The Economic and Political Exploitation of Nicaragua

by Laurie Lipson and Roberto Kaffke of S.F. State

Introduction

The largest and richest of the Central American republics is Nicaragua. It is fertile land, with extensive forests and large pockets of mineral deposits, yet it has long been a land of enslavement and exploitation. Unlike its neighbors, Honduras and Guatamala, which have been little more than banana farms for United Fruit Company, Nicaragua has been exploited principally for military reasons.

Nicaragua is a mountainous land with two large lakes, an abundance of volcanoes, a strip of Pacific coastal area where the majority of the people work and live, and with a vast underdeveloped forest to the east. Cotton and gold are the main exports. The gold is controlled by the Americans and the cotton by the fluctuating markets manipulated by Wall street. In 1966, the world market price per pound of cotton fell sharply, causing havoc not only in Nicaragua, but also Mexico, Peru, and El Salvador.

To forget the canal, would be to overlook the basic reason the United States has been so involved in the internal affairs of Nicaragua. Pushed through by the ill-famed Bryan Chamarro treaty of 1914, the U.S. gained the rights in perpetuity to explore and construct a canal with an option of 99 years to build naval bases in the Bay of Ponseca and Corn Islands.

Military intervention in Nicaragua negan in 1855 with the invasion of William Walker, the head of a private army financed by J.P. Morgan. 1909 saw the first armed arrival of U.S. Marines. Returning in 1912, they remained until 1925. In 1927 they again landed and remained in force until 1934. Augusto Cesar Sandino, a peasant leader, came out of exile to form aresistance movement against the invaders and was successful in a series of running battles. The marines were present under the pretext of the dictatorial regime to protect American property and investments and also, of course, to secure the canal.

In 1934 the Marines were withdrawn and Sandino entered the capital, Managua, as liberator. But his idea of giving the land back to the peasants was dangerous in the opinion of Arthur Bliss Lane, the U.S. ambassador. Sandino made the eternal revolutionary mistake of laying down his arms, and at a dinner Lane suggested to General Somoza that he get rid of Sandino. Murdering Sandino, the Somoza dynasty entered power which it maintains to this day. A permanent U.S. military mission remains, as does the FBI and CIA.

The people are Andalusian in nature, being quite poetic and rebellious, warm-hearted and generous, of mayan and Spanish descent. The three urban areas of importance are: Managua the sweltering yet growing capital, Leon, cultural and historic city, and Gragada, on the shores of Lake Nicaragua. Puerto Cabezas and Bluefieds are on the Atlantic coast and figure heavily in history as well as the future. Both these Atlantic ports figure also in the plans of the CIA.

There are only 100 secondary schools of which 68 are Roman Catholic or private. 63.7 percent of the population remains illiterate and life expectancy is a cheery 50-55 years.

The United States is the chief market for Nicaraguan goods. the U.S. found Nicaragua a valuable and dependable ally during World War II when Nicaragua was second in the exportation of rubber to the USA. Nicaragua imports 100 million dollars and export 100 million dollars worth of goods per year. Nicaragua encourages American investment and passed laws on March 11 1955 and March 20, 1958 to solicit foreign capital. In 1962 foreign investment and control, of which American interests control the overwhelming amount, was in the following sectors: mining, 80% commercial fishing, 80%, lumbering, 90%, commerce, 50%, manufacturing 33%. THese figures vividly illlustrate the exploitative nature of foreign investment, for investment is concentrated in the natural resources, which are exported from the country, rather than the manufacturing sector, where benefits to the Nicaraguan people would be felt. Foreign investors in Nicaragua are interested in making money and not in developing the economy.

The breakdown which follows of specific companies with investments in Nicaragua is by no means exhaustive but merely a sample of how many hands are in the pie. Information was difficult to obtain at time as many American companies operate in Latin America under susidiary companies with Spanish titles and officers.

Mining: In 1938 six American companies joined to form the Neptune gold mining co. under the Delaware laws to exercise options on certain gold properties in Nicaragua. The division of s stock was: American smelting and refining co., 45.82%, New York and Honduras rosario, 25.20%, Benjamin C. Warnick and co. ltd., 15%, Premier gold mining, 8.50%. Terra Nova properties, 4.25%, Harry A. Guess, 0.94%. Neptune also has subsidiaries in Panama, Chile, and Mexico.

In 1938 La Luz mines limited was incorporated. La Luz is controlled by Falconbridge Nickel Mines ltd which is in turn affiliated with Mcintyre Porcupine mines ltd. La Luz has mining claims to property located at Suina, 90 miles west of Puerto Cabezas. The account sheet for La Luz 1963: production, 6,585,048 dollars, operating 5,257,496, profit, 1,327,552. Still other foreign mining companies in Nicaragua are Empresa Minera de Nicaragua a subsidiary of the Canadian co. morada mines. Bonan of Canada and India Mining co. Minas de Limon which operates outside of Leon is affiliated with above companies and heavily exploits natives for a dollar a day.

Timber: Until 1963, when it ceased production, Nicaraguan Long Leaf Pine Company, a subsidiary of Robinson Lumber Company of New Orleans, was the largest lumber company in Nicaragua, exporting twenty million board feet annually.

Starting in 1962, the American company Bluefields Lumber Manufacturers began cutting pine and cedar for export. Another American firm, Weiss Ricker, finances mahogany logging contracts and buys mahogany for export.

While in Puerto Lorenzo earlier this year, one of the authors was able to observe Nicaraguan hardwood being trucked down from Nueva Segovia to the Honduran port by German exploiters.

Oil: As early as 1956, the Waterford Oil Company of Bismarck, North Dakota announced plans to start exploration for oil in the vicinity of Puerto Cabezas. Since then Standard Oil of New Jersey has built a refinery at Managua with a capacity of 5500 barrels a day and a cost of eight million dollars. Standard Oil has also built a pipeline from Puerto "Somosa" on the west coast to Managua.

Standard Oil of California and Texaco are also operating in Nicaragua. Under Nicaraguan tax laws, foreign investments are not taxable for the first ten years.

Agriculture: Information on ownership of coffee and cotton plantations was not readily available. It is known that the Banco Central and America are using agronomists to study uses of land for commercial exploitation. Nicaraguan Sugar Estates, which is partly American owned, produces 60% of the total annual sugar production. A United Fruit Subsidiary Cukra Development Co., is developing plantations near Bluefields and owns facilities on the east coast for extracting oil from African palm. Cuban exiles are growing tobacco on estates near Esteli and Bluefields.

Commerce: In 1965 the Bank of America opened a subsidiary, Corporacion Nicaraguenes de Inversiones S.A. in Managua. At present a new skyscraper is being constructed for the bank's offices. The Banks of London and South America as well as that of the Bank of Montreal also exist in Nicaragua.

Manufacturing: The British American Tobacco Co. has a major interest in the one company which produces cigarettes. General Mills has built a 2.4 million dollar flour and feed mill near Chinandega. The Southland Corporation of Texas financed a plant for production of milk and milk products.