Word: nicaragua
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Before asking for another extension of credit from President Bush, she should take another look at her own plans to pick up the pieces of Nicaragua's shattered glass...
This is not to say that the picture was rosy in pre-revolutionary Nicaragua. Although there may have been a relatively more stable economy and a higher per-capita income, wealth was concentrated in the hands of the Somozistas and the ruling elite that backed Somoza's corrupt and repressive regime. But the ten years of Sandinista rule undeniably increased the overall poverty of the country. This was what Chamorro--in Washington this week to plead for more aid--has pledged to reverse. This is what she has failed...
WHAT CAN BE DONE about Nicaragua's broken economic glass? After receiving $300 million in aid from the United States last year, Chamorro counted on expected grants and loans from other international sources to revive the economy. Because of the chaotic state of the economy, however, lenders are reluctant to cough up funds until the new reform package announced last month begins to take effect...
...relying on institutions like the IMF instead of proceeding with real reform at home would be a perilous tack for Chamorro to take. Nicaragua certainly needs to reduce its foreign debt. But as Nicaragua's current debt demonstrates, foreign aid, although an attractive idea, tends to increase countries' dependence upon foreign governments rather than building up a strong domestic economy...
Most important, Chamorro must free private businesses from the exorbitant taxes and arbitrary regulations begun under Somoza and extended under the Sandinistas. "Reform" will do little to alleviate Nicaragua's overall poverty if promised foreign aid reinforces the prerevolutionary maldistribution of wealth. If aid comes without a freer business climate, small firms and small farmers will suffer at the expense of a retrenchment of the upper class returning from exile...