Nicaragua News Service
                             Vol. 2, No. 30
                             July 9-16, 1994
                         by Colleen Littlejohn
 
Major news stories for the week:
 
1.  Plans ready for celebration of 15th anniversary of Popular 
     Sandinista Revolution.
2.  Drought in most of country.  Situation is critical in Region II.
3.  Russia to forgive $1.2 billion of Nicaragua's debt to them.
4.  New investments in housing.
5.  INE defends itself against strong criticism.
6.  National Assembly decrees revaluation of bonds.
______________________________________________________________________
 
1.  Plans ready for celebration of 15th anniversary of Popular Revolution.
 
Acts to commemorate the celebration of the 15th anniversary of the Popular
Sandinista Revolution will be held throughout Nicaragua in every
department and township, with the largest celebration to be held in
Managua for residents of Regions III and IV. 
 
Before the official July 19th activities, cultural and children's
activities will be held to celebrate July 17th, Day of Joy, which
commemorates the day that Somoza fled the country to find refuge in Miami. 
 
The July 19th festivities in Managua will be held in the Plaza of the
Revolution and will begin with a party-vigil on the 18th. 
 
2.  Drought in most of country.  Situation is critical in Region II.
 
Last weeks' newspapers were filled with stories about the effects of the
devastating drought that is affecting the major part of the Pacific coast
of Nicaragua. 
 
The drought is most severely affecting Regions II and IV, while
ironically, in Region V, some areas have been afflicted with severe
flooding.  Some areas of Region I have also been affected.  In Leon alone,
73,000 are unemployed due to the drought. 
 
Minister of Agriculture Roberto Rondon, stated that losses have affected
20% of the total national harvesting area and that although these losses
should not at this time provoke panic, if the drought persists for 15 more
days, the effects will be more drastic, not only for basic grains but also
for alternative crops such as sesame seeds and peanuts.  Traditionally
there is little rain in the Pacific area between June 15th and July 15th. 
It is unclear whether this traditionally dry period has come earlier, or
if it is just beginning, which would mean more crop losses in the regions
most affected by the drought.  Most of the crop affected belongs to small
farmers' and are intended for family consumption. 
 
Last week hundreds of poor peasants from the town of Santo Tomas del
Norte, located 60 km north of Chinandega, took over and emptied the
contents of a warehouse that belongs to the town's city government where
food donations were being stored.  Santo Tomas is one of the poorest zones
in Region II.  The town's mayor stated that the food, property of the
Ministry of Social Actions, was part of a donation from Spain, France and
Germany.  It was due to be distributed within a few days after the
completion of a needs census.  The donations had been delivered two weeks
earlier during a visit of President Chamorro. 
 
A local leader of UNAG stated that hunger was the main factor in the
sacking of the warehouse.  That opinion was confirmed by several members
of the group who participated in the actions.  One of those claimed: "We
couldn't stand it any longer, how the mayor was only giving away things to
those closest to him." 
 
Another local mayor, of San Francisco Norte immediately began to
distribute food from his town's warehouse in order to avoid a similar
incident.  In many areas of Region II, there has been a total loss of
basic grains -- corn and beans, to the point that the government has
ordered the Minister of Social Action, William Baez, to prepare an
emergency Food for Work plan for the area. (Barricada 7/12, 7/13; La
Prensa 17/14)
 
3.  Russia to forgive $1.2 billion of Nicaragua's debt to them.
 
Russia has offered to pardon 85% of Nicaragua's overdue debt to them. 
This is a relief of approximately $1.2 billion of Nicaragua's total debt
to Russia of $3.2 billion.  According to this pre-agreement, another $240
million must be paid in the medium term in hard cash.  The rest of the
debt must be negotiated separately.  This is the first time that Russia
has offered debt relief to Nicaragua. 
 
Earlier in the month, Germany agreed to relieve 70% or $150 million of
Nicaragua's overdue debt.  Nicaragua owes Germany a total of $700 million,
most of which was aid from the now extinct German Democratic Republic. 
(Barricada 7/16)
 
4.  New investments in housing.
 
The dream of having a decent home remains just that, a dream, for the
majority of Nicaraguans.  Over 400,000 houses are needed to fill the
demand of those without homes.  This situation is made even more difficult
because of the intense migration from the countryside to the cities during
the last 10 years. 
 
Despite the demand, however, basically the only houses being built in
Nicaragua, with the exception of a much criticized colony of journalists
where a small two bedroom house will cost almost $20,000, are the
condominiums being built for the international community and the small
percentage of Nicaraguans who can afford a house in the $90,000 - $150,000
price range. (La Prensa, 7/15)
 
5. INE defends itself against strong criticism
 
One of the most criticized people these days in Nicaragua is Emilio
Rappaccioli, Minister of the Nicaraguan Energy Institute, a position he
has held since 1979.  For that fact alone, many on the right have been
relatively pleased that the current energy crisis has given them another
opportunity to call for the firing of Rappaccioli, an FSLN militant. 
 
Rappaccioli, however, gave an interview to La Prensa last week and
produced a letter that he had sent to the Presidency in 1992, warning
that, if the country could not increase its capacity to generate
electricity, it would face severe rationing in June of 1994, because one
of the principal generating plants in Managua would be shut down for
repair until January of 1995, and other smaller plants would also be
affected by major maintenance.  The Minister also warned that a drought,
such as that suffered in 1991, would make the situation even more
difficult, a prophesy that has been fulfilled this year. 
 
Nicaragua should have purchased equipment in 1992 to increased its
capacity, but Rappaccioli stated that the investment that was ready to
finance the first plant of 25 megawatts fell through because of the
transport strike of 1992 and that affected the second investment for a 35
megawatt plant.  The government, at that time, did not purchase the
equipment needed with national resources. 
 
At present, there is financing for the two plants, but the process has
been held up by a legal dispute between a Japanese company and the
US-based General Electric about who will implement the projects.  That
situation should be resolved in a few days. 
 
Energy crisis in Nicaragua is not new.  In 1980, the Sandinista government
inherited a study written by the Somoza government called: Master Plan for
Electrical Development in Nicaragua, 1977-2000 which was a blueprint for
the development of the sector.  INE has been severely criticized recently
for not implementing the plan. 
 
However Rappaccioli explained that there were three factors that hampered
the country's ability to implement the master energy plan.  First was that
many of the projects recommended were formulated only as initial profiles
and when INE began to work on their development, it was evident that the
majority of the projects were not feasible. 
 
Other projects that were feasible and vital for the development of the
sector were located in zones affected by the war.  For example, the Soviet
Union agreed to finance a hydroelectric plant in the Sixth Region, but the
plans had to be abandoned in late 1984 due to the war.  That project,
which would have produced 350 megawatts of electricity, would have doubled
Nicaragua's energy output. 
 
Finally, Nicaragua's capacity to generate energy was severely hampered by
the commercial blockade by the United States which denied Nicaragua access
to traditional sources of financing, such as the World Bank or the IDB,
for energy sector projects. 
 
As a result of these three factors, Nicaragua is the only Central American
country which was unable, in the decade of the 80's, to build a major
hydroelectric complex. 
 
The effects of the current energy crisis were not felt sooner because of
an agreement with Panama to import energy during peak daylight hours and
export electricity to Panama during the night when demand in that country
is higher.  Neither country, at this moment, has any excess energy to
spare. 
 
The only short term solution to the current energy crisis is if the rain
begins to normalize in the Jinotega area, which would allow the Apanas
hydroelectric dam to generate more energy.  INE is about to contract a
US-based company to seed the clouds above the are in hope that that
process will provoke the much needed rain. (La Prensa 7/14)
 
6. National Assembly decrees revaluation of bonds
 
A new law which will positively adjust the value of the bonds and
certificates given to those considered unjustly confiscated by the
previous government, was passed by the National Assembly last week.  The
measure is, according to Emilio Pereira, Minister of Finance, "an
important step on the road to stability and reconciliation in the base." 
Under the new law, the bonds will be redeemable in 15 years with interest
rates which will fluctuate between 3-8 percent yearly depending on the
time of maturity.  The law also states that the bonds can be used to
purchase houses protected under Law Number 85 if they exceed a constructed
area of 100 sq. meters.  Antonio Arauz, president of the Association of
Bond Holders, stated that the new law was a "good deal for bond holders."
(Barricada, 7/13)