International community is co-responsible

Civil society says it out loud: “The IMF deliberately pretended not to see what was happening. I cannot see any other explanation, because here in Nicaragua it was a long time ago quite obvious what was going on. To me, what is happening now, is a cover-up for sins committed in the past, of which the IMF also holds responsibility”.

By Christian Korsgaard

13. August 2002

Those who believe they have seen all there is to see, should take a glance at the Central American country Nicaragua these days, where president Enrique Bolaños, with the support of civil society has embarked upon a crusade against corruption. The accusations are directed at the nation’s former president, Arnoldo Alemán, whom the new authorities blame for ‘milking’ the Nicaraguan state during his reign as president.

The rest of Latin America is in amazement observing the ‘war against corruption’, not only because the mere fact that a Latin American ex–president is asked to face trial because of his behavior as Head of State is quite unusual, but also because they want to see how the rest of the world reacts to this intent to break the habit of so-called ‘alternating corruption’. According to this much-used principle, one government fails to question the former – expecting that once their own time in office has run out, a new government will do the same.

So far, donating countries and International Financial Institutions (IFIs) have limited themselves to expressing moral support and encourage Bolaños to continue the fight, but more financial support is needed if the war is to be won. In brief, Alemán, who maintains control of the Parliament, is successfully blocking a fiscal reform requested by the International Monetary Fund (IMF) before releasing promised loans. Unless the political deadlock in Nicaragua is solved within a very short time, thus releasing the promised loans, there is a considerable danger that public support for the war against corruption may turn into social dissatisfaction with the Bolaños administration, because it will eventually run out of funds needed to get the economy back on track. Should this happen, the war could be lost, which would in turn set a disastrous example for the rest of the continent. Corruption can be fought and the war can be won. But when corruption is as institutionalized as is the case in Nicaragua, help is needed.

Background

The talk about corruption started already during the Alemán administration, but it was not until Bolaños took office in January 2002 that evidence, concrete accusations and formal charges made headlines. On August 7th a temporary peak was reached, when Alemán and thirteen members of his closest family and circle of friends were charged with laundering what the prosecutor claims could be as much as 100 million dollars – just about the same amount as is set aside for the entire Ministry of Education this year.

During a public and televised event in which the evidence was presented, a visibly affected Bolaños expressed “sadness, pain and disillusion because of the clear and convincing evidence that the ex-president planned and participated in a fraud that involved the little money that our people have. I never imagined that you would betray your people. You took money from the pensions. You took medicine from the sick. You took salaries from the teachers. You abused peoples’ confidence!” (click here in order to access Bolaños’ entire speech in Spanish). According to local experts, a conviction of the ex-president could result in minimum four years of imprisonment and a fine of twice the stolen amount.

However, it is still unsure whether ex-president Alemán will finally have to face trial on the charges presented, or whether he will once more succeed in avoiding justice by using his parliamentary immunity as a shield. Using a highly criticized plot Alemán was in January able to switch the office of the President of the Republic, with that of the President of the Parliament. From this position he has during the last eight months been able to maintain control of the majority of the Members of Parliament, made his successor’s political life impossible, and brought the legislative work to a virtual stand–still. Bolaños has only been able to assure 46 of the 47 votes needed to strip Alemán of his parliamentary immunity.

Among Alemán’s most successful attempts to block any political, economic, and social progress in the country, is no doubt the sabotage of the Executive’s attempt to assure legislative support for a much–needed fiscal reform. According to IMF-demands, the reform need to be passed by the Parliament before IFIs and donor-countries will release a major economic support package. Holding the entire population as political prisoners, Alemán and his faithful supporters in Parliament has so far been able to spoil any possibility for a quorum, making it clear that unless Bolaños retreats from the war against corruption, no progress can be made.

Civil society organizations have not remained passive during the last eight months, even though attempts to organize massive manifestations and asking the public to sign a petition to nullify Alemán’s immunity have all had limited effects. However, with the publication of a letter to the international community on July 31st, 94 civil society leaders helped the Executive to take a giant step forward. In the letter, signed by seven former presidents and vice-presidents, ex-ministers, business people, media representatives, intellectuals and artists as well as leaders of civil society organizations, the petitioners asked the international community to help Nicaragua fight the evils of the past, by releasing the mentioned support package in spite of the fact that the fiscal reform has not been passed.

The fear of the signers of the ‘Letter of the 90’ is that if the loans are not released, Bolaños’ popularity might turn into public anger because the government is unable to fulfill electoral promises about creating jobs for the 50 percent of the population, who at present do not have a steady job: “To separate one thing from the other, and expect Nicaragua to respond to the requirements and terms of a country in a normal condition, would not be fair at all and would only help those who, being responsible for the current situation want to continue enjoy the hopelessness and the chaos that they themselves seeded. Nicaragua could become a success model in the fight against corruption. But lacking support only encourages corruption. The failure of this struggle by lack of international support would create a terrible precedent, not only in Nicaragua, but also in other Latin American countries”, the 90 signing nobilities claimed.

Possible consequences

The consequences if the present deadlock situation is not solved and requests in the ‘Letter of the 90’ aren’t met, are multiple. Ana Quirós from the independent NGO umbrella structure Coordinadora Civil fears that the poverty situation will become worse, because the lack of funds will make it hard to respond to the needs of people affected for instance by the continued coffee crisis. Another consequence could be a destabilization of the government if public support to the war against corruption decreases, which could in the end facilitate a return to power of those who are to blame for the current crisis.

But Quirós stresses that the democratic costs could be even higher, as more and more opinion makers seem to be in favor of Bolaños using the ultimate ‘weapon’: closing down the reluctant Parliament, the ‘infected’ Supreme Court and the incompetent office of the Auditor of Public Accounts: “Naturally, civil society organizations would not approve of such a move, but pressure and advocacy for this ‘final solution’ is undoubtedly growing”, claims Quirós, who at the same time acknowledge that such action would cause tremendous damage to the democratic process in Nicaragua.

If the war against corruption is lost, consequences beyond Nicaraguan borders are also foreseen. First of all, it would naturally send the signal that the IFIs value immediate macroeconomic issues like a fiscal reform as more important that the more long term impact that an elimination of corruption could provide. This would be a completely illogical and irresponsible message to send to corrupt governors around the world, who would see little reason to change their behaviors. On the democratic level, the failed attempt to use democracy as a pile driver to make war on corruption would lead to a catastrophic loss of credibility for the democracy as such.

However, the reluctant IMF should also consider the consequences that a loss of the war might cause to the institution itself. According to Quirós, the IMF is now pressuring the Bolaños administration and putting up conditions which were never made during the Alemán era: “The IMF has been tough on Bolaños. The new administration lowered expenses and increased revenue, in spite of a general, economic recession. But instead of giving the government a helping hand, it was rather told to continue along the same lines, and recollect another 400 million dollars in revenue. These macroeconomic conditions were never mentioned during the Alemán administration, even though anybody who didn’t wish to be blind, could see that something was wrong”.

Quirós is not afraid of blaming the IFIs of co-responsibility for the present situation. According to her analysis, the IMF was during the reign of Alemán so afraid of a return to power of the leftist sandinistas that irregularities and corruption were permitted: “It is a repetition of the US philosophy during the Somoza dynasty in our country, when Franklin D. Roosevelt said that ‘yes, he’s a son of a bitch, but he’s our son of a bitch’. The IMF deliberately pretended not to see what was happening. I cannot see any other explanation, because here in Nicaragua it was a long time ago quite obvious what was going on. To me, what is happening now, is a cover-up for sins committed in the past, of which the IMF also holds responsibility. If the IMF does not actively support the war against corruption, it will cause huge damage to the institution’s reputation”, says Quirós.

Outside support is definitely needed if the war against corruption is to be won. The ‘Letter of the 90’ was sent to the IMF to soften the institution’s attitude, but also individually to the donor countries because these supposedly decide the IMF policies. The hope is that putting pressure upon the individual countries and the European Union, Nicaragua will not only be able to count upon frozen, bilateral aid, but also advocate for a change in the IMF demands. It has been agreed internationally that the debt-reduction program in which Nicaragua takes part (HIPC – Highly Indebted Poor Countries Initiative) consider structural adjustment issues, like for instance fiscal reforms and revenues, to be subordinated to poverty reduction strategies, of which the war against corruption forms part. However, in the case of Nicaragua, it does in fact seem clear that macroeconomic considerations still prevail over poverty reduction strategies.

“The world is observing us”, said Bolaños in his message to the nation following the presentation of evidence against Arnoldo Alemán. But Nicaragua is also observing the world. In times of need, how much is just good intentions and moral support? And how much is concrete and needed assistance to fight an evil until now inherent in Nicaraguan politics?