Nicaragua Reminds the US of its Debts
April 11, 2018
Chuck Kauffman / NicaNotes
Passage by the US House Foreign Affairs Committee of the NICA Act brought a rebuff by the Sandinista government of President Daniel Ortega and a reminder of the US's own unpaid debt to Nicaragua. The US owes Nicaragua an estimated $17 billion -- plus 31 years of interest -- for its illegal Contra War to overthrow the Sandinista government in the 1980s under Ronald Reagan and continued under George H. W. Bush. Read the Nicaraguan government's response to the congressional committee's action.
Nicaragua Reminds the US of its Debts
Chuck Kauffman / NicaNotes
(August 2, 2017) -- Passage by the US House Foreign Affairs Committee of the ridiculous NICA Act brought a rebuff by the Sandinista government of President Daniel Ortega and a reminder of the US's own unpaid debt to Nicaragua.
The NICA Act (Nicaragua Investment Conditionality Act of 2017), if it became law, would require US representatives in multilateral lending institutions to vote against loans to Nicaragua until the Sandinista government overthrows itself and turns over power to the US-approved opposition whose support among voters is in the single digits.
I've discussed the NICA Act several times in this space. I have not changed my assessment that it is not ever going to become law, but there are others who take it more seriously and certainly the spurious claims made recently by Global Witness that Nicaragua is the most dangerous country in the world for environmentalists will play into the discourse of Ileana Ros-Lehtinen and other far-right Congresscritters.
So, we can't just ignore it, no matter how slim the prospects of it becoming the law of the land. At the end of this blog I'll suggest some actions solidarity activists should take during the August congressional recess during which time nothing will move forward in Congress.
I think it is worth reproducing in its entirety the Nicaraguan government's response to the congressional committee's action, not just for the zinger at the end, but so we can see how the language used by the Sandinista government has changed while still defending the same principles of sovereignty and self-determination that it defended in the 1980s. Here it is:
The Government of Reconciliation and National Unity, learning of the Introduction of the Legislative Initiative known as NICA-ACT in the Congress of the United States, communicates the following to our People:
1. We reject and condemn the NICA-ACT as the continuation of the historical United States Policy of imperial interference in Nicaragua.
2. Our Country will continue to develop its Policies and Proposals for National Unity, in accordance with our Constitutional Commitments, and our Realities.
3. The Christian, Socialist and Sovereign Nicaragua, will continue to develop its Model of Dialogue, Alliances and Consensus, which has secured Reconciliation, Peace and Unity, allowing us to face all challenges with Faith and Optimism.
4. In a Year of Municipal Electoral Processes, we continue to create optimal conditions for Nicaraguan Families to express their Will, and to elect their Local Governments in Social Harmony, and to guarantee the Peace that we all seek, with Our efforts and daily work.
5. Our People have ratified this Blessed and Free Nicaragua, consolidating a Model and a Project that includes us all as Protagonists of Democracy, Freedom, Security, Advancing along routes of prosperity.
6. The Nicaraguan State has initiated Legal Proceedings which will enable us to require that the United States of America, honor Payment of the Indemnity ordered in 1986 by the International Court of Justice at The Hague, as compensation for the fatal damages caused to the People and Government of Nicaragua, for the destructive and illegal interference of that Power in our National Affairs.
The Nicaraguan State will demand the right of our country to be recognized today, with resources that will be used to promote Peace, Democracy and Development.
Managua, July 27, 2017
Government of Reconciliation And National Unity
* * *
The US government ignores that it owes Nicaragua an estimated $17 billion, plus 31 years of interest, for its illegal Contra War to overthrow the Sandinista government in the 1980s under Ronald Reagan and continued under George H. W. Bush.
The International Court of Justice at The Hague (World Court) found the US liable for the death and destruction of that war in 1986. The Court had not yet ruled on a dollar amount, but the Nicaragua government had developed a rigorous system which determined the deaths, loss of limbs, destroyed infrastructure and lost economic activity were valued at $17 billion.
Someone more wonkish than I am could probably calculate how much interest has increased that figure and how much the pittance of foreign aid from the US has decreased it. US intervention in the 1990 presidential election resulted in the Sandinistas losing the government and one of the first acts taken by US-backed President Violeta Chamorro was to drop the World Court case.
President Ortega officially reinstated the case when he returned to elected office in 2007. Nicaragua Network has repeatedly reminded people of the US legal debt to Nicaragua over the years and to remind people that any US aid has only been small payments on our country's large debt to that country.
As presidential advisor and former Sandinista Comandante Bayardo Arce has pointed out, Nicaragua currently receives no government to government aid from the US with the exception of some small Drug War grants to the Army. So, a cut-off of US aid would only affect the political parties and civil society groups who are funded by US "democracy promotion" programs to undermine democracy and political stability. It would be surprising if those funds were cut off.
But the NICA Act doesn't address US aid, it addresses international loans. And cutting Nicaragua's access to international loans and grants would hurt the economy and poverty reduction programs. How much is a bit hard to calculate. I saw one report using a figure of 70% with regard to foreign aid and the Nicaraguan budget but it was unclear what the 70% figure was referring to.
By our calculations, about 11.5% of Nicaragua's national budget is funded by international aid and loans. That money is almost entirely used by the government to fund social programs, which includes programs such as Zero Hunger and Zero Usury as well as infrastructure such as farm to market roads and overland connections between the Pacific and Caribbean sides of the country.
In the World Bank and International Monetary Fund, the US has traditionally held veto power even though its percentage of votes is less than a fifth of that of all the countries with seats on the governing boards. Would the other countries respect a Trump Administration veto like it has other US administrations? I don't know what the voting rules are. I do know that the Inter-American Development Bank has changed its voting rules so that now no country can veto a loan by itself.
But, to further complicate a risk assessment on passage of the NICA Act is the fact that other multilateral lenders and most bilateral donors and lenders follow the lead of the IMF. A US veto of an IMF loan could potentially cause Nicaragua's access to foreign aid and loans, other than from Russia and China, to dry up which would force it to reduce the national budget by over 10%. That would be a major blow to any country.
Therefore we have to act as if the NICA Act were a serious threat instead of grandstanding for Miami right-wing donors and activists which is what I think it is. Your Members of Congress are home in their districts right now and Senators will be there in another two weeks.
The District visits are going to be dominated by the healthcare issue but it is our best opportunity to drive a stake through the heart of the NICA Act, so please take advantage of this month when every member of Congress will be kicking off their re-election campaign and a third of the Senators will be too, to meet with them and their staff, or to bring up the NICA Act in public meetings. Hardly any of them will have any idea what the NICA Act even is, so if you can plant the idea that it is a bad thing now, we'll be way ahead in the battle if the bill moves forward to votes in the House and Senate.
And, it seems to me that we have one powerful argument why House and Senate members should vote against the NICA Act. It is a reason that should appeal to Democrats and Republicans, liberals and libertarians and it doesn't depend on the politician being a decent human being or even a rational one. That reason is that right now there are very few Nicaraguans among the thousands of Hondurans, Salvadorans, Guatemalans, and Mexicans trying to enter the US from the south.
It is not in US national security interest to damage Nicaragua's economy. The result will not be to change the government, but only to add Nicaraguans to the flow of migrants and refugees flowing north. If that is not a persuasive argument, then neither will be any other that we can put forward.
We will have more actions to take when Congress comes back into session and we get a clearer idea if the NICA Act is going anywhere. It would still have to be voted on in the full House, a subcommittee and the Senate Foreign Relations Committee would have to hold hearings and vote on it, then Mitch McConnell would have to schedule it for a vote in the Senate which would require 60 votes to open debate if even one Senator makes that demand.
If there are any differences between the House and Senate versions of the bill, a conference committee would have to resolve the differences before both chambers of the legislature vote on the final bill. Only then would it go to the president for his signature or veto.
Judging by comments of his ambassador to Nicaragua, Laura Dogu, damaging Nicaragua's economy is not a priority of the Trump State Department. Of course, we don't want it to get that far, so it is important that we take advantage of the August recess to let our elected officials know that we oppose the NICA Act and that we care about how they vote on it.
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