[Phil Cournoyer is a Nicaraguan citizen and longtime member of
the FSLN [Sandinista National Liberation Front (Sandinistas)].
He has been an active socialist in Canada and Nicaragua for almost
50 years.]

More than six months have passed since the inauguration of
the new "21st Century Sandinista" government of Nicaragua last
January. Jubilant celebrations of that event expressed the excitement
of hundreds of thousands of Sandinista supporters. New hopes for an escape from the hell of neoliberal catastrophes breezed across our country's mountains, volcanoes, valleys, and lakes, from the large cities
to the remote hinterlands and coasts.

The FSLN leadership had used the election campaign to assure
the country (and Washington) that no second edition of the
1979 revolution would take place. Even so, many wanted to believe
that the new government would signal a return to the inspiring
days and social advances of the revolution.

What does the first six-month performance of the new government
tell us about the relationship between reality and such hopes?

The Ortega government inherited a nearly "Africanized" country.
Nicaragua is second only to Haiti as the poorest country in
the hemisphere. Almost 80% percent of the population lives on
less than US$2 a day, and over half of them on less then US$1 a
day. The health and educational systes have been hollowed out.
Over the previous 17 years a million or more Nicaraguans have
gone into economic exile (mostly to Costa Rica, El Salvador, and
the United States). The country now depends on family remittances
and foreign aid to stay afloat.

Lights out

The privatized national electrical system has been bled dry and
brought to near collapse - especially its generating capacity.
In 2006 severe power cuts were imposed across the country. The
new government alleviated the problem for a time, relying on
donated generator plants from Cuba and Venezuela. But more
breakdowns in the system soon forced a return to long power
cuts, from five to 10 hours daily in both rural and urban areas.
This has created havoc in the economy, especially the retail
sector, the health system, and people's daily lives.

The collapsed electrical system can be taken as a metaphor for
the condition of the republic on the eve of the elections. The
Sandinistas won the presidency largely because the traditional
right-wing forces assembled in the Constitutional Liberal Party
(PLC) had split down the middle.

The Catholic Church was also divided, with now retired Cardinal
Obando y Bravo opting to back the FSLN in return for its support
to a government-initiated bill that illegalized therapeutic
abortion. These divisions, splits, and confusion in traditional ruling
class formations (the Church hierarchy included) stemmed from
a mounting lack of confidence in their own ability to keep the ship
afloat, or rather, to re-float the shipwreck and pilot it away from
rocky shores.

The FSLN drove through the gap opened by the split in the oligarchic
parties and won a minor-Nicaragua's Sandinista Government
Allies with Anti-Imperialist Forces

Inauguration day

The course of Ortega's new government was foreshadowed by
the events surrounding its inauguration on January 10.

Presidents and high-level delegations attended from most Latin
American and Caribbean countries, including the presidents of
Mexico and other Central American countries. Hugo Ch�vez attended
from Venezuela, and Evo Morales from Bolivia. Cuban vicepresident
Jos� Ram�n Machado stood in for Fidel Castro. Taiwan sent its president Chen Shuibian; Iran and Libya sent high profile representatives. Spain sent its Crown Prince. Perhaps just to be different, Canada and the United States sent low-profile delegations whose presence was not even noted in the official welcoming.

It turned out that Chavez had to delay his arrival by over
three hours. Ortega kept the assembled VIPs and the Crown
Prince himself waiting throughout the hot afternoon until our Venezuelan guests appeared. The event, including the long wait,
was televised live. Broadcasts on rightwing TV and radio were
punctuated by howls of protest from commentators about the
"national disgrace" entailed in making Spanish royalty and visiting
presidents wait around (and around!) for Chavez.

That was just the thin end of the wedge. After a drastically
abbreviated swearing-in ritual, Ortega cut short the ceremony
to join, as he explained, tens of thousands of workers, farmers,
and youth waiting at a nearby lakeside plaza. They too had
been celebrating for many hours under the hot sun. Off he went,
accompanied by the new cabinet and his closest allies among the
presidential visitors.

In the plaza, Chavez, Morales, and Ortega addressed the tired,
but tumultuous crowd with strong appeals for Latin American unity,
anti-imperialist struggle, national liberation, and socialism. Ortega
interrupted his own speech to invite Cuba's Jose Ramon Machado
to take the mike. The crowds greeted the Cuban companero
with a thundering roar of enthusiasm. The Taiwanese president
shared the platform but did not speak.

The mass inaugural celebration introduced a new theme song for
the FSLN, one that has accompanied both FSLN rallies and official
functions ever since - la Internacional with its opening appeal
"Arriba los pobres del mundo" (arise ye poor of the world). Our
president-elect proclaimed that the new government represented
a continuation of the Sandinista revolution of the eighties. He announced that his first acts as president would be to restore free
education and health services, a social conquest of the revolution,
reversed by the pro-U.S. government elected in 1990.

He also announced that Nicaragua would join the Bolivarian
Alliance for the Americas (its Spanish acronym ALBA also
means "dawn") to become fourth member after Venezuela, Cuba,
and Bolivia. ALBA's mandate is to facilitate commerce and cooperation
among its members based on principles of solidarity
and economic harmony, in overt opposition to the exploitative relations
maintained by the world capitalist and imperialist market.

The next day the four ALBA presidents convened a public
session carried live on radio and TV, where they signed a packet
of agreements projecting major trade and cooperation initiatives
to help lift Nicaragua out of the abyss. Venezuela forgave Nicaragua
its debt.

Nicaragua-Iran agreements

On the Sunday following the inauguration Iranian President
Mahmoud Ahmadinejad arrived in Managua on a state visit. The
two presidents announced major trade agreements and ties based
on cooperation and friendship. Daniel Ortega used the visit to
denounce U.S. aggression against Iraq and threats against Iran � a
theme he again stressed during his state visit to Iran in June.

Recent follow-up announcements include an agreement that Iran will build a US$350 million ocean port on the south Caribbean coast of Nicaragua and a pledge of US$120 million to help build a massive hydroelectric project that could go a long way to solving the country�s longterm electricity deficit.

Iranian cooperation, reached in bilateral agreements, is coordinated
through ALBA, because it often involves joint Venezuelan-Iranian
initiatives such as a recently constructed tractor factory in
Venezuela that is supplying Nicaraguan farmers with low-priced
machines.

In March Hugo Chvez returned to Nicaragua. He went to the indigenous community of Sutiava (in Leon province) where he and Ortega announced that Venezuela would build a US$3.5 billion oil refinery on the Pacific Coast near Nagarote.

This refinery will process Venezuelan oil both for Nicaragua and for export to other Central American countries and to China. Ch�vez insists that it will be completed before Ortega's six-year term is finished, even if work has to take place 24-7. An allied petrochemical complex will also be built near the refinery, promising thousands of longterm jobs to local workers. These projects, when completed, should generate annually hundreds of millions of dollars of revenue for the country.

Chavez used the occasion to talk about his vision of the way
forward for Latin American nations.

"Every day I say even more vigorously that the only way out of poverty and backwardness is to take the road of socialism, a new socialism built by ourselves.

"I believe that Christ is the first great socialist of our era, because
Christ advocated equality, love among us, and the only way that
we can have equality in society is through socialism. Capitalism
is the kingdom of exploitation, inequality, and hate, of ambition
and egoism. Socialism is the kingdom of love, fraternity, and
equality. This was what Christ came to preach to the world. And
so, even though some priests will get uptight, I will keep on saying, for me as the Christian that I am, my Lord is one of the greatest revolutionaries in history, one of the greatest socialist revolutionaries in history."

Venezuelan aid

Fast forward to July 19: Chavez and Morales returned to Managua
to join the celebrations of the 28th anniversary of the 1979
insurrectionary defeat of the U.S.-backed Somoza dynasty.
The three presidents again united their voices to stress the urgent
need for Indo-Latin American unity and vigilant anti-imperialist
struggle. Chavez, never shy, once more used his formidable oratorical
skills to advocate a socialist, anti-capitalist course for our Patria
Grande - our term for the vast Indo-Black-Latin American
nation extending from the Rio Bravo on the U.S.-Mexican border
to Tierra del Fuego at the southern tip of the continent, taking in
the Caribbean island countries.

Venezuelan aid and trade agreements now amount to over US$5 billion dollars.

Much of this aid will be executed over a period of several years, and
the overall amount will no doubt increase significantly over that
time. Projects, in addition to the refinery, include an all-season
highway from Bilwi (Puerto Cabezas) on the north Caribbean
coast, southwest to Rio Blanco.

The highway project will require the rebuilding of the Puerto Cabezas
docks and a modern hospital for road construction workers
that will also serve regional communities. Other programs
include agricultural inputs such as farm credits, fertilizers, and
related technologies, and also educational and health projects.
Venezuela has guaranteed the country�s petroleum needs at fair
prices, in the ALBA spirit. This involves long-term, low-interest
payment agreements, including the option to pay in kind with
agricultural, maritime, and mineral products � hence opening
the possibility of expelling the dollar from commerce between
the two Caribbean countries. All oil collaboration between the
two countries is being channeled though an autonomous company
- ALBANISA - responsible to the Venezuelan and Nicaraguan
state oil companies.

Cuban aid mainly targets the health and educational sectors
and is also channeled through ALBA. Cuban doctors and medical
specialists are working mainly in the Caribbean coast autonomous
regions, and in a newly opened eye clinic in Ciudad Sandino near
Managua, part of ALBA's Operation Miracle (OM). To date more
than 12,000 Nicaraguans have attained improved or restored
vision through the OM program. Many received their operations
either in Havana or Caracas, but soon it will be unnecessary for Nicaraguans to leave our country to get treatment. Two more clinics
will be opened in each of the two coastal regional capitals.

Nicaragua is to become a regional center for the program,
enabling people from Mexico and Central America to get attention
here. Cuban specialists are training Nicaraguan doctors who will
later take full responsibility for the Nicaraguan component of
OM. As well, about 80 just-graduated Nicaraguan general practitioners
have recently returned from medical school in Cuba and
are doing their internships with Cuban doctors in remote areas of
the autonomous regions.

Cuban educators play a key role in the national literacy program,
set in motion by an FSLN-inspired NGO two years ago. The new
Ministry of Education adopted the program, creating the National
Literacy Council to press the attack on a 34% illiteracy rate.
Using the Cuban Yo se puedo technique and tens of thousands
of TV monitors donated by that country, the program has now
conquered illiteracy in Managua. Soon UNESCO will declare Managua
the first Central American capital to free itself from illiteracy.
The Literacy Council's two-year target is to help 800,000 more
Nicaraguans to read and write.

Brazils Lula

Other countries beyond the ALBA alliance and Iran are also stepping
up aid to Nicaragua, most importantly Brazil. Luiz In�cio
Lula da Silva (most often known as Lula) visited Nicaragua in July
and signed a series of agreements in various areas including
tourism, education, energy, forestry, industry, commerce, generic
medicines, and agriculture. He and Ortega concurred that
ethanol should not be produced from corn or other food products
except sugar cane or palm oil, a compromise position that was
subsequently endorsed by Venezuela.

In August Taiwan's president again visited Nicaragua, promising
to increase his government's aid. Taiwanese capital employs
over 30,000 Nicaraguan workers, mostly in the maquila sector.

Chen Shui-bian promised that Taiwan would buy Nicaragua's
entire coffee crop, hoping that this and other aid will entice Nicaragua
not to follow Costa Rica's lead and break relations with
Taipei in order to re-establish relations with China. In his parting
words as he left for home, Chen Shui-bian suggested that Daniel
Ortega would merit a Nobel Prize if he succeeds in convincing Beijing
to accept Nicaraguan recognition without compelling a break
with Taipei!

Days after the inauguration Ortega scuttled the former government�s
plan to privatize water. He appointed Ruth Herrera (longtime
Sandinista and leader of the consumer protest against water
privatization) to take charge of the national water utility. She
immediately decreed that the wealth-burdened elite - including
their plantations, breweries and bottling plants, industries,
and hotels - would have to pay their water bills. They shed this
obligation once their cronies took power in 1990.

The most important economic initiative of the government
in the countryside is the Zero Hunger Campaign aimed at the
poorest sectors of the population, especially women farm-owners.

This US$150 million project is expected to benefit 75,000 families
during the next five years through programs to revive and support
small-scale family farming.

Nearly two-decades of neoliberal "adjustment" devastated small farmers and traditional crops that could not compete with highly subsidized U.S. agricultural exports. During that time most of the gains of the agrarian reform of the eighties were reversed as old and new capital bought out farmers bankrupted by lack of access to affordable credit. The new program provides farmers with impregnated cows and sows, chickens, seeds, and free agronomy services. In tandem with the Zero Hunger effort, ALBA launched a low interest farm-credit program, largely financed by Venezuela's National Economic and Social Development Bank (BNDES) through its new Managua branch office.

When Hurricane Felix devastated Nicaragua's Atlantic coast
in early September, the central government responded energetically
and in concert with authorities of the regional autonomous
government - largely an indigenous administration. Longtime
Miskitu leader Brooklyn Rivera, who in the eighties led a wing of
the indigenous armed struggle against the Sandinistas, lauded
the government not only for its humanitarian aid but for having
"reacted with sensitivity, taking into account conditions in the indigenous communities, their way of life, their organization, and
their world view." 

Economic policy

The most puzzling feature of the first six months of the government
has been the relative lack of discussion of basic economic
policy, including a new agreement being negotiated with the
International Monetary Fund (IMF).

Daniel Ortega�s February budget was a remake of the
previous government's numbers, with the exception of a significant
increase of spending on education and health, and allocations
to the new Zero Hunger program. A reprieve from some large foreign
debts made this spending possible.

The budget failed to include more progressive taxation measures,
despite widespread clamor that the rich - especially bankers
and financial sharks - should begin to pay taxes. The budget
included commitments to continue to pay off the internal debt,
a large part of which is owed to speculators who snapped up a
government bond issue used to rescue deposits holders following
major bank collapses in 2000- 2001. Later, official entities such
as the Auditor General and the State Prosecutor declared that
this "debt" is illegal.

Nevertheless, the previous and current governments and the National
Assembly have argued alike that failure to honor this �debt�
would unleash "panic in financial markets" and "ruin Nicaragua's
international credit status."

The debt payments are crushing, and dwarf the entire fund being devoted to the campaign against hunger. This provokes deep resentment among poor and middle-class sectors who question why their taxes, and foreign aid, should be converted into handouts to parasites � the bankers, finance companies, and coupon clippers.

The FSLN leadership�s economic strategy is to lift the country out
of the pit of neoliberal devastation through market-oriented,
capitalist measures coupled with social and budgetary policies to
cushion the poorest and most vulnerable sectors from the worst
impacts of free trade and capital accumulation. They believe this
will only succeed if more foreign investment comes in, and if a
�good investor climate� is assured. Hence, the reluctance to
repudiate what is clearly an illegal internal debt.

Secret talks

The negotiations with the IMF have largely been held in private.
To date not much is known about them, except that macroeconomic
policy will remain largely unaltered. Both right- and left-wing
critics of the government have complained about the secret nature
of these talks, although the previous three governments were
never known for openness in their dealings with imperial masters.
Details of the finalized IMF agreement should become clear
with the discussion of the 2008 budget that will have to take into
account the impact of last year�s entry into a �free trade� agreement
with the United States.

The U.S. cries foul

The grand scheme is to cobble together a two-pronged economic
course that relies both on U.S.-sponsored �free trade� and
the ALBA alliance, in addition to trade and aid with Iran, Brazil,
and Taiwan. But imperialism can hardly be expected to accept this
combination without protest. The inherent conflict was laid bare by
Nicaragua�s recent (and still unresolved) conflict with Esso, the
giant U.S.-based oil concern.

In mid-August Esso arrogantly refused to allow Petronic (Nicaragua�s
public petroleum corporation) to offload and store Venezuelan
oil in its tanks at the port of Corinto on the north Pacific coast.
The government responded by sending Esso a bill for millions of
dollars in unpaid taxes and custom charges, and a Corinto judge
impounded the oil storage tanks pending resolution of the dispute.
The Esso tanks were filled with Venezuelan crude.

Esso and the U.S. ambassador Trivelli cried foul, denouncing
the alleged violation of property rights. The big-business association
COSEP parroted this line, as did ALN head and banker Eduardo
Montealegre, and other rightwing politicians. Vice-president
Jaime Morales shot them down. "No private interests," he insisted,
"can be allowed to trump national interests." He stressed that
the oil was desperately needed to cope with constant electricity
cuts.

Esso is refusing to negotiate unless and until the court restores
full and uncontested control of the tanks to their foreign owners.
Morales warned Esso that it was making a grave error, resorting to
a popular expression: "No solo se le fue la mano sino tambien los
pieds." His image here is unmistakable - such errors can cost
an arm and a leg!

Strong words from our vice-president, a former Contra leader.

Meanwhile the city of Managua has also moved against Esso
for unpaid local taxes, and the Ministry of the Environment has
re-opened an investigation of a recent perilous oil spill just outside
Managua. Esso says vandals caused the spill. As one skeptic
put it, "Some spill! Some vandals!"

Contesting "hegemonic values"

Esso's provocation in Corinto this August recalls the initial skirmishes
between Cuba and the U.S. government and oil monopolies
in 1960 that sparked Cuba's showdown with imperialism.

The Nicaraguan government's alignment with anti-imperialist forces
and its initial, limited measures to alleviate popular suffering invite
U.S. retaliation, combined with increasing class conflict and
polarization.

Frente leaders are well aware of the dilemmas and risks involved
in the Sandinistas' economic policy, but see no viable alternative.
Sociologist Orlando Nu�ez, perhaps the main theoretician
and ideological defender of the FSLN government, and head of
the Zero Hunger campaign, put it this way:

"For a party with a socialist mission like the Sandinista Front,
our situation is very complex and contradictory. The party holds the
presidency and has the most political sympathizers in Nicaragua.
However, it is still a minority in other state powers, and faces an
opposition that is trying to unite and jointly oppose it. This party,
now in power, has to administer a country where capitalist economy
dominates and must govern a society whose hegemonic values
are liberal and neo-liberal. Its strategy implies defending revolutionary measures of the government and acting as a party
opposed to the capitalist system now in force."

But how can we Sandinistas contest capitalist "hegemonic
values"? In Venezuela, repeated popular mobilizations turned
back the right-wing assault. Can Nicaragua follow a similar path?

[Part two of this article will attempt to describe the responses of opposition parties and forces in Nicaragua to the FSLN's course, Washington's reaction, and how grassroots people and movements are reacting to new openings and challenges.]