratic Linguistics - When acronyms take over.

7. International School - When pluralism descends into ethnic conflict.

8. Homage to a Friend/Life in Suburbia - The Goodwill bins, mall parking lots, and buddy cop films.

9. Tower of Babel - God reacts to a new skyscraper in Qatar.

10. Radiohead - You are now entering the strange world of indie music.

Nicaragua: The German Century

Founding members of the Deutsche Club in Nicaragua  1901

When one thinks about foreign powers that have changed the course of Latin American history, the two countries that immediately come to mind are Spain and the United States.  Others that make the list might be Great Britain with its influence in the Caribbean and along much of the region's Atlantic coast during the 19th and 20th century, or France with it's former Caribbean colonies and that one quixotic adventure into Mexico.  A country that doesn't come up very often is Germany; but the German footprint--the result of a wave of immigration in the 19th century--can be seen from the Oktoberfest celebrations in Nuevo Hamburgo, Mexico to the German museums in Valdivia, Chile.  Germany's impact in Nicaragua has been particularly consequential.

Nicaraguan history has been marked by three great power shifts.  The first was independence, which was thrust upon Nicaragua in 1821--no battles were fought, no dilemmas faced.  A few flags and people were swapped.  The power vacuum left behind by the Spanish, however, unleashed a feud between the country's two major cities--Granada and Leon--for control of the newborn state.  The dispute culminated in a civil war, where the Leon faction (the liberals) requested the help of a group of American mercenaries, led by the southerner William Walker.  Walker, after helping to beat the Granada faction (the conservatives), turned his guns on his allies the liberals, and proclaimed himself president.  So, it wasn't until the 1850s that Nicaragua actually had to fight and die for its independence; and it was not against the Spanish, but against a group of slave-state proponents from the United States.*

The second major power shift was the rise of Jose Santos Zelaya, the dictator responsible for the actual establishment of a Nicaraguan political state.  Gaining power through a coup in 1893, Zelaya began building railroads, establishing steam lines, and strengthening public education.  He enacted a number of seminal constitutional rights, introducing habeas corpus, compulsory education, the separation of powers, and property guarantees.  He also took control of the entirety of the Nicaraguan territory by expulsing the British from the Atlantic side of the country, and creating a new department, named (naturally) Zelaya.

The final shift was Anastasio Somoza, who transformed the country into his personal estate.  He is the founder of a very particular political culture: the modern clientalist corrupt authoritarian dictatorship.  A political culture that sees politics as a winner-take-all game, and the presidency as the pinnacle of power, fame, and wealth.  A political culture which became so entrenched that even a popular revolution could not shake it.

Germans, I'll argue, played a critical role in both the appearance of Zelaya onto the national political scene and in cementing Somoza's legacy. All in all, a small group of German immigrants were responsible for much of what happened politically in Nicaragua in the twentieth century.

Telenovelas

What's wrong with her?

Oh, that's Elena.  She's in a coma.

What happened?

She was in a car accident.  She was in the car with Bruno and they were running from the police.

Why were they running from the police?

Because Bruno had just kidnapped her.

Why did Bruno kidnap her?

Because he is in love with her, and because he wanted a ransom payment from the money she inherited from her engagement to his twin brother Alejandro.

Is that Alejandro?

Yes.

Where is he?

Well, Alejandro was on his way to visit his beloved Elena, because she was about to give birth.  But Bruno poisoned the pilot of Alejandro's private jet and the pilot died mid-flight, and now Alejandro is stranded on a desert island.

Who is he talking to?

That's the spirit of his departed mother.  She is the reason Alejandro is rich.  You see, Bruno and Alejandro were separated at birth; Bruno went off with his father, a very wealthy business man, and Alejandro went to live with his mother in a dirt poor neighborhood in the city Medellin.  The two brothers didn't know of each other's existence until one day they crossed paths.  It was around the time of their father's death, and the will, shockingly, handed down all the father's riches to his wife.  So, Alejandro and his mother suddenly became incredibly rich, and Alejandro was left to run his dead father's businesses.  None of this made Bruno, the heir apparent, very happy.  Not only that, but Bruno's girlfriend, Elena ends up falling in love with Alejandro.

The Algorithm

"Does Standard & Poor take into account the impact of its ratings when assessing a country's credit worthiness?"

"No"
 - Myriam Fernandez de Heredia, S&P's director of sovereign ratings for Europe and Africa, on Los Desayunos de TVE (January 20th, 2012)

The new algorithm would change everything.  The Standard & Poor sovereign credit rating system used a hybrid-form of analysis that combined computerized quantitative modeling with expert qualitative insight.  Everyone understood, however, that the credit ratings themselves, once announced, changed people's behavior and, as a result, altered the equation.  It was a bright young man, a recent MIT graduate, that formulated an algorithm that incorporated the rating's projected impact into the final sovereign credit score.

For example, let us imagine that the credit rating for the sovereign bonds of the Republic of Krakhovia suffer a downgrade due to the country's high debt burden and low growth rate.  The country's S&P rating goes from A to BBB+.  The announcement spooks potential Krakhovian bond buyers; Krakhovia has trouble selling its bonds and must raise the bonds' interest rate; the rise in the interest rate exacerbates the country's already troubling debt levels.  So, the projected debt levels, once the impact of the BBB+ rating is taken into account, are higher than earlier models would have anticipated.  The new algorithm suggests Krakhovia's bond rating be downgraded to BBB.  A BBB rating, however, causes even greater concern than the original downgrade, sending bond interest rates even higher.  The new algorithm suggests Krakhovia's bond rating be downgraded to BB+.  BB+ bonds are borderline junk bonds, alarming bondholders who are increasingly trying to unload the assets.   The algorithm suggest a B- rating.  At B-, the bondholders are sent into a panic, causing a massive sell off and the crashing of the country's currency.  The algorithm suggest a CCC rating.  At CCC, the IMF enters the picture.

The algorithm, once tested, proved unusable because any downgrade (no matter how small) sent the rating spiraling to CCC (the lowest possible rating), and any upgrade resulted in an AAA rating (the highest possible).

The markets were never informed of the algorithm.