5. The Junta of National Reconstruction (July-December 1979)¶
Core Argument¶
The Junta of National Reconstruction, a coalition of the petty-bourgeois FSLN and the bourgeoisie, abolished the constitution, Presidency and Congress on 22 August 1979, ruling by unappealable decree under emergency powers. Policy emanated from the nine-member FSLN Directorate, transmitted by Daniel Ortega for Junta approval. The Fundamental Statute mandated trade union involvement in production planning and oversight, ostensibly to overcome capitalist ‘arrogance’ and increase output. Union representatives pressured firms to form production councils to prevent economic sabotage—including withholding investment, asset stripping, and capital flight—but were denied access to management accounts. The Ministry of Labour rejected calls for full transparency, keeping business records secret. This ‘workers’ control’ primarily enforced labour discipline and raised exploitation rates, not genuine worker power. Decapitalisation proved insurmountable; the Christian Science Monitor estimated nearly US$2 billion was lost between 1979 and 1988. The government inherited 50,000 dead, 120,000 exiled, 600,000 homeless, and 40,000 orphans. Decrees Three and Thirty-Eight expropriated Somoza family holdings—1 million hectares, 2,000 farms, and a quarter of manufacturing—retained as state farms, with under one per cent going to individual peasants. The banking system was nationalised, but the state assumed over US$200 million in private bank debts, with generous shareholder compensation. Foreign trade in principal agricultural products was nationalised. Land seized from non-Somoza owners was returned. In December 1979, all nine Directorate members took ministerial posts, consolidating FSLN power. The Fundamental Statute granted women legal equality, child-support laws, land rights, and childcare provisions, though implementation lagged.
The Cuban leadership, from July 1979, obstructed Nicaragua’s path to socialist revolution by endorsing the Sandinistas’ preservation of a capitalist mixed economy. This reversed the 1975 lesson that a government cannot serve the working class while granting capitalism a free hand. Castro avoided advocating for a Leninist Party with internal democracy or a society organised through Soviets, as Cuba itself lacked these and Soviet-bloc support would have ended had he done so. Nicaragua was more economically backward than Cuba in 1959, with resources drained by wars against Somoza and the Contras. Believing Nicaragua could develop within a regulated capitalist economy under imperialist domination was illusory and dangerous, requiring concessions from workers and peasants that would undermine the revolution. While achieving full socialism was impossible for a poor, isolated country, Nicaragua could have followed Cuba’s example to establish a workers’ state, enabling it to counter bourgeois economic sabotage. Such a course would have bound government and masses together and helped extend revolution to El Salvador and Guatemala, where parallel movements were heavily influenced by the Sandinistas. The FSLN’s mixed-economy perspective, guided by Stalinist stagism and Social Democracy, prevented a break with capitalism, unlike Cuba’s revolutionary trajectory.