[stop-imf] Action Alert: Oppose IMF dictates to Nicaragua

[Robert Weissman]

From: "Nicaragua Network" <nicanet@afgj.org>
To: "Nicaragua Network Hotline" <nicanet-hotline@afgj.org>

*** Please Post Widely ***

Action Alert!
IMF Challenges Nicaraguan National Sovereignty!
Tell the IMF to Back Off!

The International Monetary Fund (IMF) has threatened to
cancel the loan agreement it recently signed with
Nicaragua because the country's legislature, the National
Assembly, changed the nation's budget to give more money
to local governments for public improvements and to raise
slightly the extremely low salaries of teachers, police
officers, nurses and others. [A Nicaraguan elementary
teacher earns about $60 per month.]  Besides requiring
that Nicaragua adopt the budget the IMF wants, the Fund
also mandates the privatization of hydroelectric power
even though the legislature has passed a moratorium on
further water-related privatization.  And it also requires
Nicaragua to expand its "school autonomy" program that
cuts funding to local schools, monies that must then be
made up by parents' fees.  This latter measure violates
U.S. law against user fees.  [See below for more
information.]

Write to Nancy P. Jacklin, United States Executive
Director (U.S. representative) at the International
Monetary Fund.
*Tell her that the IMF has no right to interfere in the
democratic political processes of a sovereign country like
Nicaragua.
*Tell her that the Nicaraguan people, through their
democratically elected representatives in the National
Assembly, have a better idea of the most workable economic
model for their country than do IMF officials who are
driven by a neo-liberal ideology which ignores the needs
of the poor majority of the population.  The IMF should
respect the Nicaraguan political process.  If the
Nicaraguans decide to prioritize needy sectors over the
banks, the IMF should accept that decision.
*Tell her that she is specifically forbidden by U.S. law
to vote for loans that require user fees, and that, more
generally, it is unacceptable for the IMF to impose
measures (such as privatization of public utilities and
the charging of user fees for basic health and education)
that violate national laws of member countries.

Write a typed or hand written letter and mail or fax it
to:

Nancy P. Jacklin
United States Executive Director
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431
Fax: (202) 623-4661

Let's deluge Jacklin with grassroots correspondence to
show her that there are many people in the United States
who are following the IMF actions in Nicaragua and are fed
up with IMF interference in the country's internal
affairs. Read more below!

Let the Nicaragua Network know when you write and if you
get any response!

Background Information for use in your letter:

A six-person technical mission of the International
Monetary Fund (IMF) acted like typical mafia-style
protection racket enforcers in Nicaragua on January 15.
Following up on the agreement signed with Nicaragua on
December 4 for a US$131 million loan, their
anti-democratic message was, "Revert to the president's
original budget for 2003, or face the consequences." In
their final press conference, members of the mission made
it clear that the changes made during the budget debate in
the National Assembly would have to be reversed if the
recent agreement was not to be cancelled and Nicaragua was
not to lose all multilateral and possibly all bilateral
aid. In its turn, loss of this support would mean that the
country would be unable to meet the requirements to remain
within the "Highly Indebted Poor Countries? Initiative"
(HIPC). HIPC is another con game engineered by the IMF and
World Bank to allow them to control national economies on
the ever receding promise of cancellation of part of their
external debt.

"In departing from the original budget ? as it was
proposed by President Enrique Bola=F1os for ratification by
the National Assembly ? Nicaragua has placed itself
outside the agreement made with the IMF," a spokesperson
said. "As a result it can no longer be considered to be
within the IMF program. Unless this situation changes by
March, when another mission will be here, then Nicaragua
will receive no support from the international community."

Citizens in Nicaragua React to IMF Blackmail!

Reaction to the IMF strong-arm tactics was swift.  The
measure that the IMF most objects to is the National
Assembly?s reprioritization of funds from payment on the
internal debt to bankers in order to allow small raises
for police, teachers and health workers.  Some observers
note that President Bola=F1os prepared his budget not only
to please the IMF but also to please his banker
supporters.

Alejandro Benda=F1a, Director of the prestigious Center for
International Studies, accused the IMF of a "policy of
blackmail worse than that which existed during the Spanish
colonization." "We have never elected the IMF to be our
government," he expostulated. "The Nicaraguan government
has two options ? to hand over the Nicaraguan people to
the bureaucrats, or to pack the IMF mission back onto its
plane and send it home to Washington. The IMF is widely
discredited; there are many peoples? initiatives and
ethical tribunals that have condemned it and its policies.
Its prescriptions constantly violate human rights,
imposing policies which inflict more impoverishment and
hunger, less health care and education."

This position was strongly echoed by a united Sandinista
Front. Also accusing the IMF of blackmail, FSLN General
Secretary Daniel Ortega emphasized that the mission?s
position "showed a complete disrespect for Nicaragua?s
national sovereignty." Reading from a statement prepared
by the Sandinista National Council, Ortega claimed that
the amendments passed by the National Assembly actually
meant that the budget remained within the overall IMF
guidelines in any case, with the added benefit that the
proposed raises offered to the sixty-five thousand public
sector workers would put more money into the economy and
so generate more state income through taxes and other
spin-off effects.

The Nicaraguan Center for Human Rights (CENIDH) also
joined the chorus of criticism. In a strong statement,
CENIDH maintained that, "Since 1990, a succession of
Nicaraguan governments has made agreements with the IMF on
the backs of the Nicaraguan people. None of these has led
to any improvement; rather the overall quality of life for
the majority has been constantly deteriorating. The
Nicaraguan people are the victims of a new dictatorship,
that of the IMF, which imposes fundamentalist economic
models through authoritarian and anti-democratic means.
These models serve only to deepen our dependence and
under-development. We call on President Bola=F1os to act
with firmness and dignity; he must not allow the IMF to
continue to act in this arrogant manner." CENIDH further
issued a call for the creation of alternative proposals to
set over against the "blackmail and pressures of the
multilateral organizations."

The Civic Coordinator (a coalition of non-governmental
organizations) issued a statement supporting the transfer
of funds by the National Assembly from interest payments
(on the national debt) to the banks to local
municipalities for public works.  Coordinator leaders Vida
Luz Meneses and Ricardo Zambrana noted that the banks have
been receiving interest payments at a rate of 20%, while
at the same time they have been defaulting on their tax
payments to the tune of US$200 million over the last two
years.  "The banks should honor all of their obligations
to the tax office!" emphasized Zambrana and Meneses.  Tax
revenue from the banks could make up the 1% deficit in the
budget caused by the diversion of funds to increase the
miserable salaries of public employees like teachers,
nurses, and police officers.  Meneses and Zambrana stated
that "The IMF mission exceeded its functions; it does not
have the authority to demand of Nicaragua that its
National Assembly approve the budget exactly as it was
introduced by the executive branch, nor should the
president permit this."

The Bola=F1os government defended the agreement with the
IMF. The president claimed that the "global package" would
breathe new life into poverty alleviation programs and
"bring hope to Nicaraguans everywhere." The US$131.5
million would be allocated with $129 million "to support
the government's economic program," which means that it
will go for balance of payments support, and $2.5 million
to bring Nicaragua into compliance with HIPC (Highly
Indebted Poor Country) debt relief requirements.  It was
unclear how any of these funds would help the poor.

Further Demeaning and Illegal IMF Conditions!

IMF conditions also would require Nicaragua to sell its
state-owned hydroelectric dams and hydroelectric company.
This privatization process has been fraught with
corruption and irregularities. Early in 2002, Enron bid to
buy the hydroelectric dams. But when Enron failed to
comply with conditions of the sale, the contract was
transferred to Coastal Power of Texas.  However, the bid
was so low, estimated at only 20 percent of the plant's
value, that the comptroller general of Nicaragua began a
review of the process. This incident prompted the National
Assembly to unanimously pass a law that suspended all
private concessions involving water uses until a national
regulatory framework for water could be established.
 Although President Bola=F1os vetoed the bill, it stands
until or unless the Assembly votes again to "sustain" the
veto, which it has not done.

The latest effort by the corporate globalizers to
commodify everything has been to grab national and local
water systems, raising rates and thereby leaving large
numbers of the poor without essential water service.  The
privatization of the management of the water systems of
Leon, Chinandega, Matagalpa, and Jinotega was moving
forward, in spite of organized citizen resistance, until
the National Assembly, reacting to general alarm among the
public, passed the moratorium.  In meetings with IMF
officials in November, representatives of the Nicaragua
Network and other groups were told that, if this
moratorium stands, the IMF would have to consider what to
do, because Nicaragua would be "in breach" of its
agreement.

The IMF agreement was also predicated on the sale of 51%
of the shares of the successful national phone company,
ENITEL.  This was most one of the most controversial
aspects of the IMF package. Much of Nicaraguan civil
society, together with many opposition figures in public
life, has become increasingly critical of "the rush to
privatize." While impoverished Nicaraguans have been
fighting primarily to prevent the privatization such
basics as power and water, the loss of the phone company
from public service is widely seen as a key stage in the
remorseless process.  The agreement with the IMF overall
has been particularly criticized for largely ignoring the
civil sector, and nowhere more so than in the
privatization context.

"The IMF is taking an Olympic leap over the laws of our
country, including our Supreme Court, the Comptroller
General's Office, the National Assembly and our
constitution," said Ruth Herrera, a representative of the
National Network in Defense of the Consumer, a Nicaraguan
organization. "One has to ask if any of our democratic
institutions will be respected." Herrera is working with
the Humboldt Center, the Center for International Studies,
and the Nicaraguan Center for Human Rights (CENIDH), in
Nicaragua, as well as Public Citizen, the Quixote Center,
the Nicaragua Network and the Latin America Working Group
in the United States to oppose IMF-mandated measures.

In addition to violating Nicaraguan law, the new IMF loan
conditions contain requirements that violate U.S. law by
imposing user fees for Nicaraguan children to attend
schools. The new agreement will require the government of
Nicaragua to continue to implement "school autonomy"
legislation that reduces national government funding for
schools. Under the "school autonomy" system the government
pays only teachers' salaries [at a level of misery], some
special training, and some school repairs.  Parents must
come up with the money for additional salary, desks, books
and materials, electric bills and cleaning materials. (The
children clean the schools.)  For many parents, these fees
mean that their children cannot go to school. The fees are
supposed to be voluntary, and poor children exempted.
 But, in Nicaragua, only poor families send their children
to public elementary schools (the middle class and the
rich send their children to private elementary schools) so
pressure is put on the parents to pay the fees since the
schools cannot run without them. The IMF official at the
meeting mentioned above, when asked by the Nicaragua
Network about the "school autonomy" measure, which was on
a list of conditions that we were allowed to see but of
which we could not have copies, became nervous and said,
"Ask the World Bank."  He also told us that the list was
available on the web.  It is not.

U.S. Law Bans Vote for User Fees for Primary Education in
Loan Agreements!

In November 2000, the U.S. Congress passed legislation
requiring the United States to oppose any World Bank, IMF,
or other multilateral development bank loan which includes
user fees for basic health or education services, and to
report to Congress within 10 days should any loan or other
agreement be approved that includes such user fees.  The
actual language mandates opposition to "any loan of these
institutions that would require user fees or service
charges on poor people for primary education or primary
healthcare, including prevention and treatment efforts for
HIV/AIDS, malaria, tuberculosis, and infant, child, and
maternal well-being, in connection with the institutions'
lending programs."  The report language is even more
explicit: "user fees should not be imposed or required
through Bank or Fund sponsored "community financing,"
"cost sharing," or "cost recovery" mechanisms prepared in
conjunctions with loans, structural adjustment schemes or
debt relief actions."  The euphemism for primary school
user fees used in the case of Nicaragua is "school
autonomy" which would come under the Congress's
prohibition on "community financing."

Congresswoman Nancy Pelosi (D-CA) sponsored this
legislation. The last time a loan agreement was approved
(for a country in Africa) that included user fees for
primary education, Pelosi wrote a letter to the Treasury
Department.  She has just been elected House Minority
Leader and, while she may have little time on her hands at
this moment to deal with international issues, she also
has a great deal more clout.

After you have written to the IMF, ask your Member of
Congress to call Congresswoman Nancy Pelosi, tell her that
the IMF has approved a new agreement with Nicaragua that
includes user fees for primary education and ask her if
she would again write to the Treasury Department about
this apparent violation of U.S. law.  Remind your congress
person that the legislation prohibits our representative
(Executive Director) to the IMF from supporting any such
measure.  (And remember, the United States, as the largest
contributor of funds to the IMF, has a virtual veto over
any loan agreement.)  Ask your member of Congress if he or
she would also be willing to call or write a letter to the
Treasury Department.  The Capitol Switchboard telephone
number is (202) 224-3121.  But you can also call your
local office and save long distance charges.

For more information, contact the Nicaragua Network, 1247
"E" Street, SE, Washington, DC, 20003; nicanet@afgj.org;
or visit our web page at www.nicanet.org