The economic, political, and social failure of 15 years of dictatorship

Fifteen years of a dictatorial regime headed by Daniel Ortega, can be summarized in a phrase: an economic, social, political and moral failure. To demonstrate this, I will rely mainly on official data.

The starting point of the analysis must be an assessment of the conditions in which Ortega received the government in 2007. As engineer Enrique Bolaños once said: the table was served.

Let’s think back a bit: economic growth rates above 4% annually; growing exports and investments; sustained flows of bilateral and multilateral development cooperation. Including the participation in the United States’ Millennium Challenge Cooperation and the European Union’s Budget Support Programs, balanced fiscal accounts, inflation control and stability in the exchange-rate regime. The beginning of the free trade agreement with the United States, CAFTA; and substantial reduction in foreign debt and its servicing. 

There was internal political and social peace at the domestic level and harmonious international coexistence. The Nicaraguan National Security Institute (INSS) had an operating surplus and solid reserves. The police and the army were in the process of professional and institutional development. There was a framework of freedoms and rights, spaces for civil society participation and decentralized and pluralistic media.

In addition to these conditions, Ortega was bathed with the substantial resources of Venezuelan cooperation. In short, a favorable platform to crystallize the most successful government in national history.

Hunger in the zero-hunger country

The main banner of the dictatorship, especially in its beginning, was: Long Live the Poor of the World! The announcements on poverty were embellished with programs with bombastic names such as “Zero Hunger.” So, let’s start here: FAO’s 2021 regional report reveals that one out of every 5 Nicaraguans suffers from hunger (19.3%). There is more: the proportion has been growing in recent years.

On the other hand, ECLAC estimates show that, in 2020 the percentage of poverty exceeded 50% of the Nicaraguan population. For its part, FIDEG estimated at 45% the percentage of poverty in 2019, with an increasing trend since 2015. According to this foundation, poverty would exceed 50% if it were not for remittances. By the way, the dictatorship closed this research center to prevent it from publishing the data related to 2020.

Regarding migration: as of November 2021, 72,000 Nicaraguans were detained at the border in their attempt to enter the United States irregularly. And 47,000 had requested asylum in Costa Rica. In other words, at least 150,000 compatriots fled last year from Ortega’s paradise.

Let’s continue with the family economy

It is not necessary to be an economist to know that stable employment and decent income represent two key factors to improve the welfare of the population. And that one of the beneficial consequences of economic growth is precisely to create jobs and raise wages. So, reviewing the annual reports of the Central Bank we find that in July 2007 unemployment was 5.9% and underemployment 47%. Fifteen years later, INIDE (National Institute of Development Information) reported that in September 2021 open unemployment rose to 4.7% and underemployment, in the middle of this same year, represented 45% of the working population.  What is an underemployed person? It is a worker without a permanent job, whose income does not even reach the minimum wage. Summarizing, according to INIDE, 62% of the labor force is currently unemployed, underemployed or in the category of “unpaid worker.”

After 15 years, Ortega’s “vibrant economy” managed to reduce unemployment by a meager 1% and underemployment by 2%. If we consider the hundreds of thousands of migrants who left the country during this period in search of better horizons, it is obvious that these percentages would be negative. 

Now let me turn to salaries. The Central Bank records that, compared to 2006, on the average, real wages of workers in the formal economy increased by 1%! That is an average, because in the farm sector, commerce, and social services, among others, they decreased. 

It is not difficult to imagine the afflictions of 80% of the population working in the informal economy. In fact, in 2021 the cost of living reached its highest level in the last 10 years. So go and ask the dictatorship’s economists to explain to you how an economy that grew, according to them, at a rate higher than 5% is not able to generate steady employment, nor improve the real wages of workers.

Foreign debt

For now, little is said about the foreign debt, but it is an issue that has strategic implications for the medium and long term. Ortega received a debt of US $3.4 billion, in round figures. Now the debt has quadrupled: the year closed with a debt of around US $14 billion.  Along with the debt, payments are also growing, year by year.

INSS: a full-length portrait

Undoubtedly, one of the most enlightening portraits of the dictatorship’s economic and social failure is the performance of the social security system. Ortega received the INSS with a surplus of C$1.7 billion cordobas. Ten years later the surplus had turned into a deficit of C$2.4 billion. This result is logical if we consider that in 2007 the payroll registered 1,208 workers, and ten years lates it had risen to 4,060 workers. Meanwhile, fraud with pensioner’s funds emptied the institution’s reserves. The empty buildings in different parts of Managua remain as piercing evidence of the looting.

But there is a more substantive issue: the social security crisis is the clearest indicator of the failure of the economic model, of concentration and exclusion, imposed by the dictatorship: economic growth rates close to 5%, on the average, were unable to create enough formal jobs and better income for workers, which is the basis of any social security system. According to Central Bank data, as of September 2017 the number of INSS affiliated workers began to decrease, month by month. The April 2018 crisis was not the cause of the institution’s financial burdens.

Ortega showed no mercy in unloading on the backs of the most vulnerable the costs of corruption and waste: he stripped 300,000 pensioners of almost 800 million cordobas through a sinister maneuver by modifying the fixed devaluation rate of the Cordoba. He imposed two reforms that increased the contributions of employers and workers. He also imposed an invisible but devastating and implacable punishment: changing the formula for calculating pensions for active contributors, who will only feel the loss when they reach retirement age.

A Mafia State

International Transparency Reports place the Ortega regime, year after year, as the most corrupt in Central America —that’s a lot to say in itself—, and the third worst in Latin America: only behind Haiti and Venezuela. On the other hand, in terms of money laundering, the Basel Institute ranks the regime among the most discredited in the world, and the GAFILAT has it included in its “gray list,” something like the list of main suspects.

And no wonder. Ortega turned corruption into state policy. The most flagrant acts of corruption have the status of law: the canal concession, the Tumarin hydroelectric plant, the custom scanners, to name a few. Of course, the most shameless and substantial was the appropriation of Venezuelan cooperation funds (more than 5 billion dollars according to Central Bank reports). Not to mention the family appropriation of the fuel company, DNP, “ALBA Generacion,” the Puerto Sandino fuel storage plant and the shady acquisition of DISNORTE and DISSUR.

Political failure

The most recent and clear evidence was the repudiation of the vast majority of the population to the electoral charade of November 2021. Several post-election surveys agree that more than 80% of the population rejects the regime. Under these conditions, it is no surprise that the dictatorship responds with massive violations of human rights: imprisonment, exile, extrajudicial executions, suppression of freedoms.

On the political level, perhaps the most serious events are the transformation of the army into a personal guard and the seeds of hatred they have sown in the population.

And the economic successes?

Certainly, they must be mentioned. Macroeconomic statistics such as GDP, foreign exchange reserves and exports show positive records. The number of multi-millionaires has also grown.

This article was originally published in Spanish in Confidencial and translated by Havana Times