Nicaragua: Debt Crisis & Land Reform

Against the Current, No. 9, May/June 1987

Carlos M. Vilas

IN ITS JANUARY-FEBRUARY 1987 issue, ATC published an article by Ralph Schoenman, “Their Socialism and Ours,” in which the author discusses many aspects of the political economy of the Sandinista Revolution in Nicaragua. The article is very broad in its scope, dealing with both domestic and international issues, some of them not directly related to the Sandinista experience but to international politics in general and to contending political and philosophical tendencies within theories of revolution.

I am not going to discuss every topic in Schoenman’s article but instead will concentrate on those issues most directly related to the Sandinista Revolution. My opinion is that Schoenman’s article is based on partial and inaccurate data, and reflects a biased interpretation which may foster critical misconceptions about the Sandinista Revolution. I will focus my comments on Schoenman’s treatment of foreign debt, agrarian reform, and the reproduction of private property within the revolution. My comments are based on my studies of the Sandinista Revolution, better access to first-hand information, and seven years of living and working in Nicaragua.

l. The Foreign Debt: Schoenman omits the most basic, crucial issue, that Nicaragua is not paying its foreign debt. The statement that “By 1985 [debt] interest payments alone had skyrocketed to double (200%) the value of export earnings” (48) sounds impressive, but actually is just the result of mechanically comparing two items in Nicaragua’s foreign accounts, and says nothing in regard to the actual behavior of the debtor country. In the last three years Nicaragua’s disbursements have been merely symbolic, aimed at allowing the country to continue negotiations with its creditors, and to renew yearly moratoria. It is true that Nicaragua has maintained a low profile in the international movement for nonpayment of the debt; nevertheless, Nicaragua is not paying, and the Nicaraguan foreign debt is for sale in international financial markets at very low values indeed! It is apparent to me that Schoenman’s fears on this subject lack any reliable basis in fact.

2. Agrarian Reform: It is false to say that there has not been any significant land distribution to individual (in fact, family) peasants. As of June 1986 more than 263,000 manzanas of land were allocated to peasant families in the form of individual plots. In addition, legal titles to 1.4 million manzanas already under peasant cultivation, but which until then lacked any legal security, were distributed. Both aspects of agrarian reform allowed more than 42,000 peasant families access to land. It must be emphasized that the lack of legal title was in the past one of the basic mechanisms through which peasants were dispossessed from their land by the landowners and the Somocista clique.

The present emphasis of the agrarian reform is not just on APP (state-owned farms) as Schoenman claims, but on APP and cooperatives. By the end of 1986 more than 75% of all land expropriated through the agrarian laws had been allocated to peasants on a cooperative basis.

The acceleration of the agrarian reform started at the end of 1984 as a result of peasant demands and the FSLN’s sensibility to them. It is false that 50 % of the land allocated to peasants came from former state farms. The main source of land for the peasants has been, and continues to be, the large, private capitalist sector, which has been drastically reduced by more than two-thirds since 1979 (from almost three million manzanas to less than 900,000). The state sector has also contributed in recent years to this process; as I state in my article in the same ATC issue, in some regions (for example on the northern border) almost 60% of the land allocated to peasants previously belonged to state farms. However, looking at the nation as a whole, the percentage of state land involved in this stage of the agrarian reform is no greater than 20%.

Schoenman’s remarks about the negotiations over land expropriation in mid-1985 reflect either bad judgement or a frivolous handling of information. The issue involved the expropriation of some private estates near Masaya in June 1985. At that time there was a massive peasant mobilization for land, but according to the existing agrarian reform law it was not possible to satisfy peasant demands, since there were no estates larger than 500 manzanas in that region. Therefore the government opted to negotiate immediately with landowners for the purchase or exert change of their properties in order to provide the peasants with a favorable solution. Some private owners accepted the deal while others did not; in the latter instance they lost their lands, as in the case of Mr. Bolanos Geyer, up to then a very important agro-industrial capitalist. In January 1986 a new agrarian reform law was issued, increasing the amount of land which could be subject to reform by reducing the legal floor from 500 manzanas to a much lower 50. This means that every farm from fifty manzanas up could be affected by the agrarian reform.

3. Private Ownership Reproduction within the Revolution: Schoenman’s information on this issue is particularly inaccurate. His claims that “the economy remains, structurally as it was before the revolution,” that the Nicaraguan state sector “lacks … control over the commanding heights of the economy,” are frankly ridiculous. Of course the process of establishing the state as the axis of accumulation is very complex and relates not only to revolutionaries’ will but also to objective possibilities. All in all, this process is developing more broadly and deeply in Nicaragua than Schoenman is willing to acknowledge.

From a microeconomic perspective, that is, with regard to state ownership of firms, by 1985 state-owned firms accounted for 45% of GDP, and private firms 55%. But within the private sector a distinction should be made between peasant and urban family production on the one hand, and proper capitalist production units on the other. The former represent about 35% of GNP and about 60% of all private production. It would be a big political and theoretical mistake to mix peasants with the remaining large landowners, or artisans with the very few remaining industrial capitalists! These social sectors obey distinct economic rationales, and their allegiance and response to revolutionary policies have been markedly different.

It should also be remembered that the agrarian reform has sharply reduced the amount of land held in large capitalist estates, creating two new types of ownership (state and cooperative) and enlarging the share of land held by individual peasants and Indian communities. By the end of 1985 cooperatives accounted for more than 19% of all arable land and 75% of all land directly allocated through the agrarian reform process; the larger capitalist estates, which in 1978 accounted for 36% of all arable land, had been reduced to 11% by 1985, and to less than 9% by the end of 1986. All these figures are public ones and have been published and quoted in a variety of governmental, private, international and academic sources.

From a macroeconomic perspective, regarding the “commanding heights of the economy,” it is publicly known that from the very beginning of the revolution the state took direct “command” of the banking system, foreign trade, domestic credit, interest rates, technical assistance, price mechanisms, exchange rates, labor conditions, and the like. Schoenman’s claim that nothing has changed in the structure of the Nicaraguan economy is, to say the least, extravagant.

4. Finally I would like to point out some further inaccuracies in Schoenman’s article.

4.1 MIPLAN (the former Ministry of Planning) was not just “eliminated.” it has been restructured and turned into a more efficient technical secretary to the President’s office: the Secretary for Planning and Budget. This transformation has endowed SPP with a greater degree of competency and jurisdiction compared to MIPLAN.

4.2 It is false to state that the Soviet Union is trying to convince or force the Nicaraguan government to negotiate with the contras, On the contrary, the Soviet Union is supplying the military resources that the Nicaraguan government and people are utilizing in order to defeat the contras and U.S. government aggression.

4.3 The first agrarian reform law dates from August, not October, 1981; the former (not present) Vice-minister of Agrarian Reform is Ricardo, not Roberto, Coronel.

4.4 Edgardo Garcia, and not Jose Adan Rivera, is the head (actually, secretary general) of the Rural Workers Association; Jose Luis Villavicencio is not the FSLN coordinator in the National Assembly (incidentally, a post that does not exist).

4.5 There is no “federal budget” in Nicaragua, since Nicaragua is a unitary state.

There are many other points where Schoenman’s information is inaccurate or his interpretations are ideologically biased. Nevertheless I think that these comments are sufficient to raise doubt as to the objectivity of the article.

I agree very emphatically with Schoenman’s appeal to revolutionary socialists “not to hesitate to defend the Nicaraguan revolution against imperialist intervention.” But in order to make this important task a less difficult one, revolutionary intellectuals should pay more attention to real facts and not involve themselves in subjectivism or cling to preconceived ideas. Moreover, they should pay close attention to the accuracy of the information they handle and disseminate.

May-June 1987, ATC 9

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