The political economies of Nicaragua and El Salvador, along with those of every other Central American country, are undergoing remarkable metamorphoses as the region is swept by globalization. A new cycle of capitalist expansion and modernization appears to be underway on the basis of a novel set of economic activities introduced in the aftermath of the 1980s wars for national liberation. Drawing the region into globalization are maquiladora assembly production, tourism and hospitality, non-traditional agricultural exports (NTAEs) and remittances from abroad.
Globalization represents a new and distinct transnational phase in the history of the world capitalist system. To understand how globalization emerged in Nicaragua and El Salvador it helps to cast a deeply historic net. The 500-year history of world capitalism can be divided into four broad epochs: mercantile, classical competitive, multinational corporate and now globalization. All of these epochs involved a re-articulation of Central America to the global economic system, causing the transformation of social forces and the restructuring of economies, classes, states and power blocs.
The mercantile epoch entailed a colonial insertion based on the supply of labor and raw materials to neighboring colonies from conquest to the mid-1880s. The next epoch, classical capitalism, centered on coffee and bananas until the economic crisis of the 1930s. Following World War II began the third cycle, multinational corporate capitalism, which rested on the expansion of the agro-export sector. The large-scale introduction or extension of beef, cotton and sugar alongside traditional coffee and banana production marked this period. With this cycle also came the promotion and protection of infant domestic industries through import substitution industrialization and the Central American Common Market (CACM). The massive dislocations caused by rapid capitalist development during this cycle spawned the coming social and political conflagrations. And, finally, the present epoch of globalization began in the 1980s as Central America embarked on a new re-articulation to the world economy.
As the regional conflict unfolded in the 1970s and 1980s, superficially it seemed a bipolar contest between the old oligarchies and the popular revolutionary movements. But globalizing dynamics allowed transnational elites among dominant groups to cohere by the 1980s into a neoliberal “New Right,” acquiring its own political and economic protagonism. Its prospects for continuing to accumulate wealth and privilege depended on converting the region into a new export platform, rather than restoring the traditional agro-exports and industries of previous social and political arrangements. It sought, for example, to submit backward oligarchic property relations to capitalist modernization through a program of neoliberal restructuring and a new “competitive” insertion into the global economy.
This does not, however, negate that the revolutionary movements in Nicaragua and El Salvador succeeded in breaking the hegemony of the landed oligarchy, rich industrialists and financial groups that came into existence within the CACM. But due to a complex confluence of factors, these movements were unable to implement and stabilize their project of a radical redistributive and socialist-oriented reconstruction of the region. One principal obstruction was massive U.S. intervention. A second was the weaknesses internal to the revolutionary project itself. A third was the changing nature of the dominant classes and their renovated political-ideological project. These factors are not unrelated; they are different dimensions of a process whose structural determinacy was the emergence of the global economy.
The emergence of the neoliberal New Right in the 1980s in Nicaragua and El Salvador was thus, in part, a very result of the revolutionary upsurge, which altered the dominant power blocs in each country. The outcome of the social upheaval was the displacement of the old oligarchy, the conditional defeat of the broad popular sectors and the conditional victory of the new dominant groups. This political outcome paved the way for the transnational model to take hold. The transnational nuclei among local elites vied for, and achieved, hegemony among their own groups in the 1980s, and went on in the 1990s to assume state power and implement the neoliberal program.
Global capitalism arrived in Nicaragua with a vengeance in the 1990s. The transnational processes that have transformed economies, class structures, politics, and social and cultural institutions throughout Central America undoubtedly left their mark on Nicaragua. But these processes unfolded uniquely there, because of the popular social revolution following the overthrow of the Anastasio Somoza regime in July 1979.
The Sandinista revolutionary forces constructed a viable counter-hegemony to the Somoza dictator ship. But they fell short of consolidating and sustaining a social revolution out of the initial political opening, an impossible feat amid the combined structural constraints of globalization and U.S. policy. The project collapsed owing to a host of internal and external, subjective and objective factors. Among them, a flawed model of revolutionary, participatory, popular democracy instanced by the subordination of civil society to the state and “vanguardist” Sandinista abuses of power. Irrespective of the shortcomings of the Sandinista’s revolutionary democracy, the project was not viable due to global structural factors.
The structural power of transnational capital converged with the vastly superior direct U.S. state power in the application of a massive destabilization campaign and complex interventionist strategies. The goal was to disintegrate Nicaragua’s external linkages and undermine its internal cohesion so as to make a popular alternative to a polyarchic political system—rule by a small group of elites in tightly controlled electoral processes—and free market capitalism unfeasible.
The United States launched a massive counterrevolutionary campaign that devastated an already war-torn and exhausted population. The spearhead of the U.S. campaign consisted of the organization, training, supply, command and logistical support for a counterrevolutionary military force that grew to over 20,000 troops. The “Contra” war lasted throughout the 1980s, but in the second half of the decade U.S. strategy shifted. At first, it had depended on an externally based counterrevolution for a military overthrow of the Sandinistas and an authoritarian restoration. But later, new forms of political intervention under a rubric of “democracy promotion” proved most successful, largely through support of a domestic “moderate” opposition.
The opposition, organized and trained through large-scale U.S. political aid programs, operated through peaceful means in civil society to undermine Sandinista hegemony. The efforts of the opposition paid-off with the 1990 electoral defeat of the Sandinistas and the consequent restoration of elites in a polyarchic political system. After the elections, a coalition led by the transnationalized New Right nucleus took over the state, particularly such key ministries as Finance, Economy and Development, the Central Bank, Foreign Affairs and the highly centralized executive itself. Many prominent members of this nucleus were technocrats trained at Harvard or other elite global universities who had developed transnational ties at their previous posts in institutions such as the World Bank and the Inter-American Development Bank (IDB). This New Right represented the Nicaraguan variant of the Chilean “Chicago Boys” that quietly advanced the neoliberal agenda.
Following the 1990 elections, Washington approved a two-year $541 million assistance package, including approximately $25 million in political aid channeled through the U.S. Agency for International Development (USAID) and the National Endowment for Democracy. The USAID program in Nicaragua was the largest in the world, making the transformation of the state following the elections practically immediate. A 1991 USAID Strategy Statement laid out in no uncertain terms the magnitude of the transnational strategy for Nicaragua: “The strategy presented in this document is an extremely ambitious one. It is difficult to overemphasize the degree of change in the Nicaraguan economy and Nicaraguan society which it envisions.” The Strategy Statement was a remarkable blueprint for the construction of a neoliberal republic. It detailed a comprehensive program for restructuring every aspect of the country to suit the economic power that actors of the global economy would be able to wield over the shattered republic.
The ideological dimensions of this counterrevolution contained two objectives. The first involved rooting out any vestige of Sandinista influence and incorporating into a new historic bloc the Nicaraguan masses, whose consciousness and “daily practices” acquired in ten years of revolution were problematic. The other objective, which proved even more difficult and elusive, was instilling a polyarchic political culture among the elite as an important component of reconfiguring a domestic bourgeoisie.
The development of a polyarchic political culture among the elite and the legitimization of a neoliberal social order among the population were crucial counterparts in eroding the revolution’s value system. One example of this political-ideological endeavor was the penetration and restructuring of the education system because of its importance as an institution of ideological reproduction. USAID allocated $12.5 million to replace public school textbooks developed under the Sandinista government. The new “depoliticized” textbooks began with the “Ten Commandments of God’s Law,” referred to divorce as a “disgrace” and to abortion as “murder,” and stressed the importance of “obedience to parents and legitimate authorities.” Text on world history asserted that all U.S. interventions were carried out to bring “peace and stability” to countries around the world. USAID Nicaragua director Janet Ballantyne even stated that the textbooks would help “reestablish the civics and morals lacking in the last eleven years.”
U.S. encroachment was of course not limited to the classroom. U.S. agencies continued funding political aid programs to assist anti-Sandinista groups. The objective was to move towards a depoliticization of the population, to eclipse the more militant grassroots social movements and to incorporate key sectors into an emergent bloc under the hegemony of a reconstituted private sector. Meanwhile, U.S. economic aid went to bolster the debilitated private sector, for balance-of-payments assistance, and to pay debt arrears to the World Bank and the International Monetary Fund (IMF). USAID made disbursal of all assistance dependent on stringent conditions vis-à-vis the government’s social and economic policies.
Complicating this bleak scenario was the crisis and transformation of the left. The Sandinista grassroots still engaged in sustained resistance to the counterrevolutionary program in the early 1990s, but a new Sandinista elite formed among those who had acquired substantial properties during the 1990 regime change. New Sandinista landlords and entrepreneurs began to develop an affinity of class interests with the bourgeoisie, especially with transnational factions clustered around commercial and financial sectors.
This new Sandinista elite gradually went from leading the popular classes in their resistance to the counterrevolutionary program to utilizing the party’s dwindling authority to contain and control their mobilization. The masses became a manipulable bargaining chip: mobilized to protest when the Sandinista elite needed pressure on the government and the non-Sandinista elite; and demobilized, contained and pacified when such protest actually threatened the Sandinista elite’s own place in the new order. In fact, new Sandinista economic groups developed close business and personal ties with transnationally-oriented New Right capitalist groups. In this regard, what took place in Nicaragua, more than in any other Central American country, was a circulation of elites, made possible (or unblocked), ironically, by the revolution.
In El Salvador, the transition to global capitalism also occurred in the context of a war for national liberation. A massive popular movement burgeoned in the 1970s and combined with a guerrilla movement to snowball by the early 1980s into a full-scale insurgency. Although the Farabundo Martí National Liberation Front’s (FMLN) forces came to threaten state power, the U.S.-led counterinsurgency staved off a triumph similar to what had taken place in Nicaragua.
Behind the very visible battle between the revolutionary armed movement and the U.S.-supported dominant groups was the reorganization of the Salvadoran state and economy in accordance with the global economy. As in Nicaragua, this meant the reconfiguration of the dominant groups and the emergence of a New Right faction; in this case within the ruling party itself, the Nationalist Republican Alliance (ARENA).
The massive U.S. intervention in El Salvador involved the synchronized application of military force with political, economic and social programs, including a broad reform agenda. The intervention not only relied on a Salvadoran military trained, supplied and advised by U.S. Army Special Forces, but also, and more importantly, on a reorganized state with adequate economic and political restructuring. The thorough U.S. penetration of the Salvadoran state and society would not have been possible were it not for the revolutionary forces, because dominant groups would have never accepted U.S. tutelage had the revolutionary movement not threatened their very survival. They were forced to rely on U.S. intervention and to accept, however grudgingly, the terms and conditions that accompanied that intervention.
The task of destroying the old oligarchic political and economic structures fell to the revolutionary movement. The insurgency, therefore, enabled the overall conditions for the transition to the transnational model. Yet the same is also true of the counterinsurgency. The dialectic of revolution and counterrevolution became the agent of change and transformation. On the one hand, the counterinsur gency was a reactive movement in response to the proactive challenge of revolution. But it also became a powerful instrument of the dominant groups locally and transnationally to achieve the definitive social, political and economic restructuring of El Salvador.
U.S. intervention in El Salvador was in this sense a modernizing force. Historical accounts that characterize the intervention as an effort to sustain the old oligarchy—or those that simply dismiss the economic and political reforms as cosmetic dimensions of counterinsurgency—miss the point. Transforming the landed oligarchy and the praetorian state was just as much a part of U.S. strategy as was defeating the popular uprising. U.S. intervention sought to remove the barriers placed on the country by the state and local elites.
Between 1981 and 1992, the United States provided an imposing $6 billion in economic, military and covert aid for El Salvador with at least another $1 billion from the international financial institutions. If the immediate goal was to prevent economic collapse and to contain the insurgency, the broader objective was to integrate the country into the global economy with an entirely new composition of social forces. This included “modernizing” the outlook of the country’s economic and political elite, promoting neoliberal reform, establishing the hegemony of the private sector and cultivating distinct agents to take the reins of the new transnational project in the country.
Between 1980 and 1984, Washington cobbled together a counterrevolutionary coalition comprised of elements from the armed forces, the police, the Christian Democratic Party (PDC), other centrist parties and private sector groups. The subsequent social and economic reforms of President José Napoleón Duarte’s PDC government postponed neoliberal restructuring amid the dual threats of a leftist triumph and immediate economic collapse. U.S. superintendents did not push to privatize state properties or productive resources and allowed the Salvadoran government to run huge budget and trade deficits. The government reforms included regulating market forces and the state-sponsored redistribution of property and resources—measures that under “normal” circumstances are anathema to neoliberal restructuring. But in the case of El Salvador they were promoted as necessary; first, to rescue the social order itself; and second, to lay the groundwork for the transnational project.
Despite sharp resistance from the oligarchy, the United States pushed the land reform program as an urgent measure to preempt the revolutionary forces and restructure the country. In the end, agrarian reform undercut the landed oligarchy and paved the way for a more modernized market in land. Similarly, the nationalization of the banking system and nationalized coffee and sugar marketing limited the investment options of the oligarchy. It gave the state some control over the mechanisms for the reproduction of capital and assisted the shift to new economic activities—namely, import-export trade, modernized capitalist agricultural sectors and maquiladora textile production.
By the latter half of the 1980s, the social and economic reforms had achieved their limited purpose. The reprieve given the country from structural adjustment to carry out reforms that accelerated the demise of the oligarchy had come to an end. The moment had arrived to unfurl the neoliberal program.
USAID started to withdraw its support for the reforms in 1985 and began to prescribe privatizations, the lifting of state price controls, fiscal auster ity, raising tariffs, and so on. In the late 1980s and early 1990s, the financial system and international marketing were re-privatized. The Central Bank became autonomous and began signing agreements directly with USAID. The period of social, economic and political reform was a mere interlude, a bridge between the collapse of the old oligarchic order and the construction of the new neoliberal order. The Duarte government became an obstacle to the transnational project, because it intended to deepen the social and economic reform program. It was ARENA—founded in 1981 by a shadowy group of right-wing military officers, paramilitary operatives and conservative members of the oligarchy—that would become the party of a reconstituted and newly mobilized Salvadoran bourgeoisie by the end of the decade.
Between 1983 and 1988, two competing factions emerged within ARENA vying for control over the party. One faction had close ties to the old landed oligarchy and military cliques. The other had strong ties to emergent financial, industrial and commercial interests, and it began developing an alternative discourse of political moderation,
economic modernization and right-wing populism. In this same period, the Salvadoran Foundation for Social and Economic Development (FUSADES) became an incubator of organic intellectuals for the neoliberal project ARENA began to champion. Wealthy Salvadoran business people founded FUSADES in 1983 with encouragement from USAID, which gave the organization more than $150 million over the next ten years. FUSADES played a critical role in bringing together the New Right nucleus that went on to dominate the party. When ARENA assumed state power in 1989, it became the internal agent for the country’s reinsertion to the global system.
The transition in El Salvador produced the appropriate conditions for global capitalism in the country. But first, the war needed to end. The military stalemate made it impossible for the emergent transnational bloc to stabilize the new social order. The eroded alliance between the military and the economically dominant classes provided the New Right, once it attained power, with the necessary political autonomy to negotiate with the FMLN. This resulted in President Alfredo Cristiani of ARENA signing the January 1992 Chapultepec peace accords despite fierce resistance from the party’s old guard and sectors of the armed forces. In this sense, the peace process was as much a mechanism for concluding the transformation of the Salvadoran state and the class structure as it was for ending the military conflict and accommodating the FMLN in the new order. Additionally, the peace process dismantled the corporatist military structures, which also represented a triumph of the New Right over the old oligarchy.
The Chapultepec accords laid the basis for an accelerated integration of El Salvador into global capitalism. The National Reconstruction Plan—drafted by government bureaucrats with the assistance of USAID following the accords—became an instrument for consolidating the neoliberal project. The Plan emphasized the reconstruction of infrastructure and relief programs to facilitate private-sector activity, foreign investment and a speedy re-articulation of the country to world markets. The accords preserved class rule of the Salvadoran elite—with the New Right as the dominant bloc—while it limited the institutional changes allowing the FMLN to transfer its struggle from the military to the internal political arena. Military stalemate and a negotiated settlement did not demonstrate that neither side won the war or that the outcome was, as some have claimed, a “negotiated revolution.” Instead, the end of the conflict represented the incomplete victory of the New Right and its transnational project.
Political-military power in revolutionary struggle is not an end, but a means to bring about the transformation of the social order. The success of popular struggle must be measured by the extent that it results in structural transformation, in an improvement in the cultural and material conditions of life for popular majorities, and in the empowerment of majorities to shape social structures and cultural processes in their interests. The political-military successes of the Sandinistas and the FMLN were “national” phenomenon that became increasingly impotent in the face of globalization. Paradoxically, the successes of the revolutionary forces do not show that popular change is possible under globalization. It demonstrates, to the contrary, how constraints imposed by the global system severely limit the effectiveness of popular struggles and local power.
National liberation movements have run their course; “national” liberation is not possible. Apart from the handful of remaining anti-colonial struggles, “national” liberation is no longer a particularly meaningful concept in the age of globalization. This assessment does not imply an end to the struggle of popular majorities in Nicaragua and El Salvador—or the rest of the region—but only the end of one round in an ongoing historical process. The next round will have to be a transnational struggle involving regional and transnational social movements searching for viable formulas of social and economic democratization, political empowerment and the construction of a counter-hegemony under the new conditions of global capitalism.
ABOUT THE AUTHOR
William I. Robinson is associate professor of sociology, global, and Latin American studies at the University of California, Santa Barbara. His two most recent books are Transnational Conflicts: Central America, Social Change and Globalization (Verso Press, 2003), and A Theory of Global Capitalism: Production, Class, and State in a Transnational World (Johns Hopkins University Press, 2004).
1. United States Agency for International Development (USAID), Country Development Strategy Statement: USAID/Nicaragua 1991-1996 (Washington, D.C.: USAID, June 14, 1991), pp. 62-63.
2. For details on the USAID textbooks, see Midge Quandt, “U.S. Aid to Nicaragua: Funding the Right,” Z Magazine, November 1991, pp. 47-51.
3. James Dunkerley, in Power in the Isthmus: A Political History of Modern Central America, (London: Verso Press, 1988), p. 351, notes that the Salvadoran elite “was completely unprepared for the scale of U.S. intervention in economic as well as political terms following the crisis of 1979.” This fact is even more significant since the Salvadoran elite did not have a tradition of political dependency on the United States as did, for example, its Nicaraguan or Honduran counterparts. Moreover, to be sure, the Salvadoran oligarchy put up much resistance to the U.S. reform program and frictions between it and Washington persisted throughout the 1980s.