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Daniel Ortega's Socialism

With the crisis in Nicaragua, the true anti-poor nature of Daniel Ortega’s regime has been more clearly visible

Daniel Ortega's model in Nicaragua has nothing of socialism

Enrique Sáenz

15 de noviembre 2019


“Poor of the earth, arise!” Daniel Ortega proclaimed to describe the goals of his regime. He filled his mouth with words attacking the governments that had preceded him, while the posters spread this phrase across the width and breadth of the country.

It never really was a government of the poor, but through propaganda and the sharing out of crumbs it managed to deceive many of the gullible, both within and outside the country. The funds from the Venezuelan oil cooperation served to cover up a political economy based on cheapening the cost of labor, that impoverished the country and exacerbated sub-employment and the informal economy.

The April 2018 crisis was the result of an accumulation of needs and frustrations, principally due to the expiration of the subsidies from the Venezuelan oil money. The balloon deflated, and at that moment the true face of the economic and social failure of the Ortega camp emerged.

With the crisis, the true anti-poor nature of the regime has been more clearly visible. Since this isn’t a question of speeches, but of events and data, let’s go over the principal policies and measures that deepen the anxieties and poverty of the middle-classes and the poor:

1) For the salaried workers who are inscribed in the Social Security system, he made them pay the costs of the pillaging, the corruption and the incompetence of the Institute’s administration. The reforms that were imposed in February of this year made up for these losses by raising the amount deducted for each employee’s contributions. In addition, they modified the formula for calculating future pensions, impoverishing from now on those within a few years of reaching the age of retirement.

2) To protect the finances of the company that unlawfully holds the official monopoly on electricity, they raised the rates, both openly and under cover, while the subsidies for the poorest were reduced or eliminated, and others are in limbo. In addition, consumers are carrying the weight of the company’s inefficiency: year by year the company incurs increased technical losses through a lack of investment and through incompetence. It’s an open secret that the TSK company, which operates the monopoly, is the property of the governing clique. They didn’t blanche at establishing a department to squeeze everything out of those who fall into arrears.

3) They stripped the state workers of their 5% cost of living increase. The budget approved in November 2018 included – as it does every year – a cost of living adjustment to compensate for the cordoba’s loss of buying power. But then, in express violation of the law that they themselves approved, they reduced the workers’ salary, since in practice [failing to implement the adjustment] amounts to a salary reduction. Let’s remember that not all the State workers are Ortega supporters. There are thousands of educators, nurses, doctors, bookkeepers, professionals, security personnel, janitors, secretaries and other occupations who maintain their jobs with the state in order to be able to put food on the family table. They have no other alternative. And they were slashed with a two-edged sword, because in addition to the 5% reduction in their salaries, they were nailed with an increase in their contributions to Social Security.

4) In fiscal policy, the regime applies a perverse set of policies that work against salaried employees. They never modified the guidelines for collecting income taxes, so that in Nicaragua – absurdly, – workers who receive only minimum wage pay income taxes. Their salaries don’t even provide enough for food, but their income taxes are deducted, although they barely have an income.

5) Speaking of fiscal reform, it’s important to highlight that the tributary reforms imposed by the regime in February of this year don’t only affect business owners: by increasing the prices of goods and services, these affect consumers. The price increases hit the poorest especially hard, because food prices show the greatest tendency to rise. On the other hand, by increasing the companies’ production costs, business owners on all levels find themselves obligated to freeze salaries and reduce personnel, thus increasing unemployment and extending poverty. The regime hasn’t dictated one sole measure to protect the poorest.

6) Within this context, the regime froze minimum wages for two years, with the argument that the measure protects employment. This argument is a half-truth, because its end result is a greater impoverishment of the most vulnerable population, which receives the lowest salaries. It’s worth noting that Nicaragua has the lowest minimum wage of all the Central American countries. Anyone can see in the publications of ProNicaragua [Nicaragua’s official investment and export promotion agency], that one of the incentives that their regime displays to promote foreign investment is the poverty of our people. With no scruples, they classify it as a competitive advantage. You can check their publication: “Nicaragua Overview” and see on page 26 of that publication the graph they’ve developed to show – as something very vital – that salaries in Nicaragua for the free trade zones, the area of services and the agricultural sector are the lowest in Central America.


All of these measures sharpen the pernicious impact of the economic and social model that the regime has imposed throughout these ten-plus years of absolute power. A model that has nothing of socialism, nor of solidarity, nor of Christianity. Definitely, a hypocritical discourse that has supported the insatiable enrichment of a minority, headed by the family in power.

Please, let’s not talk any more about these terrible consequences having been provoked by the socio-political crisis. They’ve been in the incubator since before the crisis. The economic and social penury of the population are the result of a failed model, and they worsen every day due to Ortega’s determination to hold on to power by blood and fire.

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Enrique Sáenz

Enrique Sáenz

Economista y abogado nicaragüense. Aficionado a la historia. Bloguero y conductor de la plataforma de comunicación #VamosAlPunto