Roots of the FSLN’s Defeat

Against the Current, No. 26, May/June 1990

James Petras

THE NICARAGUAN ELECTIONS were decided in the boardrooms of the banks and in strategy sessions in Washington, New York, London, Zurich and Bonn, though the votes were cast in Managua.

Nicaraguans voted with a boot on their chest and a gun to their head. For committed activists, the war and embargo solidified and deepened their opposition to U.S. imperialism and its local clients. For the less committed, the unorganized poor, U.S. violence and shortages were blamed on those who transformed Nicaraguan society and provoked the ire of the patron.

The electoral defeat of the Sandinistas requires a critical re-examination of their political strategy and their economic policies, as well as their conception of their relationship with the capitalist countries. To have raised these issues in a critical fashion before the election would have subjected one to a shower of abuse and derision, as most of the left celebrated each and every policy shift toward accommodating the counterrevolution and the market as a success, as realism, as examples of “new flexible thinking” or “the only possible course.”

The Sandinista electoral defeat will have a profound impact on the anti- imperialist struggles throughout the world—in the Third World as well as in the advanced capitalist countries and in the former Communist nations. The propaganda machines in the West can be expected to churn out a massive outflow of articles and books citing the Nicaraguan outcome as another example of how socialism fails and how in free elections the pro-Western forces always prevail over collectivism.

On the left the social democrats (or democratic socialists) are likely to publish a spate .of articles dealing with the non-viability of collectivism in the Third World, doom-and-gloom thinking about the need to avoid confrontation and to accommodate Western interests, while others on the radical left will simply blame U.S. policy for the outcome.

While there is no doubt that the United States played a major role in the electoral outcome, the FSLN strategy toward the U.S., the domestic economic elites, the urban working class—in sum, the Sandinistas’ long-term economic and political strategy—was a decisive factor in shaping the political debacle. The thesis of this essay is that the FSLN’s politico-economic strategy and the policies attendant to it essentially undermined and dispersed the socio-economic  forces supporting the revolution without securing the support of the domestic elite or overseas capitalist states it was designed to attract.

The original formula of the regime, a “mixed economy,” contained the seeds of its downfall, as the particular “mix” between private and collective power unfolded over the decade.

Political Strategy of Defeat

To understand the flaw in the FSLN’s strategy, it is important to understand that of the United States. Essentially, Washington adopted a dual approach, a prolonged war of attrition combined with a political-electoral strategy.

The long-term, large-scale military-economic strategy revolved around the economic embargo to block development and social reforms and a military strategy to destroy productive units, increase FSLN military expenditures and intimidate the population. These moves keyed the political strategy financing and organizing the media, political parties and propertied elites within Nicaragua toward electoral exploitation of the socioeconomic conditions created by the external military-economic pressures.

In 1984, Washington pulled out of the elections because the strategy did not have enough time to make itself felt. But five more years of intensified warfare and concessions from the FSLN created optimal conditions.

In this context, the FSLN committed the strategic mistake of organizing elections in the midst of ten years of destructive war and economic embargo. They reversed the logic of revolutionary politics by organizing on terrain created by the counterrevolution. Under conditions of revolutionary warfare elections follow, not precede, peace, economic reconstruction and consolidation of the state.

Elections became a panacea for the Sandinistas to end the war and begin development, rather than conditioning elections on first ending the war (demobilization of contras, reallocating budget expenditures) and beginning reconstruction and development.

The second deeply flawed component of the FSLN’s political strategy was their policy of open-ended unilateral concessions to the internal and external elites—at the expense of consolidating support among their historic base.

The decision to endanger the revolutionary process by calling elections in the midst of war and economic disintegration was not made through an examination of the conditions of the working class and the rural and urban poor. It was made in response to U.S., European and elite demands.

Moreover, the political process preceding the elections was marked by a whole series of unilateral concessions that strengthened the opposition and weakened the Sandinista national constituency. The signs of popular disaffection with Sandinista concessions were visible when Daniel Ortega freed the Somocista and contra terrorists.

Apart from the injustice to their victims, the freeing of these terrorists blurred the line between revolutionary politics and the opposition in the eyes of the majority who were not deeply involved. It may in fact have swayed some to believe that the jailed were not guilty or were even fighting a good cause. In any case, it must have demoralized Sandinista supporters, who had been defending the revolution and fighting the war, to encounter their torturers and assassins on the streets handing out leaflets in the election campaign.

The pattern of opposing, then conceding, opposition positions was repeated throughout the period leading up to the elections: the extraordinary, massive, long-term, and extensively documented U.S. organizational and financial intervention in Nicaraguan politics was denounced, then accepted.

No regime—West or East, North or South—except the Sandinistas, has allowed now media (La Prensa) and political groups supporting external armed intervention to receive funds and to function publicly. The decision to allow the United States to bankroll UNO’s political campaign was merely the culmination of this policy.

In the economic sphere (to be discussed below), a similar process of unilateral concessions to the overseas bankers, exporters and landlords converged with the political concessions to strengthen the opposition’s grip on the electorate, making the opposition the force to which the regime responds.

These unilateral concessions were matched by a similar process externally. In the so-called peace process, Nicaragua accepted the rules by which its electoral process was subjected to minute scrutiny, while Guatemala and El Salvador’s bloodletting was passed over and the contras were not demobilized. Once again, the populace was marginalized and concessions to external deals with overseas elites took primacy.

After years of urging the Nicaraguan people to support the Salvadoran FMLN, Ortega, at the Central American presidents’ conference at San Ysidro, signed a statement that described the Cristiani regime in El Salvador as “legitimate arid ‘democratic”—exactly what the United States, UNO and the death squads had been saying (and only a few weeks after Cristiani had bombed densely populated working-class neighborhoods).

The cumulative effect of one-skied unilateral Sandinista concessions to UNO, the United States and its regional clients was to reinforce the ideology, image and authority of the opposition. The Sandinista constituencies saw each and every position they had believed in, fought for and defended conceded to their adversaries.

This policy of unilateral and unreciprocated concessions was seen as clever politics by cheerleaders for the Sandinistas in the United States and Europe. They were hoping to convince liberal or social democratic legislators that the Sandinistas were ‘reasonable and flexible,’ and net ‘orthodox Marxists.’ But few if any concessions were forthcoming, only demands for more Sandinista concessions, more bipartisan contra aid and money for UNO.

The Sandinista strategy of reaching upward, outward and to the right eroded the coherent class and popular positions inside Nicaragua. Since Sandinista politics pandered to the elites in the name of “new realism,” there was little to hold less committed Sandinista supporters: They could not be expected to follow the 180-degree policy shifts, the drift to the right, in the hope that they would find the golden chalice man uncertain future, particularly since all the Sandinista byways were leading toward orthodox market-oriented austerity programs.

The last, somewhat bizarre effort of the Sandinistas to follow in the footsteps of their Western adversaries was the election campaign itself. The FSLN resort to image politics, patronage, celebrities and personality in a context of a highly polarized and destitute electorate, looking for relief from hunger and oppressive economic conditions, confronting affluent, well-financed and externally connected elite, must be seen as disastrous.

No doubt, their Washington consultants and U.S. liberal advisors had a hand in the making of this disaster. But it was the Sandinistas’ policy to first allow structural and class divisions to remain and, secondly, to permit their ruling-class leaders to deepen the cleavages, and thirdly, to attempt to formulate a campaign that overlooked past relationships of power and to provide no class strategy for the future. On the contrary, the future course marked by Ortega banked on the free market.

Ortega’s adaptation to the rock-star electoral campaign style didn’t cut any ice with people suffering wage freezes, price rises and promises of more of the same. Sandinista political will’ couldn’t overcome class realities of politics.

A Strategy Between Two Chairs

The Sandinista regime’s policy of a “mixed economy” was flawed, and over time a scratch turned to gangrene. While the notion of a “mixed economy,” in the sense of retaining elements of private property ownership, is a sensible one in underdeveloped societies with a substantial petty commodity sector, in Nicaragua the general formula of a ‘mixed economy- meant that the strategic export sectors—the main instruments of accumulation—remained in the hands of the agricultural and commercial elites.

The Sandinistas continued and even attempted to deepen the agro-export economy inherited from Somoza, focusing their reforms on the distributional side. They attempted in short to harness the Somocista agro-business structure to a welfare state.

The result was that neither worked: the elites absorbed subsidies, exported hard-currency earnings, financed counterrevolution and failed to invest. The continuation of the pre-existing agro-export sector absorbed resources, cut back on small-scale programs and prevented alternative structures from emerging.

The “mix” in the mixed economy created an incongruous and unstable situation between a popular revolutionary state and a counterrevolutionary ruling class (controllers of the means of production). The ruling class could not control the state, the state could not develop the economy. One or the other would have to concede.

Over the decade, the Sandinista regime oscillated between threats, pressure and concessions: the former policy in the first half of the decade, the latter in the last few years. The economic damage of this version of a mixed economy was exceeded by the political: the agro-business elite, with its base intact and with economic subsidies from the FSLN and United States (through the CIA) was in a strategic position to mount its struggle to regain hegemony, particularly in rural areas, among small and medium farmers experiencing hardships imposed by the United States but mediated by the FSLN regime.

Sandinista economic strategy was built on flawed assumptions that concessions to the overseas banks and the United States would lead to a continuation of pre-revolutionary relations. As a consequence, the Sandinistas continued paying the inherited Somoza debt and new debts (until they ran out of funds and fell into arrears),despite the cutoff of new loans, particularly in the ‘international’ lending agencies such as the World Bank.

Likewise, Sandinista expectations of continued trade with the United States proved illusory with the imposition of the economic embargo. The effectiveness of the embargo was in direct relation to the continual reliance of the Sandinistas on a new opening.

To the degree that the Sandinista policy was geared to changing U.S. economic blockage—by political and economic concessions to the internal opposition—its policy fell between two chairs. It failed to gain U.S. support, while strengthening its internal adversaries. While the F LN gained tactical victories in small loans and limited trade, maneuvering among its capitalist adversaries, the latter gained strategic allies within the political enemy.

Under the stress and pressures of the war, the FSLN beat a disorderly retreat from the mid-1980s onward, shifting from cooperatives and a regulated economy to the anarchic forces of the ‘free market’ the shift from controlled prices to price gouging in the cities. The freeing of market forces unleashed hyperinflation, black marketeering, speculation, disincentives to work for a wage and incentives to buy and sell.

The economic policies undermined the working-class and working-poor base of the revolution and vastly expanded petty-commodity speculative strata linked to “liberal economics” and with an affinity for counterrevolutionary politics. At the time, Sandinista and overseas theoreticians rationalized this process of class restructuring caused by Sandinista economic policy by attacking orthodox class analyses and inventing new amorphous categories such as the ”popular classes,” the “intermediary classes,” and imputing to them a trans-formative role, overlooking their relationship to the market and exaggerating the autonomous role of culture and political will.

Within this matrix of larger-scale structural continuities, state-economic elite contradictions and working-class restructuring, Sandinista policy evolved toward liberal economic orthodoxy by the end of the 1980s. The trend was from a mixed regulated economy toward a deregulated market culminating in an International Monetary Fund-style economic stabilization plan.

The Sandinistas introduced an austerity program that savaged wage and salaried workers and the rural and urban poor, while increasing profits and prices for the economic elites in a fashion not dissimilar to the programs implemented by reactionary regimes in Latin America.

This must have enraged the mass base of the Sandinistas. The electoral rejection of Ortega by many former FSLN supporters must have been their revenge at this silent coup–a response, unfortunately, which they will probably regret. The “stabilization” program confirmed the power of the agro-business elites and further destabilized household incomes of the working poor.

Sandinista economic policy was played out on the terrain of the capitalist class, and it is not surprising that they lost the support of substantial sectors of the working class and poor without gaining the support of the middle class and propertied classes. In practically every country in the Third World where orthodox stabilization policies are implemented, incumbent electoral regimes lose (except in Mexico where the PRI routinely rigs the outcome).

Sandinista adoption of economic orthodoxy hollowed out their revolutionary political appeal and eroded their social base. Their electoral program of opening up to Western markets played into the hands of their capitalist adversaries. Many voters might have thought: If the future is with overseas capitalism, and one has to choose between a candidate financed by and linked to international capital and another who has been in conflict with it, then perhaps it is better to vote for the former.


The Nicaraguan revolution took place in a poor and underdeveloped country and sustained a decade-long destructive war with an intransigent imperialist power. The pressures of war and economic necessity forced difficult choices on the revolutionary leadership.

Strategies designed to consolidate that revolution, unmade it. Unilateral political concessions to external and internal elites opened space and provided historically unprecedented opportunities for the revival and expansion of counterrevolutionary politics. Economic policies geared toward accommodating external adversaries were politically and socially costly to a degree unanticipated by the leadership.

The FSLN leadership reversed the logic of revolutionary politics—convoking elections prior to military-political stabilization and economic reconstruction, rather than after. The electoral results were tragic, not only for Nicaragua and Central America, but for progressive forces everywhere.

Nevertheless, painful lessons can be extracted from the experience:

1) Strategic socio-economic policy must be congruent with the interests of the social base of the revolution. Revolutionary leaders cannot take for granted initial popular support, then wander over to the private investor and international banking side and still expect to retain support.

2) The interests of internal class supporters take precedence over the demands and pressure of external liberal and social-democratic policy makers.

3) Democracy cannot allow itself to be subverted by political parties subsidized by external powers; nor can supporters and media advocates of externally based armies claim a legitimate place in the democratic process. Revolutionary pluralist-socialist democracy establishes boundaries or it self-destructs.

4) Class-based democracy rooted in the workplace is essential to ensuring that production and distribution take precedence in regime policy over speculation and commercial exploitation, as well as ensuring the regime’s accountability to those who made the revolution.

5) Small and medium-size decentralized enterprises oriented toward the domestic market should take precedence over large-scale bureaucratic and private export projects. Export economy should be subordinated to the domestic market.

6) State and regime consolidation (elimination of armed external enemies and their internal allies) and economic reconstruction precede, they do not follow, elections.

In world-historical perspective, the socialist revolution will not end with the electoral defeat of the Ortega regime. Even in Nicaragua the struggle for state power is far from resolved. The bourgeoisie has gained a portion of power, namely control over the political regime. The working class and urban and rural working poor axe still the dominant force in civil society, through the mass organizations and in the state, through the popular army, judiciary and police.

Attempts by the new regime to purge the state and repress the popular organizations are likely to provoke a crisis, conflict and possibly ignite a civil war. Given Ortega’s embrace of electoral politics and free-market economics, it should not be difficult to negotiate and perhaps reach some formula for power-sharing. Specific economic-policy measures and political governance could be agreed to, if the Chamorro regime does not insist on confrontation with state structures. Ortega has already demonstrated, in office and out, a willingness to accommodate the economic interests of overseas lenders, U.S. policy makers and Nicaraguan property owners. He cannot, however, support policies reversing the land reform and restoring land to prerevolutionary landowners.

In Central America, as well as in the Caribbean and Latin America, U.S. interventions have only produced longer or shorter detours to popular revolutions. But delayed transformations in which nationalist, democratic and social demands converge are much more radical. U.S.-installed electoral regimes have been unable to consolidate power and resolve fundamental contradictions, whether it be Duarte in El Salvador or Aquino in the Philippines.

On the contrary, U.S. interventions tend to exacerbate deep-seated economic problems. Grenada, with almost one-third of the labor force unemployed, is illustrative of the outcome of U.S. intervention. The electoral outcome in Nicaragua is a temporary and partial setback in the larger historical process.

May-June 1990, ATC 26

Leave a comment

ATC welcomes online comments on stories that are posted on its website. Comments are intended to be a forum for open and respectful discussion.
Comments may be denied publication for the use of threatening, discriminatory, libelous or harassing language, ad hominem attacks, off-topic comments, or disclosure of information that is confidential by law or regulation.
Anonymous comments are not permitted. Your email address will not be published.
Required fields are marked *