NICARAGUA: THE OTHER WAR
Strogoff, Nancy
NICARAGUA: THE OTHER WAR BY NANCY STROGOFF The Reagan Administration's war against Nicaragua can hardly be described as "secret." Many months ago, The Washington Post proclaimed on its front...
...Luxury items are the first to go, followed by imported components for manufacture...
...The unemployment rate exceded 33 per cent, production levels were no higher than they had been in the 1960s, international reserves were gone, and capital flight had stripped Nicaragua even of some $66 million the International Monetary Fund had lent the country just months before the Somoza dictatorship fell...
...The Bank is considering an urban management project for the entire country, and it sees agricultural development as an important next stage of lending...
...Congress approved a $75 million economic aid package...
...When the forty-two other member countries backed the loan extension, the executive director for the United States declared, "The current macroeconomic policies of the government of Nicaragua are not conducive to economic development...
...insistence on policies that undermine economic development...
...Describing an urban reconstruction project in the area around Managua for which the World Bank had lent $22 million, an official said, "The Nicaraguan government had performed so well in terms of using the financial and physical resources: They mobilized the people...
...Factories shut down, unemployment rises, the middle class takes its managerial talent elsewhere...
...Despite U.S...
...Tomorrow it could be Argentina...
...But there are other repercussions that will ultimately create new problems for the Reagan Administration...
...But the main thrust against the Sandinistas has been mounted through multilateral development institutions such as Nancy Strogoff is a free-lance journalist in New York City...
...When you open Pandora's box at these banks, anything could happen," he explained...
...It was the best urban development project at the Bank...
...Last May, it cut sugar imports from Nicaragua by 90 per cent, reallocating the Nicaraguan quota to Honduras, Costa Rica, and El Salvador...
...It's exactly the same dynamic that you saw in Cuba," argues Bill Leo-grande, assistant professor of Latin American studies at American University in Washington...
...Western European and Latin American members concurred, attacked the United States for "political motives in economic disguise," and charged that the U.S...
...My understanding is that the Bank's staff does not have any problems with the technical validity of the project," the executive director for Canada replied...
...The American war of sabotage and disruption is seen on the nightly television news— when contras attack from bases in Honduras, when CIA-supplied planes bomb Nicaragua's oil reserves at Puerto Corinto, and when Congress complains about the cost of toppling a sovereign government...
...The repercussions within the Nicaraguan economy are bound to be severe...
...Reagan Administration officials hope to do in Nicaragua what Richard Nixon and Henry Kissinger did in Salvador Allende's Chile— "make the economy scream...
...The Bank approved $30 million for a fishing industry rehabilitation project that the United States had successfully vetoed in 1981...
...Government placed an embargo on wheat shipments to Nicaragua in 1981...
...Most countries receiving U.S...
...I asked a Treasury Department official to explain, and he showed me a document that began, "Nicaragua is currently following unsound macroeconomic policies, which could have a directly harmful effect on this project...
...In addition to sponsoring bombing, burning, and strafing, Washington has waged a quiet economic campaign against the Sandinista government in the halls of multilateral lending institutions...
...Many months ago, The Washington Post proclaimed on its front page, U.S.-Backed NlCARAGUAN rebel army swells to 7,000 MEN.The New York Times once politely headed a front-page dispatch, U.S...
...Refusing to Dispel Impression It Is Helping Anti-Sandinista Forces...
...the World Bank and the Inter-American Development Bank (IDB...
...They'll have turkey and apples and pears for Christmas dinner...
...At the World Bank and the IDB, management and staff are disheartened by U.S...
...During the first eighteen months of reconstruction, the World Bank and the IDB pumped $175 million into Nicaragua for agricultural, rural, urban, and social development projects...
...The purpose of the economic squeeze is to create discontent in the middle class...
...Since the Falkland Islands crisis, a shift in the Argentinian and Chilean votes has made it possible to approve "hard loans," which have somewhat more stringent terms and require agreement of only a majority...
...By pulling down the Nicaraguan economy, one reduces the exports from other Latin American countries to Nicaragua," Feinberg notes...
...The economic blockade made people's ordinary lives very difficult, and yet it made Fidel Castro politically stronger...
...We'll be lucky if we eat beans...
...But we'll vote for loans to Nicaragua...
...For the first time in two years, IDB member nations last September blocked a U.S veto of a loan to Nicaragua...
...Nicaragua is the only Central American nation expected to achieve positive growth this year...
...The problems of the people's daily lives were sacrifices in the struggle against imperialism...
...That's the whole idea," explains Richard Feinberg, an economist at the Overseas Development Council...
...There are stories about rationing, long lines, empty shelves...
...Projects in Nicaragua have proven to be among the most successful the banks have funded...
...One difficulty is that its assault on the Nicaraguan economy can't be contained: It also hurts the economies of Costa Rica, Honduras, El Salvador, and other nations...
...Costa Rica is a prime example of a country racked by capital flight...
...We'll support the United States in World War III," an official at the Argentine embassy said...
...The sugar cut-off cost the Nicaraguan economy about $ 15 million in annual foreign exchange...
...When the Sandinistas came to power in July 1979, they were ripe for aid...
...Also, private businessmen frightened by the tensions in the region don't feel secure enough to invest in the growth of their own countries...
...After heated debate, the U.S...
...and a lot of it was volunteer work...
...Without foreign exchange [from international agencies or other sources], not only can reconstruction not take place, but the government can't afford to import the goods the middle class needs...
...the United States has 35 per cent of the votes...
...press reports, the Nicaraguan middle class is experiencing distress and disaffection...
...position should be a candidate "for what The Washington Post refers to as 'Reaganism of the Week.'" According to U.S...
...More telling, perhaps, was a remark by the executive director for Argentina at the Inter-American Development Bank...
...Civil war had left a devastated country—50,000 dead and hundreds of thousands wounded—and a wrecked economy...
...They built twice as many roads and water supply connections as were expected in so short a time...
...And I think that the Sandinistas are going to be able to do the same...
...The armed assault on Nicaragua constitutes but one element of the war, however...
...Today it's Nicaragua...
...There is, in fact, nothing wrong with Nicaragua's foreign exchange rate that a few international dollars couldn't fix...
...President Carter supported the recovery effort, but shortly after Ronald Reagan entered the White House, his executive directors at the development banks began vetoing loans to Nicaragua, insisting that the Sandinistas were pursuing "inappropriate macroeco-nomic policies...
...If that's true, then the U.S...
...So they didn't blame the government for economic problems...
...It was to have been a "soft window" loan, providing the best terms for the poorest countries, but such loans require approval of 66 per cent of the weighted votes cast by IDB executive directors...
...Within Nicaragua, too, the Reagan Administration's economic squeeze may backfire...
...The document, apparently intended to apply to any Nicaraguan project, cited the country's low foreign exchange rate, current account deficit, and internal investment policy, and concluded that keeping Nicaragua on hold at the development banks "could have a chilling effect on the economy...
...Dissent erupted at the Inter-American Development Bank last summer when the United States vetoed a $2.2 million loan extension for an $18 million rural roads project in Nicaragua—a project that was already 95 per cent complete...
...resistance, the World Bank recently sent another mission to assess the Nicaraguan economy...
...We didn't want to be in a position of subsidizing a government we had serious differences with," said a State Department official at what is commonly called the "Get Nicaragua" desk...
...And they saw them that way...
...aid—from Chile to Costa Rica to Zaire—have monstrous account deficits...
...This, in turn, undercuts the Central American Common Market, which is built on the idea of trade between countries...
...argument about technical problems seems to disappear with the morning mist...
...Instead, they transfer their money to Miami or to Swiss banks...
...As a first step in the process, the U.S...
...In mid-November, The Wall Street Journal reported from Managua: "Those lucky Grenadians," says a legal secretary...
Vol. 48 • January 1984 • No. 1
