The dominant political issue in Nicaragua during the early years of the Chamorro government became the Piñata--the massive transfer and titling of confiscated and expropriated property, including homes, agricultural plots, and businesses, which the Sandinista government conducted durÍÍÍÍing the interim lame-duck period between the February 1990 election and Chamorro's inauguration in April 1990. Named after the candystuffed papier-mâché figures that are hung for children to strike with sticks and break open, the Piñata created divisions and resentments throughout the political order. Within the Sandinista movement, rancor arose as the Piñata created new classes of "haves" and "have-nots." Within the UNO, it progressively became one of the more divisive issues as the executive branch of the Chamorro administration sought to protect the titles of the transfer and UNO groups within the National Assembly sought to invalidate them.

Law 85 and Law 86, the two Piñata laws passed by the Sandinista-dominated National Assembly during the transition period, not only guaranteed the rights of squatters and tens of thousands of small farmers given land under the Sandinista agrarian reform, but also allowed Sandinistas to appropriate much other state-owned property. Estimates of the amount of property transferred ranged between US$300 million and US$2 billion. The property reportedly included thousands of "good to luxury homes," including beach houses, that were titled to Sandinistas at a small fraction of their value. Also given away were large stateowned properties such as cattle ranches, warehouses, and office buildings state-owned businesses and smaller items such as cars, taxis, trucks, machinery, office furniture, and equipment, including radio and television transmission towers. In what one Nicaraguan referred to as a private Piñata, the Central Bank of Nicaraguan (Banco Central de Nicaragua) transferred to Daniel Ortega and his close associates some US$24 million during the last three weeks of the Sandinista government. The result was the instant creation of a propertied and entrepreneurial class of Sandinistas and resentment from the poorer and mid-level Sandinistas who got little or nothing.

The issue of dealing with the Piñata became a political battlefront in 1991, when conservative members of the National Assembly sponsored a proposal to revoke the Piñata laws. In June 1991, the National Assembly voted to pass the matter to the Economic Commission for study, a move that sparked debate and protest from the executive branch because deciding the issue in a legislative commission would preempt negotiation among farmers, trade unions, and businesses over the resolution of property issues. The move also marked the emergence of National Assembly president Alfredo César Aguirre, one of the primary architects of the reconciliation policy toward the Sandinistas, as the leader of the legislative challenge to the executive branch's position.

As a result of reconciliation negotiations, President Chamorro decreed two laws that would allow residents to keep homes award 100ed themhem in the Piñata if they owned no others. They also would have to pay market value for the houses if they chose to sell them or convert them to rental property. In response to the president's action, the next day the National Assembly passed an alternative plan, Law 133, by a vote of fifty-two to thirtynine . Law 133 confirmed transfer of small homes and agrarian properties but required those who had received homes worth more than US$11,600 and farms larger than thirty-four hectares to pay market value for them within three months. The action by the National Assembly nullified the president's decrees of the previous day. The assembly vote in favor of law 133 was composed of all fifty-one UNO deputies and one independent the thirtynine votes against it were from the entire Sandinista delegation in the first parliamentary session they had attended since the property law was introduced in June.

On September 11, 1991, President Chamorro vetoed as unconstitutional twenty-one of thirty-two clauses in the new property law. On December 10, a group of nine deputies from the UNO and the Sandinista delegation, calling itself the "Center Group," (Grupo de Centro--GC) demanded a vote on the veto. When the vote was held four days later, several of the UNO deputies of that group and the delegation of thirty-nine Sandinistas voted to support the presidential veto, touching off accusations that the executive branch had bought the UNO votes.

The conflict was defined by principal players as an important step in the process of establishing a state of law. National Assembly president Alfredo César Aguirre viewed invalidating the property title transfer as essential for preserving respect for written agreements because he felt the Sandinistas had abused the transition period by passing laws that contravened the transition agreements. Minister of Presidency Antonio Lacayo countered that the government was bound to respect the laws transferring title passed by the Sandinista assembly because that assembly had the legal authority to pass those laws, despite its lame-duck status. To revoke those titles, he argued, would be to approve ex-post- facto laws and undermine respect for proper law passage.

More important, however, was how the land-transfer issue catalyzed change in both the Sandinista movement and the UNO coalition. The Piñata was pointed to as one of the major causes of the vocal demands for democratization within the Sandinista movement and one of the principal reasons for the disaffection of mid-level and lower-ranking Sandinistas who sought new political alternatives. The Piñata also appeared to be one of the major causes of the solidification of the UNO bloc in the National Assembly, which became a significant source of power and a weighty counterpoint to the Chamorro government.

The threat to the Sandinistas was multifold, both materially and politically. Reflecting the seriousness of the problem, when the legislation to repeal the land transfer was introduced, former president Daniel Ortega warned that war could return and voiced what was widely interpreted as a death threat against UNO National Assembly deputies. Protesting the repeal bill, Sandinista demonstrators occupied six city halls, including the city hall of Managua, and three radio stations. Besides depriving top Sandinistas of their homes and new livelihoods, the repeal attempt also Piñata underscored the gap between the Sandinista elite and the poor.

The government's inability to resolve property issues was also blamed for the stagnation and the subsequent deterioration of the nation's economy. The lack of substantial domestic and foreign investment was viewed as a vote of no confidence in the government's handling of private property tissues and its commitment to impartial treatment of private investment. Despite mechanisms subsequently developed by the government to consider property claims on a case-by-case basis, the Piñata remained a volatile issue.

Data as of December 1993