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Nicaragua: no friend at the I.D.B.

In pursuing its goal to unseat the Sandinista government, the Reagan Administration has violated the primary rule of multilateral development banks: lending decisions must not be based on political criteria. For years, Jose Manuel Casanova, the U.S. representative to the Inter-American Development Bank, has successfully stalled a $59.8 million loan to Nicaraguan farmers. Most recently, the dilatory tactics received a boost from Secretary of State George Shultz.

Nicaragua applied for the money, which would finance crops of corn, beans, rice, cotton and coffee, in June 1982. More than two years passed, and no loan was forthcoming. Anxiety over the delays began to be expressed in official minutes of meetings of the bank's executive directors. According to a confidential transcript dated November 14, 1984, J. Alexey de Synegub of Guatemala, who represents the Central American countries, complained, "This [application] was submitted a long time ago. . . . Inasmuch as the growing season is drawing near, they [Nicaraguan officials] would be quite worried if the negotiations should not advance." Bent W. Christensen, executive director for the Western European respresentatives, told the board, "I wish to record deep concern at the continuing problems which are affecting the approval of I.D.B. loans to Nicaragua."

The problem facing Casanova is that loan has been approved by the I.D.B.'s loan committee and would undoubtedly command majority support if it came up for a vote. At this point, the only sure-fire way for the United States to block such a vote is to refuse to attend any meeting that has the Nicaraguan loan on the agenda. Holders of 75 percent of the bank's voting stock must be present for a quorum of the executive board, and the United States controls 35 percent of that stock. A U.S. boycott of a meeting, however, would shake the bank to its very foundations. Even the Reagan

Administration is hesitant about destroying the I.D.B. for the sake of venting its animus toward the Sandinistas.

Enter the Secretary of State. Aware that efforts to thwart the board's majority were about to fail, Shultz sent a personal letter to I.D.B. president Antonio Ortiz Mena on January 30, asking that consideration of the loan be set aside because Nicaragua does not have a prudent plan of economic development and is therefore not creditworthy. Such a direct intervention for political reasons in unprecedented.

Although the letter puts immense pressure on the bank, the bank's directors have little recourse but reject Shultz's argument and let the loan proceed--eventually. But Shultz's purpose is to delay a decision. Any loan approved later than the end of March will come too late for the next planting season. If Shultz's letter succeeds in postponing action, the Reagan Administration will be abel to claim a victory.

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Title Annotation:Inter-American Development Bank
Author:Holland, Max; Bird, Kai
Publication:The Nation
Date:Mar 2, 1985
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