Commercial relations with the United States were reestablished in 1990, after the electoral triumph of the National Opposition Union (UNO), thus bringing about the opportunity for the installation of a democratic system and a free-market economy. With intent to reflect upon the interchange between Nicaragua and the United States over the last seven years, the Business magazine interviewed the United States Ambassador to Nicaragua, Mr. Lino Gutierrez.
Mr. Ambassador, after a year of living as a representative of the government of the United States in Nicaragua, could you tell us what have been the most important changes in Nicaraguan economics and politics?
I have been in Nicaragua for fourteen months and what I have observed is that Dr. Aleman has instituted important economic reforms, preparing Nicaragua for the eventual signing of the ESAF with the International Monetary Fund. This is very positive since Nicaragua needs a program of this type. The steps which the President has taken, such as the tax reform and the closure of BANADES, are important measures which will prepare Nicaragua to enter the IMF agreements. I believe that the President, in his first year of governing, achieved an economic growth of 5% in 1997, which represents four years of continual growth for Nicaragua. We hope that the new measures will prepare the nation for the economic launch that is so fervently awaited and sought.
As for as politics, there was a transfer of power from one democratically elected government to another. This is, perhaps, the first time in the history of Nicaragua when academics debate whether or not something like this has happened in the past. A peaceful transfer of power is very significant, since it allows for the strengthening of democratic institutions such as: National Assembly, Judicial Power, Inspector General of the Republic's Office, and the Supreme Electoral Council. All of this is very important for the democratic future of Nicaragua.
What do you think of the decision by groups of ex-militants of the Nicaraguan Resistance and the Sandinista Army to lay down their weapons?
It is very important that these armed groups have abandoned violence and have been reintegrated into civil society. There are probably still some groups, more likely "bandits," but it appears that the organized groups like the 3-80 and the FUAC have ended their warring activities and have been reintegrated into society, which is very positive.
After the triumph of UNO in 1990, a period of transition was initiated which sowed the seeds for the installation of democracy in Nicaragua. Do you believe that this period is over or that we are still in the transition phase?
It is the historians' job to decide when periods or eras end and begin. Nicaragua has undoubtedly suffered much during the six decades of dictatorship and civil war. An ex-minister of the government told me, "If Nicaragua grows at 8% for the next 15 years, it will be where it was before the Revolution." This shows how much the economy plummeted in the years of conflict. I think there is a lot missing from what Nicaragua should be; nevertheless, the steps are being taken to facilitate the rise and recuperation of the economy.
Nicaragua has been receiving economy aid and technical cooperation from the United States. What do you think of this relationship?
The United States has been present since Nicaragua became a democracy again in 1990. From that date to the present, the United States has designated around $1 billion for the economic recuperation of Nicaragua. We still maintain the program, which, although is not as substantial as it was originally, still represents an important assistance: $30 million in donations, not including the money which has not been deposited yet from 1997. This does not include the contributions from the US to the BID and the World Bank, of which we are great contributors.
In these relations, which sectors or economic activities in Nicaragua have benefited?
In the beginning our aid focused on helping Nicaragua stabilize her economy, with liquid transfers to the Ministry of Finance to fight the 13,000% inflation. Our focus afterwards was to allocate funds to the most needy sectors in the country (small producers, small businesses, health sector) and organizations like Pro Mujer (For Women), to help expectant women in order to ensure the survival of their children. We also helped by way of MARENA and, finally, by strengthening the democracy by collaborating with the National Assembly, the Judicial Power, the Comptroller General, the CSE, and with Ethics and Transparency Observers. We are currently supporting the CSE with the Atlantic Coast elections.
Is it possible that the said aid could be increased in the coming years, or is the figure basically established.
You know that global assistance which the United States allocated to the rest of the world substantially declined after the fall of the Berlin Wall. But I know that Nicaragua still needs help and we have been able to maintain a steady level of $30 million annually. I have asked that the aid be increased slightly this year since the government is going to sign the ESAF and needs help from donor countries in order to spend in the social sector, which is most in need. However, the aid will be more or less constant for the next few years, around $30 million annually.
Is it conceivable that the United States could influence the international community so that aid to Nicaragua could be increased?
We, of course, want to help Nicaragua so that it can get back on its economic feet. The Paris Club will play an important roll, and everything that we can do will be done. Nevertheless, the signing of the ESAF will be fundamental for Nicaragua, since it will permit her to be part of the HICP program, which will be the only way for Nicaragua to restructure her external debt, which some have termed "eternal debt."
Could you explain exactly what is the behavior of external commerce between the two nations? Has Nicaragua shown a favorable tendency with respect to its exports to the United States?
I learned just the other day that in the first nine months of 1997 the exports to the United States increased 30%. Simultaneously, United States exports increased 12%. This shows that it is a very active commerce and that it is growing greatly, which I consider to be good for both countries. The United States currently has a commercial deficit with respect to Nicaragua. Our exports to Nicaragua are in the order of $230 million and Nicaraguan exports to the US exceed $300 million. Among the products which our country sells to Nicaragua are different types of machinery, clothing, and basic goods, most of all grain. We buy products like beef, coffee and fish from Nicaragua.
Have you perceived any interest on the part of American investors to install enterprises in Nicaragua? Do you know of any limitations in our country which prevent potential investment?
There is a movement which is accelerating to decide an investment in Nicaragua. In the fourteen months which I have been her, I have seen Bell South and medium-size companies like Domino's Pizza, McDonald's, and Burger King be installed here. A company specialized in geothermal areas recently signed an exploration contract with the government. I think we will see more. Concerning potential obstacles to investment, what might possibly detain potential investors are the reports of street disturbances and social conflicts, events which send the message that nothing has changed in Nicaragua, which is not correct. In spite of the fact that these phenomena occur in other countries, they are more evident in Nicaragua because a special stigma from the 80's and the past exists.
What do you think of the roll of the private sector in the Nicaraguan economy? Could you say that the private sector has reached the kind of solidity require to assume responsibility for directing the economy?
Very positive. President Aleman has said that the private sector has to be the engine for the recuperation of the economy. This is a government which believes in market laws, not trying to impose state control but rather taking measures which favor free-enterprise so that it can develop itself. I believe that it has evolved greatly in some sectors. Nicaragua has learned how to compete globally, how to compete with its Central American neighbors, how to take advantage of external investment, complementing what already exists. There are some sectors which haven't gotten the message yet, a little bit of paternalism exists with them, but I am confident that as long as they are learning they will be in a better position to compete. In this sense, the TLC with Mexico for example, as Minister Sacasa said in a dinner with the members of AMCHAM, "whenever a market of 4 million inhabitants signs an agreement with a larger market--Mexico has 90 million inhabitants--the advantage belongs to the smaller country because its products can enter into this market."
What message would you send to the Nicaraguan enterprise?
Keep up the good work. Get informed about the world economy, use the Internet, and know that we at the Embassy are dedicated to give out whatever help and information is needed. I'm sure that with the spirit of the people and the private enterprise, Nicaragua will be able to complete more favorably in the world economy.