Nicaragua Network Hotlines for October 3, 2006

News topics covered in this Hotline include:

• OAS laments intervention and describes electoral process as "normal"
• National Assembly reforms Energy Stability Law
• Incoming President will inherit US$3.5 billion debt food
• Over 500 children fall ill after eating World Food Program genetically modified food
• Rainforest Alliance: situation in Bosawás is chaotic food

Topic 1: OAS laments intervention and describes electoral process as "normal"

On Sept. 25 the Organization of American States (OAS) electoral observation mission issued a statement lamenting recent examples of foreign intervention in the Nicaraguan elections. "The future of the political institutions in this country depends exclusively on the decision to be made by the Nicaraguan citizens. The [OAS] mission understands the role of the international community to be one of cooperation with Nicaraguan institutions and organizations so that the will [of the Nicaraguan people] can be expressed in free and transparent elections," read the statement.

The OAS statement was issued just four days after the Swedish Ambassador in Nicaragua Eva Zetterberg claimed the Supreme Electoral Council (CSE) "is a biased organization, which has not been able to move beyond political party lines." Her comments caused outrage within the CSE and the two main political parties, the Constitutional Liberal Party (PLC) and the Sandinista Party (FSLN).

The Nicaraguan press interpreted the OAS statement to be a response to Zetterberg's comments and those of US congressman Dan Burton who visited Nicaragua last week. During a press conference in Managua Burton said that the return to power of FSLN leader Daniel Ortega would cause his government to "rethink" its relationship with Nicaragua.

On Sept. 25, undeterred by the _expression of the OAS' disapproval, US Ambassador Paul Trivelli repeated the implied threat stated by Burton a few days earlier that electoral victory for the Sandinista- led United Nicaragua Triumphs alliance would have negative consequences for Nicaraguan immigrants working in the US. "We have said on many occasions that this electoral process is important for Nicaragua, for the region and for the US for many reasons, including the half a million Nicaraguans living in the US." According to Trivelli, Burton's comments during his recent visit to Nicaragua did not constitute intervention; he was simply explaining what would happen if Ortega wins the forthcoming elections.

Trivelli went on to say "obviously there is a lot of interest from my government, the US Congress and the private sector to visit Nicaragua in this electoral period." Next on the list of US officials to visit the country during the electoral period is US Secretary of Defense Donald Rumsfeld who arrived in Managua on Oct. 1 to take part in the VII Conference of Defense Ministers of the Americas.

José Miguel Insulza, Secretary General of the OAS, who is currently in Nicaragua to take part in the VII Conference of Defense Ministers, said that the Nicaraguan electoral process is developing "normally" and complies with "acceptable international standards." He went on to say that "leaders and representatives of one country should not intervene, even verbally, in another country's affairs. Unfortunately [foreign intervention] has become habitual, though it is not a habit [the OAS] looks well on. We would prefer it if everyone abstained from attempting to influence [the outcome of elections]."

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Topic 2: National Assembly reforms Energy Stability Law

The National Assembly passed several amendments to the Energy Stability Law with a unanimous vote on Sept. 27 in an attempt to reduce the catastrophic effects of the current energy crisis. The amendments include the extension of the electricity rate subsidy for consumers of less than 150 kilowatt/hour a month until next July, the reduction of the Value Added Tax (VAT) from 15% to 7% on the electricity rate for consumers of between 300 and 1,000 kilowatt/hours a month and tax exonerations on the importation and sale of energy saving light bulbs.
Minister of Public Finance Mario Flores criticized the legislative branch's decision to reduce VAT from 15% to 7% on the electricity bills of consumers of between 300 and 1,000 kilowatts/hours a month. According to Flores this decision could put the country's economic program with the International Monetary Fund (IMF) at risk.

During the same legislative session the deputies approved a US$5 million subsidy to the National Electricity Transmission Company (ENATRAL). This money will be used by the state company to buy electrical energy from other Central American countries which will then be given to the Spanish electricity distributing multinational Unión Fenosa as part of an attempt to reduce the energy deficit.

Meanwhile, on Sept. 27 the Consumer Defense Network presented a request for Unión Fenosa's contract to be cancelled before the litigation panel of the Supreme Court of Justice. According to the Consumer Defense Network the multinational electricity distributing company has committed numerous breaches of contract including the failure to comply with its plan of investment and erroneous charges to consumers including the application of a 1% city tax, which according to municipal authorities, does not exist.

Consumer Defense Network lawyer Miguel Angel Baca said that if the Supreme Court orders INE to cancel Fenosa's contract for breach of contract then the company "would not be able to claim any sort of compensation from the government." The fear that Fenosa could claim a multi million dollar sum in compensation has been manipulated by the government on several occasions in the past so as to avoid broaching the subject of canceling the transnational corporation's contract.

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Topic 3: Over 500 children fall ill after eating World Food Program genetically modified food

The Nicaraguan Alliance to Protect Biodiversity has accused the World Food Program (WFP) of severely affecting the health of over 500 children by distributing genetically modified (GM) food in the municipalities of Jinotega and Siuna. The World Food Program distributes food to over 1.5 million people across Nicaragua, mainly children, pregnant women and families living in extreme poverty.

Vice Mayor of Siuna Evanisto Luna said that over 120 children in Siuna were seen in health centers in the municipality with symptoms of diarrhea, vomiting, dizziness and skin infections after consuming food donated by the WFP. At the request of the municipal authorities of Jinotega and Siuna the Alliance to Protect Biodiversity carried out tests on the food being distributed by the WFP which confirmed the presence of specimens from GM crops.

According to Julio Sánchez, representative of the Alliance to Protect Biodiversity, the presence of GM foods “represents an unacceptable risk to human health, as well as negative consequences for the national biological diversity, the national economy and the environment.”

The Alliance, together with the local authorities of Jinotega and Siuna, demand that the government: 1) order WFP donated food to be taken out of the country so as to avoid further health problems and contamination of the Nicaraguan biodiversity; 2) order the WFP to buy food within Nicaragua in the future so as to avoid the introduction of GM food; 3) put in place policies which allow Nicaraguan families in rural areas to produce their own food as opposed to depending on hand outs from the WFP; and 4) pass the law on Biosecurity and Biological Diversity.

Information Assistant for the WFP Sabrina Quezada insisted that the food donated to Nicaraguan families by the organization is apt for human consumption. “We work with MAG-FOR [Ministry of Agriculture and Forestry] and MINSA [Ministry of Health] and we comply with the rules and regulations of both institutions.”

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Topic 4: Incoming President will inherit US$3.5 billion debt

During a lecture at the Central American University (UCA) economist Nestor Avendano described the disastrous state of the Nicaraguan economy and the multi billion dollar debt which will be inherited by the incoming president in January 2007. Whoever wins the forthcoming elections should not plan to “open a bottle of champagne to celebrate his victory,” said Avendaño, but should contemplate the inheritance of US$2 billion external debt and US$1.5 billion internal debt this government is leaving behind after all recent debt relief is calculated.

Avendaño went on to condemn the Bolaños' administration handling of the economy and specifically its failure to spend the US$200 million saved as a result of the debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative on poverty reduction programs. In accordance with the Multilateral Debt Relief Initiative of the 2005 G-8 meeting, the money saved by governments of HIPC countries as a result of the debt relief should be spent on educational, health and environmental programs to reduce poverty. In Nicaragua, however, 52% of the money saved has been spent on paying the interest on the Negotiable Investment Certificates (CENIS), and while the social spending budget has not increased, government ministers and officials have received generous pay raises.

One of the most serious problems facing the country's economy, said Avendaño is the US$1.6 billion annual trade deficit. While Nicaragua imports US$2.8 billion in goods and services a year it exports just US$1.2 billion.

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Topic 5: Rainforest Alliance: situation in Bosawás is chaotic

The international environmental organization Rain Forest Alliance is concerned about the shocking rate of destruction taking place in the Bosawás Biosphere Reserve located in the Northern Atlantic Autonomous Region (RAAN). Coordinator of the Rain Forest Alliance Jaime Guillén described the situation in the area as “chaotic” due to the lack of state presence.

Representatives of the Alliance working in Nicaragua invited El Nuevo Diario journalist Fermín López to accompany them on a flight over the area to witness the destruction from the air. Vast areas of what is described as one of Nicaragua’s largest “untouched” regions of rain-forest have been cut down to make way for large agricultural plantations and cattle farms. These agricultural ventures are unauthorized (the Bosawás Reserve is meant to be a protected area) and are carried out mainly by newcomers to the area who take over land without permission from the local communities or any other authority.

The Rain Forest Alliance is working with local indigenous communities on projects of sustainable development of natural resources.