This editorial explains the implications of the recently reformed Consumer Defense Law on the country., which shows will force the business sector to negotiate a new alliance with the government. This in effect would further strain the relationship with the business sector within the opposition groups.
The problem is not just for the bankers
By Enrique Sáenz, Editorial in La Prensa, Feb 8, 2021
Unfortunately the history we have lived as a country, generation after generation, is populated by charlatans, strong men, conspirators, dictators, frauds, traitors, murderers, Judases, deal makers, corrupt and irresponsible fanatics; in brief, if you look at a gallery of photos of those who wielded power at some moment in these 200 years, you will always find someone to whom you could assign these adjectives. Of course, there are honorable exceptions. But that is what they are: exceptions.
Nevertheless, even the dictators most well-known for generations that are still alive, like José Santos Zelaya and Anastasio Somoza Debayle, in the end had a limit and left power, thus avoiding greater damage and destruction to the country.
Ortega has demonstrated that he has no limits in his obstinacy to remain in power. No matter what it might cost. No matter what is destroyed.
You do not have to go very far. Among the avalanche of laws that he has issued in recent months, there is one that provides a full-length portrait, even though it may not appear to. We are referring to the reform of the consumer law. By its name it does not tell you anything, but its content can be devastating for thousands and thousands of Nicaraguan families.
Through this law the dictator is attempting to evade the impact of the sanctions imposed by the previous US administration. As we know, the banks and companies owned by the mafia in power were the object of sanctions. In addition, some were sanctioned on a personal level. One of the impacts of these sanctions is that the banks, in order to preserve their international financial relationships, saw themselves forced to cancel deposits, accounts, financial operations, credit and debit cards, in short, all the financial services that banks provide.
With the reform of the Consumer Law, they want to force the banks to reopen these operations under the threat of sanctions that range from fines to their closing.
I have heard or read comments that refer only to the banks, probably because they are the immediate targets of the measure, but those harmed will be all of us Nicaraguans, even though it might not seem so.
Let us look more closely at the issue.
The principal social and economic partner of Nicaragua is the United States. Let us review some numbers for 2020: $1.1 billion dollars in family remittances, $1.4 billion in exports, $1 billion in imports, $2.5 billion in free trade zone exports, the biggest proportion to the US. Just that adds up to $6 billion dollars. We are leaving out the loans the banks receive and investments. This is does not mention the impact on credit cards, increased cost of loans or the increase in country risk.
Well, behind these numbers are the free trade zone workers, exporters, importers and merchants, the families that survive on family remittances, as well as the small, medium and large enterprises, in short.
And what do they have to do with this law?
Let us move to two examples: if you export cheese to the United States for US$50,000, those bills are not sent to you by plane in a box. You send the cheese, and you receive a bank transfer. If you are an importer, and you buy a shipment of computers for $20,000, you do the transaction through a bank. And if you receive a family remittance, almost all of us know this, well you also withdraw it principally through the banks.
It happens that the banks do not have branches in most of the cities of the United States. They operate with a mechanism that is called correspondent banks. There are large international banks that are all over. So, the local banks have “correspondent contracts” through which the US banks provide banking services in the name of the local banks.
So what? Ortega is pointing a pistol at the head of the bankers: or reopen banking operations for the mafia, or you will be the target of sanctions. The bankers are up against the wall: if they accede to Ortega´s blackmail, they lose their correspondent banks, with the risk of collapsing international commercial and financial transactions. If they do not accede to the blackmail, they expose themselves to the sanctions of the dictator.
For the record, this is analysis, it is not crying “those poor bankers”…
We cannot rule out that in his irresponsible Machiavellianism Ortega might be plotting another move: approving the law with the expectation of applying it selectively. The idea is to show up with machete in hand to each banker to put the squeeze on them, subdue them politically, force them into dubious under-the-table operations or keep them from making loans, for example, to organizations that participate in the elections.
The problem is that the chain begins to break with just approving the law, because immediately international risk rating agencies, multinational banks, the International Financial Action Group known as GAFI, will adopt their measures with the consequences that we have noted.
To summarize: the dictator, in order to protect his patrimony and the mafia in power, is irresponsibly putting at risk the national economy, the economy of businesses, jobs in the free trade zones, exporters, importers and the hundreds of thousands of families who live off of remittances. He is taking the country to the edge of the cliff.
We began saying that through these 200 years of history as a country we put up with charlatans, strong men, conspirators, dictators, fraudsters, traitors, murderers, Judases, deal makers, corrupt and irresponsible fanatics.
Unfortunately, it is up to us the current generations to deal with the most malignant of all of them.