US Aid Efforts Tied to Smooth Transition
THE outlook for Nicaragua's economic revival is good, and recuperation may even be quick, say several US-based specialists on Latin America. They add, however, that the Sandinistas must respect Sunday's election results and hand control of the government to Violeta Barrios de Chamorro and her coalition in order for the outlook to hold. A smooth transition could open the way for substantial financial aid from Europe, the United States, and development banks.
The US has already sent strong signals that it intends to lift its sanctions and trade embargo and put together an international aid package, although the White House has not yet determined how it will link these moves to the transition in Nicaragua.
``We're frankly just working all of that out,'' says a senior administration official.
It is difficult to separate the embargo's effects from those of the war against the contras and the Sandinistas' own economic mismanagement. Otto J. Reich, the US ambassador to Venezuela until last year, says that lifting sanctions will benefit Nicaragua more than imposing them damaged the country.
The Sandinistas, for example, were unable to replace some spare parts for American-made heavy equipment. But some argue that Managua still could not afford to buy them from non-US sources. Jorge Salizar Carrillo, director of Florida International University's Center for Economic Research, estimates that the embargo added a 10 percent premium to goods formerly bought from the US.
The Bush administration also has been vague so far about direct aid to Nicaragua. But after conferring with President Bush and other congressmen this week, Sen. Sam Nunn (D) of Georgia noted: ``You're talking about hundreds of millions of dollars'' over a four- or five-year period.
During the past decade, economic production per person in Nicaragua fell as much as 75 percent. It was the second wealthiest nation in Central America, behind Costa Rica, when the Sandinistas took power. Now it is the poorest nation. Inflation last year ran 1,700 percent.
The Soviets gave Nicaragua about $1 billion in military and economic aid annually until 1988, by US estimates. The Soviets currently send about $324 million in goods and 25 tons of wheat and rice annually. This aid contributes 5 to 10 percent to Nicaragua's gross domestic product, Dr. Salizar says.
With its relatively well-educated work force and economic ties to its neighbors, Nicaragua could ``recuperate fairly quickly,'' Salizar says. He says the country could post annual growth rates of 8 to 10 percent within a few years if Nicaragua and its partners continue economic reforms.
Such reforms, plus aid for Nicaragua, could also breathe life back into the Central American Common Market - one of the fastest-growing economic markets in the world in the 1960s.
Nicaragua, a member of the regional common market, stands $300 million in arrears to its partners. The European Community has expressed a willingness to take over this debt if Nicaragua undertakes political reforms.
Central American nations have ``a good economic future if they have political stability,'' Ambassador Reich says.