Nicaragua: the real war is now economic

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MANAGUA newspapers, radio, and television are giving extensive coverage to two public relations windfalls for local propaganda: The Iran arms controversy and the Hasenfus case have shown there has been illegal public and private US financing of guerrilla activities with the tacit support of the surrounding Central American countries. The political uproar in Washington and Democratic advances in Congress have injected a hint of hope into the dominant mood of a nation under siege. Considerable resources are devoted to mobilizing arms caches and emergency stocks in the countryside should an US invasion occur. The memory of Grenada has not faded; military supply planes are shot down and the 82nd Airborne Division is on maneuver off Nicaraguan shores.

Once again rumor has it that the United States is about to break diplomatic relations. Publicity is also given to declarations from US public officials. Sen. Edward Kennedy's lamentation last August that the contra vote was ``the start of sending US troops to Central America'' does not contradict the President's own recent rhetoric about the ``overthrow'' of the present government as the ultimate objective of US foreign policy.

The pain and disruption of contra military efforts are significant. In a tiny nation of 3 million persons, the number of deaths since 1983 is staggering: about 17,000, or more than the 12,000 fatalities during the overthrow of Anastasio Somoza. There really is little evidence of a serious military threat to the Sandinistas outside of the rebel control over the isolated region in the mountains along the Honduran border and a small pocket to the east of Managua. Uncoordinated groups of mercenaries act in isolation without political backing at the local level.

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In the view of stalemate on the military front the real screw-tightening from the US has become the economic burden of defense expenditures combined with the quasi-permanent disruption of the local economy from the trade embargo and total mobilization. In the last two years, defense expenditures have increased sixfold; they represent 60 percent of government expenditures and 15 percent of the nation's gross national product. The common impression that Soviet or Cuban assistance fuels the local capacity to resist is far from the truth.

The cycle of scarcity of foreign exchange and inflation (recent months extrapolated give 1,000 percent on an annual basis) is complicated by the flight of technicians and professionals. Foreign exchange is in drastic short supply, with a second exchange rate for foreigners at 20 times the official one and the black market at 40 times. The results have been dramatic: Economic activity has slipped 5 percent in 1984 and 6 percent in '85.

Such an economic burden is not sustainable in the long run - and maybe even in the short run. Expatriate Chileans working in Nicaragua recalled the ultimate impact of US economic pressures in Chile in 1972-3 which, they have recognized in retrospect, were actually modest in comparison with the extreme form that economic destabilization has taken in Nicaragua.

Irony abounds in thinking about US policy in Nicaragua and South Africa. The Reagan administration argued against sanctions as ineffective in South Africa, although economic destabilization is part of the acceptable arsenal against the Sandinistas. In spite of claims about moderation, the administration's actions strengthen the position of hard-liners in Managua; this brings to mind the increasingly marginal positions of moderates like Archbishop Desmond Tutu in South Africa.

The final irony in Nicaragua is that present policy exacerbates the very problems it purports to change: The state of siege has meant clamping down on internal dissent and restraining groups calling for the overthrow of the present government; without US trade, investment, and aid, the government is increasingly forced to turn to the Eastern bloc and a truly mixed economy becomes less visible; increased militarization is not a luxury but a necessity for a government at war.

The time for a policy change in Washington is now. The nations of the region which form the broad Contadora group are planning soon to send their foreign ministers to Central America accompanied by the secretaries-general of the UN and the Organization of American States. The present widespread public outcry provides an additional stimulus to the new Congress to confront the President. Congress is to vote next month on the final $40 million of the $100 million in aid appropriated for the contras last year. A more appropriate policy than ``rollback'' would be ``containment'' of the Sandinistas, with positive economic inducements for change in the form of trade, credit, and investment.

Thomas G. Weiss is executive vice-president of the International Peace Academy, New York; he has just returned from Managua. His views are his own.

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