NICARAGUAN REGIONAL REPORTING--SOCIAL AND ECONOMIC

UNCLAS MANAGUA 000222 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR WHA/CEN E.O. 12958: N/A TAGS: SOCI ELAB ECON EFIN KIRF SMIG NU SUBJECT: NICARAGUAN REGIONAL REPORTING--SOCIAL AND ECONOMIC ISSUES: CARAZO REF: MANAGUA 221 ¶1. (SBU) During a January 26 election reporting trip to the department of Carazo, just south and east of Managua (reftel),emboffs discussed a range of economic, social, and religious issues with local leaders. Businessmen Aquiles Jaenz, Edgard Bermudez, and Ramon Conrado, the President, Secretary, and Treasurer, respectively, of the Carazo Chamber of Commerce, provided an overview of departmental economy. They stated that even when Carazo's economic development peaked in the 1970s, it still had a serious unemployment problem. The local economy has never recovered from the ravages of 1980s Sandinista mismanagement, and now unemployment is much worse. Although there are no exact figures, the Chamber estimates at least 30 percent unemployment in Carazo, as well as widespread underemployment. This average conceals wide variations, as the mayor of the small municipality of La Conquista told emboffs that at least 75 to 80 percent of the people in his town are jobless. ECONOMY BASED ON SUBSISTENCE AGRICULTURE, GOVERNMENT JOBS, AND A HANDFUL OF FACTORIES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶2. (SBU) According to the Chamber, subsistence agriculture is the primary economic activity in the region, and, of the small quantity of agricultural goods that are produced for sale, few go beyond the department. Little of the former coffee industry remains in Carazo, and returns on ranching have declined markedly. Other local leaders complained of the "unreliable" prices paid for those agricultural products that are exported, including sugar and rum, and called for the creation of a national development bank that would help producers to expand production and produce better quality goods for international markets. For now, the only industry is provided by a single plastics factory and a few recently-arrived free trade zone (FTZ) textile factories; the latter have slightly improved the unemployment numbers. What remains of the economy is service oriented, in the form of jobs in government, health, and schools, all of which depend on the GON budget. Aside from the arrival of the FTZ factories, the only real growth in recent years has been in the informal sector. LOCAL CHAMBER OF COMMERCE WELCOMES CAFTA, BUT COMPLAINS OF POOR GON COORDINATION AND PLANNING - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶3. (SBU) The Chamber leaders complained that local and national developmental strategies are rarely coordinated, and stated that local business feels neglected by both the GON and the national business council, which they said ignores departmental concerns and really only represents Managua. While Managua enjoys national and international business interests, virtually all business in Carazo is local. The Carazo Chamber welcomed the passage of CAFTA, but feared that without a coherent development strategy, Carazo would draw little benefit from it. Most businesses in the department are small and family owned, and there are widespread fears that free trade could lead to the arrival of larger companies that would put the local enterprises out of business. ¶4. (SBU) The Chamber leaders suggested that the GON should help to promote development strategies to enable individual towns or departments to develop a sort of "cottage industry" whereby a whole town or region would produce specialized items for collective export as a way of taking greater advantage of CAFTA. Carazo needed more than just textile factories, they opined. Along with many other local leaders, the Chamber noted that the depressed economic situation in Carazo has led to large scale emigration, primarily to Costa Rica, given the proximity of the border, but also to the United States and elsewhere. Much of the population that remains now gets by on remittances sent home from family members abroad. CATHOLIC CHURCH CONCERNED ON ECONOMIC PROBLEMS, MIGRATION, EVANGELICAL COMPETITION - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶5. (SBU) While in Carazo, emboffs also met Father Rafael Bermudez, the top Catholic Church official for the department. Bermudez stated that his parishioners are primarily interested in assistance with their many (mostly economic) problems, and that they feel little help from Managua is forthcoming. He believed that the number of people leaving the department to seek opportunities elsewhere is increasing. Bermudez regretted that some of those seeking solutions are turning to the evangelical churches, which he described as providing them little more than "therapy." He was reluctant to admit that the number of evangelicals is growing, and insisted that the Catholic Church is "holding its own" in Carazo. TRIVELLI