NICARAGUA DRAINING ITS TREASURY TO PAY FOR WAR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000202230071-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: December 23, 2010
• Sequence Number: 71
• Publication Date: March 29, 1983
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/12/23: CIA-RDP90-00552R000202230071-6
CHRISTIAN SCIENCE MONITOR
29 MARCH 1983
Nicaragua draining its
treasury to pay for- war
By Van PuUey -
Special to The Christian Science Monitor
Ester Nicaragua
Up and down the rows of houses, Nicaraguans watched
solemnly as some 20 trucks jammed with soldiers passed
through this northern town on their way south.
These battalions of the "popular militia" were return-
ing home after months of fighting 'counterrevolutionary
groups in the border region near Honduras.
According to the Re
Nicaraguan Institute for Economic and Social Studies and
former key official at the Ministry of Planning, one reason
for the country's economic problems is the falling world
prices for Nicaragua's major export crops.
"The problem is not so much with the volume of produc-
tion, but with the value," Fr. Gorostiaga says. "Sugar sold
for 24 cents Per Pound two years ago. Now it's at 9 cents. We
lost perhaps $140 million in 1982 from the deterioration in the
terms of trade, reducing our total export earnings to about
$4 0,000. This is one thing holding back our reform process."
Filtered cigarettes and medicine are the latest in a long
list of Items scarce in the country. The government has ra-
tioned gasoline and sugar since 1961 to prevent speculation
and boarding. Motorists lined up for hours in Managua at the
end of last Year to pay $3 fora gallon of gas, even though they
were restricted to five gallons per week. The rationing has
caused severe overcrowding on the public transportation sys-
tem, which had always been somewhat crowded.
In addition to fighting the counterrevolutionaries, the
Sandinistas fight .a constant battle in the marketplace
against food shortages and price gouging. Problems have
been exacerbated when opposition elements have at-tsmes
deliberately spread rumors of impending shortages to trig.,
ger panic.
The National Law of Economic Emergency passed in 1981.
made it a punishable offense tEhaard, speculate, or dissemi-
nate false information through any means that might pro-
voke people to take such action. It also prevents strikes that
have been encouraged by ultra-leftist labor unions and gives
the government more control over prices and the economy.
The government also announced this year it will take over all
marketing of cooking oil, flour. and soap - basic commod-
ities in short supply.
The Sandinistas have had difficulty controlling the Nica-
raguan economy in practice. Distribution of many basic food-
stuffs, especially outside Managua, is inadequate.
Spot checks at several stores and markets in the country
proved that dual pricing exists for many basic commodities
that the government has tried to control.
Overall food consumption is up 40 percent over pre-revolu-
tionary level, but a 1982 Managua survey was inconclusive
about improvements in the diet of the poor. Demand and ris-
ing revolutionary expectations continue to outstrip the coun-
try's current productive capacity forcing reliance on expen-
sive imports.
There were hopes of improving the food situation in 1982,
but natural disasters hurt production. Flooding in May of last
year destroyed 20,000 acres of just-planted basic grain crops,
S3.6 million in stored grains. and left $350 ml lion in damages
to the national economic infrastructure according to a United
Nations survey. A drought followed in July and-August
causing estimated losses of $47 million.
Most Nicaraguans now seem to believe the US is interven-
ing in their country and making things worse. This has made
the scarcity of goods unimportant to some by comparison,
Officials in the Reagan administration has expressed
ities bet"el Sanitized Copy Approved for Release 2010/12/23: CIA-RDP90-00552R000202230071-6
"What are we to do?" asked Dohna Elena, a
shopkeeper in Esteli. as the trucks roared by her house on
the Pan American Highway. "Every day, it is getting
harder for us to make ends meet."
Nicaragua's Sandinista leaders admit that the cost of
fighting counterrevolutionary forces slipping across the
border from Honduras is draining the economy. t
The Sandinistas say the revenues from the state sector
- which are about 40 percent of the nation's gross domes-
tic product - are needed to finance social services for the
poor and maintain an army estimated at 22,000 to fight the
.counterrevolutionary forces that they say are backed by
the United States. Critics charge that the Sandinista plans
for social reform are undermining the economy and -en-
ergy of the free market. ..
The war threatens to crimp the government's social initia-
tives - the literacy campaign and health care - begun in the
early days of Sandinista rule.
The World Bank says private investment in the economy
shrank from 80 percent of the total before the revolution to 10
percent in 1981 due to an uncertain economic and political
climate that prevails in the country.
But the war and austerity moves are not causing wide
discontent here. In fact, the war appears to be promoting
national unity.
Nicaraguans by and large seem more understanding of
what their Sandinista leaders are doing now than they were
last year. For example, when the Argentine-British war over
the Falklands Islands pulled the international spotlight away
from this corner of Central America last spring, many Nica-
raguans bagan to criticize the Sandinista leadership. They
began st zHng "Why isn't there enough sugar?" and "When
are we going to have elections?"
The Rev. Martin Mateo, director of the Agricultural
School in Esteli, explains the change this way: "While the
truth is that Nicaragua's problems are caused by three
things, American pressure, government inexperience, and
the international financial crisis, the government can pass
their part of the blame off on the US because of the interven-
tion. The Sandinistas have never been stronger.-
Hit-and-run border incursions by groups attempting to
shake the Sandinista government were taking place as long
ago as 1961. But the scale of such operations has greatly in-
creased and the economy has fallen into serious decline since
that time.
When the Sandinistas came to power in 1979 after toppling
dictator Anastasio Somoza Debayle, they called for sweeping
economic and social reform. They sought to reduce ineouai-
STAT