Months of deadly un­rest foul Nicaragua’s econ­omy

Austin American-Statesman Sunday - - NATION & WORLD - By Christo­pher Sher­man and Zu­niga

LEON, NICARAGUA — Two days af­ter protests be­gan in Nicaragua in April, a for­eign auto com­po­nents com­pany was meet­ing at a ho­tel in the city of Leon when smoke from a burn­ing univer­sity build­ing just a block away bil­lowed above the ho­tel’s colon­naded court­yard.

The vis­i­tors quickly cut short their event and be­gan chang­ing their travel plans to exit Nicaragua. Within three months, the El Con­vento ho­tel it­self was forced to close for lack of busi­ness, as a sis­ter ho­tel in the same city had in June.

Nicaragua’s econ­omy has been dev­as­tated by the nearly five months of un­rest sparked by cuts to so­cial se­cu­rity ben­e­fits that quickly evolved into calls for Pres­i­dent Daniel Ortega to step down.

In June, the coun­try’s eco­nomic ac­tiv­ity was down 12.1 per­cent com­pared to a year ear­lier, ac­cord­ing to the cen­tral bank. Econ­o­mists esti- mate 200,000 jobs have been shed, in­clud­ing as many as 70,000 in the tourism sec- tor, which has be­come Nic- aragua’s top source of for­eign cur­rency in the past two years.

Rev­enue at hotels and restau­rants plunged 45 per­cent in June com­pared to 2017, ac­cord­ing to Nicaragua’s cen- tral bank. Sim­i­larly, con­struc- tion suf­fered a 35 per­cent drop and re­tail 27 per­cent. Some $900 mil­lion in de­posits fled Nicaragua’s banks. They re­sponded by tight­en­ing their lend­ing to pre­serve liq­uid­ity, thus also con­tribut­ing to the eco­nomic slow­down.

Nicaraguan Union of Agri­cul­tural Pro­duc­ers says more than 12,000 acres of pri­vate land have been occu- pied by gov­ern­ment sup­port­ers in what busi­ness lead­ers have called con­fis­ca­tions in re­venge for their sup­port of the pro­test­ers.

The pro­duc­ers say 91 per- cent of the land oc­cu­pied by squat­ters was used for farm- ing and live­stock.

Vic­tor Hugo Sevilla, the gen­eral man­ager of both Leon hotels, con­tin­ues check­ing email, but said, “I haven’t got­ten any re­quests from for- eign­ers for reser­va­tions. We have re­ceived five, maybe eight, rate in­quiries from do­mes­tic (trav­el­ers), but no firm reser­va­tions.”

Leon, Nicaragua’s sec- ond-largest city, was among the places where protests and road­blocks were most in­tense. From the be­gin­ning, the protests were met with vi­o­lence from riot po­lice and civil­ian gov­ern­ment sup­port­ers. In July, they vi­o­lently cleared the road­blocks and ran protest­ing stu­dents off oc­cu­pied univer­sity cam­puses.

More than 300 peo­ple have been killed in the un­rest, ac­cord­ing to hu­man rights groups. The gov­ern­ment calls the pro­test­ers “ter­ror­ists” and says it de­feated an at­tempt to drive Ortega from of­fice that was spon­sored by the U.S. gov­ern­ment and do­mes­tic op­po­si­tion, in­clud­ing some in the pri­vate sec­tor.

Ortega con­ceded this month that the road­blocks and un­rest have cost the coun­try jobs. In an in­ter­view with Span­ish news agency EFE, he said do­mes­tic tourism was start­ing to re­turn, but “where there has been more of a prob­lem is in at­tract­ing in­ter­na­tional tourism, be­cause this sit­u­a­tion tends to re­pel the tourists.”

A ma­jor fac­tor has been that the coun­tries that send Nicaragua’s big-spend­ing for­eign tourists, in­clud­ing the U.S., Canada, Spain and Eng­land, is­sued travel warn- ings urg­ing their cit­i­zens to avoid travel to Nicaragua.

Ma­jor air­lines such as Amer­i­can and United cut their flights to Managua from three per day to one. Spirit, Delta and other car­ri­ers trimmed their flights as well, said Jose Adan Aguerri, pres­i­dent of the Su­pe­rior Coun­cil for Pri­vate En­ter­prise.

The coun­cil, which is Nicaragua’s main busi­ness cham­ber, joined the call for a na­tional strike Sept. 7. The Civic Al­liance, formed to rep­re­sent a broad swath of Nicaraguan so­ci­ety in a stalled di­a­logue with the gov­ern- ment, said the strike aimed to push the gov­ern­ment back to di­a­logue and to protest the ar­rest of al­liance mem­bers and other po­lit­i­cal pris­on­ers.

The coun­try’s pri­mary tourist des­ti­na­tions like the colo­nial gem Granada and the Pa­cific coast surfer par­adise San Juan del Sur be­gan feel­ing the con­se­quences of the un­rest al­most im­me­di­ately. Hotels and restau­rants cut back hours, then days and even­tu­ally closed com­pletely.

For years, Ortega en­joyed a rel­a­tively sta­ble re­la­tion­ship with pri­vate busi­ness. Since re­turn­ing to power in 2007, the one-time Marx­ist rebel com­man­der had soft­ened his views and largely left Nicaragua’s pri­vate sec­tor to do what it wanted.

The re­la­tion­ship was crit­i­cized by some as a tacit agree­ment to keep the coun­try’s busi­ness elites out of pol­i­tics. In an in­ter­view in July with Venezuela’s Te­lesur net­work, Ortega said his un­der­stand­ing with Nicaragua’s pri­vate sec­tor had been strictly eco­nomic and not po­lit­i­cal.

In April, how­ever, the coun­try’s busi­ness in­ter­ests, caught off guard by the so­cial se­cu­rity sys­tem changes, quickly joined the op­po­si­tion. As the so­cial and po­lit­i­cal cri­sis deep­ened, the pri­vate sec­tor be­came in­creas­ingly out­spo­ken in call­ing for Ortega to move up elec­tions.

Mario Arana, di­rec­tor of the Nicaragua As­so­ci­a­tion of Pro­duc­ers and Ex­porters and a for­mer head of the cen­tral bank, said the pri­vate sec­tor de­cided to get more in­volved when stu­dent pro­test­ers were killed.

“When there was an over­re­ac­tion here to a civil, peace­ful protest by the stu­dents, where peo­ple be­gan to lose their lives, so­ci­ety suf­fered a so­cial ex­plo­sion where the pri­vate sec­tor aligned with the peo­ple,” he said. “The pri­vate sec­tor is committed to try­ing to find a ne­go­ti­ated exit from the cri­sis.”

Juan Sebastian Chamorro, who leads the Nicaraguan Foun­da­tion for Eco­nomic and So­cial De­vel­op­ment, said the gov­ern­ment has shown signs that it rec­og­nizes the sever­ity of the eco­nomic im­pact. It has is­sued new debt, ad­justed rules to tighten the selling of dol­lars and cut pub­lic spend­ing as it fore­casts a 10 per­cent drop in tax rev­enue.

Whether any of that will be enough to stop the econ­omy’s slide is doubt­ful un­less it’s ac­com­pa­nied by a po­lit­i­cal so­lu­tion that re­stores sta­bil­ity, ex­perts said.

AL­FREDO ZU­NIGA/ AS­SO­CI­ATED PRESS

A bi­cy­clist looks out into Lake Nicaragua in the colo­nial city of Granada last week. Nicaragua’s econ­omy has been dev­as­tated by the nearly five months of un­rest and vi­o­lence sparked by cuts to so­cial se­cu­rity ben­e­fits.

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