Nicaragua's Need: Economic and Political Discipline

AT their trade union hall, Sandinista workers have been advocating a third general strike to protest the country's five-digit annual inflation. Former contra rebels at their repatriation unit, and affluent Nicaraguans at a new chic French restaurant also complained that hyperinflation needs to end immediately. Both sides hold President Violeta Chamorro responsible, and each complains that she has collaborated with the other side. Hyperinflation and unemployment, intermittent atrocities such as the assassination of Col. Enrique Bermudez, a former contra commander, and the erection of armed barricades by both Sandinista state workers and ex-contras have plagued Mrs. Chamorro's first 10 months in office. Both Sandinista and contra leaders believe that she has not provided the benefits promised their troops for ending the war.

Nevertheless, Chamorro has taken important first steps to construct a democracy in perhaps Latin America's most turbulent and economically devastated setting. ``President Violeta'' personally remains very popular, though her policy of reconciliation through compromises with the Sandinistas is less so.

Chamorro agreed, under implicit intimidation, to preserve Sandinista military autonomy, to proceed slowly in economic privatization, and to delay the neutralization of the partisan ``state within the state'' in the judiciary and the executive. Particularly controversial was her retention of Sandinista Gen. Humberto Ortega as defense minister.

In the coming year, Chamorro's task will be to move from the initial guarantees to the Sandinistas that their political status is secure, to ensuring that the Sandinista state is not protected in perpetuity.

THE anti-Sandinistas, representing perhaps a majority of public opinion, questioned whether Chamorro should have offered the Sandinistas these guarantees. They are understandably bitter that the new Sandinista opposition is ``governing from below,'' as former President Daniel Ortega boasted after his defeat.

Yet the Sandinista Front is also suffering from internal divisions. At the party's first congress next July, it will ratify the transition from a revolutionary front toward a new democratic party ideology. The Sandinista leadership has preached moderation to its more ideological rank and file since the general strikes of last May and July proved unpopular with the public.

The desire to win future elections is driving the transformation of the Sandinistas to a normal political party. Nevertheless, in preaching rapprochement with the Chamorro government, the Sandinista National Directorate has found that the party base of labor unions and military cells prefer more strikes and armed intimidation, as union leader Lucio Jimenez explained, ``to accelerate the contradictions in the bourgeois government.'' The Sandinista leadership, therefore, like the government, is caught bet ween its traditional ideals and the need for pragmatic reconciliation.

For her part, President Chamorro last October tried to include more extreme elements of both the her alliance and the Sandinista movement in a negotiation process called concertation. But the independent labor unions and a business association that supported Chamorro failed to agree to the pact between the government and the Sandinista labor unions banning layoffs or strikes during the following six months.

As a result, the most alienated sector is the most hard-line element in Chamorro's alliance. Its members feel that the president has been unable to solve the economic crisis resulting from the Sandinista monopoly over state jobs, creating Latin America's largest budget deficit. Economists at the Central Institute for Business Management estimate that four stable private-sector jobs are lost for every Sandinista state employee paid out of the deficit.

Chamorro's fiscal policy defies the economic law that no country can live beyond its means. The US has an enormous deficit as well, but, unlike Nicaragua, it has foreign lenders to finance it. At least two studies by outside economists from the US and Colombia have advised Chamorro to cut the deficit, but to no avail. Now the president has a Costa Rican team that presumably will repeat the same message: Stop printing money!

Nicaragua can expect more courage from its leader. Chamorro needs to find a negotiated way to lay off tens of thousands of Sandinista employees. If they choose to strike without negotiating or voting, as required by law, Chamorro should insist that the Sandinista military arrest them, as she refused to order them to do last May and July. Otherwise President Chamorro will be long remembered for bringing Nicaragua peace, but losing its democracy to a failure of political and economic discipline.