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Multinational Monitor: Apart from supporting the Contras, what single step has the Reagan administration taken in the past four years to squeeze the Nicaraguan government?
Jim Morrell: There has been nothing more troublesome than the pressure the United States has exerted on the international lending institutions. All of these poor countries depend on these loans.
Monitor: Is there any way to estimate how much money the Nicaraguans have lost from these international lending institutions?
Morrell:: You can just look at what they were getting during the first few years after the revolution and then add to that what they ought to be getting from the IMF. The basis for an estimate is to look at what the other countries in the region have been getting.
Monitor: What are those figures?
Morrell:: The ballpark figure is that the Nicaraguans ought to be getting several hundred million dollars a year. But the Nicaraguans have been receiving only a fraction of that. During the first few years they got that kind of money.
Monitor: What will happen in the future?
Morrell:: I think that the pride and independence of the Inter-American Development Bank is at stake. so, perhaps, after some more maneuvering and when the congressional appropriations for the Bank come in, maybe the Nicaraguans will get their farm loan. But it will be slow and hard-going.
Monitor: Has the Reagan administration worked out a well-crafted policy through these international lending institutions to "get" the Nicaraguans?
Morrell:: They had a vendetta and they knew what they wanted to do. Apart from that they just pulled the levers. I think it's reactive in that sense.
Monitor: So you would say the most extensive pressure from the Reagan administration has come on the multilateral front?
Morrell:: Well, there is none more significant than that. Perhaps the Nicaraguans could discount the bilateral aid from a conservative American administration, but multilateral institutions are supposed to be above politics of this sort. And it's the unkindest of cuts when they too reduce their aid under political pressure from the Reagan administration.
Monitor: What avenues do U.S. officials use to pressure these lending institutions?
Morrell:: We know that in January of 1982, the World Bank was considering a loan to help improve the water supply in Managua and this went before Secretary of State Haig and he said simply - it was the policy of the United States to vote against all aid loans to Nicaragua. And so the United States opposed that loan. The U.S. Treasury Department had to concoct some story to rationalize its position. But, all of the other countries approved it so it went through. Every loan once it has reached the Executive Board has been approved by every other country. The only exception was a loan before the Inter-American Development Bank in June of 1983 to finish a rural road network that was already 80 percent completed. This loan was defeated by the United States because it had to be processed through a Special Operations Fund that the United States had a veto power over.
Monitor: In your talks with foreign members of these international lending institutions what seems to be the general consensus? What do they say in private about the American position?
Morrell:: I spoke to the Canadians today, and they said they were disturbed and that there was a limit to their patience. They've made public statements on this issue. They say it must be resisted.
Monitor: What can the Canadians or anyone else do to get the U.S. to change its position?
Morrell:: Well, a number of people have already talked to President Ortiz at the Inter-American Development Bank. We'll have to see if a majority of the owners of the Bank tell him that they want to live up to a multi-national charter.
Monitor: What has been the outcome of these discussions?
Morrell:: In the past few months, Ortiz has begun to respond to this pressure. In November of 1984, the Bank's management signed off on this latest agricultural loan of $58 million to Nicaragua. Every other nation in Latin America approved it in principle. At the Vienna meeting in March, a number of nations even denounced the United States' position of scuttling this loan which has threatened the multi-national character of the Bank. You see, the United States doesn't have a veto power on the Executive Board, so its strategy is to pressure the Bank president. The U.S. has veto power in one loan window. called the Fund for Special Operations. But the loan now under consideration is a loan for ordinary capital which the United States has only 35 percent control over in the Executive Board. Once the loan reaches the Executive Board, it will be approved 65 percent to 35 percent. So (Secretary of State George) Shultz wrote to Ortiz on January 30, threatening a cut-off of U.S. funding for the Bank if it approved the loan to the Nicaraguans. And, since the Bank depends very much on U.S. funding, these threats are something to be taken seriously.
Monitor: Would the United States really sever its financial support of the Inter-American Development Bank?
Morrell:: 1 think it might. The Reagan administration may excite the right-wingers in Congress to do that. It would be a real showdown because it would freeze the bank's operations for all of Latin America. Last January our representative to the Bank. Jose Casanova, threatened to walk out if any meeting of the Executive Board considered this loan to Nicaragua. If he walked out it would have frozen the entire operations of the Executive Board because the Bank could not have approved any more loans to anyone. You have to have a 75 percent quorum to conduct business on the Executive Board of the Bank, and the U.S. has 35 percent control over the board. Once an item appears on an executive agenda you can't take it off, unless the person putting it on so requests. So I think the U.S. might consider doing this.
Monitor: As the result of the United States pressure to prevent these international lending institutions from giving aid to Nicaragua have the Sandinistas had to turn elsewhere?
Morrell:: When the U.S. blocked the loan to complete the repairing of Nicaragua's road the Dutch government stepped in and helped fund the completion of rural roads to the coffee fields. The Swedes and Canadians are also providing bilateral aid to Nicaragua. The Canadians, in fact, are exploring the possibility of building a hydro-electric plant in Nicaragua. There are quite an array of countries, east and west, Brazil and Mexico included. that are aiding Nicaragua.
Monitor: Do you think the Nicaraguans will capture new trading partners in the future or will their luck run out?
Morrell:: I think they will persevere. They are an essentially rich and underpopulated country with a lot of resources. But that's all long-term development. Like the rest of the countries in the region, Nicaragua suffers from foreign exchange shortages.
Monitor: Have members of Congress expressed much outrage at the U.S.'s lobbying position?
Morrell:: Oh yes. The Chairman of the House Banking Subcommittee on International Development Institutions, Rep. Stan Ludine (D-NY), has written the Treasury Department, strongly requesting that the normal procedures of the Inter-American Development Bank be followed, particularly on Nicaragua's latest request for 858 million in aid. The purpose of this loan is to help small private farmers in Nicaragua. It's really a renewal of a loan that the bank made several years ago.
Monitor: A top American official told me that the U.S. has not even begun its policy of economic asphyxiation. Do you think that's an accurate assessment?
Morrell:: That's probably true. They could always proclaim a trade embargo. But, I don't think Congress would agree to that as sort of a trade-off or replacement for military assistance. The Reagan administration's consideration of such alternatives are very disruptive to the kinds of relations that the United States has historically had with the nations throughout the region.
Monitor: Do you have much faith in Nicaragua's new foreign investment law?
Morrell:: I don't think that foreign investment will be flooding into there now. Not until there is some resolution with the Contra war. But in the long-term there could be some possibilities.
Monitor: How would you describe the difficulty the Nicaraguans had with the IMF?
Morrell:: Well, they made a basic decision on assuming power that they were going to carry fiscal deficits and that they were going to have subsidy programs to help the poor. None of this would meet the criteria for stand-by arrangements.
Monitor: Recently the Sandinistas suspended their subsidy programs to the people and made other reforms. Are they preparing to appeal to the IMF?
Morrell:: Yes, they are thinking of doing that. They were in arrears with the IMF but I think that can be handled by a small initial payment.
Monitor: If you were advising President Ortega, what would you suggest that he do in the economic arena?
Morrell:: Mend its fences with the international banking community, ask for a compensatory financing facility because it requires less commissionality and try to arrange for an intermediary to deal with the International Monetary Fund so there could be a little more give and take. As you know, the Sandinistas have in the past refused to meet the IMF's criteria. But if they had a little more flexibility, there could have been a meeting of the minds.
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