Laura Alfaro, Warren Alpert Professor of Business Administration at Harvard Business School and former Minister of National Planning and Economic Policy in Costa Rica, reflects on why the current crisis in Nicaragua with its draconian human rights abuses should matter to the region and the world
June:
Laura Alfaro is the Warren Alpert Professor of Business Administration at the Harvard Business School. She served as Minister of National Planning and Economic Policy in the government of Costa Rica from 2010 to 2012. As a Costa Rican, she has a unique regional perspective of what's going on in Nicaragua today. Welcome, Laura. Thank you for coming.
Laura Alfaro:
Thank you, June, for this invitation. It is also an opportunity to discuss my region. As you know, I've been back from government since 2012, but I have family there and we do get affected by it, but everything that happens-
June:
Yeah. Many of our listeners may actually not know what's going on in Nicaragua. Could you briefly catch us up with that?
Laura Alfaro:
So, let me just give some background. And again, my field of specialization is an economist, so let me start a little bit there. Nicaragua is the poorest country in Central America. The second poorest country in Latin America. Poverty rates, depending how you measure, can be around 25%. Income per capita, again depending how you measure it could be around $5,000. The economy was not doing great before COVID for many reasons. One has been that the regime of Ortega, who has been there since 2007, had strong ties with Venezuela. And as the Venezuelan economy has been suffering, some of the aid has been diminished to Nicaragua. And this led to some attempts to change the pension system in 218 that led to some widespread riots. And then the government acted violently against some of these riots that, again, just speak of the situation then. And then, the economy started to suffer and then COVID hit.
And so this is a regime that, in economic terms, it has been suffering. COVID hit. This is a regime that has been there since 2007, already seen some local elections in 208. There were signals that these local elections had widespread issues in terms of illegitimacy, voter suppression, so on and so forth. I think the international community didn't pay too much attention, but some experts had started to notice some changes in the regime towards becoming more authoritarian. Little by little, the government started to take on different institutions, the courts, so on and so forth. So this is a process that has been taking a while. During this, the business elite actually supported Ortega again. They were getting benefits. They also got the support from some other social institutions.
So in the background, we have a regime that has been taking over the democratic institutions, little by little. In the background, we have a regime that is losing support from Venezuela. In the background, we have a regime that did not act properly to COVID. And in fact, as many other authoritarian like-leaders, rejected that he was a problem. I remember the marches for love and where everyone was hugging and kissing.
And so this is the background. Elections are coming next year. The government also passed a very complicated law that allows them to prosecute anyone who mentions anything against the regime called the fake news law. And with that, anyone can go to jail and he has used this. So in the last month, all the opposition has been jailed. Figures like Christiana Chamorro which in a poll that was leaked, emerged as a very serious candidate for the position, was jailed. It was followed by other journalists, other potential candidates, Félix Maradiaga, who I know from the World Economic Forum. And also Juan Sebastián Chamorro, who's the cousin of Christiana and a female journalist. And again, Arturo Cruz, students, leaders of movements. They have all been persecuted, jailed, again under this law that allows to jail people without a lot of evidence, just under some view that they're against the government. So this has been a widespread and clear strategy of getting rid of any potential opposition candidate looking ahead towards the elections. So it is clear that he just wants to run unopposed in the next election and just sustain and maintain his power.
June:
So why does that matter?
Laura Alfaro:
It matters, not only from the point of view that he's destroying the democratic institutions in Nicaragua, he has become the poster child of the book, Animal Farm. He's taking everything he fought against in the regime of Samosa, which was also a regime in which the people from Nicaragua suffered. So everything he stood for, he's just stepping on it and just taking a playbook from the Samosa regime and just maintaining himself in the country. The people from Nicaragua continued to suffer, as I said it's the second poorest country in the region. So, it's not that we have seen throughout this regime an improvement so that he created the seed towards development. And so, again, it's not only destroying democratic institutions, but the path towards improving the lives of the people of Nicaragua, becoming who he fought against in the worst way.
All of this has been...And there's the eyes of the international community that seems to be somewhat indifferent. In the words of the former vice president of Costa Rica, Kevin Casas, he has been emboldened by impunity, knows that either no one cares enough or have other things to do or is not a priority. And he has stayed in as president for now since 2007. It only started by getting rid off the clause in the constitution that did not allow for reelection. And now we see more draconian measures. And as I mentioned in 218, there was widespread repression and human rights violations to the people in Nicaragua. The way the opposition has been jailed is also a clear violation of human rights. Many have not had access to a lawyer and basic legal rights that every person should enjoy.
June:
Well, you just quoted a former Costa Rican vice-president. So I'm going to quote a former Costa Rican president who happened to be your former boss. Laura, your tocaya, Chinchilla, said that the repression in Nicaragua takes place in a region where many alarms are being sounded because of the deterioration of human rights. So what do you see the stakes here as being for the international community? Why should we care?
Laura Alfaro:
I don't think the legitimacy of the international institutions that we have created is at stake. The organization of American states has pronounced itself against the regime but it ends there. In the U.S. there seems to be some attempts of revoking some visas, but it ends there. I think there has to be a more energetic, serious approach with some vision and a mission if you want, not only to Nicaragua, but to the region. This happened in Venezuela and continues to happen in Venezuela. We see, now, the second act in Nicaragua. We see, now, Haiti also in a very complicated situation. And you just don't see the word leaders, even in the U.S. as worried as they should. I think, to be fair, it's not easy to solve these situations. Having said that, I do agree with my former boss and not because I need to. We both moved on, but she's an expert in this topic that there has to be a more energetic approach to Nicaragua.
The international community doesn't have many tools, but some of the tools are aid and support. The IMF and the World Bank have many programs with Nicaragua. And I think there has to be a rethinking of this aid to make sure that it's not being used by Ortega just to maintain himself in power at the expense of the people. And so, this does involve some tough trade-offs. At the end of the day, if you stop the aid, there's also the worry that is the poorest people who pay, but it has been the poorest people who have been paying in the history of Nicaragua. It's a country where you do have high income inequality, high poverty. You have some business people that are extremely rich. Some of the richest people in Central America are from Nicaragua, again, speaking of that income inequality. So it is not that what we have done as an international community has worked.
And so they need to rethink the approach. And again, Ortega is very good at playing the international community. He changes a little bit and then the international communities is like, "Oh, he's fine. He changed." He's not going to change. He revealed his type a long time ago. I remember when we were in government, it was very interesting because there was a lot of support from the U.S. to Nicaragua, even though he had a very negative rhetoric against Nicaragua. And I remember asking everyone, "What's going on?" And everyone said, "There's one thing that he says, and very different thing what he does." And the international community seem to side with him because they have a very low bar.
As soon as he gives them a cookie, let's help fight, I don't know, the drugs, the drug cartels, or let's try to do this for... Little things they would side with him. And again, I'm not saying solutions are easy, but there does seem to be approach that let's not engage because we don't know how to solve it, but he has taken advantage of that. And the outcome is, again, repression, destruction of democracy, and a country that continues to endure poverty. And with very few or clear options for a change. Again, all the opposition is now in jail.
June:
You say that Ortega is a master at changing just a little bit in order to satisfy the international community. Historically during his regime, I think Nicaragua has been seen by some governments or some international organizations as being a stable force compared to what's going on in what we call this, the Northern Triangle. Do you think that's over with this wave of repression? Do you think the international community is now no longer seeing Nicaragua as a source of stability?
Laura Alfaro:
I would like to believe that, but I don't think it will be the case. Because t's not radical, it's just this slow moving deterioration, grabbing of power. And that, I think there is a fear to make it worse. And so people just allow it to slowly deteriorate and decay. I think there's also, understandably, a fear perhaps that these will create more migration to the north. And again, dealing with this migration is not easy. It's complicated. I do think that they're trying. Let's not make this worse, feed the problem that we already have with the other countries. As I said, he had also strategic moments, help the U.S., fighting the drugs. So that they felt that he was staying stable enough not to become too much of a problem, but this is what is sad. It's that slow decay, is a slow deterioration that just gets worse.
And there's a moment that there's no going back, but I don't see this willingness to intervene. There's also this phenomenon that when complicated, bad things happen in Nicaragua, they do tend to migrate to Costa Rica and not necessarily to DUS. And so that also, at least for the international community, is a way to solve the problem that for them is more complicated, which is the migration to the north. Having said that, Costa Rica does get that migration and that doesn't get as much press internationally. Even the 2018 riots, there were some estimates of thousands and thousands of people from Nicaragua coming to Costa Rica.
June:
Are we seeing that migration again from Nicaragua to Costa Rica?
Laura Alfaro:
COVID has been very complicated. And there was a moment where they were trying to close the borders to prevent the spread of the disease. Ortega was denying the disease and doing these marches for love, spreading... But it's complicated because some of the Northern part of Costa Rica and the agriculture has been dependent on some of this migration and eventually the government did allow this flow of people. There's also a lot of central American trade, regional trade, especially in manufacturing goods. And that was also allowed so that we have trucking from Nicaragua to Panama. That also created issues in terms of the spread of the disease. As of right now, the borders are not completely closed and so this has been allowed to continue. I cannot give you statistics on how bad the spread of the disease in Nicaragua, because I couldn't find them. There's no reliable information. There's also no reliable information on the vaccination process. Costa Rica did start. It's going slower than everyone had hoped, but it is advancing.
June:
And do you have any information given that context on an increase of migration to Costa Rica because of the political situation?
Laura Alfaro:
The word on the ground is that it's happening. Nicaragua has been hit by the crisis, the same way as Costa Rica, but they're not reliable statistics in terms of this flow. Having said that, some of the political leaders that are persecuted have been trying to get out of Nicaragua and sometimes they do go Costa Rica.
June:
It seems like all the journalists are going to Costa Rica.
Laura Alfaro:
Exactly. Yes. The journalists are going there. I don't know how much.
June:
I know you're not in the government anymore, but given that you have experience in the government, do you think that the government is, or should, be helping those journalists continue to practice their profession in Costa Rica?
Laura Alfaro:
I think Costa Rica... Again, this is not simple. I don't want to convey that there are simple solutions. I mean, this is our neighbor. We do benefit when they do well and we do suffer when they don't. But I do think Costa Rica has duty to stand with human rights and democracy. Not only because I believe this is the right thing to do, but it would be hypocritical of Costa Rica also not to do it. I do think we're not a high income country, but we're a middle income country. And that has been achieved thanks to the pursuit of a democratic and stable country. We got rid of the army, Figueres got rid of the army, in 1949. And since then we have been a stable democratic country. And it would be very hard to argue that the benefits that I have enjoyed and other people from Costa Rica have enjoyed, has not been due to this respect to democratic institutions and to human rights.
And so that's why I do think we have a duty to start on the side of democracy. And thus, I think the government should be perhaps more vocal against what's going on in Nicaragua and supportive of the people who are trying to report what is going on, not just the journalist, but in general, in the opposition. And again, this is now widespread going against students and farm owners, and it is widespread this repression.
June:
It's a very sad situation. Your analogy with Animal Farm really moved me. One of the things that has struck me about this repression and the recent arrests is how many of the targets were women.
Laura Alfaro:
Yes, my former boss has been very vocal about these. Nicaragua was a country who had a woman president, even before Costa Rica and Chamorro. And the leader from the position who emerged as the most likely candidate, also a woman, but in general, there has been a lot of women leaders. And, again, in a very sad situation, at least I think it is interesting that it is women who are leading the cause, the face of the cause. This also speaks that many times the face of poverty tends to be women. And so in a country like Nicaragua, in particular. And so I do think that they're standing on principles, on a faith that there has to be something better for Nicaragua. As you mentioned, the story of this country, it is sad in this way that there was a dictator, there was some hope in a revolutionary movement. And then the revolutionary became that dictator again.
This also means that it's hard to convince perhaps the people of Nicaragua that there is a better path, that there might be a better path in democracy.9 But we do see people not giving up and trying to create that better path. They're suffering for their hope and their faith and I do think we all need to try to help. If just telling the world that this is going on and that they should care about it as well, if that is how we can help, then thank you for this interview.
June:
You're welcome. And I know that you're an economist and not a political scientist. So I really appreciate your having taken your power as a Costa Rican and a Costa Rican with government experience. But I'm wondering, looking at the situation as an economist and as a former planning minister, do you see human rights and the economy as being completely separate, or are they interwoven? How do you see that relationship?
Laura Alfaro:
Again, the case of Costa Rica is occasional. And again, I'm not saying that we're a rich country, we still have many problems in Costa Rica. We also have income inequality. We have poverty. But it is through a path embedded in democracy and respect of human rights that we have slowly improved our situation. The countries in Central America, we were not endowed with natural resources, like some countries in South America. We were not endowed with oil. We're not endowed with iron ore as Brazil. We do enjoy some advantages. Our land tends to be very productive. We have a lot of potential in solar energy, wind energy, hydro energy. So we have a lot of potential, but all these areas that we can take advantage are areas that require sustained investments. And the only way that we can have sustained investments is in a stable environment.
And that democracy has been the one that has been able to deliver that stable environment. That is the one where you do see widespread incentives for people to invest, not just few. Widespread incentives to share the gains of that investment through wages, not just some appropriate and everything. I do think, at least for Central America, these go together. Might be different in some of the countries that can explore it, some cash cow, oil or natural, but we don't have that. I usually joke that what we have is a lot of insects and biodiversity and that is also what is sad. The world is moving to a place where Central America can take advantage. You're just moving into a world that is valuing our biodiversity. Pharma. There are potential things we can kind of learn from the insects, the bio-diversity, or our plants [inaudible 00:26:31]. And as I mentioned, we are very well positioned to take advantage of green energy and the world is moving there. And there's a lot of opportunities, a lot of funding, but it has to be in a stable environment.
June:
And so would you say that Nicaragua's stability is key to Costa Rica?
Laura Alfaro:
Again, a former president of Costa Rica, Nobel prize winner Oscar Arias, in the eighties, realized it was key. People couldn't differentiate Central American countries. And so he actively moved to this peace process and he was successful. The region was successful at the time. I think Costa Rica has managed to differentiate itself. It is probably also the case of Panama. I think people when they think of Central America tend to think of perhaps the Northern countries as being different, but that is not something that we can just take for granted. If the region does become complicated, it will affect us in many ways.
As I said, the first one is migration. And so we have some time perhaps in which we can continue with our somewhat differentiated reputation, but we cannot take it for granted. The other thing we have learned is that democracy needs continued support and work. We all hoped the region got better in the nineties, and now we see what's going... This tendency towards more authoritarian regimes and Ortega becoming the Mugabe, or even the Samosa, of Nicaragua.
June:
So there are going to be elections in Nicaragua in November. Do you have any hopes for those?
Laura Alfaro:
He has cooked it. It's cooked. He has taken every institution. It's still interesting that the lengths he's going. Because, again, the previous election since this local election in 208, just signaled that even the elections were not clean. He was not allowing international observers. All of these things that we know are seen as that process is not clean and legitimate. He has put his people in the courts and so on and so forth. And even with that, he had to get rid of the opposition. That just speaks that he knows he would lose, but he has systematically created a situation that he will win. There just won't be any opposition. People are afraid. There are all these paramilitary groups that are going after anyone who's willing to say something against the regime. And so, it's hard to see a change unless the international community becomes more vocal.
June:
If you were sitting at the government table right now and giving some advice or thoughts, what do you think Costa Rica should do? What do you think the international community should do before November?
Laura Alfaro:
I think the international community should stop allowing the clock to run itself until the election and be more decisive now. I think the international community, especially the U.S., has a more open government, a more understanding government. I think there's an opportunity to talk to them. I think this needs to engage also the multilateral institutions. It shouldn't be just the U.S., it should be an international community. The IMF, the World Bank, the United Nations, they should not turn their back on Central America. This is not a story of the good is the enemy of the better. This is not good. This is really bad. And he's getting worse.
The fact that he's not exploding or that they perceive that it's not exploding is not an excuse not to act, because he did explode in 218. And we just don't have enough information. Again, the journalists have been prosecuted. Anyone willing to talk is being jailed. So the situation is worse than they think, and they should act. And they have tools. Nicaragua has received aid from the [inaudible 00:31:53] from the World Bank. I was checking, they have many programs. They need to rethink these programs. And again, this is not the better being an enemy of the good. They need to act.
June:
Thank you very much. We've been listening to Laura Alfaro. She's the Warren Alpert Professor of Business Administration at the Harvard Business School. She served as Minister of National Planning and Economic Policy in the government of Costa Rica from 2010 to 2012. Thank you very much for coming, Laura.
Laura Alfaro:
Thank you for this invitation. And I hope we chat again, in more happy times.