Coverage of ALBA in Nicaragua’s corporate media: when intellectual integrity no longer fits the bill

Saturday 20 September 2008 by CEPRID

Karla Jacobs


The opposition media in Nicaragua claim President Daniel Ortega’s government manages the multimillion dollar Venezuelan cooperation in a dishonest and fraudulent fashion. According to these media outlets the government is probably creating a secret public debt of massive proportions as a result of the commercial agreement between Venezuelan and Nicaraguan state oil companies PDVSA and Petronic. Headlines warning that the main purpose of the commercial agreement is to benefit President Ortega’s and his cronies’ bank balances are commonplace. Suggestions that the officials responsible for administering the programs financed by Venezuela are corrupt fraudsters form part of many mainstream journalists’ daily reporting. Some have gone as far as to suggest that the result of the government’s "mishandling" of what they disparagingly refer to as Venezuelan President Hugo Chavez’ "Petrodollars" will be comparable to the devastating aftermath of the CENIs scandal. (The CENIs scandal, considered the largest fraud in Nicaraguan history, involved a number of high level public officials of Arnoldo Aleman’s and Enrique Bolaños’ governments working together to bankrupt the country to their personal financial benefit).

According to Nicaraguan government officials, however, the country’s incorporation into the regional integration project ALBA (the Bolivarian Alternative for the People of Our America) and the subsequent funding made available for social, infrastructure, energy, transport and agriculture programs, has saved the country from all out economic and social collapse. Government officials and allies have described the coverage of ALBA by Nicaragua’s corporate friendly press as media terrorism. President of Petronic Francisco Lopez had this to say on the matter: "[The opposition forces] sabotage every day via the media using media terrorism to attack this noble project which offers faith and hope to impoverished people. ... The line is to reject and refuse to understand how countries can be in solidarity with us. Why do they want and demand ratification by the National Assembly? So as to have influence themselves over the management [of ALBA funds] when their record is negative." (1)

During the First Latin American Encounter Against Media Terrorism which took place in Venezuela earlier this year journalists and communications experts from across the American continent got together to discuss the "falsification" of information by corporate and transnational media companies in the region. In the Encounter’s final declaration, the Caracas Declaration, this procedure was defined as "media terrorism" which was described as "a form of constant massive aggression" aiming to undermine "people and governments working for peace, justice and inclusion."

So, do the claims by the Nicaraguan opposition media about the government mismanaging ALBA funds stand up to close scrutiny of the facts? To what extent can the anti ALBA media coverage be considered the product of media editors’ intellectual dishonesty as part of an effort to destabilize the Sandinista [FSLN] government? Do the official figures outlining the achievements of ALBA programs reflect the day to day reality experienced by ordinary Nicaraguans in terms of access to basic food products, electricity, public transport, employment and financial credit?

Among the media outlets I will refer to in this article as "opposition media" are the two main daily newspapers, La Prensa and El Nuevo Diario, a number of the most popular national TV channels including Channel 2 and 12, numerous local and national radio stations like Radio Corporation and Radio ABC Estereo, and internet news sources like www.confidencial.com.ni, www.elinformativonica.com and www.trinchera.com.ni. The editors and other influential journalistic staff of these media outlets range from social democrat to the reactionary right. Their stance on certain social issues such as the polemic therapeutic abortion ban, for example, differs considerably. They are united, however, by their apparent intent to undermine pretty much everything the FSLN government has done over the last twenty months.

Media pick and choose news items to suit their take on events

The criticism of the government’s handling of ALBA funds most often repeated is the presumed lack of transparency which, it is claimed could lead to the creation of a secret public debt: "Colossal mess with ALBA funds" (La Prensa, May 24th 2008), "Secret Public Debt, ALBA-Caruna funds create parallel budget," (El Nuevo Diario, April 4th 2008), "A Dangerous Debt Looms: Venezuelan cooperation used incorrectly" (La Prensa, June 20th 2008), "Ortega manages funds as he chooses without responding to [calls for] transparency," (www.elinformativonica.com, April 28th 2008). These are just a few examples of the sort of headlines that corporate friendly Nicaraguan media outlets choose when reporting on ALBA.

While the opposition media has proved itself very keen to emphasize what its editors perceive as confusion, mix up and dishonesty, it has not demonstrated the ability or the will to carry out the research necessary to answer the questions raised or get to the bottom of the doubts implied. Often media outlets will simply boycott or misreport events in a way that fits in with their positions. To substantiate this assertion it is worth taking a look at the way the opposition media covered Petronic President Francisco Lopez’ presentation to the National Assembly’s Economic Committee last June. After the media had imposed the idea that the PDVSA Petronic trade agreement was creating a public debt with Venezuela, a number of opposition deputies insisted that Lopez clarify the terms of the agreement between Petronic and PDVSA before the Economic Committee, which he did on June 11th.

It is likely that Lopez’ explanation to the Economic Committee was similar to the one he gave to Tortilla con Sal during an interview in July. On that occasion he described the agreement between PETRONIC and PDVSA as "a sale and supply contract. It is not a contract between governments. It is a contract between two companies. It is a simple business contract falling under the commercial law of Venezuela and the commercial regulations of Nicaragua. There is no debt of any kind. The contract itself implies no obligation of legal commitments. No guarantee is required of the Ministry of Finances or any other body of the revolutionary government of Unity and Reconciliation. It is a bilateral exchange between two businesses under whose terms and conditions the whole debt has to be paid within 90 days. ... the means of payment that Petronic or Albanisa now has with Venezuela is that 50% is paid within 90 days, 25% is paid to a legal entity defined by Venezuela, in this case the ALBA fund and 25% is paid to a Nicaraguan financial entity called Caruna, those are the choices the owner of the money, PDVSA, has decided on and that is how the matter is treated in the contract." During the same interview Lopez said "the business project has been explained to [the Economic Committee] exhaustively with documentation."

After Lopez’ presentation President of the Committee opposition deputy Francisco Aguirre said he felt satisfied with Lopez’ clarification that no public debt was being created as a result of the importation of Venezuelan oil under preferential payment conditions. El Nuevo Diario, however, claimed, on June 12th, that Lopez had actually confused things further. "Lopez did not clarify and then ran away [from journalists]" read the headline. "Now no one knows what juridical status Petronic has, what role ALBA-Caruna plays in public programs, or where private, party and state interests begin and end," read the subtitle. "[The situation represents] an enormous churned up river, where the only thing clear is that there are abundant fishing opportunities." This scathing, sarcastic discourse reads like opinion but is presented as reporting.

La Prensa, meanwhile chose to barely mention Lopez’ presentation about the PDVSA-Petronic trade agreement but ran a front page story under the headline "Kicks instead of explanations" about what the La Prensa described as Lopez and his teams’ "aggression" towards journalists when they questioned him about the "Tecnosa" case (La Prensa, June 12th). The "Tecnosa" story is the case of a contract given to a construction company Tecnosa, in which Lopez and members of his family have shares, to build a number of houses as part of a government housing project, "Houses for the People," which is funded in part by ALBA funds. The opposition media claim the contract was awarded to Tecnosa as part of a closed bidding process and is one of the mechanisms through which Lopez is personally benefitting from ALBA funded programs. In response to these media claims Lopez requested that the Comptroller General’s Office look into the case. The investigation is currently taking place. Like on the occasion mentioned above, the "Tecnosa" story often serves the opposition media as a convenient distraction to keep readers attention from the real news story. Little if any information is provided about the Comptroller investigation process, however.

ALBA Caruna also discredited by media

Since taking on the administration of funds made available from the PDVSA Petronic trade agreement Caruna, a private financial cooperative, has also received its fair share of demonization and misrepresentation in the Nicaraguan media: "ALBA Caruna, a nice little earner," La Prensa, June 20th, and "Dance of millions in ALBA Caruna," El Nuevo Diario, June 16th 2008. Weekly center right news bulletin Confidencial claimed in its edition for June 22th - 28th that "the architects of ’operation ALBA’ ... decided to channel funds through ALBA Caruna" in order to avoid "parliamentary control and audits. The antiquated micro credit institution [now administers the ALBA funds] ... allowing President Daniel Ortega to do whatever he pleases with the financial resources."

During an interview with Tortilla con Sal in July Caruna’s President Jorge Martinez spoke about the agreement it has with PDVSA and the ALBA country signatories to manage the ALBA funds in Nicaragua. "On the agreement to hold and manage money from the ALBA fund, basically what we have is an agreement to hold and administer those funds so as to place them correctly with fair, accessible interest rates that differentiate them from the conventional banking system and other financial outfits in the country."

Here is a summarized overview of Caruna’s work within the ALBA framework taken from the same interview:

"We have an agreement with PDVSA to hold and administer funds. An agreement that frees up 25% of the oil invoice traded via an oil distribution company in Nicaragua. We use that 25% to channel credit to the farming and production sectors in our country and of that, up until May this year we had placed C$440 million córdobas, a bit more than US$22 million dollars to be more exact. And we have benefited about 50,000 people in 57 cooperatives of producers, cattle farmers and small farmers throughout the country. Those C$440 million, those US$22 million, have been placed at an interest rate of 8% on the balance, with different payment dates and periods depending on the activity financed. Caruna reaches from Bilwi, or Puerto Cabezas, to Somotillo on the Honduran border with 25 branches throughout the country. As well as that we use the country’s network of cooperatives to make loans with Caruna so that credit reaches small farmers. We have alliances in Chontales through the Caja Rural de Chontales, in Nueva Guinea with the Banco de San Antonio, a cooperative, and we are working also with the Fundación El Rama. These are the remotest parts of the country. And we are about to open an agency in Bluefields in the Southern Autonomous Region where we used not to have any branches.

That is what the funds are used for, from 25% of the oil receipts. The other 25% freed up goes to the common fund of the ALBA member countries, Bolivia, Cuba, Nicaragua and Venezuela. Those countries decide how those resources are invested and we have an agreement with them to administer those funds. So it is ALBA-Caruna that manages that ALBA fund.

Both funds originate from the oil receipts but the agreements are with PDVSA, or PDVSA-Caruna to hold and administer those funds correctly. Of those funds that have been used, US$20 million has been assigned to the Streets for the people programme, that’s about C$400 million. And for improvements to public transport initially US$2 million have been assigned but that will reach US$5 million. That is to say a little more than C$100 million to modernize transport. And we are also supporting the construction project Houses for the People, with a first stage of 400 houses for a sum reckoned at US$5 million.

We have a programme of artisanal fishing for the Northern and Southern Autonomous Regions that benefits 830 artisanal fishing workers. We have a programme of cattle rearing worth US$6 million scheduled to rear 24,000 calves and benefit 1675 producers. We have a programme of agricultural inputs benefiting 8000 farmers via the distribution of urea at a fair price, Urea for the People. And in coordination with the Agriculture Ministry, MAGFOR, we have a programme to distribute seed and inputs to a total of 87,000 families in that small farmer programme.

We have a total of about 170,000 Nicaraguans benefiting directly from those funds, the ALBA fund and the ALBA-Caruna fund. Between the two we have 170,000 Nicaraguans benefiting. So that is the coverage."

As Francisco Lopez explained, the owners of the money - PDVSA and the governments of the ALBA countries - have chosen Caruna to administer, under relatively strict supervision, the funds made available as a result of a concessional commercial agreement between two companies. All of these transactions take place outside the mechanisms of central government, not by default but by design as part of ALBA’s aim to provide an alternative model based on fair trade, solidarity and complementarity.

Fears of a new internal debt disproved by ALBA management

After Lopez’ presentation to the Economic Committee the media desisted from its scaremongering about a debt with the Venezuelan authorities and began suggesting that a massive internal debt with Caruna was being created. "We owe millions of dollars to the government’s para state bank," read the front page headline of El Nuevo Diario on June 18th. "The state has acquired a new internal debt for US$29.9 million with an institution called ALBA-Caruna," read the subtitle. The day before the same newspaper had put forward some questions about ALBA Caruna’s participation within the framework of ALBA. Below I have intertwined El Nuevo Diario’s questions with extracts from Tortilla con Sal’s interview with Jorge Martinez (JM) providing answers to the questions raised.

El Nuevo Diario, June 17th: "This is where a number of questions to do with the oil agreement emerge ... who will Venezuela charge? ALBA-Caruna or the State of Nicaragua?"

JM, Tortilla con Sal, July 25th: "In the end, in the period available to pay the credit since the funds are freed in cash by agreement with the oil distributor to Caruna’s account as stipulated by PDVSA, we are the ones who are going to pay PDVSA. It is not a debt of the Nicaraguan State, nor of any institution of the Nicaraguan State."

El Nuevo Diario: "ALBA-Caruna lends money to state owned generating plants (US$29 million to Gecsa in 2007), to Central Government with the "Streets for the People" program, and other loans; ... is a new internal debt being generated as a result of these operations?"

JM: "Not at all. ... We could say that people are trying in bad faith to sell the idea that the resources freed up from the oil invoice and that we have made available to the generating and transmission system is a public debt. But really it is not a public debt because in parallel we have a contract with Union Fenosa where they recognize that all the resources handed over to the petrol companies or to the generators is on behalf of Union Fenosa.

Union Fenosa receives a subsidy from the Nicaraguan state derived from the fact that all Nicaraguans consuming less than 150 kilowatt hours a month get a subsidy. That subsidy is paid out by the Treasury Ministry to Union Fenosa. So then Union Fenosa has an agreement signed with Caruna saying that they pass that to Caruna so as to pay what was spent on generating and transmitting by Caruna. The debt relationship is that Union Fenosa owes Caruna, because Union Fenosa receives the benefit of services from ENATREL and ENEL and from its system of generation and transmission because they distribute that energy and charge for it. So then, the one responding for that debt is Union Fenosa and those critics know it and have kept quiet about it."

As for the assertion that ALBA-Caruna is lending money to Central Government as part of the Streets for the People program, Martinez explained that this program is actually carried out on a municipal level with loans being made through the Association of Nicaraguan Municipalities (AMUNIC).

Unless one believes that Martinez was making up all the information he presented in his interview (as opposition media editors perhaps would), it is fair to say that a considerable amount is being achieved with the funds made available from the PDVSA Petronic/Albanisa concessional trade agreement. Supporters of the government claim the opposition forces in Nicaragua have chosen to misunderstand and misinform the general public about this process.

Officials working within ALBA framework loth to answer hostile journalist’s questions

It is true that there are numerous details about the mechanisms through which ALBA projects operate that have not been made clear by the government and the other institutions involved. Perhaps this is in part due to the true novelty of the program being put in place (never before has a process of Latin American integration and solidarity been so far reaching and effective). The FSLN government and its allies are involved in implementing a process without precedents. At times perhaps actions are improvised and exact future measures and consequences unknown. Add to this situation the prospect of hostile journalists asking what may be considered as irrelevant questions and it is understandable if public officials and other important figures are keen to avoid talking to the press. Jorge Martinez (JM) and Caruna’s Assistant Manager Armando Chible (AC) gave the following account of their experience with the national media:

JM : Within the framework of our public relations and media relations we have developed information for national media on what we do, for example, when we open a new branch or when we hand over a new loan. The information is public.

But some media, like El Nuevo Diario or La Prensa, have come asking for information and ask questions in bad faith. We had an event in the PAEBANIC centre to talk about the agricultural cycle with 63 cooperatives and 100 leaders. We were talking about interest rates, loans, the sectors we support. And one of those journalists came up to me and said “Caruna manages the ALBA money......don’t you think that money comes from shady sources?” So when someone starts to talk like that, I have to say, “Look, excuse me I cannot discuss the matter with you because you are presupposing things that don’t exist or exist only in your imagination....”

AC : In that event we were explaining the different programmes we had with Wisconsin, ALBA-Caruna and so on.

JM : We were presenting via Datashow.

AC : So they are watching, all those news media but... they are not seeing. We put everything on the screen. But the journalists don’t see, What they see is the dark side. They see the words ALBA-Caruna and are prejudiced. So there’s good reason not to help that along when the journalist concerned is in bad faith and only wants to find something bad. They just have to see that it’s Chavez, that it’s ALBA, that it’s ALBA-Caruna and there, it’s bad.

Opposition media instigate unrealistic expectations

Another way in which the opposition media undermine the achievements of ALBA is by instigating unrealistic expectations among the general public. For example, during the national public transport strike in May, many opposition media outlets criticized the government for not freezing the oil price, as if that was within the realms of possibility for the government of one of the most impoverished countries in the continent. President Ortega’s comment, "we must take consciousness of the moment we are living," during an address to the nation at the height of the strike was astute and relevant, while the opposition media refused to take on board the profundity of the international crisis caused by constant oil price increases. On May 17th the strike came to an end after the ALBA country Presidents agreed to provide funding for a US$1.30 discount per gallon of fuel for all public transport in Nicaragua.

In a similar vein, opposition media criticisms that the FSLN government is not doing enough to combat inflation are often made without reference to the international context. For example, on June 6th internet news site Trinchera published a story under the headline "[Venezuelan] oil does not contain crisis," in which it was reported that "despite [Chavez’] promise that the [PDVSA Petronic] agreement would solve the country’s oil problems, the problem has actually got worse, ... the price of gasoline continues to rise." The article was taken from the Christian Science Monitor, a US publication, and translated into Spanish for a Nicaraguan audience. As in other ALBA member countries the opposition media enjoys taking advantage of the international financial and economic crises to portray progressive governments as incompetent.

ALBA social policy unacceptable for Latin American elites

Soon after Nicaragua’s incorporation into ALBA in April 2007 President Ortega described the regional integrationist project in the following way: "Today ALBA represents the only alternative which offers [our] peoples the chance to progress, with the conception of fair trade, with solidarity as a fundamental element, with the asymmetries or differences in our economies taken into account, so that we really can achieve growth, which, with the passage of time, permits balanced relationships allowing us to move forward together with economies that can respond to [the demands] of our societies."

These confident words have effectively been proved to be true during the last 18 months. Contrary to what the corporate Nicaragua media would have us believe, ALBA has provided incomparable financial support during the crises and tragedies Nicaragua has faced. It was because of ALBA that the Nicaraguan government was able to overcome the daily power cuts of up to twelve hours in 2007. After Hurricane Felix a category 5 storm caused devastation in Nicaragua’s north Caribbean coast in September 2007 the Venezuelan government was the first and has been the most generous donor. After a fire destroyed the livelihoods of over 1,500 small business men and women in Managua’a largest market, el Mercado Oriental, in July this year BANDES, the Venezuelan National Development Bank, provided US$3.5 million in low interest rate loans to those affected.

Francisco Lopez is of the opinion that "[ALBA’s] framework has social policy areas that are inconceivable for the Right, inconceivable for the people who sabotage this project. ... Why do [our adversaries] feel threatened? Because their methods, their policies, their neoliberal thinking has failed."

After considering the information available and the claims made by both the opposition media and the FSLN government and its allies, who you end up believing really comes down to who you think is more credible based on whatever first, second or third hand experience you have had in or to do with Nicaragua. For what it is worth here is a bit about my experience. I have lived in an impoverished rural community in the north of Nicaragua for the last five years with my husband [a campesino farmer] and our daughter. Over the last eighteen months I have witnessed results of the ALBA funded projects which the opposition media claim do not exist, disregard, or say do not have any beneficial effect.

It is true that the daily power cuts which affected the country during 2006 - 7 have been overcome almost completely. It is true that ALBA-Caruna and the Ministry of Agriculture are making accessible credit widely available for campesino farmers to grow basic food products (over half the farmers in my community were able to plant crops that way this year). I know three women who have been benefitted with the Zero Hunger Food Production bonus. The same program will be benefitting five families in the community where I live next year.

Friends of mine in two different barrios in Managua and in three different barrios in Esteli have confirmed to me that they are able to purchase the below market priced basic foods as a result of the Food for the People program. I recently saw repair work on a road in a marginalized barrio as part of the Streets for the People Program in the municipality of Sebaco where the local government is controlled by the PLC. The bus fare on public transport in Managua was still C$2.50 when I was there last week.


(1) Tortilla con sal’s exclusive interview with Francisco Lopez

Karla writes for www.tortillaconsal.com

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