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.

Book Review: How to Make a Nicaraguan Quilt

Rigoberto Lopez Perez

On September 21, 1956, Anastasio Somoza Garcia visited the city of Leon to accept his party’s nomination to (once again) stand for reelection in the upcoming Presidential contest. The act was merely a formality; Somoza had already been ruling the country for twenty years and through land expropriations and the personal control of several national industries had become one of the richest men in Nicaragua. Dictators, however, like all leaders, require the appearance of legitimacy, even if it’s through rigged procedure. So, Somoza Garcia made the trip north.

Days earlier, Rigoberto Lopez Perez, a young aspiring poet, landed in Nicaragua, after an ambiguous stint in El Salvador. He immediately headed for his hometown of Leon, carrying a cardboard box filled with his belongings, which included a .38 caliber Smith & Wesson. On the evening of the 21st, he sneaked into a town party thrown in honor of the visiting President. It is said, that when he took out the .38 caliber Smith & Wesson and unloaded it into Anastasio Somoza Garcia, the dictator looked straight at him and remarked (like a father reprimanding his child), “You fool! What have you done?”

Margarita, está  linda la mar by Sergio Ramirez tells the story of this extraordinary event, which led to the death of the first Somoza and the consecration of Lopez Perez as a martyr (you can find his bust next to the cathedral in Leon). As Ramirez retraces the assassin and his victim’s steps up to that fateful party, he flashes back a half-century to tell the story of Ruben Dario, by that point an international literary sensation, and his triumphant return to his hometown of Leon after decades of roaming around the metropolises of the world.

The two narrations mirror each other: as Lopez Perez arrives on a boat to the port-city of Corinto, Dario is also arriving on a boat to Corinto; as Leon throws a parade in honor of Somoza, the city is also throwing a parade in honor of Dario; as Somoza lays dying, Dario lays dying. Even some of the characters are present in both narratives. Dario writes what would become one of his most famous poems, “A Margarita Debayle,” on the side of a little girl’s fan; that little girl grows up to marry Lopez Perez’s victim, Anastasio Somoza Garcia.

Game Theory and Tardiness

Imagine the following situation: two good friends decide to have dinner at a certain restaurant and agree to meet each other at the restaurant at five-thirty in the evening.  Whether or not they honor their established meet-up time can be seen as a game theory dilemma.

In the situation there are four alternatives: (1) they could both show up on time; (2) friend A could show up on time and friend B could show up late; (3) friend B could show up on time and friend A could show up late; (4) they could both show up late.

Now, because time is infinite, alternatives 2, 3, and 4 are vague--they fail to specify the exact moment in which one or both of the friends arrive (example: in alternative 4, both friends could show up late but at the same time, or they could both show up late but with one friend showing up before the other).  So, to clarify things a little bit, lets just state the four alternatives as:

(1) they could both show up on time, at 5:30pm
(2) friend A could show up earlier than friend B
(3) friend B could show up earlier than friend A
(4) they could both show up late but at the same time

Alternatives 1 and 4 are optimal.  In alternatives 2 and 3, one person has to sit around waiting for the other to arrive.

What is interesting is that in punctual societies, like the United States (or stereotypically Germany and Japan), there exists a socially ingrained consensus to choose alternative 1.  In countries where such a socially ingrained consensus does not exist (stereotypically non-punctual societies: the developing world), each individual shoots for alternative 4, but ends up with alternatives 2 or 3.

Bureaucratic Linguistics 101

“Hello everybody, please take a seat.”

The meeting was being held in the company’s largest conference room, which seated over sixty people. A representative from each department was there: there was an HR guy, the CTO, the CRM, the CMA, the CFM, the CMO, the CISA, you name it. At the front, standing next to the CEO was the new face we had been called on to meet. The CCO gave his standard upbeat assessment of the company’s current “transition period,” before energetically introducing our new COO. We gave our new leader a polite round of applause.

“Thank you.”

 
He began by humbly praising our skills and character, and expressing his emphatic belief that the future of the company was bright. And then he got down to business. Because everybody knows the first meeting under new management can only mean one thing: new acronyms.

“So, we are all familiar with the Customer Satisfaction Matrix, or CSM.  Well, we believe the people we do business with should be viewed as clients, and that it is not merely their satisfaction that should be considered but their input, be it praise or constructive criticism.   So, here we see an example of a Client Feedback Template; these CFTs are what you will be working with from now on.”

When I first started the CSMs were Purchaser Approval Ratings (or PAR—which lent itself to cutesy PowerPoint slide titles like: “PAR for the course” and “PARticulars”), and then Purchaser Approval Rankings (because they enjoyed the acronym so much).

“Now, the ‘indicators’—or what used to be called ‘indicators’ and shall now be considered ‘markers’—have changed.  In this first square we see the marker states: ‘Client received prompt connection to representative.’  You’ll remember that it used to say something like, ‘Customer received immediate connection to sales agent.’  In the second square, the ‘marker’ states…”

These “buzz word meetings,” as they are known, have become an established rite of passage for any respectable upper management hire.  It is their opportunity to lay claim to a new era, to plant their flag.

“I think we all agree that the Peer Orientation Observation and Practice, the so-called POOP sessions with the newly hired employees—the NHEs—had to be renamed.  Here we have their new name: Monitor, Input, Listen, and Follow-up.”

The directives are clear.  The old acronyms must never be used again.  They have been forever banished by the new tsar.  We must act as though they had never existed, as though we had always used the new acronyms.  How else to avoid confusion?  Oceania has always been at war with Eurasia.

“Now, there are also a few confusions about WPTs...you know, work position titles.  We are ready to assign new WPTs, but let me be perfectly clear, these are simply changes in the titles and not in the responsibilities that accompany those titles.  Your current job description and responsibilities remain unchanged unless we talk to you separately.  Lets start with the Financial Administration and Accounting Representative...”

WPTs is a mistake on his part.  He should have said WRD (Work Responsibility Designation).  WPTs got banished years ago, when an old regime attempted to get rid of the concept of “titles.”  But it’s a typical mistake.  Most of us have trouble keeping up with the changes, and simply pick and choose our favorites and stick to them.  This is to the eternal consternation of our boss, who is constantly reminding, warning, and lecturing us to use the “new format.”

“…As for the CSP, his title will remain unchanged.”

The poor CSP. He’d been called that since getting hired, the letters slowly growing independent of the words they represented, until one day he could no longer say with certainty what they were. Custodial Services Provider was his best guess, but he conceded that Cleaning Services Personnel couldn’t be ruled out. He thought he remembered an e-mail about his title getting changed but the acronym stayed the same. Anyway, he didn’t really know what any of the acronyms really stood for, technically, so it didn’t bother him too much that that list also included his own WRD.

“…Folks, lets remember to keep it light, but to also keep it positive…”

A slide flashed behind him, showing a middle aged man on the phone in his office giving the camera a thumbs up; beside him an acrostic: Teamwork/Harmony/Understanding/Motivation/Belief = Upbeat/People. It was well known, even up at the executive level, that rogue employees had begun using vanished acronyms as derogatory terms or placeholders for profanity. CAO (Chief Accounting Officer) became synonymous with cheapskate or tightwad (as in “What a CAO…”), while CTD (Closing the deal) inevitably meant sex (as in “I CTDed your mother last night”). Some acronyms, if said to the wrong person in the wrong context, could get you fired, as former colleagues of mine can attest.

Before ending the meeting, two interns came around handing each department rep a three-ringed binder. Sandwiched between their plastics covers was a rain-forest worth of warm printer pressed papers: this years glossary of acronyms.

“We have no doubt that the new format will help simplify and clarify much of our reporting.  Thank you.  And lets GTW!”

(Get To Work)

Nicaragua: Race

In Nicaragua, there is a direct correlation between skin tone and income level.  The lighter your skin tone, the richer you are, the darker your skin tone, the poorer you are.

Unlike countries like Mexico, Guatemala, Ecuador, or Bolivia, Nicaragua does not carry the burden of an indigenous underclass.  Native American minorities (and in Bolivia’s case, majority), and their accompanying distinct ethnic identities, historic traditions, cultural practices, and surviving languages, do not exist in Nicaragua. Nor did the African Diaspora leave a mark on Nicaragua as it did the in the Caribbean nations, Panama, Columbia, Venezuela, Brazil, and Ecuador. (At least not on the western side of the country, where the majority of the population lives.  Significant indigenous and black-African minorities and majorities do exist in the geographically segregated and sparsely populated Caribbean coast. In this post, however, I will deal exclusively with the western half.)

Nicaraguans are a homogenous bunch, in so far as they can all be described as Spanish-speaking Mestizos.  But within this Spanish-speaking Mestizo category there is an immense variety of skin-tones, accents, and social classes.  In this post I will explore the racial dynamics of a country where there are technically no racial minorities, but where skin-color still plays an important role historically and in the day-to-day life of the average Nicaraguan.

Lets begin by stating that Nicaraguans, perhaps due to this lack of a festering racial minority, are incredibly open and blunt about the skin color of their friends, relatives, and casual acquaintances.  I already discussed bluntness in Nicaragua as it regards to physical attributes, but what I did not mention is that skin color is by far the most popularly used distinguishing descriptor for a person.  Chele (loosely meaning whitie, but without the racist implications) and Negro (loosely meaning blackie but, again, without the racist implications) are the two most common nicknames in Nicaragua.  They are not only nicknames, they are also used in situations where a person needs to get the attention of a light-skinned or dark-skinned stranger or when a person decides to give a friendly “Hello” to a random passer-by.  Americans, such as myself, are well acquainted with “Oe, chele” (“Hey, whitie”), the salutation every gringo receives from any passing stranger. (Rural folk are especially friendly, as one would expect from people who live in tiny towns and are used to greeting anyone that walks by.  They will undoubtedly offer up a “Oe, chele” any time they cross your path.)