Nicaragua's Marxist leaders may stick to mixed economy
For five years Nicaragua's Sandinistas have proclaimed their belief in a mixture of government and private control of the economy. For just as long, Nicaragua's private sector has doubted their sincerity.
But no matter what economic system the Sandinistas want, they will have to live with a mixed economy now and for some time to come, say many Western diplomats and others who watch the Nicaraguan economy at close range.
Almost five years of experience have taught the Sandinistas that they are incapable of managing a public sector much larger than it is now, says a fairly conservative Western observer who who observes the economic scene.
''They simply do not have the managerial capability,'' he says. ''They don't have the trained people and won't for another generation. The sector of the economy they already control is by and large badly run and they know it.''
Therefore, this specialist thinks, Nicaragua will continue to have mixed economy even ''15 or 20 years from now.''
According to a top-ranking United States diplomat, the Sandinistas are in a bind because most of the goods that produce their foreign exchange - coffee, cotton, and especially cattle - are produced by the private sector.
''In general,'' he says, ''they cannot for the foreseeable future have a productive economy without having a productive middle class. And to do that, they must co-opt that middle class into the system.''
The foreign currency produced by the middle class is particularly vital now because Nicaragua has a severe shortage of foreign exchange. One high-level Sandinista source says that in 1983 Nicaragua's foreign exchange needs came to more than $900 million, while the country obtained only $550 to $600 million. This caused shortages in machine spare parts and fertilizers, which are vital for continued production of agricultural and industrial goods, as well as shortages in basic imported consumer goods like toothpaste and toilet paper.
Sandinista and Western diplomatic sources say that Nicaragua's economic problems are compounded by inefficiency in government-run enterprises, a fall in the productivity of the private sector, and private-sector unwillingness to reinvest captial in the economy. (The private sector still owns about 55 percent of property, and provides 60 percent of total GNP).
Business observers blame this situation on foreign exchange shortages, but they also add that they fear the Sandinistas will nationalize more businesses and that Nicaragua will become ''another Cuba.''
Even observers who think the Sandinistas will continue a mixed economy blame Nicaragua's leaders for creating fear in the private sector. They trace the problem to the Sandinistas' political mistakes, highhandedness, radical rhetoric , and their refusal to offer a genuine political role to the private sector and middle classes.
Radical Sandinistas who wanted to take over larger sectors of the economy hoped heavy subsidies from the Soviet Union would make it possible for them to abolish the private sector.
But the Soviets are not giving that kind of assistance, observers on all sides say.
One former Sandinista observer with excellent government contacts claims that initially, some Soviet leaders gave the Sandinistas hope that after the death of Soviet leader Brezhnev, aid would increase. But when top Sandinista leaders attended Brezhnev's funeral in November 1982, it became clear that neither Andropov nor any other top Soviet leader wanted to substantially increase aid.
If the Sandinistas wanted to radicalize today, they would have to put the country on a subsistence economy of ''tortillas and beans,'' many observers say. But most observers think the Sandinistas would find this politically impossible.
Nicaragua's population, though poor, has many landowning peasants and owners of small shops and market stalls. These owners would not accept a radicalized subsistence economy, observers say. And many Nicaraguans without property enjoy consumer goods beyond the ''tortilla and beans'' level.
As one Western diplomatic observer says, ''Why should they nationalize further? They don't need ownership. It's control that's important, and they've got that already.''
He stated that the Sandinista government already owns half of the economy. (The private sector still owns about 55 percent of property, and provides 60 percent of total GNP). It controls foreign exchange and thus all imports and exports. It completely regulates internal trade, imposes high taxes on profits, and can nationalize the property of any person who disagrees with government policy.
With all of this power, he says, the Sandinistas know it would be irrational to nationalize further.
He pointed out that there have been no serious waves of nationalizations since 1982.
One top-ranking Western diplomat predicts that 15 years from now there will be no large private landholdings (land in parcels of 494 acres or more), but that most small to moderately large landholdings will continue still exist.
Commerce still will be largely in private hands, so will the import of agricultural equipment and fertilizers, he says.
However, this key official says, industry in Nicaragua is mainly of the free-zone sort - meaning it imports raw materials, or even already manufactured goods, and then further refines this goods, which it then exports, largely to the US. (For example, Nicaragua would import different kinds of paints, mix and can them, and then export them.)
But this kind of industry, he said, cannot survive beacause of a shortage of foreign exchange and because it leaves Nicaragua too dependent on the US.
He sees the Sandinistas trying to create industries based locally produced agricultural products. Such industries will probably have mixed ownership, this observer says.