Nicaragua's Sandinistas Try Free Enterprise

DURING its 11 years in power, the Sandinista National Liberation Front (FSLN) confiscated hundreds of Nicaraguan businesses after accusing owners of undermining the government. Strict state control over the economy followed. But Nicaragua has changed. And so have the Sandinistas.

Although publicly criticizing efforts by the new government of President Violeta Barrios de Chamorro to privatize state-owned businesses and move Nicaragua toward a free-market economy, top Sandinista leaders are also reaping the benefits of capitalism and private enterprise.

A new Nicaraguan airline run by former Sandinista government ministers made its inaugural flight last Saturday on the lucrative Managua-Miami route. Called Central American Airlines (CAAL), its $275 round-trip fare is the lowest on the market.

Sandinista leaders and the party itself also own and operate a string of businesses that include a wood-products company, restaurants, and department stores. There are plans to start a new television channel in February.

Retired members of the Sandinista army and the secret police even ran a Managuan gun shop, selling shotguns, pistols, and hunting rifles for two weeks before the government closed the store. The sales embarrassed President Chamorro, who was trying at the time to convince civilians to hand over weapons from the contra war.

``It's too bad the store's been shut because weapons are what we know most about, and we were just swamped with customers,'' laments Jorge Roustan, the gun store's director and a former captain in the Sandinista secret police. ``Now I guess we'll have to see what else we can do.''

While the gun business was closed, most Sandinista enterprises are flourishing. Party leaders are reluctant to discuss the extent of business investments. Enterprises like the airline are ``private businesses'' operated by Sandinista party members - not by the FSLN as an organization, says Herty Lewites, CAAL vice president.

``We are and will continue to be Sandinistas, but this business is entirely private,'' says Mr. Lewites, former minister of tourism, at an inaugural party complete with champagne served by liveried waiters at CAAL's spotless new headquarters. ``The important thing is to provide jobs to those Sandinistas who devoted their entire lives to this revolution, and are now out of work.''

With unemployment estimated to be nearly 50 percent just as thousands of former soldiers and Contra rebels flood the job market, the Chamorro government is seeking investment to provide new job opportunities.

But critics question where the Sandinistas found the capital to grow their new business empire, alleging that former government employees looted the treasury before leaving office in April.

``For years we heard about how the Sandinistas were `sacrificing for the people,' earning pitifully low salaries,'' says Gilberto Cuadra, president of the private business organization COSEP. ``So where do they get money to start up a new airline?''

The Sandinistas created and operated the national airline Aeronica with planes confiscated from its predecessor, Lanica, owned by dictator Anastasio Somoza Debayle, overthrown in 1979. The Sandinistas prohibited competition, but were hit when the United States cut off landing rights in Miami under the US trade embargo declared in 1985.

Aeronica, which has passed to the Chamorro government, must now compete with the Sandinista airline as well as American Airlines and Pan Am, which are preparing to fly Managua to Miami.

Lewites is operating CAAL with other Sandinistas, including the former minister of finances. He says 68 percent of the investment capital came from his partners, the rest from unspecified Saudi Arabians and a Nicaraguan-born Arab named Georges Hallaq, who now lives in Greece. The airline has leased one Boeing 727-200 for three trips to Miami per week. The operating plan is to buy their own planes next year and fly to Europe, Lewites says.

After losing the Feb. 25 elections to Chamorro, the Sandinista government hastily granted property titles to party members for hundreds of vehicles, homes, and other government property ``in recognition for the sacrifice they made for the revolution,'' according to former President Daniel Ortega Saavedra.

But critics say this was the tip of the iceberg, and that millions of dollars disappeared on the eve of Chamorro's April 25 inauguration. Officials of the new government found $3 million in the state treasury, exactly the amount the Sandinistas encountered when they overthrew Somoza. In the following decade, the country's foreign debt rose from $1.6 billion to nearly $11 billion.

Mr. Cuadra and other critics say they cannot prove financial impropriety because documents were shredded. Others maintain that the issue of corruption has been blown out of proportion.

``People are making a lot about the Sandinistas getting into business. But this needs to be seen in the regional context,'' says Arthur Gallese, executive director of the Managua-based Institute for Socio-Economic Research. ``Any party accumulates certain economic power while in office in order to survive once out of power. And if the Sandinistas committed some abuses, these are minor compared with rampant corruption in countries such as Mexico or Guatemala.''

The Sandinistas may be held to a higher standard due to their image as ``revolutionaries.'' But Lewites says there is no contradiction between Sandinistas' socialist past and its present need to build an economic base in order to wield political clout.

``Look, we thought we would be in power for a long time. And the election marked the return of traditional power groups like the Chamorro family,'' Lewites says. ``To counter that we need to maintain ourselves, and protect our interests and those of our supporters.''