Interview with Magda Lanuza, April 7, 2003
Q - Before we get to the specifics of what has been happening in Nicaragua, I would like you to just set the framework for our readers, and say something about the relationship between privatization to the question of the external debt, because the readers need to have that set up for them to get it.
Nicaragua started a very strong period of privatization beginning in 1992 when the first structural adjustment program was signed between the International Monetary Fund and the government of Violeta Chamorro. Some of the conditions for renegotiating the external debt were to sell some of the State owned enterprises or companies. That was the first phase of privatization, and it lasted from 1992 to 1995. The Nicaraguan Government was encouraged to sell the small State companies such as some workshops, some bakeries, small ones which belonged to the government which in the 1980s were in the hands of the State.
Then the second stage of the privatization started in 1994 when the World Bank and the Interamerican Development Bank started different national programs for the privatization of public services, like health and education. They gave money to the Nicaraguan government to start a whole rehabilitation, what they called modernization, of the education and health systems. They tried to set up more private enterprises in health and education. We had then a boom in private schools, private universities, and private hospitals. And inside the health system itself, many of the services that were provided free according to our own constitution were privatized.
The third part of this privatization, which comes with this structural adjustment program, was to sell the biggest and best companies, owned by the State, such as electricity, water, communications and port services. So that was the last thing that the Nicaraguan government had to sell off to transnational corporations, and it all started in 1995, even though since the second package of the structural adjustment signed with the International Monetary Fund already some conditions were demanded, namely that Nicaragua had to go farther in the privatization process. So the last part of the privatization process of Nicaragua is dealing currently with public services. In one word, we can say that with the Free Trade Agreement of the Americas, and with the Central America Free Trade Agreement, Nicaragua is really far along on those agendas, because we have been encouraged, forced, to privatize public services. That is why in Nicaragua currently the government institutions are merely facilitators for investment.
Now Nicaragua is part of the HIPC initiative (an IMF debt relief program) – even though we can see that it doesn’t work. It meant only more structural adjustment for our national economy. And after that they continued to say that the problem in Nicaragua will end this year with this process of the HIPC initiative. But it is really far from that, because the external debt is growing every day. They are saying that we need to sell off our remaining public services to be able to service the national debt. So this is the linkage of debt and privatization in Nicaragua.
We say that the International Monetary Fund and the World Bank are co-workers or co-facilitators of multinational corporations. Because in the case of Nicaragua, for example, electricity now is in the hands of one of the biggest Spanish transnational corporations investing in Guatemala, Panama, and the Dominican Republic. Then we have the communications service, which was also privatized in a very corrupt way, in which the last government, now in jail, carried out that whole, terrible process. The current government has done nothing to investigate. And this year, one of the conditions which the IMF and the Nicaraguan Government signed in the program last December was that by the end of this year Nicaragua should privatize the remaining 51% of the shares of the telecommunication company.
Q – What is happening with water privatization?
In July 2001 the Nicaraguan government came out with a proposal for poverty reduction, which is part of the HIPC process. In that initiative, they made a lot of noise about the participatory process, they ran workshops throughout the country, and many NGOs got involved in that game of the government. In the end, the document came out and all the information in there is what the World Bank and the IMF wanted the Nicaraguan government to have there. For example, I remember what the Civil Coordinator [CCER] said, “Hey we worked so much with you and none of our proposals are there.”
The document is divided into three different parts. One of them is a lot of words about Nicaragua, how poor it is, blah, blah, blah, information that you can read in any UNDP report.
However, at the end we read about this strategy for poverty reduction in Nicaragua. The action plan talks about ENACAL, the National Enterprise for Water Administration. In one of the projects, a lot of money was granted by the IDB and a German bank to improve the water system in the western part of the country and then in the north, in Jinotega and Matagalpa. The action plan doesn’t use the term privatization. It says that the state company, ENACAL, has to be “competitive.” They are just changing words
Another aspect of the water issue is this: In 1998, one of the conditions for the Government to get money from the IDB was that at the end of the water system improvement project in Chinandega and Leon, they should get an audit by a firm from abroad. Nicaragua signed that loan with those conditions.
So last year, when that project finished, they did the audit. It was a company from Texas that came to look over the books. Then, this audit firm had to provide the names of transnational corporations that would be interested in managing the water system, and they said that there were five transnational corporations, two from France and one each from the United States, Canada and England, that would be interested in managing the best water systems in Nicaragua, which is in Chinandega.
Q - Now when you say manage, you mean they aren’t going to own them?
Right. There are three different ways of privatization of management. One of them is for 20 years, which is called concession. Or, for a period of 10 years they can manage under a lease; and finally for five years, it is a short-term contract. The Interamerican Development Bank is advising that it be a 20-year concession. But the companies are already looking for privatization for more years than that. Since every year there is less and less money for government-owned water institutions, they are so weak so that they cannot deal with the whole management and control of these very new water system in Chinandega and Leon. We heard last week that the workers of ENACAL [the national water infrastructure company] were dismissed, which means that they are trying to tell the transnational companies that you will not have any problems with workers; the road is clean and you can make your own contracts and bring in new people, because at some point these transnational corporations are scared about unions. For example, in communications, this has been a big problem for the Swedish Company.
Then there is the case of Hydrogesa, the company that runs our biggest hydroelectric power plant, which is located in Jinotega. It is a dam that was built in the 1960s. At that time, the Somoza Government took the land from the indigenous communities, displaced them, and didn’t pay them anything. The indigenous communities to a certain extent have remained in the area of the dam. This water resource is not only for electricity, but also the water for local communities, which means that even though it is a lake that they never wanted, local people now see the lake as their own, and they can fish in it and even use it for transportation. But this new attempt at privatization at some point last year failed.
Q – An attempt at privatization?
Yes. There were five corporations interested in it, but in the end only two of them satisfied all the requirements that were stated in the legal framework. Those two were Enron and Coastal Power from the U.S. And then the whole process went wrong. Anyway, the process is stopped now. But Enron is waiting for a new chance to take the dam.
At the local level, there has been a lot of resistance. And people are really demanding that it not be privatized. There is a lot of mobilization, and the indigenous people have been organized against privatization, and the local mayor as well.
The Government created all these names and companies for privatizing small pieces of the hydroelectric company. But we link these privatizations of Hydrogesa with the water privatization process. Because once the company gets there, it will privatize the production of energy. They will not take into account people’s needs for the water that is there. This is one issue. And the other issue is that once they get the water, they will be able to do whatever they want with the resource, even export it.
So at the national level there have been different actions against privatization, but we can see that at the local level the most important thing has already happened: they have already organized and they have some connection with national organizations, which can provide some information.
At the local level they have been keeping in touch with national organizations, such as non-governmental organizations (NGOs), which have access to information, or web pages, or have the time to hunt down information. We organize workshops for them and give them information. So they are well-prepared; they are well-informed.
Q – Are there protests also in Leon and Chinandega, Matagalpa and Jinotega?
Well in Matagalpa not so much. In Jinotega there have been. In Leon and Chinandega, yes, for example, the unions in Chinandega, they have organized themselves. Some locals are really well organized on how they will stop this. In Managua you can see a lot of graffiti asking not to privatize water, and in the National Assembly there are some members who have stated exposed openly their opposition to the water privatization.
Q - Wasn’t there a law passed stopping all further privatization?
There is a law that was passed last year. But it is very difficult to understand what is really happening, because it was said that there will be no water concession, no water privatization until there is a general water law in Nicaragua. There are two ways to understand this victory. The Minister of Trade is opposed to the privatization. But the Ministry of the Treasury wants to sign with the IMF, so there is a contradiction because one is saying we want the privatization, and the other is saying no. So we reached this understanding, that the bill is there because the Aleman loyalists in the Ministry of Trade do not like Bolańos and they want him to have troubles with the IMF. So that is why they are stopping privatization.
The other reading is that now there is a proposal coming from the government on the issue of water management. This for us would signify an attempt to legalize all these privatization frameworks. It would mean more legality to help corporations to come to Nicaragua and look for water resources. They are not talking about water resources in the sense of taking care of water, protecting the water sources; they are not talking about the local people’s rights to use water. In the bill that is now in the process of being written, they only talk about water management, that is, merely the merchandising of this natural resource. The National Consumers’ Defense Network is working on a proposal that we as Nicaraguan civil society can take to the National Assembly and present as a civil society initiative. It deals with how different committees can manage water resources, how they can protect them, how they can involve local authorities in the water problem. S far as the agreement that was signed last year with the IMF goes, nobody knows what the Government signed, not even the National Assembly. All we know is that there is a document in which they are enforcing more privatization of electricity, communication and water resources.
We think the government is really scared, and doesn’t know what will happen if they go with this water privatization process. It will be very, very hard for them. Because there are even big leaders of the national political life who are against water privatization, and local communities will fight against it. So NGOs, like we at the Center for International Studies, are just trying to get information to the local people and support them with some of the local workshops we do for the population. For the National Consumers’ Defense Network we did a whole document on the water privatization process, how it started, how it is working in other countries. We have also been working on linkages between people in Nicaragua and some other parts of the world against water privatization, the people in Bolivia, for example. There was this World Water Forum in Tokyo last month. We organized so that somebody from the National Consumers’ Defense Network would go there and explain how the people of Nicaragua are fighting against water privatization.
Q - Do you work with the Consumers’ Defense Network?
Yes, we work with them. We provide them with information. Everyone there is active, and they don’t have time to write up notes. We send them information that can be useful for them.
Q - So you are the research end, and they do the street actions?
Well, at times do take part in the street actions. We do a mixture of research and organizing and educating people.
Q - Let me ask you a question about the long view. There was a meeting of the Nicaraguan Network in November. The Coordinator, Chuck Kaufman, said that given the protests against privatization in Latin America, this time the corporate elite may have overreached itself on the water issue, and invited a lot of trouble. Do you think that this is a really hot issue that is going to mobilize a lot of people and movements in Latin America?
Definitely, and it is growing. For example, the Spanish transnational corporation now in Nicaragua in the field of electricity is really scared of people; they hate social movements; they hate people in the streets. But remember that these corporations have all this military equipment to stop social movements. You know at the beginning of the 20st century Chiquita Banana [then United Fruit] called in the US Army to protect their investments here. With people organizing themselves in different countries against the privatization, governments are using many initiatives in the military sector. They are moving very fast and secretly. For example, last week a consulting group hired by the Organization of American States, said they wanted all the countries of Central America to pass bills in their legislatures in which they state that foreign armies can intervene directly in any country.
Q - That OAS said that?
Yes, last Friday the Minister of the Interior and the police and some of the National Assembly were saying that Nicaragua won’t pass this bill. It is really rude and scary. And we also know of some bilateral agreements that different governments are signing with the United States Government. So we see that, for example, in the Free Trade Agreement of the Americas (FTAA), they are putting aside money and resources for security. This means that all these transnational corporations that will be taking over these privatizations are demanding security from the US Government and other governments. And this security means no unions, no organized communities, and no social movements. We are seeing that the future will be very hard to be with these military systems.
Q - So you will have to stop the FTAA.
We will have to stop it. But in Nicaragua we should be more organized, more mobilized. It is not like the case of El Salvador or Costa Rica. Two years ago, those countries had strong mobilizations against privatization. In Nicaragua, there are many factors involved. At least, education is one key thing that we need to do with people, to organize them and tell them what is happening, and that only mobilization will stop it.
Q - We hear that the Consumers’ Defense Network is pretty militant and out in the streets and doing a lot of protests. But you are saying there should be more?
More, we need more in Nicaragua. More people.