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June 2006

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Nicaragua, CAFTA, & CIPRES

By Mike Nuess
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N icaragua is almost the size of Washington state with a similar population density. Its greatest physical resource is its rich land, with about five acres of good farmland per person. Agriculture is the cornerstone of the economy, providing over 60 percent of Nicaragua’s export income and over 40 percent of its jobs. Half of Nicaraguans live on small-to-medium sized farms and produce 80 percent of Nicaragua’s food. 

Life is still hard in Nicaragua, as it has been for centuries, first under conquest by the Europeans, then the North Americans. There was a brief period of hope after the Sandinista revolution overthrew the U.S.-backed Somoza in 1979. Literacy grew swiftly from less than 50 percent to over 90 percent. Effective agrarian reform policies returned stolen land to farmers and farm cooperatives, provided affordable loans, technology, and technical support, and partially shifted production from export (for profits to foreign capital) to internal food production for sustainable self-sufficiency. Infant mortality dropped, the death penalty was eliminated, and labor and agricultural unions were accepted. 

Reports from the Inter-American Development Bank, Oxfam, and others highlighted Nicaragua as an example of effective social and economic progress on behalf of the poor majority. 

By 1990 Reagan’s contra war had destroyed this shining example. Exhausted, terrorized, and embargoed-back-to-poverty, Nicaraguans “elected” the U.S.-designated client government and the trends once again began to reverse: 

  • Literacy rates are in decline and malnutrition grows 
  • Nicaragua is the second poorest country in the Western Hemisphere 
  • About 70 percent of Nicaraguans earn no more than $2 per day, the World Bank’s definition of poverty, and 20 percent live in extreme poverty, earning less than $1 per day 
  • The average monthly wage is $36 
  • One out of every three children is malnourished 
  • Over half of the 900,000 schoolage kids cannot afford school 
  • 45 percent of all income goes to the richest 10 percent of the population, while only 14 percent goes to the poorest 
  • Since the end of the Sandinista period of the 1980s, farmers have received negligible credit, technology, and technical assistance 

In October 2005 I joined a Witness for Peace delegation to Nicaragua composed of a dozen citizens from Washington and Oregon. We met with several stakeholder groups, such as the National Union of Farmers and Ranchers (UNAG), the Rural Workers Association (ATC), the Center for Rural & Social Promotion, Research & Development (CIPRES), a coffee producers’ union for small farmers (CECOCAFEN), a fair trade association, research groups, and an economist from the Center for International Studies. 

We visited agricultural cooperatives in the campo (the rural countryside). We also saw sophisticated, diverse, yet complexly integrated, sustainable agricultural models operating at the family-farm scale with appropriately selected technology for the current economic conditions. At a CIPRES research facility, for example, we saw effective grey-water treatment systems generating nutrient-rich water for plants and worm beds generating organic fertilizer. 

Under the CIPRES model, these sustainable family-scale farms aggregate into cooperatives, which in turn aggregate into larger organizations that can both disseminate information and represent them as political stakeholders.

Since 1998, a CIPRES project has rebuilt the lives of 5,000 rural families, providing animals, seed, irrigation equipment, grain silos, and training to produce both sufficient food, as well as bio-gas and fertilizers from animal waste. Project results were: increased production of eggs, dairy products, chickens, fruit, and vegetables; improved health and diet; sufficient bio-gas for cooking fuel and a 50 percent drop in firewood consumption; revolving credit cooperatives; reforestation; and more pasture. Extension of the CIPRES model to 75,000 families could lift them out of extreme poverty, sustainably, at a cost of about $30 million. 

Rich land and sophisticated knowledge of biologically wise, holistic solutions to food security were in abundant evidence. 

Obviously Nicaragua is quite capable of sustainably feeding its people well. But there are no jobs, so nearly 20 percent of the people have migrated abroad, sending $600 million per year to families at home, an amount equal to one fourth of Nicaragua’s GDP. These funds are Nicaragua’s greatest source of vital foreign exchange. For many, only material aid from church groups, NGOs, and Nicaraguans working abroad make it possible to meet their basic survival needs. 

CAFTA 

T he stakeholders we met strongly opposed CAFTA. Already World Bank-imposed structural adjustment programs designed only to insure debt service have resulted in the privatization of public services, such as communication and electricity (and have attempted to do so for water). The promised “efficiency of privatization” has not occurred. The only “efficiency” realized has been profits to private multinationals resulting from price increases, cutbacks in labor, reduced maintenance quality, and cutoffs of a growing sector with less and less ability to pay. Long-term economic stability has been sacrificed. 

Coffee production has long been critical to Nicaragua’s vital foreign exchange, accounting for 27 percent of Nicaragua’s exports and one-third of its agricultural employment. Over 300,000 livelihoods depend on it. Coffee, then, comprises part of Nicaragua’s “comparative advantage,” according to the World Bank’s neoliberal framework for the developing world. But World Bank structural adjustment programs have encouraged other countries, such as Vietnam, to export more coffee (as they had encouraged Nicaragua to do in the past). The resultant glut on the world coffee market has been devastating for Nicaraguan coffee producers. Prices dropped drastically in 2002 to well below production costs. Yet consumer prices in the U.S. did not drop as large, transnational coffee distributors benefited. 

CAFTA will require eventual removal of the tariffs that now slightly protect Nicaraguan farmers and subject them to unlimited dumping of subsidized products from the U.S. It will be just like NAFTA in Mexico where income drastically dropped for 15 million small producers and forced over a million families off the land and into Free Trade Zone (FTZ) sweatshops. Mexican agricultural production has halved in the decade of NAFTA. Though some of it looked good on paper—a tripling of foreign investment into FTZs, a doubling of exports from FTZs, and 800,000 new jobs after 7 years— this “trade” was merely “paper transfers” that contributed povertylevel wages to the Mexican economy. Raw materials were “imported” into the FTZs, assembled products were “exported,” but the dollars and profits passed right through to multinationals. Even the poverty-level wages were short term: most of those 800,000 jobs are gone, as the multinationals “found” cheaper labor in other depressed and desperate FTZs. 

There are proven alternatives, for example the CIPRES program that could sustainably lift 75,000 families from extreme poverty for $30 million—$400 per family— about a tenth of Nicaragua’s annual debt service on a principal already paid several times over. This unjust debt was built by U.S.-imposed governments, war, and economic embargo. 

Today’s new “trade” agreements are really “protectionist policies” for multinationals and their investors. They usurp local, regional, and even national sovereignty, the very backbone of democracy. 

Meanwhile, in agriculture we produce enough to feed everyone, but have not yet applied the technical, social, and economic tools to insure this wealth is sustainable (by moving from fossil-fuel-based inputs of over five calories for each calorie yielded to organic methods that reverse the ratio), distributable (diversified regional production) and accessible (affordable to the poor, too). 

Hating the corporations and governments who serve them resolves nothing. Changing them into transparent, accountable, and responsible servants of a democratic humanity resolves everything. We can easily predict they will be the last to see that resource scarcity is obsolete and we no longer live in world of “either us or them.” 

We may soon realize that we need our Nicaraguan sisters and brothers as badly as they need us.   

Mike Nuess is an educational consultant, primarily in the fields of energy and building science. He is the author of General Plenty: Always and Only the Path to Peace . 
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