10 September 2015
Nicaragua: Making Cooperatives Central to Democratization

A phenomenon deserving more attention by those interested in the debates on Socialism in the 21st Century is the development of the cooperative and associative sector in Nicaragua. Over 50 percent of the Central American country's gross domestic product is produced either by small family-owned associative enterprises with less than 10 workers or by more advanced cooperatives some of which have several thousand members. This non-capitalist sector of the economy currently employs about 70 percent of the workforce in a country where neoliberal policies have deliberately attacked secure formal employment, as they have done around the world. The lives of about 2 million people, one in three Nicaraguans, are directly influenced by cooperatives, either because they themselves or else one of their close relatives, belong to a co-op.

Nicaraguan cooperative

Cooperatives operate practically all public transportation systems, most of the dairy industry and other basic food production too. They even play an important role in some export sectors, such as coffee and beef production. The cooperative movement has received strong support from the current Sandinista government led by Daniel Ortega. Since the relevant legislation was passed in 2012, Nicaraguan family businesses, collectives and cooperatives have been supported by the Ministry of the Family, Community, Cooperative and Associative Economy. However, cooperatives are not a new phenomenon in Nicaraguan society. They have been a key component of the National Project devised by General Augusto Calderón Sandino back in the 1930s at the height of his armed resistance against the U.S. military occupation of Nicaragua.

On August 27th 1932, as the war waged by his guerrilla army of rural workers and their families against the U.S. marines then occupying Nicaragua was coming to an end, Sandino announced his project of creating rural workers' and artesanal mining cooperatives in the areas liberated by his “crazy little army” of patriots and revolutionaries. This is the first time in Nicaraguan history that cooperatives were presented as an alternative to the traditional plantation system installed since colonial times to satisfy the needs of the imperial powers and their local client elites. In 1933, after signing the peace agreement that put an end to the war, Sandino founded Nicaragua's first cooperatives in an area along the Rio Coco, around Wiwilí with demobilized guerrillas from his army.

In July 1933, Sandino explained to a correspondent, “We are organizing in this river port on the Rio Coco a mutual society called the 'Rio Coco Cooperative' based on the brotherhood that you are familiar with that we practiced in our army. We are building houses, a barracks, a hospital, a refectory, offices and a radio station along with all that is necessary to live. We are clearing land and bringing large extensions into cultivation, setting up gold washing processes and so on. The idea is to turn these untouched regions into centers offering life and culture to all people victims of the exploiting classes and of poverty.” Just a few months later, at the instigation of the U.S. Embassy, Anastasio Somoza ordered the treacherous murder of Sandino and his companions, then in Managua for talks with the Nicaraguan government. Somoza and his allies among Nicaragua's reactionary élite immediately targeted the Sandinista cooperatives around Wiwilí with vicious political genocide against Sandino's followers and their families and the appropriation of their land and goods by Somoza and his cronies.

For almost five decades the Somoza dictatorship repressed cooperatives for being expressions of “sandino-communism”. A few large agricultural and service co-operatives were founded in the capitalist cotton-growing industry, but any attempt to build a non-capitalist cooperative movement was doomed before it even started. Not until after the revolutionary overthrow of the dictatorship on July 19th 1979 was Sandino's historic cooperative program implemented as a nationwide government policy. In fact, shortly before the revolutionary triumph, many communes were founded during the final weeks of the struggle, in liberated areas around the city of Leon, in order to grow food for the Sandinista guerrillas in what became one of the clearest signs of a “parallel power” challenging the dictator Somoza's control over the country.

Under the revolutionary governments between 1979 and 1990, over 3,000 mainly agricultural cooperatives were founded, often on land expropriated from former heads of the Somoza regime. Among these cooperatives, 1,170 were production co-ops while 1,559 were service and credit cooperatives. These cooperatives received on average 35 percent of all loans from the country's financial system and administered considerable shares of production, both for export (coffee, cotton, beef) and internal consumption. The defeat of the Sandinista Revolution in the 1990 elections, mainly due to the devastating effects of the Reagan Administration's genocidal, terrorist “low-intensity” war marked a dramatic change in the situation of rural families and what was overwhelmingly their cooperative movement. Until that year, up to 81,000 rural family households had received State loans. After 1990, that support dropped to zero.

The process of neoliberalization of the country was fiercely resisted by rural workers and their families, the other popular sectors and the Sandinista Front. Before leaving office, the outgoing Sandinista government managed to pass laws known by their numbers, such as Laws 85, 86 and 88, aiming at expeditiously legalizing and/or regulating agricultural properties in hands of the rural families who, because of bureaucracy and other administrative shortcomings did not have due legal title to their land. But rural families found it very difficult to withstand the lack of credit imposed by the privatized neoliberal banking system and many co-ops were forced to dissolve. At the same time, landowners expropriated by the Sandinista Revolution organized and started demanding their properties back. New laws adopted by the right-wing government, such as Laws 1090 and 1190, were designed and used to deprive rural families of their land.

As Ariel Bucardo, president of Nicaragua's National Confederation of Cooperatives, CONACOOP, explains, “We were born in the struggle; we lost the elections; we resisted and we were forced to keep on struggling”. The 17 years of neoliberal misgovernment from 1990 to 2006 debilitated the cooperative movement, but also taught it valuable lessons. One of those lessons had to do with the importance of alliances: for example, the leaders of the cooperative movement, as well as those of the rural small and medium producers union UNAG, very soon realized that in the new context the Sandinista rural sector needed to join forces with fellow rural families from among the previously anti-Sandinista, U.S. organized Contras. Both sides were members of the same social class, with the same problems and suffering the same exploitation. In the early 90s meetings were held between the rural workers' leaders and some Contra chiefs, such as Commander Franklin, that lead to a more united rural sector presenting common demands to the neoliberal government of President Violeta Chamorro.

After 17 years in the opposition, the Sandinista Front again entered government in January 2007. Although weakened, the Cooperative Movement was ready for a new stage in its development, supported by new structures and reinforced by experiences such as:

  • CONACOOP, a unitary expression of the country's cooperative movement, encompassing coops from all political allegiances under a common core of cooperative values. This movement was officialized by the very progressive General Law of Cooperatives of September 2004, a law passed under a right-wing administration that was a true achievement of popular struggle.

  • The Caja Rural Nacional (CARUNA), now a large cooperative bank founded by an initial group of 37 members with a capital of only a couple of thousand dollars. Today it has 40.000 members and administers considerable financial means, among them the funds of the programs ofALBA and PETROCARIBE.

  • Development of cooperativism within the coffee-growing sector, extending control by first-, second-, third-, and fourth-degree cooperatives to all aspects of production, marketing, technical assistance and research.

  • New urban experiences of cooperativism, including different kinds of collective transport.

With these experiences, the 1,700 cooperatives that survived the bitter, acid test of neoliberalism, Nicaragua received renewed support in January 2007 under Nicaragua's second Sandinista government. Leaders of the cooperative movement often quote President Daniel Ortega's words at the time, when he said: “We are back in government. The time of cooperatives has arrived”. Accordingly, the Sandinista government has prioritized development of cooperatives in Nicaragua as a fundamental policy to radically democratize the country's economy. That process is also radically democratizing Nicaraguan society as a whole by recognizing the fundamental role of women as protagonists in the national economy.

Today, in 2015, Nicaragua has over 5,000 cooperatives involving more than 389,000 families from the popular classes, directly influencing the lives of over 2 million people. There are cooperatives in each and every one of the country's municipalities. There are dozens of Unions with at least five member co-ops and 12 Federations with at least three Unions each, encompassing all sectors of cooperative activity in the country. In terms of employment, co-ops give jobs to 450,000 Nicaraguans. In comparison, big capitalist sugar mills such as San Antonio and Monte Rosa, commonly regarded as big employers, hardly reached 16,000 jobs in the 2012-2013 harvest. Another big source of capitalist employment, the country's duty-free trade zones, employ no more than about 140,000 people.

Coffee cooperatives export volumes of about 50 million pounds of high-quality gourmet beans. In other crops, such as sesame seeds, production is totally cooperativized. Co-ops are the main providers of the dairy industry with about a million liters of milk delivered every day in spite of the current drought and limited storage capabilities. Other activities, such as collective transportation, are almost completely in the hands of cooperatives. Tourism, too, is strongly cooperativized. Garbage recycling is one of the future areas of cooperative development in Nicaragua today. All this vital economic activity is accompanied by a joint effort between cooperatives and the State to formalize working conditions in the sector, by developing similar systems of pensions and health insurance as those existing in the formal sector. 

However, in spite of the achievements, CONACOOP's president Ariel Bucardo, interviewed recently by Tortilla con Sal, insists that the movement must advance further in some important areas: firstly, to deepen the unity of the cooperative movement and secondly, to strengthen co-ops as efficient economic units administratively, financially and in terms of education and culture. Ariel Bucardo also notes that, while 45 percent of cooperative members are women, much remains to be done in order to attract young people, most of whom ignore joining a co-op as an employment choice because the educational system does not teach them about the cooperative movement. Bucardo mentions that of the 42 universities in the country all of them promote the perspective of big business and multinational companies, ignoring or understating the central, fundamental role of the family, associative and cooperative sectors in Nicaraguan economy.

Although most of the members of the cooperatives in Nicaragua define themselves as revolutionaries, the movement includes organizations of various orientations, even some which identify themselves with the opposition. All those cooperatives, however, share a common core of values around self-management and economic democracy. In the view of Ariel Bucardo, cooperatives are the sector that best express the Christian, Socialist, Solidarity values the Sandinista Government is promoting as it seeks to carry out its radical democratization of Nicaragua's economy and society

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