Initial Reflections on the Violence in Nicaragua

As many people – certainly most likely to be reading this – already know, Nicaragua was roiled by protests that turned violent over the last week. Estimates are that 34 people have been killed, most on Friday and Saturday as the conflict extended throughout the country, though the majority of deaths were still in Managua. Sunday, President Ortega announced that the reform of the social security system that set off the protest would be annulled and new negotiations begun. On Monday, a large peace rally in Managua seemed to signal the winding down of the tensions, though some protests continue. The details of the events over the last week are far from clear; how to interpret them is even murkier. Despite efforts to pack them into a tight narrative, the reality is that the sources of the violence and their purpose are difficult to synthesize from the conflicting reports. What we can discuss are the broad outlines of the conflict, and the short-term winners and losers that have emerged from it. Finally, for those in the United States, we can continue to stand firm against U.S. intervention in the political process in Nicaragua, which has only ever made things worse for the majority of the Nicaraguan people.

Context for the Protests

The National Social Security Institute (INSS) in Nicaragua is facing a long-term sustainability crisis. Expenditures have increased while anticipated revenue has not been met. Unless reform is undertaken, the social security fund will deplete its reserves by 2019. Nicaragua completed its Article IV consultation with the International Monetary Fund in November of 2017. The crisis in the INSS was highlighted in this consultation as urgent and policy recommendations for reform were made. The IMF did not dictate a specific set of changes, but offered a menu of four alternative reform packages, all of which included sharp reductions in benefit payments of 20-30%. Three of the four proposals also included raising the retirement age (to 63 or 65) with increasing contributions featured in some as well. From the IMF’s perspective, the threat from INSS insolvency is that the government will have to transfer revenue to cover shortfalls, impacting its ability to service debt payments. Even if that outcome is not a first priority for others, it is clear that INSS insolvency will create enormous budget tension at a time when other factors are also pinching Nicaragua’s economy.

Negotiations over reform for the INSS involved COSEP, representing private industry, workers’ representatives, and the government. COSEP left the table when its proposed reforms, largely based on the most regressive IMF recommendations, were rejected. The government then took the step of announcing its own attempt at a compromise reform package on Wednesday. In the government proposal, the formula for expanding contributions to the system included a 3.25% increase in business contributions, compared to .75% increase for workers, with the government contribution increasing by 1.25% for public sector workers. In addition, a 5% contribution for health benefits was also announced, far short of the 20-30% benefits cut recommended by the IMF, but still falling squarely on the shoulders of people with limited means. The government kept the age for receiving benefits at 60 (COSEP’s position had been to raise this to 65). Increasing contributions while cutting benefits was guaranteed to spark some protest, and indeed, pensioners marched the day it was announced, but they were later followed by students. Likewise, adopting a formula opposed by the business community led to COSEP issuing its own call for demonstrations.

The causes of the turn to violence that escalated on Thursday and grew into a national crisis by the weekend are less clear. There are competing explanations. One view, dominant in the reporting of La Prensa and through its reporting, the international media, is that the government was to blame. In this narrative, groups of pipe-wielding “orteguistas” weighed into crowds of peaceful demonstrators in an effort to intimidate, and ultimately shut down, the demonstrations. When protests continued, the police, later joined by the military, used excessive force to try to stop them.

An opposing view is that the escalation of tensions was the result of government opponents using the protests as a pretext to engage in a violent campaign of destabilization. In this narrative, militant groups associated with the opposition parties, Citizens for Liberty (CxL) and Sandinista Renovation Movement (MRS), ratcheted up the tensions, burning government buildings and firing on police. One of the first deaths on Thursday, for example, was a police officer killed by a shotgun blast; social security buildings, FSLN offices, and other public spaces were set aflame all over the country. Clearly not all the demonstrators were peaceful.

It is possible, of course, that elements of both explanations are true: that the original protests were a peaceful, legitimate expression of grievances; then the government overreacted, and in that space of increasing conflict, opposition groups opportunistically sought to heighten the tensions.

Maybe.

Of course, if one is to step back and ask who benefitted from the violence, the answer is clear: COSEP and the opposition parties. The government withdrew the INSS reforms, and signaled a willingness to go back to a table that COSEP had previously walked away from. This is not good news for the poor. COSEP’s position has now been strengthened in these negotiations, and that likely means deeper cuts, and a possible increase in the retirement age. Also possible is that no agreement will be reached, which risks INSS insolvency and/or trouble with Nicaragua’s creditors. In addition, Ortega’s government has suffered a further blow to its legitimacy, both domestically and internationally, which will likely lead to lasting diplomatic repercussions. For example, the protests make the passage of the NICA Act, which would limit Nicaragua’s access to new loans, in the U.S. Congress, more likely. This is also bad news for the poor who will suffer the most from any reduction in loans from multilateral lenders. The opposition will treat the events of the last week (or at least their spin on those events) as vindication of their position and seek further support inside and outside of Nicaragua. The U.S. government already provides support to opposition parties. Will those parties now get more?

Meanwhile, the Ortega government gained nothing. Indeed, it is hard to imagine any scenario last week by which the government could have thought it would gain anything by attacking protesters. Left alone, the demonstrations would have faded in a few days. But state actors are often short-sighted; so, who knows? The point is not to presume the government is blameless here, since obviously it is not, but simply to point out that this was not a one-sided use of force. And, to be clear, what has emerged on the other side of the violence is an emboldened business sector and political opposition, alongside a weakened state that, for all its faults, is the only instrument with the capacity to confront poverty at the national level.

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