THE ESTELÍ ANOMALY
Throughout, the upheaval, the cigar and tobacco city of Estelí — a bastion of Sandinismo since the early days — has been quiet compared to the rest of the country. There have been protests and deaths and crime, to be sure, but nothing on the scale that the rest of the country is seeing.
“The cigar industry is different,” Juan said. “That’s because 99.9 percent of our product is exported for consumption outside Nicaragua, so our industry has been blessed.”
While the whole country has taken a hit economically, Estelí and its residents have been somewhat shielded from the worst of it because their economy is so connected to consumption of their luxury good by foreigners. A small number of factories, especially larger ones, have run into isolated absenteeism because some employees with long commutes to Estelí haven’t been able to get past the same roadblocks that have been slowing down the transport of cigars and tobacco to ports.
“Our production has been affected by personnel not being able to get to work because of the roadblocks on the highways. Many of our workers commute from outside Estelí,” said Freddy Molina, the general manager at Tabacalera AJ Fernandez. "Not having production at 100 percent means we fall behind on fulfilling orders. For a couple of days, there was no way to get cigars to the airport in Managua. That delayed shipments by three days to a week.”
AJ Fernandez employees have also been let out of work half an hour earlier than normal to help them avoid getting stuck in the protests and other crowds that might form after business hours.
Hiccups aside (some of them big hiccups, to be sure), things have been chugging along in Estelí factories.
“We are an absolute exception to the rule in Nicaragua,” Juan said. “Throughout the country — in tourism, the service industry, every other sector — business has been affected.”
Hotels throughout the country have begun to shut down. At certain points in this stretch, restaurants were reported to have been operating at as little as 15 percent capacity. Flights are arriving to Nicaragua practically empty. In this sense, Estelí is an oasis from the economic doom and gloom being faced by the rest of the country.
“The most important business entity in the country is Grupo Pellas, run by Carlos Pellas,” said Wendy Guido, an alternate assemblywoman for the minority Conservative Party in the National Assembly, Nicaragua’s legislative body. “They own Mukul, the luxury resort which is the largest and most expensive hotel in the country. Pellas has closed it. That gives me the impression that other business owners, especially much smaller ones, will have to do the same.”
Wendy told me that even the hospital the Pellas Group owns has been struggling to keep up with influx of patients after it offered to treat people wounded in the protests. Unemployment, she added, is starting to become an issue in some sectors of the economy.
That the cigar industry’s consumer base is outside the country can go only so far for so long to insulate it and Estelí from the effects of all this instability and uncertainty. Whether cigars and the town that makes them follow the rest of the country down this path will depend on how the political landscape changes and how quickly the state, civic leaders and everyday Nicaraguans can mend the wounds of this latest round of turmoil.
Still, Nicholas remains confident that the people of Estelí recognize the important role the industry has played and won’t let things devolve to the point of putting that industry in jeopardy by antagonizing cigar makers and attacking their businesses.
“Every family [in Estelí] has someone who is working or has worked for the cigar industry. If you take the cigar industry out, where is the fulfillment of jobs? There is no other industry there that can put that many people to work, so people are very conscious that this is how they support themselves and their families,” he said. “It might not be perfect, but the cigar industry has come a long way in its standards, its practices, insurance for employees, education for employees, things of this nature.”
For now, most cigar makers seem to have found ways to make do, especially in the lead up to July’s IPCPR trade show Las Vegas, which premium cigar brands usually treat as the venue for their big reveals of new products. That means that they’ve needed to contend not only with the slowdowns in production, but also with the added complication of shipping product from Nicaragua to Las Vegas in time for the show
“Luckily, we were very prepared,” said Nicholas. “A lot of my booth for the IPCPR was prepared and made in Nicaragua. We got everything through. I was on edge for a while and I was going to be on edge until the shipment hit the States. Shipments are coming through. It’s definitely backed us up and we’re behind a cycle on our shipments. We should be on track over the next couple of months as long as things don’t go crazy again.”
WHERE THINGS GO FROM HERE
I’ve only been covering the cigar industry since the start of 2013. Even in that short time, Estelí has been transformed by the cigar industry. Sure, there’s poverty. But there’s also been a palpable sense of optimism on the street, in restaurants, and in the demeanor of the people you deal with around town.
Maybe the most incredible thing about that is that even in this historical socialist stronghold, that optimism seems rooted not in the protectionist policies of a Marxist regime or trust in a paternal head of state, but in the benefits of living in a town driven by a diverse group of competing entrepreneurs making cigars for consumption in the Yankee free market that Sandinismo demonized and even fought for so long. It’s not just the farms and factories, but the economic development that has come along with all that: hotels, shopping malls, restaurants, transportation, professional services.
If living through all that transformational change — and recognizing that it’s owed in large part to the private sector — kicked Estelí’s residents out of their rigid support for their Sandinista president, his violent response to protests against his policy has turned many to outright opposition.
“[The violent response to protests] swayed a lot of people’s opinions,” Nicholas said. “I think everybody was shocked about how fast it went down. Because of how fast it happened, I tend to think that people were not happy and didn’t express it. Maybe there was a fear of expressing it.”
Estelí’s optimism has given way to an anxiety about what the future holds and what the city and country will have to go through to get there. According to Juan, there’s effectively a self-imposed curfew of 6 p.m. because violent crime has spiked with the diversion of law enforcement resources and a general drop in confidence in those institutions. Other cigar makers have talked about their facilities’ guards being held up at gunpoint and the challenge of keeping squatters off of farmland, where they would set up tent encampments and claim the land was stolen during another period of upheaval.
Meanwhile the relative calm in Estelí is just that — relative. There are protests and mortar fire and even some gunfire and deaths. At one point, protesters began using pavers that cigar makers had just paid to pave certain areas with to shield themselves from police, ripping them out of the ground and creating barricades.