Nicaragua's Hard-Won Progress

Article excerpt

FEB. 25 marked the second anniversary of Violeta Barrios de Chamorro's victory over the Sandinistas in free Nicaraguan elections. President Chamorro and her country have made remarkable progress that has gone virtually unnoticed by the United States and other countries, which have been preoccupied with Eastern Europe's similar struggle to rebuild after communism. Nicaragua is even more deserving of our attention. Its transformation is occurring in our own hemisphere, and its position is partly the result of the millions of dollars the US spent to support the contras.

Chamorro and her 14-party coalition inherited an economic mess in 1990. The US economic embargo had strangled Nicaragua's trade. Ten years of war and Sandinista economic mismanagement had cut gross domestic product (GDP) in half and chased away most of the technically trained professionals. Real minimum wages had fallen to one-tenth their previous levels, and per capita food production had fallen 37 percent.

The Sandinistas had expropriated private businesses, usurped control of all foreign-trade transactions, and tripled public expenditures. By 1990, Nicaragua's budget deficit was 20 percent of GDP and could be financed only by inflation - which reached 13,000 percent in 1990.

Two years ago, the civil war officially ended, but the legacy of earlier conflicts remained. The Sandinistas emerged as the single largest political party and used strikes to disrupt Nicaraguan society. Chamorro thus faced a double challenge: to introduce desperately needed economic reforms - some of which would cause short-term economic hardship - while building trust and harmony within the country.

Despite the odds, the Chamorro government has begun a major transformation of the Nicaraguan economy. Presidential minister Antonio Lacayo brought inflation down from an average of 1,000 percent per month in 1990 to 80 percent per month in 1991, and to an anticipated 3 percent per month in 1992. The government dismantled the exorbitant military infrastructure and reestablished relations with the international financial community.

Although progress has been made, economic renewal is coming slowly for Nicaragua. The anticipated 5 percent expansion in total output in 1992 will make but a small dent in a country whose economy contracted an average of 2. …