Economic Turmoil of the Nicaraguan Revolution

Topics: Nicaragua, Sandinista National Liberation Front, Contras Pages: 6 (1618 words) Published: November 4, 2012
An Investigation into the Economic Turmoil of the Nicaraguan Revolution: To what extent did the U.S. led trade embargos of the 1980’s and the U.S. funded contra rebel groups affect the failed Nicaraguan economy of the mid to late 1980’s?

Word Count: 1, 618
Table of Contents

Section APage 3
Plan of the Investigation
Section BPage 4-5
Summary of Evidence
Section CPage 6-7
Evaluation of Sources
Section DPage 8
Section EPage 9
Section FPage 10

Section A
Plan of the Investigation

To what extent did the U.S. led trade embargos of the 1980’s and the U.S. funded contra rebel groups have on the failed Nicaraguan economy of the late 1980’s? This investigation aims to objectively determine the influence that the U.S. had on the complete devastation of the Nicaraguan economy. To achieve this end, a detailed analysis will be made of the financially U.S. supported rebel groups, the contras, that opposed Nicaragua’s Sandinista National Liberation Front (FSLN) following the 1979 overthrow of the Anastasio Debavle dictatorship. Their nature of opposition will be exposed and analyzed as a cause for the economic destruction in Nicaragua. Further, this analysis will be paired with the 1980’s U.S. led trade embargos on Nicaragua, which will give a detailed analysis as to why the Nicaraguan economy failed in the mid to late 1980’s.

Section B
Summary of Evidence
When considering the U.S.’s actions in Nicaragua it is essential to note that this revolution took place in the midst of Cold War fear between the U.S. and Soviet Russia. In 1979 the Sandinista National Liberation Front overthrew dictator Anastasio Somoza, ending the 43 year Somoza dictatorship, and establishing a revolutionary government in Nicaragua. Ronald Reagan, with a strongly anti-Communist administration, took office in 1981 and was ultimately convinced that the Sandinistas were supporting Communist revolutionary movements and were “closely allied with the USSR.” The nature of the Sandinista government distressed the Reagan administration who saw Nicaragua as a “Soviet proxy state.” In response to this fear, the U.S. almost immediately began to suspend aid to Nicaragua, impose economic boycotts, and began supplying money, arms and training for the armed opposition contras, or, rebel fighters, made up of Nicaraguans dissatisfied with the new Sandinista government. These actions were taken in the hopes of disassembling the new government. The confluence of these actions showed quick implications as the Nicaraguan economy was “faced with a catastrophic situation.”

The new economic policies brought about by the Reagan administration were designed to economically strangle the Sandinista government. The U.S. put pressure on international aid agencies and banks not to lend to Nicaragua leading to blocked loans from the World Bank and Inter-American Development Bank to Nicaragua. Beginning in 1983 with a 90% reduction of Nicaragua’s sugar quote, the Reagan administration imposed restrictions on trade with Nicaragua. By 1985 the U.S. imposed a full trade embargo on Nicaragua which cost the country an estimated $50 million a year. This had a domino effect upon the country as urban wages had drastically fallen to only 5 or 10% of 1980 levels.

To further push the economic woes; in 1985 the U.S.’s funding for the contra rebel group reached a staggering $77.6 million. They targeted any platforms in which the Sandinistas had planned to carry out poverty alleviation goals including agrarian, health and education reform facilities. The contra forces also attacked state infrastructure, such as bridges, power lines, health care centers schools and other infrastructure deemed essential to the government. One quarter of health clinics were destroyed, but the real burden of the contra attacks fell upon the agricultural sector. Attempts to burden productivity,...

Bibliography: * Selbim, Eric. Modern Latin American Revolutions. Second ed. Oxford: Westview, 1999. Print.
* Gobat, Michel. Confronting the American Dream. London: Duke UP, 2005. Print. American Encounters.
* Hodges, Donald C. Intellectual Foundation of the Nicaraguan Revolution. Austin: University of Texas, 1988. Print.
* Prevost, Gary. "The "Contra" War in Nicaragua." Conflict Quarterly, 21 Mar. 1994. Web. <>.
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