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Nicaragua: Political Unrest Affecting the Country’s Cigar Industry

Puro Sabor, Nicaragua’s celebration of its cigar industry this year was perhaps a high point for the country. The outlook for another festival remains murky since it has been cancelled until further notice. Last month, many cigar makers said they doubted one would be held next year. Why? The once cigar powerhouse, Nicaragua, is not in good shape.

In mid April, the government led by President Daniel Ortega announced cuts to the nation’s pension system along with tax increases. That announcement, since rolled back, led to protests by students and then the government’s reaction turned violent. Officially, president Ortega says 195 people have died, but other human rights organizations put that number well over 300 and some groups say over 400. As many as 1800 have been wounded and another 2,000 people have been arrested, with about 400 still believed to be in jail. Ortega is not just facing opposition from the students but from businesses as well, who are all calling for early elections. Ortega’s term is up in 2021.

Cigar industry feeling the impact

The protests caused chaos in the country. In May, June and July, many manufacturers were having a hard time exporting their products due to protestors manning barricades along the major roadways. Some of the smaller companies were able to airfreight packages out of Managua. Many of the trips up to Managua were made in the middle of the night and the drive could take up to 12 hours as smaller trucks took back roads to avoid the conflict. The larger containers were having to go up through Honduras if they could get by the barricades and the border.

For some, simply getting boxes was a problem because of the barricades set up by the protestors. Some factories had to run at midnight going through fields to get boxes for their cigars. There was also a one-day strike, which affected about all of the manufacturers in Esteli. On top of that, there were times when workers would not show up either out of fear, or that they were being paid more to protest. (Not sure which side was paying.)

Just before the International Premium Cigar and Pipe Retailers trade show last month, police moved in and forcibly removed all the protestors’ checkpoints. As of today, most of the factories are running normally. Shipments are getting out, and others are getting in. But some of the smaller makers say they are seeing delays at customs as inspectors go through with an eye towards finding something wrong with the paperwork that results in a fine.

Situation in Estelí

Reports from Esteli say it has fared better than other parts of the country, although it did not escape unscathed. A moneychanger was murdered in a random act of violence by the cathedral. Last month, according to the Wall Street Journal, Esteli’s catholic bishop Abelardo Mata was attacked by a pro-government mob that shot six homemade explosives at his car while police looked on. The bishop found refuge in a nearby house and after diplomats intervened he was given safe passage. But the Journal says he still gets death threats. Overall, crime is up in most of Nicaragua, as the police keep focused on the protestors. The government calls them terrorists and has instituted a zero tolerance policy toward the protestors.

The country’s economy suffers

The situation in Nicaragua remains fluid. President Daniel Ortega says the crisis is over but still troubles remain. As part of Ortega’s normality claim, last weekend, the government began officially pushing tourism again. With warnings issued by many governments, tourism has been hit the hardest as reports say 70,000 hospitality workers have lost their jobs in Nicaragua. Many hotels and restaurants have been forced to close due to a lack of business.   So yes, there are plenty of hotel rooms, if the hotels are open and provided you can get there. United Airlines and Spirit have cancelled flights to Managua, American and Delta have cut back the number of flights to Managua at least temporarily. Iberia has delayed inaugurating a flight from Spain to Managua.

The hit to the Nicaraguan economy is real. The economy was supposed to grow nearly 5 percent this year, but now is dead in the water and experts predict a 1 percent decline or possibly more. The private sector estimates 200,000 are unemployed because of the crisis. This week, Nicaragua’s National Assembly cut the nation’s budget by 9.2 percent to partly make up a drop of $220 million in government income. The economy also is in trouble because Nicaragua’s sponsor, Venezuela, is having financial problems of its own and can no longer help subsidize Ortega.

Medical care is suffering as well. Doctors have been fired because they treated the protestors for wounds. Others have left the country fearing arrest or worse.

Many Nicaraguans are fleeing the country if they can. The United Nations says about 23,000 already have made it to Costa Rica stretching that nations capacity to process them all to the limit. The U.N has pledged to strengthen its presence on Costa Rica’s northern border to help process asylum claims.

Ortega denying accountability

Getting information out of Nicaragua is dicey at best. Reporters have said they were threatened if they cover the protestors. Abductions by police or the paramilitary troops almost seem commonplace in the capitol Managua, according to reports. Ortega maintains the crisis is over but accepts no responsibility. He has put blame on the Catholic Church, Colombia and the United States for the problems.

While things may be tensely calm now says one cigar maker, who did not wish to be identified for obvious reasons, the government will have to start raising prices on food and fuel to try to balance its budget. When that happens, truckers will start blockades and no longer students but starving people will be up in arms. Ortega is still resisting calls for early elections and the future of the country remains in doubt.

A 2-time Emmy award winner, Frank Seltzer is a former Correspondent for CNN, Voice of America and a producer for ABC News. He has been regularly covering the cigar industry for over 15 years.


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