For more than a week, Nicaragua was convulsed in protests that were met with heavy-handed repression that has reportedly left at least 30 dead. Tear gas. Rubber bullets. Live ammunition. Barricades and burning buildings. Daniel Ortega, the revolutionary Sandinista leader — and president for the past 11 years — “is suddenly facing a revolution of his own,” The New York Times reported.
“The Nicaragua of a week ago no longer exists,” José Adán Aguerri said to The Times. “The break was really with the [Ortega government’s] social security [reforms],” Aguerri later told The Washington Post. Aguerri is the head of COSEP, “the country’s main business organization, which organized one of the biggest protest marches,” The Post reported.
Based on much of the media coverage so far, it would be fair to think that this “revolutionary” leader has opted to cut pensions — screwing the very base that has kept him in power — and providing the impetus for a broad movement to oust him. But missing from almost all of the international news analysis has been salient information on what those reforms actually are — and perhaps more importantly, what sort of alternative reforms are actually being proposed by many of those, like COSEP, now criticizing the government.
Nicaragua’s social security system, INSS, is facing a budget shortfall — that much is true. The IMF said last year that the institution was broke, and called for urgent reforms. The shortfall is actually running at about $75 million a year, or about 0.5 percentage points of GDP. A potential problem? Yes, but far from the calamitous situation that it has been described as.
To address the situation, the Nicaraguan government, together with COSEP, have been at the negotiation table for years. But earlier this month, COSEP backed away from the table, refusing to discuss the issue unless it was linked to a broader fiscal reform plan. The government responded by publishing its proposed INSS reforms, without an agreement, on…