World Notes NICARAGUA

"Our only sin was that of trying to give the Nicaraguan people all that they deserve, at the same time we were fighting a war against U.S. aggression." With those words of justification for Nicaragua's shattered economy, President Daniel Ortega last week imposed a drastic austerity program that will slash the national budget by almost half and lay off nearly 35,000 public employees, including 10,000 army personnel and 13,000 members of the security police. The measures are aimed at stimulating production, almost at a standstill, and exports, which have been cut nearly in half by the war. The program also targets Nicaragua's towering rate of inflation, which reached an almost unimaginable 22,000% last year.

Washington greeted the news as the inevitable result of Managua's social and military policies, but hinted it might be willing to negotiate with Ortega at a future date. Opposition leaders, for their part, were disappointed by the government's failure to address political issues that would guarantee democratic reforms. The Sandinistas, Insisting that their adoption of traditional economics implied no shift from revolutionary politics, are betting that their harsh measures can bring long-term economic viability to their regime.