Nicaraguan businessman Alfredo Montealegre marketed his own brand of pasta here and, despite government price controls, he figured to do pretty well. That is, he said, until the government itself decided to compete with him in the noodle business.
The leftist Sandinista government, which now runs about 35 percent of the Nicaraguan economy, has become the competition for many of the country's remaining private businesses. Many say they are afraid the Sandinistas are thinking in terms of monopoly: that they will raid and undercut private companies until the Nicaraguan economy becomes one large Marxist-oriented Sandinista holding company.
Montealegre said the government set the price at which he bought his raw materials, set the wages he had to pay his workers and then passed his products to three successive government distribution agencies, each of which tacked on more to the cost of his pasta.
He said the government then took a superior brand of pasta, donated in large amounts to Nicaragua by Italian interests, and put it on the market shelves at a price that undercut him by a full 40 percent.
"I wrote them a letter," he said. "Theirs is a better pasta. I said, 'You can raise your price to the same level of mine and at least there will be some kind of competition.' They didn't answer the letter."
Another business leader said, "There is a kind of apartheid in Nicaragua today. The Sandinistas are the whites and businessmen are the blacks."
Under Nicaraguan law, the government controls all imports and exports. It is the only wholesaler of agricultural produce in this largely agrarian society. It attempts to control the prices of all basic foods. It controls wages, not only setting minimum wages, but also dictating wage ceilings.
Businessmen complain that they cannot do everyday business, let alone expand or diversify, without dealing with the government at every turn. The Sandinistas say the measures are necessary to eliminate the chaos that once reigned in the Nicaraguan economy, while opponents insist the new system is much more chaotic.
Even Sandinista supporters agree that everyone must break one or more of the new economic laws to survive.
Businessmen smuggle goods into and out of the country, including cattle that are driven across borders into Costa Rica and Honduras where they fetch better prices.
Farmers hide food from government buyers and sell it on the black market. Businessmen say some of the same government buyers themselves sell the goods illegally to supplement their low salaries.
Consumers say low-priced government food rations are not enough and they must go to the black market to fill their market baskets.
Employers pay their employes added wages under the table to keep good workers. Black market money changers buy and sell U.S. dollars needed to do business outside the country.
Critics of the Sandinistas say corruption in the new economy is more prevalent, although much different than it was under dictator Anastasio Somoza, who was overthrown by the Sandinistas in an alliance with businessmen and others in 1979.
"Under Somoza corruption was a matter of vice, usually by government officials," said Rosendo Diaz, an anti-Sandinista entrepreneur. "Today, corruption is an everyday necessity for everyone."
Many business people and skilled workers have left the country. Others have left the formal economy because it doesn't pay and they wheel and deal outside that economy.
Jaime Bengoechea, owner of a pharmaceutical company and an opponent of the government, said the production manager of his laboratory recently quit, saying he could make four times his legal salary just buying and selling used household appliances.
Another businessman, who asked not to be named, talked of how the government had spent $2 million to construct a plant to rebuild engines, but by the time it was finished there was no one left in the country with the skill to operate it.
"People who don't know how to run things are giving orders to people who do," said Bengoechea. "None of these Sandinista leaders has ever run a company, not even a barbershop."
When they took power, the Sandinistas confiscated all of Somoza's extensive holdings and those of his top political and military collaborators. They promised a new "mixed economy" combining government initiative and private enterprise.
But the critics say the Sandinistas continued to confiscate other private holdings as part of a plan to take over the economy. The law states that those who stay outside Nicaragua for more than six months can lose all their property, including their homes. Some businessmen's holdings were confiscated when they were accused of being enemies of the government, or "counterrevolutionaries."
"The government will control what it has to in order to develop this economy, in order to bring this country out of underdevelopment," said Sandinista Front commander Jaime Wheelock, agriculture minister and a top economic thinker in the government.
Nicaragua's poverty is undeniable. Haiti is the western hemisphere's poorest country, and Nicaragua and neighboring Honduras come next.
Nicaragua produces no machinery, vehicles or spare parts. It produces no paper products and, according to business leaders, must import 80 percent of all textiles and medicines and most building materials.
"In this state of incapacity only the government will be able to confront the great economic projects that are necessary," said Wheelock.
While many Latin American nations depend on heavy government involvement to stoke their economies, opponents here say they believe the Sandinistas will go to extremes and follow a Cuban model of government ownership. Wheelock denies it.
"We don't follow models. We follow reality," he said in an interview. "Private enterprise, especially small and medium producers have always been Nicaragua's reality."
Owners of small and medium-sized farms interviewed recently as they applied for government loans at a bank in Leon province said production is harder now because insecticides and fertilizers are harder to find, but none said that they feared a government takeover.
"The Sandinista leadership may be Marxist, but they are learning they cannot live without the private producer," said Enrique Jose Saravia, leader of a farmers' organization affiliated with the government. He said state farms and government-organized cooperatives have proven unprofitable for the government.
"The Israelis can run cooperatives because their people have a certain level of culture and commitment to a cause. Here they don't work. A Nicaraguan, especially the peasant, is too much of an individualist," he said.
"But you can't confront the government here because they will finish you," said Saravia. "You have to infiltrate them." He said his group is getting vehicles, tires, spare parts, fertilizers and other supplies it needs, while government opponents have more trouble finding those materials.
"He is a nitwit," said Montealegre, the pasta maker and Saravia's uncle. "The Sandinistas are going to get rid of all of us someday and that fool too."
Many businessmen who oppose the government, like Montealegre, admit they are making money in Nicaragua. In fact there is a whole new class of wealthy people here, mainly peddlers who bring in needed products such as spare parts for machines, air conditioners, typewriters, clothes and cosmetics.
"If it wasn't for those people this system wouldn't function at all," said Mario Hanon, another business leader. "The fact is the Marxist policies here are creating new entrepreneurs."
Many opposition businessmen insist that those new rich produce nothing and that their fortunes are being created by inflationary monetary policies of the Sandinistas that eventually will undermine the economy.
Some businessmen are insisting that the private sector be more outspoken in its opposition to the Sandinistas, but others are afraid this would lead to reprisals. Earlier this year, Enrique Bolanos, head of the opposition Superior Council for Private Enterprise and the most outspoken anti-Sandinista business figure in the country, saw about 90 percent of his land confiscated by the government, which said it needed it to distribute to landless peasants. Wheelock, in the interview, was more frank.
"Yes we needed land and when you make yourself conspicuous like Bolanos by taking the Reagan position . . . you put yourself at the front of the line when we need land," he said.
As the opposition businessmen decide whether to take a more militant stand against the Sandinistas, some repeat what Sandinista Front patriarch Tomas Borge has said about the matter.
"This revolution belongs to the workers and to the peasants," Borge said recently. "A person can still be rich here, but if he is rich he cannot have political power. If he tries to have political power, he will end up with neither the power nor his riches."