Report on a Property Issues Conference

Table of Contents

1. Executive Summary
2. Introduction: The Property Problem in Nicaragua
3. U.S. Citizens' Claims and U.S. Policy
4. Carter Center/Council Activity
5. The Montelimar Conference
6. Conclusions

APPENDICES

1. Summary Statement by Pres. Jimmy Carter: Points of Consensus
2. List of Conference Participants
3. List of Meetings during Pre-Conference Trip to Nicaragua by Drs. Jennifer McCoy and Robert Pastor, June 26-29, 1995
4. Schedule for President Jimmy Carter and Prime Minister George Price, July 4-5, 1995
5. Agenda and Questions for Discussion: UNDP-Carter Center Conference on Property
6. List of Follow-up Commission Members
7. Background on Council of Freely Elected Heads of Government
8. Selected News Clippings

Executive Summary ₁

The Carter Center and UNDP co-sponsored a Conference in Nicaragua on July 4-5, 1995 to accelerate resolution of the property problem that has entangled the country's politics and impeded its economic development and democratic consolidation. The culmination of more than one year of intensive analysis and numerous expert missions to Nicaragua by the Carter Center, in collaboration with the UNDP Property Project, the Conference brought together for the first time a group of Nicaraguan leaders representing the entire spectrum of affected interests. With Sandinista leaders sitting next to persons whose property was confiscated in the revolution, the meeting was a visible reminder of the remarkable transformation of Nicaragua from a society torn by war in the 1980s to one committed to the search for solutions to national problems through peaceful, legal means.

Hosted by the UNDP and chaired by Jimmy Carter and George Price, the meeting provided an important boost to the Nicaraguan leaders to formulate a definitive solution to the property issue. The conference identified the elements of a package solution and the next steps needed to resolve the complex property problem. During the course of the day and a half meeting, significant consensus emerged on a number of general principles: including that small beneficiaries of urban and agrarian reforms should be protected, that former owners should be compensated with improved bonds, and that recipients of larger properties should either pay for or return those properties (see Appendices 1 and 2).

In conversations on the issue of U.S. property claims, Nicaraguan officials explained the progress that has been made on resolving the claims of U.S. citizens, of which one-third to one-half were Nicaraguans who were alleged to have been associates of the former Somoza government and are now U.S. citizens.

Former president Carter proposed a Follow-up Commission of representatives of the groups at the Conference to meet immediately to translate the consensus and the general proposals into specific decisions and laws. The 18-person Commission was selected and met on July 14 under the auspices of the UNDP. All parties attended, and the Commission moved expeditiously to develop concrete proposals in two subcommittees: (a) to provide security for small property holders and (b) to increase the value of the bonds. The entire group also discussed large property issues, expanding the privatization program, and ways to address abuses. The Commission set a deadline to complete all their work in three months.

Introduction: The Property Problem in Nicaragua

The property problem in Nicaragua affects 171,890 beneficiaries of agrarian and rural reform and other expropriations of property under the Sandinista government, and 5,288 former owners, who now demand either the return of their property or satisfactory compensation. The amount of land claimed by the former owners constitutes 25% of the cultivable land area, and the estimated cost of compensating the former owners ($650 million) is the equivalent of 35% of GDP or two years of exports.

Since August 1994, The Carter Center's Latin American and Caribbean Program (LACP) has been collaborating with the United Nations Development Program in Nicaragua to facilitate an efficient and fair resolution to the complex property disputes. The difficulty in solving multiple claims to property and establishing a legal framework to guarantee property rights has generated political conflict within the country and slowed investment, foreign aid, and development. Although most Nicaraguans agree that the property issue is the key to spurring economic recovery, a formula for addressing it has remained elusive.

The underlying problem is a fundamental debate over whose rights to property should take precedence, complicated by administrative and legal impediments to sorting out competing claims and modernizing the titling system. The debate encompasses those who want to protect the gains of the revolution and those who want to preserve the sanctity of property rights. Nevertheless, the participants demonstrated a growing recognition that it is possible to accomplish both goals -- to achieve social benefits through the use of the state's right to appropriate property with adequate compensation under eminent domain, and to protect personal property rights. The larger task for Nicaragua is to identify the mechanisms to promote both of these principles simultaneously.

During the Sandinista regime (1979-90), property was expropriated for agrarian and urban reform, and abandoned property was taken by the state. However, in many cases, legal titles were not transferred to the state at the time of expropriation, and peasants and other recipients of property were not given proper titles. Therefore, when the Sandinistas lost the elections in February 1990, the National Assembly passed a series of laws to give titles to thousands of beneficiaries of the reforms, as well as to Sandinista officials who were living in houses taken over by the government. These laws became known as the "pinata" laws by those who opposed the frantic effort to legalize the transfers of property before the inauguration of Violeta Chamorro in April 1990. Since that time, they have generated enormous controversy in Nicaragua, and an administrative nightmare as the government attempts to sort out multiple claims to property.

The issues include whether to return property or compensate former owners; whether current occupants of land and houses should pay for their property, and how much; how to correct the abuses of the existing laws; how the government can raise revenues to finance the bonds used to compensate former owners; and how to sort out the multiple title claims on individual pieces of property and provide legal security to occupants in the interim. In addition, there is the complicating factor of property claims by U.S. citizens, many of them naturalized Nicaraguan citizens, which has entered into the criteria for continued U.S. aid to Nicaragua.

During the last five years, the property problem has divided the legislature, vexed the government as it strove to find the means to compensate confiscated owners, sowed conflicts as former owners attempted to evict small farmers from confiscated land, and threatened a cut-off of U.S. aid in 1994-95. The Chamorro government set up two parallel administrative review processes to assess the claims of former owners and the petitions of current occupants for titles. That process has nearly completed the review of some 112,000 current occupants, and has resulted in the approval of nearly 108,000 of their petitions for titles (which nevertheless will take another 2-4 years to survey and property title).

On the other hand, the government has made less progress in resolving the claims of former owners who suffered confiscations or expropriations without due compensation between 1979 and 1990. Starting only in 1993, the government reported by May 31, 1995 that 1,800 (35%) of the 5,200 claimants, representing 2,995 (19%) of the nearly 16,000 pieces of property claimed, had been approved for compensation.

With the help of the UNDP, Inter-American Development Bank, World Bank, and donor governments, the administrative review process was improved, and the titling system was assessed for redesign in 1994 and 1995. The challenges remaining to solve the property conflicts are formidable, but not irresolvable. They include property indemnification bonds of low value, a titling process in urgent need of modernization, a court system expecting up to 5,000 cases, insecure small beneficiaries without titles facing possible eviction, and ex-combatants still waiting to receive land or titles.

From January to June 1995, the Nicaraguan government and National Assembly were consumed with the debates over the constitutional reforms that had been approved by the Assembly in early 1995. After a lengthy stalemate, Cardinal Obando y Bravo mediated a solution to the institutional crisis, resulting in the promulgation of the amended constitution on July 4, 1995. A new Property Commission in the National Assembly began meeting in June 1995, and several draft property laws were presented by the political parties. Thus the stage was set for attention to be turned once again to the property issues.

U.S. Citizens' Claims and U.S. Policy

Although American citizens' property claims in Nicaragua are a small proportion of the total Nicaragua property problem, it has been a central preoccupation of the U.S. government. Under international law, foreign governments can actively help their citizens when their property is confiscated without prompt, fair, and adequate compensation. This does not include foreigners, who subsequent to the confiscation, become U.S. citizens, but recent U.S. policy was amended to include this group. ₂ According to officials from the U.S. Embassy and the Nicaraguan government, one-third to one-half of U.S. property claimants were former Nicaraguans, who are alleged to have been "Somocistas," whose property was taken in 1979 under Decrees 3 and 38.

The property issue has become perhaps the central issue in U.S. foreign policy toward Nicaragua, with implications for the country's economic and political transition and its ability to address the property issue. Under the expanded definition that includes naturalized U.S. citizens, 506 U.S. citizens filed claims for 1,487 properties under the Chamorro government's review process; this represents about 10 percent of the total property claims submitted. ₃

The Helms-Gonzalez Amendment to the 1994 Foreign Assistance Act requires the Secretary of State to certify by July 30 that an adequate mechanism is in place to promptly and fairly compensate confiscated citizens. If not, the U.S. government would have to suspend aid and vote against multilateral bank loans to Nicaragua, including the Inter-American Development Bank and the World Bank.

As of June 30, 1995, the U.S. Embassy reported that in total 622 property claims by U.S. citizens had been resolved, with 932 claims still pending. The U.S. State Department set a goal of 300 property cases to be resolved each semester of 1995 and 1996 in order to complete all of the U.S. claims by the end of 1996. During the first semester of 1995, the U.S. embassy reported 272 U.S. claims were resolved. The Nicaraguan government reported that another 35 claims were approved by June 30, but these involve cases where an illegitimate occupant must be removed by the courts before the property can be returned. With these additional cases, the Nicaraguan government exceeded the U.S. government's minimum goal of 300 claims resolved during the first semester of 1995.

Carter Center/Council of Freely Elected Heads of Government Activity

In June 1994, former president Jimmy Carter, accompanied by Dr. Jennifer McCoy, Coordinator of the Carter Center's Nicaraguan Property Project, and Dr. David Carroll, LACP Associate Director, travelled to Nicaragua to participate in a conference that dealt in part with property issues, and was invited by President Chamorro and others to explore ways to help resolve the conflicts. During that trip, the Supreme Court invited The Carter Center to send a team of legal experts to advise on how to deal with the approximately 5000 cases expected to be submitted by the Attorney General's office to the courts for resolution.

Consequently, The Carter Center sent a team of experts from the American Bar Association and the Land-Tenure Center at the University of Wisconsin to Nicaragua in August 1994, hosted by the UNDP, to advise the courts and to help design a larger UNDP project to speed up the resolution of property conflicts. The UNDP then worked with the government to develop a comprehensive program to increase the efficiency and capacity of administrative agencies charged with reviewing the claims by former owners and the petitions for titles by current occupants. The Supreme Court accepted the recommendations made by the Carter Center team to designate five new courts to handle property issues.

At the UNDP's request, The Carter Center sent a second team of property, mediation, and legal experts to Nicaragua November 29- December 3, 1994 to advise on the legal framework and assess the potential for mediation to resolve the most difficult disputes. The report from that trip described the nature of the problem and recommended a number of steps to make progress on the property issues, including recommendations to design a mediation mechanism to handle many of the cases expected to go to the courts.

By mid-1995, with progress on the administrative side and with the Nicaraguan Assembly preparing to consider a number of draft property laws, the time seemed ripe for a larger dialogue on the property issues. Responding to requests and expressions of enthusiasm from the Minister of the Presidency, the President of the National Assembly, the leader of the MRS, the Mayor of Managua, and other leaders, the UNDP and The Carter Center agreed to host a meeting in which civil society, political parties, and government leaders could come together to discuss the next steps in solving property issues.

The Montelimar Conference

During the last week of June, Dr. McCoy and Dr. Robert Pastor, Director of the Carter Center's Latin American Program, travelled to Managua to meet with all of the groups who would participate in the meeting on July 4-5 (see Appendix 3). The original venue for the meeting was to be Atlanta. However, during the course of their meetings in late June, Drs. McCoy and Pastor, learned from Arnoldo Aleman and Daniel Ortega that it would not be possible for them to travel to Atlanta on the proposed dates, and that the Assembly might not have completed the votes on the constitutional reform in time to travel. Therefore, after receiving assurances from Mayor Aleman and former president Ortega that they could participate if the meeting were held in Nicaragua, Pastor and McCoy called former President Carter, who agreed to move it to Nicaragua.

On July 4-5, cabinet-members, the president and key committee chairpersons of the National Assembly, leaders of the major political parties, members of the Supreme Court, and leaders of organizations representing former property owners (confiscados), present occupants (beneficiados), workers, and ex-combatants met in Montelimar to discuss an agenda including the concerns of both confiscados and beneficiados, as well as enforcement of the law. Observers included a representative of Cardinal Obando Y Bravo, the U. S. and Spanish ambassadors, the Swedish charges d'affaires, representatives of international financial institutions, and eminent persons in Nicaraguan society.

After the opening session on the evening of July 4, former President Carter met privately with Arnoldo Aleman and his advisors, and with Daniel Ortega and other members of the FSLN Directorate for extended discussions of the property issue. On July 5, President Violeta de Chamorro opened the conference and participants attended the full day of sessions on various aspects of the issue (see agenda in Appendices 4 and 5).

A broad, though not universal, consensus emerged in the meeting that small beneficiaries of urban and agrarian reforms should be protected, that former owners should be compensated with improved bonds, and that recipients of larger properties should either pay for or return those properties. Abusers of property laws passed by the Sandinistas during the last two months of the Ortega government would be prosecuted by the Attorney General's office in the court system (see summary statement by President Carter in Appendix 1).

One of the most difficult problems of the Chamorro administration has been how to fully compensate property owners whose property is now occupied by legitimate beneficiaries of urban and agrarian reforms. With a treasury severely strapped by foreign and internal debts inherited from the previous administration, the Chamorro government did not have sufficient funds to repay the confiscated owners in cash. Therefore, the government returned 529 businesses and properties operated by the state, and created a series of 15-year bonds with interest at 3-5% to compensate owners when the land or buildings could not be returned. Nevertheless, many owners were reluctant to accept the bonds, having little faith that a future government would have the resources or the will to redeem the bonds upon maturity. Consequently, bonds were selling in the secondary market for only 17% of face value.

A major topic of the forum, then, was how best to compensate prior owners and improve the value of the bonds. One of the options is to guarantee the bonds by purchasing U. S. treasury bonds. The proposed sale of at least 40% of the Nicaraguan telephone company, Telcor, is expected to provide perhaps half of the funds necessary to provide such backing. After some initial debate, a wide consensus emerged to use most, if not all, of the Telcor revenues for this purpose. Participants urged the National Assembly to approve the necessary laws to privatize Telcor by the end of July. Interest was expressed by a surprisingly broad spectrum of participants in allowing foreign investors to purchase even a majority share in Telcor, in the hopes of raising the attractiveness of the sale.

Additional means of raising the value of indemnification bonds were suggested, including using the revenues from the privatization of other state assets, payments by current occupants of large properties, mortgage loans, marketing bonds to foreign and domestic investors, allowing bondholders and workers to purchase Telcor shares with bonds at 50% of face value, lotteries, and international assistance.

A second issue discussed in the forum was how to provide greater security against suits and evictions to small beneficiaries of urban and land reform. There is a broad consensus in Nicaragua that the distribution of small plots of land and houses to people of few resources serves a social benefit for the country. Participants agreed that, unless they have abused the reform laws, such beneficiaries should be allowed to stay on their property and former owners should be compensated. Participants further agreed that small beneficiaries need greater security against suits and evictions, and discussed ways to provide such security for these small property holders while they are wating for property claims to be sorted out and proper titling to take place.

One option that was discussed is for the National Assembly to approve a new law to give protection against suits and evictions to legitimate small beneficiaries until title is received. Another option is for the state to exercise its rights of eminent domain and expropriate property for social uses, provided owners are promptly and adequately compensated. The problem with the second option is that it implies post hoc compensation over a long term, rather than a priori cash compensation, as is usually contemplated in such expropriations.

The larger properties have consistently caused the greatest conflict in Nicaragua, particularly luxury houses occupied by Sandinista and military leaders. On this point, participants generally agreed that properties larger than some social criterion ₄ should either be paid for by the occupant or returned to the former owner. The specific conditions under which property should be returned, or how much should be paid, however, are still being debated. Likewise, all participants agreed that abusers of the property laws, including those who received more than one house or property, should be prosecuted by the Attorney General's office in the courts. Support for mediation and arbitration alternatives was also strong among participants.

On the other hand, with few exceptions, most Nicaraguans support the legitimacy of one of the earliest decrees after the Revolution, Decree 3 of July 1979, which confiscated land and property from the Somoza family and very close associates, and therefore oppose the return of that property or compensation for it. Indeed, the legitimacy of the Decree is upheld in the UNO platform prepared for the 1990 elections. A second decree (# 38, August 1979) widened the circle of confiscations/expropriations to Somoza government and National Guard officials and business associates. Although many Nicaraguans continue to view those confiscations/expropriations as legitimate, some are concerned that it was misapplied to some individuals.

The Chamorro government has been reviewing property claims that fall under Decree 38 to determine whether the original expropriations were legitimate, and indeed has compensated or returned the property of some of those claimants. This is a particularly sensitive issue for the government since it touches the very origins of the revolution.

Finally, President Carter recommended a Follow-up Commission involving government, legislative, and civil society representatives to begin meeting immediately to ensure that these steps will be implemented, and to explore various options to carry out the general recommendations. The first meeting took place July 14 at the UNDP offices in Managua (see Appendix 6 for the list of Commission Members).

At its first meeting, the Follow-up Commission agreed that settling the property issue is an urgent national priority, and that their work should be completed within three months. The Commission set up two subcommittees to work on the security of small property holders and on ways to improve the value of the bonds. They also discussed future subcommittees on abuses, large properties, and privatization. The Commission further agreed to include a representative of the U.S. property owners, in addition to the Nicaraguan confiscados and bondholders. Finally, they agreed to meet again within ten days to hear the reports of the first two subcommittees.

Concusions

First, the fact of the Montelimar meeting was an important accomplishment in itself. The forum reflected an important maturing of Nicaraguan society as participants from all sides of the issue came together to discuss their differences in an atmosphere of respect and constructive problem-solving. It jump-started the slowly-building consensus and galvanized the participants to act rapidly.

Second, the set of general principles identified at the meeting is a powerful statement about the ability of the society to move forward in resolving this difficult and divisive issue. Nevertheless, while these principles may serve as a starting point, the real test has yet to come as the National Assembly, the executive, and the follow-up commission take the concrete steps needed to carry them out. The intensive discussion already taking place in the first ten days after the conference demonstrates the will and commitment of all the actors to move on this issue.

The most immediate steps are for the National Assembly to approve the laws to privatize Telcor, and to consider legislation to give security to small beneficiaries. The Follow-up Commission and the government must deal with the hard questions of how to enforce the general principle that larger beneficiaries should pay for their properties, and under what conditions property should be returned to former owners. The court system needs to be expanded by the addition of the five courts already approved in principle by the Supreme Court. The titling process must be accelerated, with the assistance of the international community and with the participation of the organizations representing the small beneficiaries -- Movimiento Comunale and UNAG.

Finally, the concerns of the principal groups affected by the problem must be considered as specific options and formulas are explored to implement the general recommendations in a fair and efficient manner.

APPENDIX 1

Summarly Statement by Jimmy Carter

Conference on Property Co-Sponsored by Carter Center and UNDP

July 5, 1995

Montelimar, Nicaragua

Points of Consensus

1. Security for Small Property Holders

   There is a general consensus that distribution of small plots of land and houses to people of few resources serves a social benefit for the country. The current administrative procedure reviews such cases and grants a solvencia to document that they have complied with the laws of the country.

   Solvencias, however, do not grant property rights. The process of surveying and processing the title will take some time, perhaps two to three years for all of the cases in the country. In addition, in many cases, the government does not currently have possession of the titles and can only receive those titles when the former owners receive compensation for land expropriated for social uses.

   Therefore, the participants agree that some protection for the small property holders is desirable until they receive the full title. At least two options were discussed: First, a law could give protection to legitimate holders of solvencias against suits or evictions. Any occupants who do not hold legitimate solvencias would be dealt with through the courts. This option received wide, though not universal support, and therefore is the more feasible of these options. However, the manner of implementation of this idea should be left to the Assembly and the Executive.

   An alternative is that the state could exercise its rights of eminent domain and expropriate property for social uses, provided owners are promptly and adequately compensated. The problem here is that this option would mean post hoc compensation over a long term, rather than immediate, cash compensation as usually contemplated in such expropriations.

2. Compensation for Confiscados

   There is a broad consensus that confiscados of small and larger properties should receive prompt and fair compensation, and that the indemnification bonds issued by the government need to be increased in value.

   The primary mechanism to raise the value of the bonds is to use a substantial portion, if not all, of the revenues from the privatization of at least 40% of Telcor, and other assets to provide guarantees for the bonds. The sale of Telcor and the use of the proceeds would be overseen by a mixed commission including the executive and legislative branches, confiscados, and others.

3. Large Properties

   A broad consensus was evident that occupants of properties larger than some social benefit value should pay to receive title. This payment, which could be at cadastral value, would in effect pay for the indemnization of the prior owner, rather than having taxpayers pay for these large properties.

4. Abuses/Enforcement

   All participants agreed that the existing laws should be enforced, and abusers should be prosecuted by the Attorney General's office and the courts.

5. Institutional Mechanisms for Mediation or Arbitration

   When appropriate, domestic or international arbitrators should be used on cases not resolvable by the government's review process and prior to the appeal in the courts.

6. Follow-Up Mechanisms

   President Carter suggests that to follow-up this meeting and ensure the expeditious implementation of these steps, a committee should be established representing the Executive (3 Ministers), the Assembly (3 Diputados), 1 Confiscado, 1 Bondholder, 1 person from Communal Movement, 1 from UNAG, 1 from UNAPA, and 1 from UPANIC. The UNDP should act as the Secretariat and convene the first meeting within ten days.

APPENDIX 2

List of Participants

Montelimar

July 4-5, 1995

Co-chairs and Sponsors

Jimmy Carter, former president, United States
George Price, former prime minister, Belize
Robert Pastor, Director, Latin American and Caribbean Program
Jennifer McCoy, Coordinator, Nicaragua Project, The Carter Center
Francesco Vincenti, Resident Representative - UNDP
James Rawley, Deputy Representative - UNDP

Special Invited Guests

Monseñor Bismark Carballo, representative of Cardinal Obando Y Bravo
Mariano Fiallos, President, Supreme Electoral Council
Ernesto Medina, President, National Council of Universities
Gilberto Cuadra, President, COSEP (Business Association)

Nicaraguan Government

Antonio Lacayo, Minister of the Presidency
Emilio Pereira, Minister of Finance
Ernesto Leal, Foreign Minister
Erwin Kruger, Minister of External Cooperation
Alvaro Fiallos, Minister of Agrarian Reform
Carlos Hernandez, Attorney General
Tomas Delaney, Vice Minister for Affairs of State
Dayton Caldera, CORNAP (privatization)
Leopoldo Lopez, Vice Minister of Property
Sergio Narvaez, Minister of Interior

Nicaraguan National Assembly - Deputies

Luis Humberto Guzman, President
Miriam Arguello
Alfredo Cesar
Juan Ramon Aragon
Juan Ramon Gamez
Ivan Salvador madriz
Alonso Porras
Dora Maria Tellez

Supreme Court

Orlando Trejos, President
Enrique Villagra, Vice President
Santiago Rivas, Judge
Roberto Sandino, Judge
Adrian Valdivia, Judge

Political Parties:

FSLN (Sandinista Front)
Daniel Ortega, former President of Nicaragua
Rene Vivas
Joaquin Cuadra Chamorro
Jaime Wheelock

MRS (Renewal Sandinista Movement)
Sergio Ramirez
Jorge Samper
Ricardo Zambrana

PLC (Constitutional Liberal Party)
Arnoldo Aleman, Mayor of Managua
Noel Ramirez
Ivan Escobar Fornos
Jose Alvarado
Rene Herrera
Eliseo Sequeira

PNC (National Conservative Party)
Julio Icaza Tijerino
Julio Ruiz Quezada

Civil Society Organizations:

Frank Rizo, Association of Confiscated Persons
Roberto Vassali, President, Association of Confiscated Americans, Nicaragua
Curtis Hentgen, Association of Confiscated Americans, Nicaragua
Antonio Arauz, President, Association of Bondholders
Luis Raul Cerna, Association of Bondholders
Oscar Cerna, Association of Bondholders
Bruce Culbertson, President, Association of Confiscated Americans, USA
Gerardo Salinas, President, UPANIC (large agricultural producers)
Daniel Nunez, President, UNAG (small agricultural producers)
Enrique Picado, Director, Movimientos Comunales (small urban beneficiaries)
Edgardo Garcia, President, UNAPA (workers in privatized firms)
Lucio Jimenez, Secretary General, CST (Sandinistra labor confederation)
Danilo Silva, Association of Ex-Combatants of War
Sergio Ortega, Association of Ex-Combatants of War
Jose Arguello Cardenal, COSEP

Observers

John Maisto, U. S. Ambassador
Fidel Lopez, Spanish Ambassador
Vicente Sanchez, Mexican Embassy
Anders Backsman, Swedish Embassy
Martin Stabile, InterAmerican Development Bank
Roger Arteaga, Bank for Central American Economic Integration

Technical Advisors and UNDP Staff

John Strasma, Land-Tenure Center, University of Wisconsin
Steve Hendrix, Land-Tenure Center, University of Wisconsin
Mario Flores, UNDP
Humberto Marin, UNDP
Alvaro Herdocia, UNDP
Carlos Zorro, UNDP
Fernando Soto, UNDP
Antonina Vivas, UNDP
Enrique Saenz, UNDP

APPENDIX 3

Meetings during Pre-Conference Trip to Nicaragua

Drs. Jannifer McCoy and Robert Pastor

June 26-29, 1995

Leopoldo Lopez, Vice Minister of Finance
Daniel Nunez, UNAG
Gerardo Salinas, UPANIC
Daniel Ortega, FSLN National Directorate
Bayardo Arce, FSLN National Directorate
Victor Hugo Tinoco, FSLN National Directorate
Sergio Ramirez, MRS leader
Dora Maria Tellez, National Assembly
William Ramirez, National Assembly
Luis Raul Cerna, Bondholders Association
Miriam Arguello, APC, National Assembly (unavailable)
Frank Rizo, Association of Confiscated Persons
Emilio Pereira, Minister of Finance
Leopoldo Lopez, Vice Minister for Property
Aida M. Herdocia, Ministry of Finance
Enrique Picado, Movimiento Comunale
Luis Humberto Guzman, President, National Assembly
Antonio Lacayo, Minister of the Presidency
Enrique Villagra, Supreme Court
Alfredo Cesar, UNO, National Assembly
John Maisto, U. S. Ambassador
Heather Hodges
Paul Trivelli
Arnoldo Aleman, Mayor of Managua, PLC leader
Noel Ramirez
Rene Herrera
Arturo Cruz

APPENDIX 4

Schedule for President Jimmy Carter and Prime Minister George Price

July 4-5, 1995

July 4

5:30 pm

Arrival in Managua

Meet with U.S. Ambassador John Maisto

6:00 pm

Meet with President Violeta de Chamorro

Antonio Lacayo, Minister of the Presidency

7:30 pm

Arrive in Montelimar

8:00 pm

Opening Session of the Conference

9:00 pm

Meet with Arnoldo Aleman and team

10:00 pm

Meet with Daniel Ortega and team

July 5

8:00 am - 4:30 pm

Conference sessions

4:30 pm

Press conference

6:00 pm

Depart Nicaragua

APPENDIX 5

UNDP-CARTER CENTER CONFERENCE ON PROPERTY

MONTELIMAR, NICARAGUA

JULY 4-5, 1995

Co-Chairman: Jimmy Carter and George Price

AGENDA AND QUESTIONS FOR DISCUSSION

TUESDAY, JULY 4, 1995

6-7:30 P.M.

Dinner in Montelimar hosted by Francesco Vincenti

8:15-9:00 P.M.

INTRODUCTION

• Welcome and introduction by Francesco Vincenti, UNDP
• Remarks by former President Jimmy Carter and former Prime Minister George Price
• Briefing on the status of the property issue by Dr. Emilio Pereira, Minister of Finance
• Comments and discussion of general principles

WEDNESDAY, JULY 5, 1995

7:00-8:00 A.M.

BREAKFAST

8:00-8:30 A.M.

CONFERENCE BEGINS

• Introduction by Francesco Vincenti, UNDP
• Invocation by Cardinal Miguel Obando y Bravo
• Remarks by President Violeta de Chamorro
• Remarks by Former President Jimmy Carter

8:30-9:00

BREAK

9:00-11:00 A.M.

BENEFICIADOS OF SMALL PROPERTY (Less than 100 square meters; less than 50 manzanas):

1. Should they be permitted to stay?
2. Should those with solvencias be protected from claims and evictions? If so, how?
3. How to expedite titling? How can small occupants contribute to this precess?

CONFISCADOS, BONDHOLDERS, AND COMPENSATION

1. Should confiscados receive fair, prompt, and adequate compensation?
2. Should TELCOR be privatized? When? What percent of the revenues should be allocated to supporting the bonds?
3. What other methods should be used to increase the value of the bonds?

11:00-11:20 A.M.

Break

11:20-12:45 A.M.

BENEFICIADOS OF LARGER PROPERTY

1. Should occupants be compelled to return houses to original owners or to the state if they have more than one house?
2. Should occupants have to pay the state or original owner for the house that they keep in order to receive undisputed dominio title? How should the value be determined, and what should be the method of payment?
3. Should occupant be evicted from the house if they default on the payment? How?
4. Should beneficiaries of the agrarian reform return any property that exceeds 50 manzanas or pay the state for it? What should be the value and method of payment?

CONFISCADOS - LARGE PROPERTY

1. In which cases, should the confiscados receive their property, and in which cases, should they receive compensation?
2. What should be the method for determining the value of the property, and the method of payment?
3. Are new legal procedures necessary to limit the number and time of judicial proceedings? Should mediation and arbitration be used? Are new courts needed?
4. Should foreign claimants be treated in the same manner and using the same principles as Nicaraguan claimants?

12:45-1:00 P.M.

BREAK

1:00-1:55 P.M.

WORKING LUNCH

2:00-3:15 P.M.

COMBINING THE PRINCIPLES INTO A PACKAGE

1. Based on the principle that each group should contribute in order to receive some of what they seek, what should a package on the property issue look like?
2. How can an agreement on property serve to stimulate new investment from Nicaragua and abroad?
3. Summary of points of consensus
4. When should the agreements be implemented? How?

3:15-3:30 P.M.

BREAK

3:30-4:20 P.M.

DISCUSSION/ PREPARATION FOR PRESS CONFERENCE

4:20-4:30 P.M.

BREAK

4:30-5:00 P.M.

PRESS CONFERENCE AT MONTELIMAR

APPENDIX 6

LIST OF FOLLOW-UP COMMISSION MEMBERS _*

Participants in Meeting of the Follow-up Commission on Property

Friday, July 14, 1995, 2:30pm, UNDP, Managua

National Assembly: (3)

Miriam Arguello
Juan Ramon Gamez
Alfredo Cesar

Nicaraguan Government: (3)

Emilio Pereira, Minister of Finance
Dayton Caldera, CORNAP
Hortensia Aldana, Director of OOT

UNAG: (2)

Juan Ramon Aragon
Sinforiano Caceres

UPANIC: (2)
Gerardo Salinas (President)
Harod Baldizon Vega (advisor)

Movimiento Comunale: (2)
Enrique Picado (Director)
(plus a legal advisor)

UNAPA: (2)

Edgardo Garcia (President)
Julio Cesar Munoz

Association of Confiscated Persons: (2)

Frank Rizo
plus one

Association of Bondholders: (2)

Antonio Arauz (President)
Luis Raul Cerna (Secretary General)

UNDP (Secretariat of the Commission) : (8)

James W. Rawley
Enrique Saenz
Alvaro Herdocia
Fernando Soto
Jairo Morales
Antonina Vivas
Mario Arana
Javier Molina

APPENDIX 7

Latin American and Caribbean Program

THE COUNCIL OF FREELY ELECTED HEADS OF GOVERNMENT

The Council of Freely Elected Heads of Government is a group of 25 current and former heads of government from throughout the Americas. The Council was established in November 1986 at a meeting chaired by former U.S. Presidents Jimmy Carter and Gerald Ford on "Reinforcing Democracy in the Americas" at the Carter Center. The Council's goals are to reinforce democracy in the Americas, promote multilateral efforts to resolve conflict in the hemisphere, and to advance regional economic cooperation.

The Council has been a pioneer in mediating and observing elections. The Council or its representatives have observed 13 elections in 9 countries: Panama (1989, 1994), Nicaragua (1989-1990), the Dominican Republic (1990), Haiti (1987, 1990, 1995), Guyana (1990-1992), Suriname (1991), the United States (1992), Paraguay (1993), and Mexico (1992, 1994). The elections in Nicaragua and Haiti were the first free elections accepted by all parties in the two nations' histories, and in Guyana, the first such elections in 28 years. The Council has worked since the elections to help consolidate democracy in Guyana, Nicaragua, Panama, and Haiti. In addition to reinforcing democracy, the Council has supported efforts to resolve the debt crisis of the 1980s, and to promote freer trade in the 1990s. Members have worked to resolve the property problem in Nicaragua and the Ecuador-Peru territorial dispute, among other issues.

The Council is based at the Latin American and Caribbean Program of the Carter Center of Emory University. Dr. Robert Pastor, Fellow at the Center, is Executive Secretary of the Council; Dr. David Carroll is Associate Director; Dr. Jennifer McCoy, Senior Research Associate; and Ms. Harriette Martin, Administrative Assistant.

Council of Freely Elected Heads of Government - Members

• Jimmy Carter, Chairman of the Council, former U.S. President (1977-81)
• George Price, Vice-Chairman, former Prime Minister of Belize (1981-84, 1989-93; Premier, 1965-81)
• Jean-Bertrand Aristide, President of Haiti (1991-present)
• Rafael Caldera, President of Venezuela (1969-1974, 1994-present)
• John Compton, Prime Minister of St. Lucia (1987-present)
• P.J. Patterson, Prime Minister of Jamaica (1992-present)
• Julio Maria Sanguinetti, Uruguayan President (1985-1989, 1995-present)
• Raúl Alfonsín, former Argentine President (1983-1989)
• Nicholas Ardito-Barletta, former Panamanian President (1984-1985)
• Oscar Arias Sánchez, former Costa Rican President (1986-1990)
• Patricio Aylwin Azocar, former President of Chile (1990-1994)
• Fernando Belaunde Terry, former Peruvian President (1963-1968, 1980-1985)
• Belisario Betancur, former Colombian President (1982-1986)
• Rodrigo Carazo, former Costa Rican President (1978-1982)
• Vinicio Cerezo, fromer Guatemalan President (1986-1990)
• Joseph Clark, former Canadian Prime Minister (1979-1980)
• Gerald Ford, former U.S. President (1974-1977)
• Osvaldo Hurtado, former Ecuadoran President (1981-1984)
• Luis Alberto Lacalle, former President of Uruguay (1989-1995)
• Alfonso López Michelsen, former Colombian President (1974-1978)
• Michael Manley, former Jamaican Prime Minister (1972-1980, 1988-1992)
• Carlos Andrés Pérez, former Venezuelan President (1974-1979, 1989-1993)
• Erskine Sandiford, former Prime Minister of Barbados (1987-1994)
• Edward Seaga, former Jamaican Prime Minister (1980-1988)
• Pierre Trudeau, former Canadian Prime Minister (1968-1979)

Nicaragua

Jimmy Carter's compromise

MEXICO CITY

ORDINARY Nicaraguans are still paying for a decade of Sandinist misrule. Early gains in education and health have been wiped out by the mess that the Sandinists made of the economy. And even their land distribution, which did help many peasants, has proved a mixed blessing: the legal morass till now surrounding seized property has been the chief obstacle to fresh investment. But on that front there is at last hope.

The seized land, about 25% of all arable land, was distributed among 170,000 families. Many were poor, long abused by the ruling Somozas or the rich who prospered under them. But the leaders of the revolution also grabbed scores of grand homes for themselves. And that has been the real trouble. Now the leaders of all the many political factions - aided by the indefatigable Mr Compromise, ex-President Jimmy Carter - have agreed to a solution.

Gathered last week at a seaside resort, right, centre and left agreed that transfers to small farmers had served a social purpose, and considered measures to give them more security, from speedier issue of title deeds to protection against eviction. Secondly, the former landowners will get compensation - probably from the government, if the land was truly distributed, direct from the big individual land-grabbers, if not.

Acceptance of the government compensation scheme is a big victory for President Violeta Chamorro, who set the ball rolling two years ago. Under her plan, exlandowners who settled suits were to get long-term bonds. These could be held till maturity, or used immediately at face value to pay back taxes or buy goverment assets. But so many rejected the scheme that the bonds issued so far, about $265m-worth, have retained less than a fifth of their face value on the secondary market.

Cross-party acceptance gives this scheme a boost. But more was needed to make it acceptable to the ex-landowners: money. And where was that to come from? Here was the other advance. Having bickered for months, the gathered politicians agreed to privatise shares in the state telecoms firm. A sale of 40% might bring in $100m-150m, in hard cash - and more than proportionately extra if Congress were to sell a majority stake. Most of the money will go to buy American Treasury bills, to be placed in trust to back the compensation bonds. The finance minister believes the scheme will double the bonds' market price by September.

The accord came just after a lengthy constitutional impasse had been resolved, thanks to intervention by the local cardinal and pressure from creditor countries. Pressure from the United States in the thousand or so disputes involving Americans also helped. But the real hero was Mr Carter, whose presence shamed others into putting party squabbles aside.

Not that the way ahead is yet clear. The 12-man commission that will follow up the accord may prove unwieldy. With a presidential election due in 1996, the parties may revert to backstabbing. Even without that, Congress may prove reluctant to legislate to allow the telecoms sell-off. But if all goes well, the much-derided Mr Carter will have helped bring about the best news impoverished Nicaragua has heard in years.

APPENDIX 8

Nicas acuerdan resolver conflicto de propiedades

Servicios de El Nuevo Herald

Montelimar, Nicaragua - Con la mediación del ex presidente Jimmy Carter, los lideres nicaragüenses alcanzaron el miércoles un acuerdo para dar los primeros pasos destinados a solucionar el conflicto de las propiedades confiscadas, que ha estancado la economía.

Al concluir la reunión en un balneario de la costa del Pacifico, Carter dijo que el espinoso conflicto es "tal vez el impedimento más serio que existe para el desarrollo económico" en Nicaragua.

Carter señaló que los lideres coincidieron en la necesidad de llevar a cabo la venta del monopolio estatal telefónico, Telcor, para ayudar a financiar el pago a miles de personas cuyas propiedades fueron confiscadas durante el gobierno sandinista.

La presidenta de Nicaragua, Violeta Chamorro, prometió solucionar antes de que concluya su mandato, en enero de 1997, el problema de las propiedades confiscadas.

Nicas en vías de solucionar disputa de confiscaciones

"No quiero dejar al próximo gobierno esa cruz, que para mi ha sido la más dificil de cargar en estos cinco años. Tengo la misión de regresar todo aquello que esté pendiente de devolución", dijo Chamorro al inaugurar el foro al que asisticron, entre otros, Carter y el ex primer ministro de Belice George Price.

Las disputas sobre las propiedades, que han hecho que los inversionistas no se atrevan a invertir en este pais extremadamente pobre, se remontan a la década de 1980.

En la conferencia. codirigida por Carter y Price, que se desarrolló en Montelimar, 70 kilómetros al oeste de Managua, participaron también ministros y legisladores.

También asistieron empresarios privados y lideres pollticos, entre cllos el ex presidente sandinista Daniel Ortega, bajo cuyo gobierno fueron confiscadas propiedades de miles de nicaragüenses y centenares de extranjeros.

"Nunca me imaginé que en mi misión iba a tener que afrontar el enorme problema de las propiedades expropiadas por el sandinismo a personas que nunoa debieron ser confiscadas", señaló Chamorro, tras reiterar su "profunda voluntad" de solucionar el problema.

La gobernante hizo una reseña en su discurso de las acciones emprendidas por su gobierno para resolver el asunto, aunque reconoció que "falta mucho por hacer".

"Hemos regresado miles de propiedades que estaban en manos del Estado, hemos entregado titulos [escrituras] a más de 10,000 familias campesinas beneficiadas por la reforma agraria y compensado a centenares de antiguos dueños a quenes por diversas razones no se les puede devolver sus bienes", explicó Chamorro.

La Presidenta expresó su "firme confianza" en que los nicaragüenses "logremos un acuerdo" sobre la mejor forma de encontrar soluciones "realislas y satisfactorias" al problema dc confiscaciones hechas por el régimen de Ortega entre 1979 y 1990.

Por su parte, Carter, que llegó el martes por la noche a Managua, reiteró que en Nicaragua "ha llegado el momento de resolver" el asunto de las propiedades en conflicto.

El Congreso estadounidense en particular ha prestado una amplia atención a los casos.

De los 15,985 casos pendientes, unos 1,000 involucran a ciudadanos estadounidenses.

Carter insistió en el "bajo valor" de los bonos entregados por el gobierno de Chamorro a las personas cuyos bienes no pueden ser devueltos.

Nicaragua moves to end land disputes

By TIM JOHNSON

Herald Staff Writer

MONTELIMAR, Nicaragua - Under the guidance of former President Jimmy Carter, Nicaraguan leaders reached consensus Wednesday on immediate steps to deal with a maze of property conflicts bogging down the economy.

Concluding a meeting at a Pacific seaside resort, Carter said that untangling the conflict is "perhaps the most serious impediment that exists ... to economic development" in Nicaragua.

Carter said the leaders agreed on the need to move ahead with the sale of the state telephone monopoly, Telcor, to help finance bonds to pay thousands of people whose property was confiscated under the Sandinista government that left power in 1990.

The 36-hour meeting brought together a cross-section of the nation's politicians, including former President Daniel Ortega of the Sandinista Front and President Violeta Chamorro, a centrist who succeeded him five years ago.

Massive property giveaways under the Sandinistas have mired the country in conflict. Some 25 percent of arable land is under dispute.

About 170,000 families benefited from the land giveaways, which included small lots and cooperative farmland. Scores of Sandinista leaders grabbed luxury houses after their movement took power in 1979.

Settling the land claims would cost an estimated $650 million, the Chamorro government estimates.

A final document noted that a consensus had emerged that the giveaway to small landholders "serves a social benefit for the country" and they should be given legal protection and titles. But those whose lands and homes were confiscated "should receive fair and prompt compensation."

Carter exhorted legislators to move quickly on the sale of Telcor, describing its privatization as vital to raising money to finance bonds that the Chamorro government is offering to compensate affected property owners.

Many affected owners have rejected the bonds, which now trade for as little as 16 percent of their face value.

At least six foreign companies have qualified to bid on the state telephone monopoly, which is expected to bring $250 million.

Carter said the government could raise additional money for the bonds by auctioning off a state cement company, the state power utility or other assets, and by appealing for foreign donations.

Confiscated property owners emerged from the meeting voicing hope over the Chamorro government's pledges to allot more money for the compensation plan.

"If the government comes through on what it says, this will be the solution to the property problem," said Raul Cerna, president of the Bondholders Association, a group representing property owners.

Notes

Note 1: This report was made possible through support provided by the Office of Regional Sustainable Development, Bureau for Latin America and the Caribbean, U.S. Agency for International Development, under the terms of Grant No. LAG-0591-G-00-4010-00. The opinions expressed herein do not necessarily reflect the views of the U.S. Agency for International Development. Back.

Note 2: Only 31% of the total properties claimed by U.S. citizens were owned by U.S. citizens at the time of expropriation or confiscation; the remainder were owned by Nicaraguans who subsequently became naturalized U.S. citizens. Back.

Note 3: An additional number of U.S. property claims were submitted after the deadline of the administrative review process, and therefore are being pursued in the courts. Back.

Note 4: The figures most often given for properties to qualify as a social criterion and therefore for occupants to receive free titles are: less than 100 square meters for houses (about 1000 square feet) and less than 50 manzanas for agricultural property (about 87 acres). There is still some debate over the exact measures that should be used, however. Back.

Note *: Commission members agreed at the meeting to invite the Assoc. of U.S. Confisados to name a representative to join the Commission. Back.