San José, Costa Rica, since 1956

Economist Doesn’t Sweat Socialist Plans

MANAGUA – The economist who designed the transition of Nicaragua’s communist- era economy from the 1980s to a free-market economy in the 1990s says he’s undisturbed by the prospects of “21st Century Socialism” championed by President Daniel Ortega and Venezuelan leader Hugo Chávez.

“Nicaragua was more communist than the Soviet Union,” said Francisco J. Mayorga of the economy the Sandinistas left behind, and which he helped reform as chief economic adviser to President Violeta Chamorro in the early 1990s. By the time the Sandinistas left office in 1990, some 80% of the gross domestic product was state-run, he said.

But while the Ortega of today bashes “savage capitalism” and calls for the spread of socialism, this Yale-educated banker says that the real economic transition that’s taking place behind the rhetoric is one that may favor small producers and deepen democracy in Nicaragua.

“I don’t think that in Ortega’s vision of the future, the state plays the same role as it did in the 1980s,” the former Central Bank president said. “The state won’t own farms, or confiscate land. They’re not even going to nationalize companies, with perhaps the traditional exception of electricity and telecom.

I don’t think his vision is something very different from a market economy.”

Indeed, Mayorga applauds the Ortega administration’s move to organize  Nicaragua’s poorest campesinos into agricultural cooperatives – a move he says will help small producers get their share of the country’s booming export sector, which grew 16.5% to $1.26 billion in 2007.

“It’s very clear what model (the Sandinistas) envision,” he says. “They want to promote a model in which cooperatives and corporations coexist and compete.”

That endorsement may come as a surprise from a man who resigned as an economic aide to the Sandinista Front more than a quarter-century ago when he realized the  party was set on a establishing a Marxist economy in Nicaragua.

“I felt they were going to fail. I felt it was going to be a costly experiment. And it was,” he says.

But today, the self-proclaimed “democratic capitalist” is upbeat about neo-Sandinista economics, even as Ortega calls for a “mixed economy” – the same buzzword that led to the Marxist experimentation in the 1980s.

That’s because Nicaragua’s export earnings have overtaken remittances and foreign aid as the main engine of the economy.

In “Nicaragua 2010: The Future of the Economy,” Mayorga’s fourth book, released last month, the former banker says Nicaragua is in a transition from a remittance-based “economy of opulence” toward something more inclusive.

As described in his third book, “Megacapitales de Nicaragua,” more than a decade of neo-liberal policies had created a “trickle-up” economy in which a dozen mega-rich, tax-evading monopolist families accumulate capital from the remittances spent by the majority of poor families.

But Mayorga expects that the burgeoning export sector is changing Nicaragua’s economic landscape. Driven by free-trade agreements like CAFTA, an increase in agricultural productivity and increasing food prices, plus a greater demand for biofuels and soaring oil prices, Mayorga expects the export growth rate experienced in 2007 to sustain itself until 2010. By then, he predicts, exports will exceed $2 billion.

Nicaragua’s agricultural export growth, he says, promises to change the face of the countryside – home to Nicaragua’s poorest.

Massive immigration, he argues, has tipped the scales in favor of the workers, who due to a tightened labor pool are beginning to receive higher wages.

In turn, small and medium-sized producers will be able to turn bigger profits. This, he notes, is in part thanks to the efforts of the Sandinista government to organize Nicaraguan campesinos into power-sharing cooperatives.

From Yale to Jail

Mayorga was jailed not long after helping to move communist Nicaragua toward a market-based economy.

To his extensive resume – which included a stint as Central Bank president, Central American Integration Bank director and INCAE professor – Mayorga can add two and a half years at the La Modelo prison in Tipitapa. There he waited in preventive prison while Nicaragua’s courts got around to deciding he was innocent of the fraud charges he says he was tried twice for.

Mayorga was accused in connection to the collapse of the Banco del Café, which closed its doors in 2000 as part of Nicaragua’s banking system collapse.

“I tried to promote (small and medium-sized businesses) around the country, which may be one of the reasons they brought me down,” he told The Nica Times in a recent interview at his Albertus Magnus Institute in Managua, which he founded after his release.

While Mayorga served as the chief economic adviser to President Violeta Chamorro in the early 1990s, the ambassador of Germany gave him some food for thought shortly after the Berlin Wall came down.

“He told me democracy isn’t an easy thing to build,”Mayorga said.

And it hasn’t been in Nicaragua. But the former banker thinks the transition toward an export-based economy will give small and medium-sized producers a chance to share in the wealth that Nicaraguan monopolies – both private and state-run – have been hoarding since the Somoza era. Then, he says, there would exist economic conditions for democracy to finally take root here.

It’s already happening, he says.

“Maybe (the Sandinistas) will weaken the monopolies,” he says with a smirk.


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