As the U.S. government’s
economic and political attacks on
the Nicaraguan revolutionary pro-
cess increased, Standard Fruit
became the first major U.S.
transnational to reach a mutually
satisfactory nationalization agree-
ment with the new government.
As Minister of Agricultural
Development, Sandinista Com-
mander Jaime Wheelock put it,
“from now on the relationship will
be between partners, not boss and
subordinate.”
On December 20, 1980,
Nicaragua’s revolutionary govern-
ment, prompted by months of
escalating pressure from planta-
tion workers, took over the
management of the nation’s 16
banana estates. This control was
ratified in a January 12, 1981
agreement with the sole buyer of
Nicaragua’s banana exports, Stan-
dard Fruit, a subsidiary of Castle
and Cooke.
According to the settlement,
Nicaragua will buy out all of Stan-
dard Fruit’s investment in
Nicaragua for $13 million. This will
be financed by a no-interest loan
from Castle and Cooke to the
government, to be repaid over a
five year period. An increase in the
export price of bananas, from
$3.70 to $4.30 per box, will help liq-
uidate the loan. And annual price
revisions will take cost increases
into account.
As part of the settlement, Stan-
dard will continue to provide
44
technical assistance and
guaranteed access to U.S.
markets over the five year period.
Standard’s local partners will con-
tinue to hold title to their land.
Because bananas generally ac-
count for less than 10% of
Nicaragua’s agro-exports, about
$25 million annually, the impor-
tance of the settlement may be
more political than economic. Still,
after months of class conflict in
the banana plantations, many
observers believed that Nicaragua
was about to lose a needed source
of foreign exchange. Yet the
revolutionary government suc-
ceeded in reaching a settlement
which, surprisingly, both the con-
servative daily, La Prensa, and the
Sandinista newspaper, Barricada,
considered to be in the national in-
terest.
Banana Background
Nicaragua’s banana production
began ten years ago when Stan-
dard first set up “production com-
panies” with local landlords. Their
organization reflected the strategy
pursued by U.S. agribusiness in
Latin America during the late
1950s and 1960s. Following the
1953 expropriation of United
Fruit’s holdings in Guatemala by
the Arbenz government,
agribusiness concerns found it
politically prudent to divest
themselves of large landholdings.
By paying a nominal rent to local
partners, who held title to the land,
these corporations retained con-
trol of production while maintain-
ing a low political profile.
In this pattern, Nicaraguan
banana operations were 20%
owned by Standard and 80% own-
ed by Nicaraguans. This majority
ownership by nationals, however,
hardly represented national con-
trol. In production decisions Stan-
dard had two votes to the local
growers’ one. Furthermore, the
local owners were largely financed
by Standard; at the time of the set-
tlement they owed Standard some
$10 million. As Wheelock put it, the
local owners “were proprietors
only in a technical sense, and
could have been expropriated by
Standard at any time.” (According
to the agreement, part of the rent
they will receive from the govern-
ment will go to pay their debt to
Standard.)
While banana production was
totally oriented towards the pro-
duction of a healthy blemish-free
fruit, working and living conditions
on the bananeras were among the
worst in Somocista Nicaragua-
-perhaps second only to the
brutal conditions which prevailed
in the now-nationalized mines in
the north. The workers, a large
percentage of whom are women,
earned about three dollars a day.
Typhoid, hepatitis, tuberculosis,
acute pesticide poisoning and
work accidents were all endemic
among the 3800 workers.
Over the years, when workers
risked repression pressing for bet-
ter conditions, Standard and its
local partners went back and forth,
passing the buck from one to the
other. The workers were never
able to establish who really was in
charge. All this changed, however,
when Anastasio Somoza was
overthrown in July 1979.
NACLA Reportupdate.update update update
Workers Move
Soon after the Sandinista vic-
tory, the growing unionization of
urban and rural workers and the
deepening of class conciousness
began to be felt in the bananeras.
After the workers’ first major
meeting in April 1980, the growers
reacted quickly with a campaign of
economic sabotage and layoffs.
But the workers refused the
employers’ orders to cut fruit
prematurely and charged that in-
correct spraying was being done
deliberately to allow plant diseases
to spread.
By May, thousands of boxes of
cut, quality bananas stood rotting
as Standard suddenly upped the
“finger,” the minimum quality re-
quirement for export. Unexported
bananas meant less export
revenues for the government, but
local growers cut their losses by
selling the bananas on the
domestic market.
In August the workers took their
charges to the Council of State,
the revolutionary government’s
highest expression of “popular
power,” opening what became a
national movement on their behalf.
The workers pressed the
government to take action, and by
November it announced plans to
create a state banana production
company. It promised badly need-
ed housing for the workers and
pledged to work to solve their
problems with access to basic
supplies, health care and wages.
As the workers’ consciousness
developed, so did their militancy,
yet they showed a remarkable pa-
tience. The Sandinista trade union
leadership played a key role in ex-
plaining to the workers that,
although the government was
unable to provide massive or im-
mediate improvements, it was
Mar/Apr 1981
fighting for their interests.
The workers agreed to wait, but
their pre-revolutionary fear of voic-
ing their demands was over
forever. Faith in the future was a
common sentiment, a willingness
to “suffer today so my children
don’t tomorrow.” As a leader of
the banana workers’ union stated,
“We workers are able to run the
bananeras by ourselves, without
foreign control. To do this, to do
what is best for our revolution, we
are ready to give everything.”
On December 20, 1980, the
revolutionary government decreed
a full-scale re-organization of
banana production. It nationalized
control over the local share of the
operations, while respecting Stan-
dard’s marketing role and the local
owner’s title to the land itself. The
government explained that the
joint local-Standard companies,
claiming bankruptcy, had failed to
comply with their labor contracts
for four months.
While the government had the
political muscle to impose its
terms on the local growers, Stan-
dard still had to be dealt with.
The government made its move
against a background of heighten-
ing domestic class tension. An
openly reactionary minority of the
business class, including the
Nicaraguan banana producers,
launched a calculated effort to
scare Standard away. La Prensa,
the conservative but still widely-
read daily, led a major campaign
to try to disrupt the new and
delicate phase of the negotiations.
Standard responded quickly to
Intestinal injuries often result from Standard’s outmoded practice of hauling bananas along overhead cables by a rope tied to worker’s waist.
45update *update. update update
Nicaragua’s December 20, 1980
move, suspending banana
shipments from the country two
days later. According to Francisco
D’Escoto, Minister-Counselor at
the Nicaraguan Embassy and one
of the negotiators, Standard’s
boycott was a result of a
“misunderstanding.”
The decree
said ‘regulate’ and they
understood ‘confiscate’.”
Nica Countermove
A top-level Nicaraguan
negotiating team flew quickly to
San Francisco to try to iron out
an agreement. Meanwhile,
Nicaragua met Standard’s unan-
nounced suspension with a sur-
prise countermove. A rented
refrigerator ship loaded the
already cut bananas to bring the
fruit to market independently. In
a massive, well-coordinated
operation, 600 members of the
Sandinista Popular Army worked
secretly day and night to replace
Standard’s label with a
Nicaraguan one. An extra large
shipment of 129,000 boxes was
loaded on January 9, 1981. In-
stead of rotting on the docks, as
Standard had hoped, the Ministry
of Foreign Trade reaped a hand-
some profit. The bananas were
sold one week later in Los
Angeles to a pre-arranged net-
work of 36 buyers.
The negotiating mission suc-
ceeded in clarifying the govern-
ment’s position, and on January
12, three days after the cargo
was loaded, the five-year agree-
ment with Castle and Cooke was
announced. Nicaragua was
represented in San Franscisco
by Commander Wheelock and
Dr. Arturo Cruz, a prominent
banker and at that time one of
the five members of the govern-
ing junta. After the junta was
46
streamlined to three members in
early March, Cruz was appointed
Ambassador to Washington, a
move which reflects the impor-
tance Nicaragua places on main-
taining cordial relations with the
United States.
Limiting Factors
Political and economic con-
straints prevented the govern-
ment from simply expropriating
the operations and turning them
over to the workers. At this point
they feel the industry is still
dependent on Standard’s pro-
duction expertise and marketing
services, which assures them
long-term export stability.
Although Nicaragua supplies
Standard with about one third of
its West Coast market, long-term
independent marketing of
bananas cannot presently be
guaranteed. Castle and Cooke is
one of three U.S. transnationals
that together control 70% of the
world banana trade.
More importantly, perhaps,
are the political constraints.
Unilateral expropriation would
have further aggravated the
FSLN’s delicate relations with
the private sector. And the
government feels it needs their
administrative and financial
resources to rebuild the war-
shattered economy. The Govern-
ment of National Reconstruction
is thus weaving a complex and
careful path, trying to meet
popular demands while preserv-
ing the precarious participation
of business. Given this policy of
“national unity,” persuasion and
negotiation are the preferred
methods of resolving conflicts
with the private sector, which
still controls 60% of the
economy.
The process of nationalization,
reveals both many of the con-
straints inherent in the present
phase of the Nicaraguan revolu-
tion and the FSLN’s ability to find
satisfactory solutions within
these limits. In relation to the
private sector, the government
was able to turn a relatively weak
bargaining postion into both a
step away from dependence on
transnational capital and a
political defeat for domestic
reaction. The government also
proved itself to be responsive to
the demands of the workers,
albeit within the limits set by the
policy of national unity. The accord
also bolsters Nicaragua interna-
tionally. It improves the climate for
Nicaragua’s massive debt renego-
tiations, while acting to reduce the
political feasibility of a U.S.-led
economic blockade.
The Final Irony
In an interesting contrast to his
company’s well-documented his-
tory of intervention and exploita-
tion in Central America, the presi-
dent of Castle and Cooke wrote to
the Wall St. Journal, contesting
their interpretation of the settle-
ment: “We feel proud of our com-
pany’s role in these negotiations,
because we think it shows the
spirit which has characterized our
dealings with sovereign nations.”
In the face of the movement
towards national self-
determination that is sweeping the
“banana republics” of Central
America, Standard may be sophis-
ticated enough to realize that the
company will have to learn to deal
with independent regimes more
and more in the future.
