Opposition to CAFTA wanes in Nicaragua

Marching down Universidad Avenue toward congress came thousands of protesters, throwing their fists into the heavy, humid air, waving anti-American placards. The demonstration against the proposed Central American Free Trade Agreement (CAFTA) earlier this month was expected to be about 20,000 people strong.

In fact, more like 4,000 people showed up.

In a country that spent a good number of the last 25 years battling US interests here, the predictable opposition to CAFTA has, in fact, been a little weaker - and the support for the trade pact broader and deeper - than expected.

Just down the street from the Managua protest, another scene - less bombastic, but arguably more significant - was playing out at the Crowne Plaza hotel. Eleven presidents of Nicaragua's chambers of industry sat in a vast air-conditioned room below a sign that read: "Yes to economic development, yes to CAFTA."

This summer, President Bush expended hefty political capital to get the controversial trade agreement passed. Four of the six co-signatories have already ratified it: the Dominican Republic, El Salvador, Panama, and Guatemala. Costa Rica's labor unions, with monopolies in energy, telecom, and insurance are blocking its ratification.

In Nicaragua, the argument is more emotional, touching on the economic plight of central America's poorest country, its leftist past, and its troubled relationship with the US. And as the debate plays out, ratification of the agreement is stalled in Nicaragua's congress.

Eric Jacobstein, an expert on trade issues at the Inter-American Dialogue think tank in Washington, says CAFTA is "being used [by Nicaraguan politicians] as a way to express other issues ... not only as a way to oppose the US, but to gain political leverage." Still, he forecasts that despite arguments ahead, CAFTA will eventually pass in Nicaragua.

People like Juan Carlos Pereira, a Harvard Business School-educated Nicaraguan, says CAFTA can bring much-needed jobs to the country, which is way behind other Central American nations when it comes to investment. Honduras and El Salvador each export some $2 billion worth of apparel a year for example. Nicaragua is closer to $600 million. "We lost a decade in the '80s because of the war," says Mr. Pereira. "We are only now starting to catch up and we need CAFTA more than anyone else."

Pereira, who runs Pro-Nicaragua, a government-backed organization that seeks to attract investment says about $400 million worth of projects have come through his office. "That represents about 7,500 jobs that are coming to Central America. I don't know how many will come to Nicaragua, but I will tell you - if we don't have CAFTA, not a single one will come here," he says.

CAFTA's cheerleaders here also point out that Asian countries - which are increasingly inking trade deals in the region - will be more inclined to invest in a country with easy access to the US market and a binding commitment to intra-regional trade.

Helena Telles Bermuder, a hairdresser with three kids, could not make ends meet, she says, before she got a job at a new maquiladora (manufacturing plant) in Granada. Today she sews jeans for Woolworth's and other brands, and makes about $175 a month, almost double the minimum wage here. It's about three times more than she was earning before. "I don't understand the economics," she admits. "But I understand jobs. And if CAFTA can help me get one - I am for it."

Nicaragua's dire need for economic gains is beyond dispute. About 78 percent of Nicaraguans live in poverty - on less than $2 a day, according to Adolfo Acevedo, an economist in Managua.

But some economists like Mr. Acevedo question whether CAFTA will help or hurt. Even without CAFTA, he points out, 80 percent of Nicaraguan production is already allowed into the US without tariffs. The trade pact may encourage more investment in maquiladoras in Nicaragua, but he wonders out loud whether it will offset the farm jobs likely to be lost as cheap US agricultural produce sweeps into the country.

"We can't all work in maquiladoras," says Acevedo, "You need basic education. The maquiladoras and those higher-end plans don't signify any development at all for the masses."

Former president and Sandinista party leader Daniel Ortega's case against CAFTA is that the US is seeking to exploit the poorest countries to get the cheapest labor. More than that, it is a piece of geopolitical opportunism: "Bush is taking up CAFTA because it is his way of keeping central America from looking south," he said in an interview, suggesting Washington is seeking to splinter Nicaragua's solidarity with the Left in Latin America such as Hugo Chavez's government in Venezuela.

Politics, no doubt, will be central to CAFTA's fate in Nicaragua. But, ironically enough, the politics that will count will be the internal workings of Ortega's own Sandinista party - made up, these days, of an increasing number of businessmen.

In fact, one significant sighting at the Crowne Plaza was this: Herty Lewites, a longtime comrade of Ortega's in the Sandinista party who is now running against him for president in 2006, was in attendance at the meeting of business leaders. "Like it or not, CAFTA is coming," said Lewites, who is running first in the Nicaraguan polls. "If we are clever, we can ask for some adjustments - but rejecting it is wrong."

• Ms. Harman is Latin America bureau chief for the Monitor and USA Today.