Nicaragua - The Banana Agreement
Fox, Jonathan
As the U.S. government's economic and political attacks on the Nicaraguan revolutionary process increased, Standard Fruit became the first major U.S. transnational to reach a...
...An extra large shipment of 129,000 boxes was loaded on January 9, 1981...
...Unilateral expropriation would have further aggravated the FSLN's delicate relations with the private sector...
...Nica Countermove A top-level Nicaraguan negotiating team flew quickly to San Francisco to try to iron out an agreement...
...agribusiness in Latin America during the late 1950s and 1960s...
...On December 20, 1980, the revolutionary government decreed a full-scale re-organization of banana production...
...Yet the revolutionary government succeeded in reaching a settlement which, surprisingly, both the conservative daily, La Prensa, and the Sandinista newspaper, Barricada, considered to be in the national interest...
...Following the 1953 expropriation of United Fruit's holdings in Guatemala by the Arbenz government, agribusiness concerns found it politically prudent to divest themselves of large landholdings...
...As a leader of the banana workers' union stated, "We workers are able to run the bananeras by ourselves, without foreign control...
...By paying a nominal rent to local partners, who held title to the land, these corporations retained control of production while maintaining a low political profile...
...Arturo Cruz, a prominent banker and at that time one of the five members of the governing junta...
...Limiting Factors Political and economic constraints prevented the government from simply expropriating the operations and turning them over to the workers...
...Standard's local partners will continue to hold title to their land...
...At this point they feel the industry is still dependent on Standard's production expertise and marketing services, which assures them long-term export stability...
...An increase in the export price of bananas, from $3.70 to $4.30 per box, will help liquidate the loan...
...La Prensa, the conservative but still widelyread daily, led a major campaign to try to disrupt the new and delicate phase of the negotiations...
...Typhoid, hepatitis, tuberculosis, acute pesticide poisoning and work accidents were all endemic among the 3800 workers...
...The workers agreed to wait, but their pre-revolutionary fear of voicing their demands was over forever...
...And annual price revisions will take cost increases into account...
...The government explained that the joint local-Standard companies, claiming bankruptcy, had failed to comply with their labor contracts for four months...
...But the workers refused the employers' orders to cut fruit prematurely and charged that incorrect spraying was being done deliberately to allow plant diseases to spread...
...This will be financed by a no-interest loan from Castle and Cooke to the government, to be repaid over a five year period...
...The Sandinista trade union leadership played a key role in explaining to the workers that, although the government was unable to provide massive or immediate improvements, it was Mar/Apr 1981 fighting for their interests...
...This majority ownership by nationals, however, hardly represented national control...
...As Minister of Agricultural Development, Sandinista Commander Jaime Wheelock put it, "from now on the relationship will be between partners, not boss and subordinate...
...markets over the five year period...
...In August the workers took their charges to the Council of State, the revolutionary government's highest expression of "popular power," opening what became a national movement on their behalf...
...Unexported bananas meant less export revenues for the government, but local growers cut their losses by selling the bananas on the domestic market...
...In relation to the private sector, the government was able to turn a relatively weak bargaining postion into both a step away from dependence on transnational capital and a political defeat for domestic reaction...
...The accord also bolsters Nicaragua internationally...
...An openly reactionary minority of the business class, including the Nicaraguan banana producers, launched a calculated effort to scare Standard away...
...While the government had the political muscle to impose its terms on the local growers, Standard still had to be dealt with...
...According to the agreement, part of the rent they will receive from the government will go to pay their debt to Standard...
...In the face of the movement towards national selfdetermination that is sweeping the "banana republics" of Central America, Standard may be sophisticated enough to realize that the company will have to learn to deal with independent regimes more and more in the future...
...And the government feels it needs their administrative and financial resources to rebuild the warshattered economy...
...update update Nicaragua's December 20, 1980 move, suspending banana shipments from the country two days later...
...In this pattern, Nicaraguan banana operations were 20% owned by Standard and 80% owned by Nicaraguans...
...It promised badly needed housing for the workers and pledged to work to solve their problems with access to basic supplies, health care and wages...
...Because bananas generally account for less than 10% of Nicaragua's agro-exports, about $25 million annually, the importance of the settlement may be more political than economic...
...The government made its move against a background of heightening domestic class tension...
...Furthermore, the local owners were largely financed by Standard...
...Their organization reflected the strategy pursued by U.S...
...Journal, contesting their interpretation of the settlement: "We feel proud of our company's role in these negotiations, because we think it shows the spirit which has characterized our dealings with sovereign nations...
...The bananas were sold one week later in Los Angeles to a pre-arranged network of 36 buyers...
...Standard responded quickly to Intestinal injuries often result from Standard's outmoded practice of hauling bananas along overhead cables by a rope tied to worker's waist...
...A rented refrigerator ship loaded the already cut bananas to bring the fruit to market independently...
...The Final Irony In an interesting contrast to his company's well-documented history of intervention and exploitation in Central America, the president of Castle and Cooke wrote to the Wall St...
...The workers pressed the government to take action, and by November it announced plans to create a state banana production company...
...All this changed, however, when Anastasio Somoza was overthrown in July 1979...
...Faith in the future was a common sentiment, a willingness to "suffer today so my children don't tomorrow...
...Castle and Cooke is one of three U.S...
...As part of the settlement, Standard will continue to provide 44 technical assistance and guaranteed access to U.S...
...The workers, a large percentage of whom are women, earned about three dollars a day...
...In production decisions Standard had two votes to the local growers' one...
...45update *update...
...Meanwhile, Nicaragua met Standard's unannounced suspension with a surprise countermove...
...In a massive, well-coordinated operation, 600 members of the Sandinista Popular Army worked secretly day and night to replace Standard's label with a Nicaraguan one...
...The negotiating mission succeeded in clarifying the government's position, and on January 12, three days after the cargo was loaded, the five-year agreement with Castle and Cooke was announced...
...Instead of rotting on the docks, as Standard had hoped, the Ministry of Foreign Trade reaped a handsome profit...
...Nicaragua was represented in San Franscisco by Commander Wheelock and Dr...
...As Wheelock put it, the local owners "were proprietors only in a technical sense, and could have been expropriated by Standard at any time...
...This control was ratified in a January 12, 1981 agreement with the sole buyer of Nicaragua's banana exports, Standard Fruit, a subsidiary of Castle and Cooke...
...transnationals that together control 70% of the world banana trade...
...More importantly, perhaps, are the political constraints...
...While banana production was totally oriented towards the production of a healthy blemish-free fruit, working and living conditions on the bananeras were among the worst in Somocista Nicaragua-perhaps second only to the brutal conditions which prevailed in the now-nationalized mines in the north...
...As the workers' consciousness developed, so did their militancy, yet they showed a remarkable patience...
...The process of nationalization, reveals both many of the constraints inherent in the present phase of the Nicaraguan revolution and the FSLN's ability to find satisfactory solutions within these limits...
...Although Nicaragua supplies Standard with about one third of its West Coast market, long-term independent marketing of bananas cannot presently be guaranteed...
...It nationalized control over the local share of the operations, while respecting Standard's marketing role and the local owner's title to the land itself...
...It improves the climate for Nicaragua's massive debt renegotiations, while acting to reduce the political feasibility of a U.S.-led economic blockade...
...On December 20, 1980, Nicaragua's revolutionary government, prompted by months of escalating pressure from plantation workers, took over the management of the nation's 16 banana estates...
...According to Francisco D'Escoto, Minister-Counselor at the Nicaraguan Embassy and one of the negotiators, Standard's boycott was a result of a "misunderstanding...
...The workers were never able to establish who really was in charge...
...After the workers' first major meeting in April 1980, the growers reacted quickly with a campaign of economic sabotage and layoffs...
...NACLA Reportupdate.update update update Workers Move Soon after the Sandinista victory, the growing unionization of urban and rural workers and the deepening of class conciousness began to be felt in the bananeras...
...After the junta was 46 streamlined to three members in early March, Cruz was appointed Ambassador to Washington, a move which reflects the importance Nicaragua places on maintaining cordial relations with the United States...
...Given this policy of "national unity," persuasion and negotiation are the preferred methods of resolving conflicts with the private sector, which still controls 60% of the economy...
...By May, thousands of boxes of cut, quality bananas stood rotting as Standard suddenly upped the "finger," the minimum quality requirement for export...
...The decree said 'regulate' and they understood 'confiscate...
...The Government of National Reconstruction is thus weaving a complex and careful path, trying to meet popular demands while preserving the precarious participation of business...
...To do this, to do what is best for our revolution, we are ready to give everything...
...at the time of the settlement they owed Standard some $10 million...
...The government also proved itself to be responsive to the demands of the workers, albeit within the limits set by the policy of national unity...
...Still, after months of class conflict in the banana plantations, many observers believed that Nicaragua was about to lose a needed source of foreign exchange...
...transnational to reach a mutually satisfactory nationalization agreement with the new government...
...Over the years, when workers risked repression pressing for better conditions, Standard and its local partners went back and forth, passing the buck from one to the other...
...According to the settlement, Nicaragua will buy out all of Standard Fruit's investment in Nicaragua for $13 million...
...Banana Background Nicaragua's banana production began ten years ago when Standard first set up "production companies" with local landlords...
Vol. 15 • March 1981 • No. 2
