I was walking to work one sunny afternoon last month, and as I was early I decided to walk past the Parliament buildings in Downtown Ottawa. It’s normal to see a few people protesting along Wellington street opposite the Prime Minister’s office, but this day I had to cross the road to avoid the silent mass standing on the stairs and sidewalk holding various Nicaraguan flags. At first, I did not recognise the flag and my initial thought was Canada’s done something to offend it’s immigrants from Honduras or something, and I could not be further from the truth. As it’s been playing on my mind for a while, and news stories don’t give me the answers I’m looking for; maybe there is another way on understanding what is going on in Nicaragua.
Understanding the Protests
April 18th 2018 saw the start of the current protests going on in Nicaragua. These began with President Daniel Ortega’s announcement of social security reforms, that entailed an increase in taxes and a decrease in benefits. Specifically, The change required employees to contribute 0.75% more of their salary to social security, up from 6.25% to 7%. Employers will have to contribute 22.5% of salaries from a current 19%. Furthermore, pensioners will also have to pay 5% of their pension to cover medical expenses. The first day saw a death toll of 30 protestors. And after 4 days of violent protest, Ortega denounced the reforms.
However, the unusual mix of students, pensioners and businessmen who are protesting, have changed course protesting against Ortega’s government with accusations of corruption and economic turmoil. The main demands seem to be a governmental reform in the form of presidential elections, as well as ending police violence and freeing the censors off mass media. This comes with an international backing from the United Nations, European Union and the Organization of American States as well as 18 other individual international governments and NGO’s.
Due to the civil unrest throughout the country, the 2018 protests have become the most violent civil conflict since the Nicaraguan Revolution, some 40 years ago. To date, around 100 people have tragically lost their lives and over 1000 have been injured in the protests, and there is still no clear end in sight.
INSS – Nicaraguan Institute of Social Security
Off the INSS website, their mission is as follows:
“Protect workers and their families against the risks related to life and work, providing economic benefits for disability, old age, death and occupational risks; ensuring health services for illness, maternity, common accidents and professional risks; and providing other social services to raise the quality of life of the protected population. All this will be financed with the solidarity contribution of employers, workers and the state.”
However, the reality looks far from the truth. Yes, there has been some reforms that have shortened the pension age and benefitted society, but on the other hand there is questionable investing that has led to the deterioration of funds. It seems that for a few years now Ortega’s government has been urged to reform the INSS. In 2007, when Daniel Ortega was re-elected and Roberto López Gómez became the INSS head, the INSS saw a surplus of 1,183.23 million Córdobas thats around 37.5 million US$. 11 years on the INSS funds have plummeted to a deficit of 2,222.7 million Córdobas, that is approximately 70.5 US$ in debt. The spending seems to be mainly with loans to the private sector that do not reflect the previous stated reforms, such as the reformed pensions for victims of war.
In an article written in 2017 featured by the Havana Times, there is commentary on how the INSS should improve their economic turn around by reform. There is also mention of problems including: “Scarce coverage; jobs with low productivity; a high-level bureaucracy that is generously well paid; a group that receives pensions without having contributed the minimum amount stipulated by law; an investment plan that is secret and discretional; and a limited slate of actors that decide on changes, leaving out the rest of society.” Yet nothing was done until the present, which seems it may be a little too late for López Gómez’s INSS and Ortega’s government.
If the INSS collapses, arguably the economy of Nicaragua will follow, hence the importance of the situation at hand. Additionally, if the INSS as a public service is riddled with corruption, what other parts of the government are reflecting this behaviour?
Ortega first came to power in 1979, when the Sandinistas overthrew the dictator Anastasio Somoza. He later was replaced by Violetta Barrios de Charamorro as electoral candidate for the 1990 election.
The Sandinistas inherited a broken Nicaragua, shaken by civil conflict and natural disaster. Over 600,000 civilians were homeless and 50,000 dead from the conflict, Nicaragua was a fragmented nation. Ortega was the answer to the unsettled country leading with Leninist reforms that sought to nationalise the country with new land reforms and a new distribution of wealth. Yet support from global powers such as the United States dwindled due to the Sandinistas’ support of communist rebels in El Salvador. Instead, Nicaragua faced a U.S. backed new group of rebels known as Contras, literally translated as “those against”, a group that was against the idea of socialist and communist rule in Latin America. Further conflict ensued with an estimated 30,000 more losing their lives in the period of 1979 to 1990.
However, the present President Daniel Ortega is not the same as the revolutionary Ortega of the 1970s. Even though there is proclamation against the evils of capitalism, the current Ortega has a wealth of business ventures estimating at US$50 million. Additionally the Ortega government owns the main 4 branches of domestic affairs, being the executive, judiciary, electoral authority and national assembly. In a sense the kleptocracy formed by this government professes anti-capitalism in a very ironic way.
All being said, the current Nicaragua has come very far from the Sandinista government of the 1980s. In comparison The GDP per capita has more than doubled and sustained a consistent low unemployment rate and economic growth since Ortega’s re-election in 2007 (Focus Economics , May 17, 2016).
What Happens Next?
Nicaragua is showing all the signs of a failed state. However, the ongoing protests and increasing interest from exterior powers proves that there is a future for Nicaragua, whether Daniel Ortega’s government remains or not.
A new election would give opportunity for a cleaner slate and Nicaragua to return to it’s former state. It would also give those protesting a reason for their diligence the past few months in wanting to return to a egalitarian democratic republic.
Unfortunately for now, time will tell the length of the civil unrest in Nicaragua.
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