Nicaragua braces for even harder days ahead
Mexico City — Nicaraguans know the United States trade embargo has hit them hard -- what they don't yet know is how hard. They will have a better idea over the next few months as they see how much the Soviet Union, other East-bloc, and Western European countries will be willing to do to fill the gap. Nicaraguan economic analysts say that, even if Nicaragua gets all of the $200 million President Daniel Ortega Saavedra reportedly asked for during his recent trip to Moscow, this sum would not enable its economy to absorb the blow.
Whatever assistance the country gets, the impact of the embargo will be considerable. Nicaragua desperately needs its current export earnings of some $400 million, of which something under $60 million comes from the US. Exports to the US are largely perishable goods like bananas, beef, and shellfish, which would be hard to market in other more distant countries.
The cut-off of US imports will be an equally hard blow. According to one non-Sandinista Nicaraguan economist, Nicaragua imported some $150 million in US goods last year. (The Reagan administration puts the figure at $111 million.) The bulk of these imports are for agriculture and associated industries.
In recent years of great economic hardship, Nicaragua has cut its imports, especially US imports, to a minimum. What is left tends to be vital for the Nicaraguan economy. If Nicaragua's agriculture and industry are to continue functioning, the Sandinistas will have to find others willing to sell them these goods. They probably will find them, but the prices are likely to be higher.
Spare parts present a major problem. If the supply of US spare parts for industrial and agricultural machinery and transport vehicles is cut off, the Nicaraguans, as the Cubans before them, will have to find ways -- and technologies -- to keep the machines working. That will take time and cost money.
As far as exports are concerned, if and when Nicaragua finds buyers for some of its more perishable goods, they are almost certain to pay lower prices.
Higher prices for its imports, lower prices for exports, drops in productivity due to lack of machinery and spare parts, adaptation of new technologies -- all these mean the Nicaraguan economy will need a lot more money.
But it needed more money even before this latest blow. Nicaragua imports goods worth some $750 million a year and exports approximately $400 million worth. It was in part to finance this $350 million gap that it asked the Soviet Union for $200 million.
According to one politically moderate Nicaraguan analyst, there are no specific regulations barring US subsidiary companies in Central America and elsewhere from trading with Nicaragua. Presumably, the Sandinista government will be able to get some much-needed goods from these sources.
One question on the minds of most observers in the region is the extent to which the US will pressure the other Central American countries to join the embargo.
The embargo, despite its hardships, is not expected to lead to the fall of the Sandinistas or, in the short run, to a change in their policies.
Politically, it will bring Nicaragua closer to the Soviet Union. Just how much closer will depend on how much of new aid to Nicaragua comes from the Soviets and how much from Western Europe.
The most likely scenario predicted by regional analysts is that both the Soviets and the Europeans will give some assistance, the bulk coming from the Soviets. But it will probably not be enough to keep things from getting worse for the average Nicaraguan.
It is uncertain what the political effect of this will be. Many Nicaraguans might rally to the Sandinistas at a time of obvious US pressure. In the long run, however, discontent with the Sandinistas is likely to increase.
One unanswered question is how Nicaragua's private sector, largely dependent on US imports, will react. Will they panic and leave the country, or will they remain under increasingly difficult circumstances?