CAFTA in Nicaragua - Just Icing on the Cake

By Mike Nuess

Nuess is an educational consultant, primarily in the fields of energy and building science. He is the author of the recent book, General Plenty - Always and Only the Path to Peace.

In October 2005, I joined a Witness for Peace delegation of a dozen Washington and Oregon citizens. We went to Nicaragua to learn about the extent of hunger and poverty, the affect of our U.S. foreign policy on them, and in particular, the issues that affect food security for the people of Nicaragua.

Nicaragua is almost the size of Washington State and it has similar population density. Its greatest physical resource is its rich land, with about five acres of good farmland per person.  Agriculture is the cornerstone of the economy, providing over 60% of Nicaragua's export income and over 40% of its jobs. Half of Nicaraguans live on small-to-medium sized farms and produce 80% of Nicaragua's food.

Life is hard in Nicaragua, as it has been for centuries, first under conquest by the Europeans, then the North Americans. Marine Medal of Honor winner, General Smedley Butler, declared he had been duped into being a gangster for big business and said he helped "purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. (Apparently the world's largest investment banker, the same one in which the Bush family dynasty has played a major role)." The Marines didn't leave until 1933, not until they had established the Somoza dynasty, which, with its brutal National Guard, insured that agricultural assets would first serve the interests of foreign capital. What followed for most Nicaraguans was dispossession of land, poverty and malnutrition.

There was a brief period of hope after the Sandinista Revolution overthrew the U.S.-backed Somoza Tyranny in 1979. Literacy grew swiftly from less than 50% to over 90%. Effective agrarian reform policies returned stolen land to small-to-medium sized farmers and farm cooperatives, provided affordable loans, technology and technical support, and partially shifted production from export (for profits to foreign capital) to internal food production for sustainable self-sufficiency. Infant mortality dropped. The death penalty was eliminated. Labor and agricultural unions were accepted. Reports from the Inter-American Development Bank, Oxfam and others highlighted Nicaragua as an example of effective social and economic progress on behalf of the poor majority.

But by 1990, Regan's Contra war had destroyed this shining example. Exhausted, terrorized and embargoed back into poverty, Nicaraguans "elected" the U.S.-delegated client government and the trends once again began to reverse. Today literacy rates are in decline and malnutrition grows.
Nicaragua is now the 2nd poorest country in the Western Hemisphere. About 70% of Nicaraguans earn no more than $2 per day, the World Bank's definition of poverty, and 20% live in extreme poverty, earning less than $1 per day. The average monthly wage is $36. One out of every three children is malnourished. Over half of the 900,000 school-age kids cannot afford school. 45% of all income goes to the richest 10% of the population, while only 14% goes to the poorest. Since the end of the Sandinista period of the 1980's, small-to-medium sized farmers have received negligible credit, technology, and technical assistance.

We met with several stakeholder groups, such as the National Union of Farmers and Ranchers (UNAG), the Rural Workers Association (ATC), the Center for Rural & Social Promotion, Research & Development (CIPRES) a coffee producers' union for small farmers (CECOCAFEN), a fair trade association, research groups, and an economist from the Center for International Studies.

We visited agricultural cooperatives in the Campo (the rural countryside). We went to three communities and several farms. We stayed in the homes of these impoverished people. We ate beans, rice and tortillas three times a day, used the most primitive of outhouses, and took water from a bucket to wash. We slept on wood cots or the floor.

These rural campesinos and the mountains they lived in were very beautiful. They were as graceful and intelligent as any people you'd find here in the U.S.

We also saw sophisticated, diverse yet complexly integrated, sustainable agricultural models; models operating at the family-farm scale with appropriately selected technology for the current economic conditions.

At a CIPRES research facility, for example, we saw galvanized, screened and vented, family-size grain silos only a few feet tall; biogas digesters comprised of plastic valves and large, durable plastic bags; simple but effective grey-water treatment systems generating nutrient-rich water for plants; and worm beds generating rich organic fertilizer.

Under the CIPRES model, these sustainable family-scale farms aggregate into cooperatives, which in turn aggregate into larger organizations that can both disseminate information and represent them as political stakeholders.

Since 1998, a CIPRES project has rebuilt the lives of 5000 rural families, providing animals, seed, irrigation equipment, grain silos, and training to produce both sufficient food, as well as biogas and fertilizers from animal waste. Project results were increased production of eggs, dairy products, chickens, fruit and vegetables; improved health and diet; sufficient biogas for cooking fuel and a 50% drop in firewood consumption; revolving credit cooperatives; reforestation; and more pasture. Extension of the CIPRES model to 75,000 families could lift them out of extreme poverty, sustainably, at a cost of about $30 million

Intelligent people, rich land and sophisticated knowledge of biologically wise, holistic solutions to a durable food security were in abundant evidence. Obviously Nicaragua is quite capable of sustainably feeding its people well.

But today in Nicaragua there are no jobs at home, so nearly 20% of the people have migrated abroad, sending $600 million per year to families far away at home, an amount equal to one fourth of Nicaragua's GDP. These funds from split-up families are now Nicaragua's greatest source of vital foreign exchange.

For many today, only material aid from church groups, NGOs and Nicaraguans working abroad make it possible to meet their basic survival needs.

Again and again we saw that the forces that pin Nicaragua down and make it the 2nd poorest nation in the Western Hemisphere come from outside Nicaragua.

These people know what has been done to them and by whom. Everywhere we heard the same resounding message that the great corporations and the governments that serve them have financed and directly supported their exploitation since the late 1800's, dispossessing most rural people of their land and livelihood via brutal dictatorships like that of the old Somoza dynasty and the obedient U.S. client governments since 1990.

The World Bank has granted loans since the Contra War, but under austerity conditions that require Nicaragua to cut public spending, sell off public services and utilities to private corporations and prioritize agricultural production for export, regardless of the peoples' need for food.

Virtually everyone told us things were much worse now than ever before, even worse than the trade embargo and terror of the Contra war sponsored by the U.S. in the 1980's.

And CAFTA? The stakeholders we met strongly oppose CAFTA. It simply continues the assault, reinforcing the historical economic trends. Already Structural Adjustment Programs, designed only to insure debt service, have resulted in the privatization of public services for communication and electricity (and have attempted to do so for water). The promised "efficiency of privatization" has not occurred. The only "efficiency" realized has been profits to the private multinationals resulting from price increases, cutbacks in labor, reduced maintenance quality, and cutoffs of that growing public sector with less and less ability to pay. Long-term economic stability has been sacrificed.

In another example, Coffee production has long been critical to Nicaragua's vital foreign exchangeÑaccounting for 27% of Nicaragua's exports and one third of its agricultural employment. Over 300,000 livelihoods depend on it. Coffee, then, comprises part of Nicaragua's "comparative advantage" according to the World Bank's neoliberal framework for the developing world. But World Bank Structural Adjustment programs then encouraged other countries, such as Vietnam, to export more coffee (as they had encouraged Nicaragua to do in the past). The resultant glut on the world coffee market has been devastating for Nicaraguan coffee producers. Prices dropped drastically in 2002, to well below production costs. Yet consumer prices in the U.S. did not drop. Large, transnational coffee distributors benefited. Clearly the increased "efficiency" applies to the multinationals served by the U.S. Government which exercises sole veto power over World Bank policies. Any "efficiency" improvements to consumers and "comparative advantages" to small producers exist only as deceitful promises on paper.

CAFTA will only take it further, they say. Nicaraguan farmers get no subsidies. The average (taxpayer serviced) subsidy to U.S. farmers is $21,000 (though heavily skewed to large agribusiness multinationals: 10% of U.S. farms receive 70% of subsidies). CAFTA will require eventual removal of the tariffs that now slightly protect Nicaraguan farmers, and subject them to unlimited dumping of subsidized products from the U.S.

It will be just like NAFTA in Mexico, where income drastically dropped for 15 million small producers and forced over a million families off the land and into Free Trade Zone (FTZ) sweat shops (no doubt the desired effect). Mexican agricultural production has halved in the decade of NAFTA. Oh, it looked good on paper: a tripling of foreign investment into FTZs, a doubling of exports from FTZs and 800,000 new jobs after seven years. But this "trade" was merely "paper transfers" that contributed nothing more than poverty-level wages to the Mexican economy. Raw materials were "imported" into the FTZs, assembled products were "exported" but the dollars and profits passed right through to the multinationals. Even the poverty-level wages were short term: most of those 800,000 jobs have gone, as the multinationals "found" cheaper labor in other depressed and desperate FTZs.

Local and regional food sovereignty/security in Mexico has been greatly weakened under NAFTA, and labor rights and environmental quality degraded, too.

Things didn't go so well for U.S. workers either, as hundreds of thousands of higher paying jobs-with-benefits were lost, unemployed workers having to find low-wage service jobs with fewer benefits. Jobs, wages and bargaining power for workers in both countries were negatively impacted (again, the intended effect).

As a Nicaraguan economist from the Center for International Studies told us, "The impact of CAFTA on the productive sector of Nicaragua will be disastrous."

There are proven alternatives, for example the CIPRES program that could sustainably lift 75,000 families from extreme poverty for 30 million dollarsÑabout a tenth of Nicaragua's annual debt service on a principal already paid several times over for an unjust debt built by U.S. imposed governments, war and economic embargo.

In 1986 the World Court condemned U.S. aggression during the decade-long Contra war, clearly an assault against the promising new self-sufficient economy of Nicaragua. The International Court of Justice ordered the U.S. pay $17 billion in reparations, nearly three times Nicaragua's current foreign debt. The U.S. has not paid.

Nicaragua has been really, really screwed. There were times when many of us could not hold back the tears.

Most of us in the U.S. remain incredibly ignorant of what has been done in our name, and continues to be done in our name across the globe. We remain ignorant of just how effectively we are deceived by the corporate-owned media and our own government. And the request we heard from the Nicaraguans, over and over again, was to find a way to wake up the good people here at home in the U.S.

We would do well to wake up to the plight of our Nicaraguan companeros and companeras, for the same forces have been at work here at home, eroding the vitality of our own family farms; eroding not only financial vitality but also diversity, from gene to seed to crop choice; eroding accountability to both the market and the regional community; forestalling sustainability and environmental quality.

It is not that subsidies, tariffs, and other economic tools are wrong, but that they are currently structured to favor the large multinationals and destroy small-to-medium sized farmers both here and abroad. Free trade agreements like NAFTA, CAFTA and now FTAA are only icing on the cake of a process that has been working for some time. Over a million U.S. family farms have been lost in the last 30-40 years. Washington State lost 10% of its family farms in just 5 years, between 1997 and 2002.

Today's new supranational "trade" agreements are really "protectionist policies" for multinationals and their investors. They usurp local, regional and even national sovereignty, the very backbone of democracy, by subjecting it to secret tribunals that under NAFTA have demonstrated clearly that corporate profitability comes before local economic health; environmental quality; access to medicine, water and other public services. From NAFTA lawsuits like Metalclad in Mexico to Methanex in California, NAFTA tribunals can ravage public health and environmental laws.

Meanwhile, humanity's wealth production capacity has only increased. In agriculture, we produce enough to feed everyone but have not yet applied the technical, social and economic tools we have to insure this wealth is sustainable (by moving from fossil-fuel-based inputs of over five calories for each calorie yielded to organic methods that reverse the ratio), distributable (diversified regional production) and accessible (affordable to the poor, too).

And as in agriculture, so it is in energy, shelter, transportation, medicine, water and all critical services. Humanity's accumulated know how allows us to make everyone sustainably wealthy, thereby eliminating state sponsored war and terrorism to control vital resources.

More and more the world evolves toward two new superpowers: the multinational giants who secretly, irresponsibly and ruthlessly concentrate humanity's wealth into the hands of a few; and the collective peoples of the world who daily become increasingly marginalized and dispensable. Hating the corporations and governments who serve them resolves nothing. Changing them into transparent, accountable and responsible servants of a democratic humanity resolves everything. We can easily predict they will be the last to see that resource scarcity is obsolete and we no longer live in world of "either us or them." Humanity's accumulated know how, with its beautiful and terrible ability to sustain or destroy us all, has transformed today's reality into one of "both us and them, else all perish."

We may soon realize that we need our Nicaraguan sisters and brothers as badly as they need us.


Food Insecurity in Nicaragua, a 22-minute video documentary of the author's October 2005 visit to Nicaragua, is available in DVD format for $5. Contact to order.

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