IV with Nicaragua's Economic Minister

"...our economy is not an economy of banks, paper and bonds. Our economy comes from the earth.."

This interview demonstrates several key elements of the development of the FSLN government's domestic and foreign policy. Internally, Orlando Solorzano outlines his ministry's policy of dialogue, the emphasis on production and investment, the support for sectors that were most excluded by previous governments. These are policies which have left the right wing opposition, unable to match the creativity, experience and capability of the government's economic approach, without arguments.

As regards government foreign policy, Orlando Solorzano reminds us of the historic role of the Central American economic integration process in promoting peace in the region. Deriving from that reality are many crucial aspects of the Nicaraguan government's foreign policy - a policy which ensures the country has a strategic role and presence in regional development, converting Nicaragua into a decisive counterweight to the agenda mapped out by the Western Bloc countries (the US, Europe and their Pacific allies) for Central America.

Minister Orlando Solorzano began the conversation with a few remarks about the role of the Industry and Commerce Ministry (MIFIC) in Nicaragua.

Orlando Solorzano: A new Nicaragua with new opportunities for the poor is possible. We all work towards that end. We want to achieve an ideal, and it is an achievable ideal, we want to contribute as much as possible so that these objectives are fulfilled. In that sense - and because we are in love with this process - we are poets. The Finance Minister is a poet. The Industry and Commerce Minister, that's me, is a poet. All the members of the government are poets. From the President down, we are all working towards a change so that our children and grandchildren can inherit a different country. In that sense, we are all poets.

You ask me about the goals and achievements of the last few years. Well, this is the Ministry of Industry and Commerce. We promote the productive development of the country, the industrial and commercial development. And we annex social development onto that. We are working towards productive, commercial and social development. Because the end goal of everything we do is social development for the benefit of our people.

In MIFIC - that's what we call the ministry, athough sometimes people also refer to it as the Economy Ministry - we are responsible for exports, we manage the country's export system. There are laws and there is a framework of reference for export companies, and within that framework around 75% of companies, representing 60% of the country's overall exports, are registered.

This is a system of temporary admission. It is a regime that promotes exporting activity. In MIFIC we stimulate exports. We resolve problems to do with different limitations that may exist. We contribute to the search for different markets, to the search for investments. The promotion of investments is very important because one of the things that is missing in countries like ours, in developing countries, is investment capital. For that reason we work to promote investment.

Also relevant to the subject of exports is the free trade zone system which we administer. We participate in the Free Trade Zone Commission which is managed by a different executive entity - the Free Trade Zone Corporation.

Apart from that, we are the ones that carry out negotiations to do with foreign trade, international trade negotiations. We participate in the WTO [World Trade Organization]. Nicaragua is party to a network of commercial treaties and agreements starting with the Central American Economic Interests Treaty.

The strategic importance of regional integration

We also participate in the [Central American] regional integration process which is one of the oldest integration processes in the world. The Central American process began in 1960, almost at the same time as the European Union's Rome Treaty. At the time it was said that these two integration processes were the most advanced in the world - one involving developed countries and the other involving developing countries.

Unfortunately, though, we feel that the Central American integration process has fallen behind. This is due in part to external influences and in part to Central America's own dynamic, for example the conflicts that have taken place at different times - political conflicts and even military conflicts.

But, fortunately, even though now we consider those conflicts to have affected the integration process, to have prevented greater progress within the integration process, we also consider the integration process itself to have served as a tool, as an instrument with which to promote peace in Central America. It is a proven fact - the integration process has been used as an instrument of peace in Central America.

It was thanks to dialogue and to negotiation in the 80s, for example, that the war was brought to an end. There was a war of aggression in Nicaragua - an intervention. It was also thanks to dialogue and negotiation that peace agreements were reached in other countries like El Salvador and Guatemala. We reached a regional peace agreement referred to as the Esquipulas agreement. And that would not have been possible without the conception of an integration process between the Central American countries. And so integration was used as an instrument of peace.

Now we have the [Central American] integration process and we also have commercial treaties with Mexico, we have a commercial protocol with the US - CAFTA. We are coming to the end of the negotiation of a commercial agreement with Canada. We have commercial treaties with Taiwan. We also participate in the ALBA integration process - the Bolivarian Alliance for the Americas. On top of all that we are negotiating an Association Agreement with the European Union.

What is the objective, the strategy behind all these negotiations? Firstly, that Nicaragua has a range of commercial agreements and treaties that extend access to different markets. And secondly, we believe that certain commercial treaties complement the others. For example, we do not believe, as some people have said, that the Bolivarian Alliance for the Americas, ALBA, contradicts CAFTA

Naturally they are the products of two different political philosophies, but that doesn't mean that in real terms they cannot be considered to complement each other. We consider ALBA as complementary to CAFTA. And we consider the Association Agreement with the European Union as complementary of ALBA and CAFTA. We have been weaving a network of commercial treaties, association agreements and integration agreements in order to ensure access to markets and greater commercial and productive complementarity.

In the case of free trade agreements, like CAFTA, we are talking about access to markets and trade relations. In the case of Central America we are talking about an integration process. Likewise with ALBA. In terms of our relations with the rest of Latin America, we tend to move towards integration relations and not just commercial relations. And as a result we achieved access to a wide range of markets.

Internal trade

Another very important area that we manage in this ministry is internal trade. Within the institution we have the Office of Consumer Defence, the Technical Norms Office, we also represent the presidency of the National Commission of Norms and the National Commission of Measurements - which is very important because it allows us to determine the quality of our products, the norms our products should comply with in order to be able to reach the international market.

On top of this we are strengthening the organization of our internal market. All over the world the organization of internal markets exists, in European countries, in Asian countries as well. In Nicaragua we have had quite a disorganized internal market and we are working towards improving on that. We want to articulate the market better with more communication with producers, merchants and consumers. The effect of this policy is to suppress certain inconsistencies that affect the fluidity of the market. We have good relations with the private sector, with big, medium and small business. All these sectors are contributing to the well-being of the country.

Among the government's policies is the policy to establish trust between investors, producers and the government. Thanks to the trust that has been created and to the government's policies in general, we have been able to oversee a major increase in production. In terms of agricultural production, for example, we are able to confirm that production increased by approximately 5% last year. This year, despite the drought, which badly affected us, production of the main agricultural products increased.

We have overseen an increase in the production of rice, in the production of beans, corn, different sorts of cooking oils and of other basic food stuffs. In fact, Nicaragua is positioning itself as the main exporter of agricultural products to Central America. That is very important because in today's world we are not only confronted by an environmental crisis, by climate change, but by a food crisis. Within that context Nicaragua's position is very important because we are big producers and we have great agricultural potential.

We also have a strategic position for our commercial activities. Nicaragua has coasts on both the Atlantic and the Pacific Oceans. Nicaragua is part of the Central American isthmus with a very good position in terms of accessing important markets, for example the US market via CAFTA. This is one of the elements that we consider as part of our programs aimed at attracting investment.

Of course the internal market is relatively small because we are a small country. But we are part of a process of regional integration, we have free trade agreements with Mexico and the US, with ALBA in the South, and with other Latin American countries as well, we are participating also in the so called Pacific Arch, and in an association agreement with Europe. That is the basis of the strategy that we are following.

Production and markets

We have access to markets, we are attractive to investors, but there is a weakness and that is that our production levels are still not as high as they should be, neither in terms of volume nor in terms of diversity, in order to maintain the country's long term economic development. So what we need to do now is to increase production. And we have the potential.

We have great human potential, great potential in terms of natural resources and we have markets. Nicaragua can think of itself as a port for as much as we can produce, mainly agro-industrial products, to cover markets in third countries. As a result we have avoided the tendency towards one foreign market. The US market receives about 30% of Nicaragua's exports. Central America also receives around 30% of our exports.

Some years the Central American market is more important than the US market. Other years it is the US market that is more important. The importance of each market varies from year to year depending on the prices of the products we are exporting.

With ALBA we have opened new markets. Now a significant proportion of our exports go to Venezuela. Nicaraguan exports to Venezuela have been increasing rapidly to the extent that last year I think 8% of total exports went to Venezuela and this year as much as 15% of Nicaraguan exports will go to Venezuela. That represents a rapid increase.

Our exports were affected by the international crisis, a financial and economic crisis, but not to the extent other countries were affected. Perhaps this is because our exports are mainly food products. And because our economy is not an economy of banks, paper and bonds. Our economy comes from the earth, it is an economy based on agricultural production, on coffee, sugar, and on other foods like grains, meat, cattle, milk, cheese. Perhaps this has meant that the crisis has not affected Nicaragua as much as it has affected other countries.

Here, in Nicaragua, we are working to improve production. We believe that one of the main problems or limitations that this country has had is regarding organization. We are strengthening the organization of the cooperatives, of the MIPYMES (micro, small and medium businesses). We have a special program involving financial assistance for the MIPYMES.

We think that our small and medium sized companies could have greater access to international markets. And some are already exporting, mainly crafts and other products produced by Pymes for example hammocks and coffee.

Now [the international market] differentiates between different types of coffee, and in Nicaragua we are talking about high quality coffee produced by small farmers. In both cases - coffee and hammocks - the producers communicate directly with the international market. It's surprising to see how in places so far from the capital producers are able to connect to the Internet and connect themselves to the international market. That is how they have been able to take advantage of opportunities that have arisen.

Our strategy is to move towards greater organization and towards territorialization - we are going to divide the country into territories. It would not be appropriate to concentrate all our capacity in Managua because the greatest need is located outside Managua. That is why last year we opened different offices in the main towns of Nicaragua's departments. We created CAPYMEs - Support centers for PYMEs. They work together with the local governments providing support and offering the services that, here in Managua, MIFIC provides. That way we aim to provide different services to producers outside the capital. We have opened twelve offices in different towns and we are going to organize another four in four further towns for a total of 16 offices.

The legacy of neoliberalism

With regard to the neo liberal model, we believe that we are overcoming the 16 years that came after the revolution in the 80s. Much of our efforts in the 80s were destroyed in the 90s and the first few years of this decade. For example, towards the end of the 1980s [the FSLN government] was preparing for the construction of a deep water port on the Atlantic Coast - everything was ready, the machinery was there, the cement had been bought, the plans were finalized, the dredgers were there. But when we came to government again in 2007 all that had disappeared. It didn't exist any more. We have to start all over again.

There were also State owned farms, big milk and cheese producers with first class cattle imported from different parts of the world - in Chiltepe, that was an enormous project. That disappeared as well. In the Valley of Sbaco there was an agro-industrial plant. That also disappeared. The July Victory Sugar Processing Plant - one of the most modern in Central America - that also disappeared. The railway system, which wasn't new, it was outdated - but it existed! - that also disappeared. Even the railway tracks disappeared.

So, we had big projects that we had worked on, that we had carried out, that we had great hopes in, but which disappeared. Why? Because during those 16 years of neo-liberalism the logic was that the State should not have anything to do with those projects. That the State should not act. That the State was nothing more than a vehicle for laissez faire, laissez passer - a shopkeeper waiting quietly in the corner of a store while the client looks for what he wants.

We, on the other hand, have a different philosophy. We believe that the State in small developing countries like Nicaragua is a very important promoter of the country's development. The State is not a shopkeeper showing clients around his store. No. The State goes out to look for clients and establishes inclusive economic and social programs in different territories to promote development.

We believe in a proactive State, a revolutionary State - why revolutionary? Because from our point of view we are making changes that the country needs to reduce the limitations that get in the way of social and economic development. And we are carrying out those changes gradually, as is necessary, but without losing from sight the final objective. And because we are carrying out those changes with the full participation of all the productive sectors, with a special emphasis on the smallest sectors. This is taking place within the model of Citizen Participation.

Citizen Power

In Nicaragua, historically citizens did not even participate even in elections. Historically citizen participation was very low. Today we do not think that participation should begin and end at election time, because that is so limited, it is limited to participating once every time there is going to be a new government. We believe that participation should be a daily event. It should be continuous. We are organizing Production Councils in the different territories, in the different cities, in the different towns. These Production Councils are designed to move society's capacity towards production.

Because the Revolution has forces that, generally, are not detected by macro-economic indicators in the same way that macro economic indicators do not detect the reality of the poorest sectors of society. Everything is reduced to the GDP in each country, divided by the number of inhabitants to calculate the per capita GDP. In the same way that these indicators fail to detect the social reality behind a very low per capita GDP of US$1,000 a year, they also fail to detect the instruments that the country can use, that the people can use for their own development. And there are instruments that can be used.

Consumers are not just consumers. Neo-liberalism sees consumers as a mass, a mass of nothing more than consumers. But organized consumers with the mentality of producers - that is not registered by any of the indicators. We want to awake our society's productive capacity in different sectors of society and within different productive activities - social capacity, social organization to stimulate production. We call these the Production Councils [which function within the] Citizen Power model which is the direct participation of the people, of these organizations, in the struggle for the social and economic well being of their country. We want to analyse and focus [that struggle] towards the productive capacity of the country.

Nicaragua has enormous potential. It's a country that has been blessed by God. He has given us very great, very diverse resources. Here we have the best land in the world for agricultural production, we have mines, we have water, we have coasts on both oceans, we have large, beautiful lakes. Our two big lakes together cover about 10,000 sq. kms. We can cultivate fish in those lakes and also fish in both oceans. We have a good strategic position and we have a marvellous climate. Our people are specialists in agriculture. Our workers are very efficient.

So, if we have all that potential, what is missing? What is missing is capital. So here what we are doing is awakening social capacity for production and looking for capital in order to be able to develop our agricultural production and our industrial production.

Tortilla con Sal: How important, in this context, are the visits, for example, by Sergei Lavrov, the Russian Foreign Minister, and by other top level officials?

OS: Very important. We are negotiating different productive projects with Russia. The inter-oceanic channel has been mentioned, for example. A huge irrigation project for the Pacific part of the country has been mentioned. And when we talk about channels, or irrigation systems, or other projects, we are not excluding other countries. We have relations we many different countries of the world. Visits from people like Lavrov, the Russian Foreign Minister, and from other people that have come here to strengthen our relations, to improve the capacity in our markets, and to attract investment with big projects which could be a public investment or it could be private - these sorts of visits are very important.

Environment and labour rights

TcS: How do you see the possible conflict between the arrival of these big investments and the need to protect the environment? For example, recently the possibility of opening a mine near the famous San Albino mine close to Quilal was mentioned. Concerns regarding mining company investments are always to do with the environmental impact. Is this a subject that concerns you?

OS: Yes we are concerned about that issue. In Nicaragua there are environmental laws. And there is an Environment Ministry that is responsible for implementing those laws. It is a strong Ministry, and it is rigid in the application of the law. All projects have to comply by the environmental prerequisites - whether it be a channel, an irrigation project or a tannery.

Not long ago the Environment Ministry, MARENA, shut down a tannery in Granada. Now they are thinking about reopening but under strict environmental conditions because they are situated close to the town of Granada which is on the shore of Lake Nicaragua. We are protecting the lake, because the lake is a source of fresh water in a world of water shortages. And we have this important reservoir.

So investments and the environment must coexist. For us [protecting the environment] is very important because it is the security of our future generations that is at stake. In the case of mines or of any other kind of investments we work to protect both the environment and also labour rights. Nicaragua is lucky to have efficient workers and, of course, labour rights must be respected. And we have commitments in this regard with international conventions, as part of free trade agreements and as part of other agreements we are negotiating - and ,of course, as part of the government's philosophy on fair pay.

Talking about justice, we argue for production that takes into account the Citizen Power Councils and we talk about fair prices for producers and fair prices for consumers. It is not just a slogan. Effectively, within the relations that we have established and that we engage in continuously with all the different productive sectors - here in the Ministry we meet everyday with different productive entities, with small, medium and large representatives of the private sector - we use different tools which allow us to follow a policy of fair prices for the producer, tools derived from our foreign trade policy, for example.

Dialogue

We do not have a price fixing tool, because we do not believe that that would resolve problems in the long term, but we do have tools like policy management and dialogue. Dialogue is an important tool. When we engage in dialogue with the producers, for example, we analyse the specific situation of the line of produce they work in, where the weaknesses are, what different sectors can contribute, what the private sector can contribute, what the government can contribute. In that way we reach a consensus about what we can do this year, what our objectives are and what we can all contribute towards fulfilling those objectives. We hold periodic meetings with different productive sectors.

TcS: Does this system of dialogue form part of the structure of Citizen Power?

OS: It is part of the structure of Citizen Power. I don't know if everyone refers to it in that way. We call it Citizen Power. But I don't know. We hold meetings and implement policies of support without taking into account the political philosophy of the producers concerned. So those who want to refer to this system as Citizen Power do so, because that is the name of our model. But it could be referred to as concertation - a private public concertation.

In reality, it is an articulation taking into account the concrete tasks that should be carried out in different productive sectors, in different productive activities. For example, we meet with the rice producers, with exporters of beans, with producers of milk and cheese, with small shoe manufacturers, with small bakers, with clothes manufacturers. We meet with cattle farmers, with the slaughterhouse industry, with representatives of the meat processers. And with each different sector we arrive at a consensus. We take decisions about what we are going to do this year. For example with vegetable producers. This year we have been very active because we want this year to be an extraordinary year in terms of production on all levels.

This government's policy is to promote production because we are working towards not just food security but also towards what we call food sovereignty. We are working towards producing all our own food. And we have the potential to do it. The aim is that this country be self sufficient in terms of food supply, and where possible to export excess to other countries. We also look to export because we do not envisage an isolated country. We envisage a country participating in open international trade. Nicaragua is one of the most open countries in the world in terms of international trade.

Regional relations

TcS: What level of coordination exists between you and your regional colleagues? Do you enjoy good relations with Honduras and Panama, for example, despite existing differences?

OS: We always have done so and now that we are in government we have much more reason to do so. Perhaps you will remember that in the 80s there was a war in Nicaragua, and also in El Salvador and in Guatemala. And yet the Economy Ministers met to talk about integration and about how we could take advantage of the opportunities that unity offered us.

So on the one hand there was war and severe political and military tension between us, but on the other an integration process which, like I explained at the beginning of the interview, we used as an instrument of peace. So, yes there are political differences with our [Central American] colleagues but we maintain relations with all the different Economy Ministries.

Not long ago the Panamanian Economy Minister visited me here because they had requested formal participation in the negotiation with the European Union.

In terms of Honduras, well, we do not recognize the current Honduras government. Different institutions and entities including the SICA Presidential Council, the OAS, the Ro Group and in Europe, the European Union and European Commission, have passed resolutions stating that they will not recognize any government derived from the coup d'etat that took place in Honduras last year.

That is what has been resolved in those forums and so we have to wait to see how these forums take it from here. We are not going to fail to comply with decisions taken by the Presidential Council. Here, in Managua, both the ALBA countries and the SICA Presidential Council met and took decisions [regarding Honduras]. So if those decisions were made by the Presidents then we must wait until the Presidents meet and evaluate those decisions. We can't go ahead and change those decisions.

But what we can do - and this is a very important contribution that President Daniel Ortega made not long ago - is to keep the economic and commercial dynamic separate from the political dynamic. We are part of a regional integration process, we are in negotiations with Europe. And, although we cannot recognize the new Honduran government on a political level until the Presidents take that relevant decision, we can continue to coordinate general positions and negotiate economic and commercial issues with Europe. Recent political events do not have to affect the region's economy or regional commerce. President Ortega clearly established that the dynamics should be treated separately, that we should not allow the political situation to affect the economy, trade or business in general.

TcS: In terms of regional trade that is encouraging ...

OS: It is very encouraging for the region and, what is more, I believe that it is good news for the negotiation with Europe because they were concerned about what would happen if the Central American countries didn't recognize the Honduran government - a government derived from a coup d'etat.

So, it is clear that what happens depends on the decision to be taken by the Presidents. The different Central American Economic Ministers are disciplined. If there is a presidential resolution that orders a certain position, then we stand by that position. If that position is changed, then we comply by that modification. But we cannot act without a Presidential resolution. We cannot pursue a change that has not been determined at the highest executive level.

TcS: Is it possible to say, therefore, that the decision to continue negotiations regarding the economic aspects of the Association Agreement with the European Union is dependent on a decision at the highest level?

OS: It depends on the final definition of political relations, because in economic terms the decision has already been taken. Our President has been very clear, Nicaragua's position has already been defined by the President. We cannot allow political phenomena to affect the regional integration process, to affect trade within the region and between the region and the rest of the world.

This position is more than justified, and it is not a new position for Nicaragua which opted for the same position during the Revolution in the 1980s. At that time there was a war, and at the same time there was an economic and commercial integration process which was used as an instrument of peace.

So we did that in the 1980s and we are doing the same thing again now in the 21st century. It is a logical position which avoids undesired political influences contaminating commercial and economic activity.

Zero Usury

TcS: Many US economic analysts have been predicting that employment levels in the US will not recover until 2015 or even 2017. That implies that the level of consumption in the US will remain low. If these predictions turn out to be accurate, to what extent will that external situation affect the development of MIFIC's policies here in Nicaragua?

OS: Naturally a low level of consumption in the US affects the level of our exports to a certain extent. That's the way it works. If and when the US economy is reactivated then our exports to the US market will increase.

What we are doing here in Nicaragua, first of all, is strengthening our internal market. Our internal market has been suppressed by poverty, by the low income levels of our population. But as the population's income increases the internal market is immediately stimulated. So what we are trying to do is to reactivate our internal market.

We oversee a number of very important programs designed to reactivate production. Perhaps you have heard of the program Zero Usury which is administered by this ministry. This program involves 77,000 women, representatives of 77,000 small businesses. For a country like Nicaragua with a population of 5.5 million inhabitants, 77,000 is a significant number of small businesses.

In this program low interest rate credits are provided. And those benefited with credit take part in a training program before they access the money. Every single women benefited (and only women are benefited by this program) spend two days here in seminars learning about small business.

They learn what income and expenditure are, what the main daily accounts are. They learn about profit margins and about the objective of their credit - to set up a business, to make that business viable and to allow the original loan to be paid back. These concepts have been passed on to the 77,000 women benefited by the program. And this year the training workshops which are provided with the support of INATEC [the National Technological Institute] are going to continue.

Since September 2007 this popular school of small business has trained 77,000 women. I don't know if there is another school in the world that has trained the owners of 77,000 small businesses in the basic concepts of business in such a short time.

And what has all this achieved? That the beneficiaries of the project are able to make better use of their resources, that they understand the importance of paying back the loan, in part so that they have the option of taking out another loan and gradually allowing their business to grow. It means that the default rate on the loans is low. In fact it is lower than the default of private financing entities.

And the entire program takes place within a mechanism of solidarity. Groups of five to ten women commit to covering their companions loan's should one default. And that mechanism is used instead of guarantees in this program. So the women benefited don't have to mortgage their house. The guarantee is a social one. The guarantee is the commitment of the groups involved. If one woman doesn't pay back the loan, she does not have access to further loans - and neither do any of the other women in their group. And of course that creates social pressure which helps encourage people to keep up to date with their payments. And as a result the program has a very low default rate.

So what is all this about? This is about strengthening small production and the internal market.

And simultaneously we are strengthening the regional market by converting Nicaragua into a big exporter, mainly of agricultural produce. Nicaragua is becoming Central America's main supplier of meat, grains, beans. We are the main exporter of cheese and other dairy products in Central America.

Another thing we are doing is opening new markets - with Venezuela, for example, and with the other ALBA countries. We are participating in the negotiation of a commercial agreement called the People's Trade Agreement with the other ALBA countries in order to access these markets.

Now 8% of our total exports go to Venezuela when just a couple of years ago we hardly exported a thing to the country. And, if we comply by the production and exportation program outlined with Venezuela, we should be exporting approximately 15% of total exports to Venezuela this year. That is similar to the proportion of our exports that goes to the European Union.

SUCRE and ALBA

TcS: One detail, Minister - do you believe that the SUCRE will help to encourage inter-regional trade?

OS: Definitely. This program isn't based on magic, it is based on method, it is scientific. The SUCRE is a system, a chamber of compensation payments. The SUCRE begins life as a chamber of compensation payments where countries make mutual loans to each other calculated according to the level of trade. The trade is carried out. And afterwards any outstanding balance between the countries is paid.

But this project is not just commercial. The commercial aspect goes alongside programs to increase levels of production and exports in the countries with weaker economies in order to ensure sufficient levels of imports to make it possible to use the payment mechanisms. If it weren't for that aspect of the project, it would not be possible for the mutual loans to cover the cost of the commercial exchange between countries - there would be a structural problem.

So, simultaneous with the SUCRE, [within ALBA] we are promoting investment in countries with lower levels of development like Nicaragua. That is why there are Venezuelan investments here. That is why the construction of a petroleum refinery is possible in Nicaragua. That is why we are able to guarantee low interest loans for agricultural production in this country.

Nicaragua has access to markets. We have increasing access to markets with the Free Trade Agreements. Our weakness is in production. We have enormous potential. It doesn't sound logical - if there is great potential for production, then why don't we produce enough to fulfill export objectives? What is missing? What is missing in Nicaragua is capital.

Because we have workers, we have some of the most efficient and capable agricultural producers is the world. In Nicaragua there are no agricultural subsidies. Here the agricultural sector fends for itself. In fact it does more than that - it sustains the rest of the economy. Not like in other parts of the world where the rest of the economy subsidizes and sustains the agricultural sector. That is why we are against agricultural subsidies - we know that we can compete with the rest of the world. We are poor but we are very efficient - with our meat, our milk, our rice, our beans, our sugar.

And we produce certain industrially processed products that are among the best in the world. For example the rum that we produce, we believe it to be the best in the world. We produce tobacco, cigars that are also the best in the world. We produce coffee - Nicaragua's quality coffee is among the best in the world. We also have the world's best cocoa. And we have more than enough land to produce and to export. So we need to make an extraordinary effort to stimulate production in order to take advantage of the markets available to us.

Going back to the SUCRE. It is not magic. The SUCRE is a mechanism that has already been tried and tested in Central America. Remember that I explained at the beginning of the interview that one of the first and most advanced integration processes took place in Central America.

The first multilateral Central American Treaty, emerged in 1958, around the same time as the Rome Treaty. And as part of that treaty, in December 1960, the General Treaty of Economic Integration and an agreement between the Central Banks to establish the Central American Compensation Chamber were signed. In other words we are experienced in the reality of compensation payment systems.

So when we talk about the SUCRE, it is not something new. Perhaps it is a strange concept for certain people, but older people like myself who have been working in this field for a long time have the certainty that this sort of system is perfectly viable. It is a perfectly viable compensation payments mechanism which is just beginning to operate.

And if, in the long term, we are going to develop this sort of trade [within ALBA] we need to strengthen production in the countries that are economically weaker in order to avoid imbalances. This contributes to equality among countries. In other words ALBA functions based on the principles of solidarity and equality between countries.

ENDS

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