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Nicaragua to Curb Oil Use, Raise Prices

June 07, 1987|RICHARD BOUDREAUX | Times Staff Writer

MANAGUA, Nicaragua — President Daniel Ortega, faced with a sharp reduction in the supply of Soviet crude oil, ordered a 5% cutback Saturday in Nicaragua's fuel consumption.

In a speech to labor leaders, Ortega also said that official prices for the 54 consumer goods distributed by the state will rise to keep them off the black market and that workers' wages will keep pace.

Western economists said both measures appear to be aimed at satisfying private Soviet criticisms of the Sandinista government's economic management and thus assuring additional Soviet oil shipments.

Ortega said that fuel rationing, to be coupled with fuel price increases, will not reduce supplies to "essential branches of the economy" or the military campaign against U.S.-backed rebels.

"The economic crisis demands greater sacrifices to assure total victory," the president declared. "Just as we are defeating aggression in the military field, we will defeat it in the economic field."

Nicaragua has become more and more dependent on Moscow since the United States imposed a trade embargo against the Sandinistas two years ago. The Soviets have supplied more than 80% of Nicaragua's crude oil since mid-1985, charging next to nothing.

Annual oil imports here have risen from 600,000 tons in 1985 to 765,000 tons planned this year. Most of the increase is to fuel a growing fleet of Soviet-made combat helicopters for the Sandinista air force.

A week ago, the Sandinista minister of foreign cooperation, Henry Ruiz, announced that Moscow "is facing limitations" and could supply Nicaragua no more than 300,000 tons of crude oil this year. According to Western intelligence reports, the last shipment of that quota arrived last Sunday.

Ortega did not mention the Soviet cutback in his speech Saturday but said that Nicaragua is asking "friendly countries" to fill an oil gap.

More Oil From Europe

Bulgaria, Czechoslovakia and East Germany are sending an additional 220,000 tons of oil, Ruiz said. Mexico, which sharply reduced its oil supplies to Nicaragua two years ago because of the Sandinistas' failure to pay for earlier shipments, said it is seeking joint support for Nicaragua among Latin American oil exporters.

Commenting indirectly on the cutback, the Soviet ambassador to Mexico was quoted Wednesday as saying that Nicaragua should depend less on Moscow and turn to its neighbors to show that the war "is a conflict within the American continent" and not an East-West struggle.

"The idea is that it should not be just one country helping Nicaragua at this time, but rather, it should be getting help from all the countries of Latin America," Ambassador Rostilav Sergueev was quoted as telling a Mexican newspaper.

Western economists and other officials, however, doubt that Nicaragua will get more than symbolic help from its Latin neighbors and predict that the Soviets will resume oil shipments later in the year.

"There is no other charitable institution in the world that will give Nicaragua the oil it needs," one specialist said.

Soviet Limit Seen

"The Soviets want to put a cap on crude oil deliveries (to Nicaragua) at the lowest possible level without damaging the war effort," he added. "They don't want the Sandinistas to become as dependent as Cuba, but they will not let them lose the war, which is what would happen if the oil ran out."

While the 5% consumption cutback announced by Ortega is not enough to offset the oil supply reduction, Western diplomats and economists believe it might help satisfy longstanding Soviet complaints about inefficient management of the economy here and ease the way for a resumption of the Soviet shipments.

For example, the government sets a price of 3 cents per gallon on gasoline, wasting potential revenue. Its efforts to guarantee basic consumer goods to all wage earners at rock-bottom prices have been defeated by a thriving but high-priced black market that discourages work in the formal wage economy.

As a result, the Sandinistas face worsening food shortages, a shrinking tax base, a growing budget deficit and signs of labor unrest.

Workers Struck Over Pay

Last week, 6,000 construction workers walked off the job at government projects after voting to reject a $24 monthly wage offer. Some of them had been earning $20 a day when the Sandinistas were desperate to finish a convention hall in time for the World Inter-Parliamentary Union meeting here in April.

Speaking in the same hall to about 1,000 labor leaders and government officials, Ortega announced a 30% wage increase for all workers from June 1, bringing the monthly minimum wage to $6. He said that state-controlled prices of 54 food, clothing and toiletry articles will rise periodically "to stimulate production and keep them on the market" and that wages will rise accordingly. Fuel prices will go up, too, but he did not say by how much.

In effect, Ortega said the government will accept higher inflation--it is already about 700% annually--to make the economy run better. But he exhorted wage earners to work harder and "keep struggling" against black market merchants.

Some presidential aides were said to oppose this approach in favor of holding down wages to whip inflation. They also resisted the circulation of a new 5,000-cordoba note, calling it a symbolic surrender to inflationary psychology.

Times staff writer Dan Williams contributed to this story from Mexico.

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