Central American Strikes And The Energy Crisis
In Central America the relentless upward trend in oil prices is provoking crisis in the parts of the region's electrical
energy system dependent on oil. Panama, Nicaragua and Honduras are the countries in the region most dependent on oil
imports. Overall Central America sources over 70% of its energy requirements from oil, imported mostly from Mexico and
Venezuela. Only Costa Rica has made determined efforts to avoid energy dependence on oil. Its State power company
generates over 80% of its electricity from hydro-electric sources
The neo-liberal privatization craze of the 1990s resulted predictably in little long-term investment in renewable energy
from geo-thermal or wind generation. Opportunist foreign companies invested in quick and dirty oil powered generating
plants to get a cut of the region's wide open energy market. The same short term approach to the region's transport
needs has emphasised road infrastructure to the virtual exclusion of all other options. A typically short-sighted
decision of Nicaragua's Chamorro government in the 1990s was to rip up rail track linking the country's capital with the
the Pacific coast and with Lake Nicaragua at Granada.
With oil prices trending consistently higher, the failure of the "free market" to meet the majority of people's
fundamental energy and transport needs becomes plainer almost week by week. But longer term implications of this crucial
fundamental economic reality have yet to sink in to governments hopelessly trying to follow faith-based "free market"
ideology. Belatedly they may have started to flirt with renewable energy initiatives like wind-power for electricity
generation or sugar cane derived ethanol for transport fuel, but the budget arithmetic of oil imports has already
overtaken most of the region with a vengeance.
The strike in Honduras
On September 6th, public transport in the Honduran capital Tegucigalpa shut down for two days when taxi drivers and bus
owners went on strike in protest at a government imposed 19.7% increase in fuel prices The government alleged the
incease was provoked by Katrina-related damage to oil and port infrastructure along the US Gulf coast. Most people in
Honduras believed it was shameless profiteering by oil companies leaning on high-level friendly officials in the
Honduran government. The national daily El Heraldo reported that around 70% of offices and businesses closed down during
By Wednesday night the National Assembly was debating measures to reverse the price hike, voting to do so at the end of
the all night session. So life abruptly returned to normal on the Thursday morning. But the lightning strike was a sharp
reminder to governments throughout the region that over fifteen years of neo-liberal economic policies have left
ordinary people with no margin to absorb increased costs in their basic expenditure. The strike was reminiscent of
violent protests earlier in the year in the Nicaraguan capital Managua over a modest increase in bus fares.
The reason Honduran taxi drivers and bus owners went on strike is becuase they know their customers cannot afford higher
transport costs. The arithmetic is straightforward. An average family of two working adults with two school age children
commonly have a total income of US$200 or so a month. That family would typically have to pay ten bus fares every day to
get to and from school and work. For them an increase of just US$0.05 cents in bus fare means an extra US$0.50 cents a
day in transport costs, or around US$12 extra on transport per month. So the margins people live on are extrenely fine.
Given that reality, continuing upward trends in the international oil price imply sharp rises in ordinary people's
direct living costs via transport and electricity increases. The trends also mean indirect price increases across the
board as businesses of all kinds try to maintain profit margins. Governments in the region are currently all run by
opportunists committed to obeying the wishes of the United States government. An obvious medium term response to the
crisis would be to work out preferential arrangements with US bug-a-boo Venezuela similar to the recent Petrocaribe
agreement between Venezuela and its Caribbean neighbours.
Deteriorating relations between the US and Venezuela make such a rapprochement awkward for US allies in the region.
(Although in this context it is worth noting that Cuba has hundreds of doctors working in Honduras covering rural areas
Honduran doctors are unwilling to serve.) It is undeniable that the United States can offer its Central American allies
little help with their energy costs. Venezuela can. Regional governments may well begin to exploit that contradiction as
the radical failure of counter-productive "free market" policies leave large majorities of their people ever more ready
to rebel in defence of basic living standards.
Another little noted impact of upward trending oil prices is that they will show up even more the disadvantages and
irrelevance of the Central American Free Trade Agreement (CAFTA) and the grand designs of regional infrastructure
schemes like Plan Puebla Panama for the majority of people in the region. CAFTA and Plan Puebla Panama are premissed on
increased urbanization and low energy costs. Rational public policy responses to higher energy costs will resist greater
concentrations of people in large urban centres and tend to promote sustainable small and medium sized energy-consuming
economic activitiy in small towns and rural areas.
Strikes and power cuts in Nicaragua
No one has really worked out the political consequences resulting from conflict between discredited, bogus "free market"
ideology and the obvious economic and environmental reality. Regional left wing opposition movements often seem unable
to recognise the depth of the changes already well in the making. Nonetheless, they are likely to benefit politically
from their historical solidarity with urban and rural workers and their families. Self-evidently, their traditional
class identification gives them elements of a workable social and political settlement for the region's poor majority
unavailable to local oligarchies.
Currently, Nicaragua offers a clear example of that. On September 20th and 21st, the capital Managua was again shut down
by striking transport workers as it was earlier this year. But the latest strike took place in the context of power cuts
caused by Spanish multinational Union Fenosa's failure to pay the generating companies, its suppliers. Union Fenosa
blames the government, arguing it needs to increase prices to stay in business in Nicaragua. The government blames the
National Assembly for refusing to ratify presidential decrees authorizing a price hike. The Sandinista opposition has
sought to balance defence of ordinary people's living standards with workable measures to keep lights and refrigeration
on and the buses running.
The energy crisis in Nicaragua has merged with the country's continuing political crisis. Paradoxically, the resulting
confusion has sharpened the clarity of wider conflicts facing the region. For whose benefit is government - for the poor
majority or for foreign corporations and the wealthy few? Who runs public policy - the United States embassy and the
international financial institutions or sovereign governments representing the interests of their peoples? The energy
crisis will put pressure on the region's political structures unprecedented since the end of open armed conflict in the
Those structures are unlikely to survive the stress of the developing energy crisis unaltered, although this year's
election in Honduras will no doubt follow the usual time-honoured, meaningless Punch-and-Judy format. By contrast, next
year's election in Nicaragua should have a more decisive regional significance. US diplomats and politicians are already
engaging in relentless interventionist blackmail to undermine support for the Sandinistas. The election in Nicaragua
will give a clear signal whether or not the poor majority are ready to go on indefinitely suffering deepening poverty
out of fear of US government reprisals.
toni solo is an activist in Central America - contact via www.tonisolo.net