Central America / Politics

US Senate and House Urge CABEI to Cut Off Funding to Daniel Ortega

Monday, March 20, 2023
José Luis Sanz / Washington

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The U.S. Senate Foreign Relations and House Foreign Affairs Committees sent formal letters on Friday, March 17, to the presidents of Guatemala, Honduras, El Salvador, and Costa Rica asking that “your government use its voice and vote” as shareholders and founding members of the Central American Bank of Economic Integration (CABEI) to “ensure that the bank’s lending does not perpetuate the consolidation of the Nicaraguan dictatorship.”

New Jersey Senator Robert Menendez and Texas Congressman Michael McCaul, the respective chairs of the committees, signed the separate letters to Presidents Alejandro Giammattei, Xiomara Castro, Nayib Bukele, and Rodrigo Chaves. They wrote that CABEI has in recent years “approved nearly $3.5 billion in funding for initiatives to be implemented under the auspices of the Ortega-Murillo regime,” financing which “provides a lifeline to the Ortega-Murillo regime at a time of growing global condemnation of human rights violations in Nicaragua.” Like the countries to which the letter was directed, Nicaragua is a founding shareholder and member of CABEI.

In early March a group of specialists appointed by the U.N. Human Rights Committee to evaluate the situation in Nicaragua issued a 300-page report accusing the Ortega government of committing “generalized human rights violations constituting crimes against humanity” and of a “systematic attack” against civilians “for political reasons”, including extrajudicial killings, arbitrary detentions, torture, and arbitrary deprivation of citizenship and of the right to stay in one’s own country. 

The report asserts that there is enough evidence to conclude that the presidential couple Daniel Ortega and Rosario Murillo are those chiefly responsible for these crimes. “The objective is to eliminate, by different means, any opposition in the country,” said the president of the team of experts, German lawyer Jan-Michael Simon.

In their letters to the heads of state, the foreign affairs committees emphasized the comparison that the U.N. experts drew between the crimes of the Ortega government and those of the Nazi regime in Germany. Just one week after the report was published, Pope Francisco echoed the comparison. “These shocking characterizations of the situation in Nicaragua underscore the urgency of ending a ‘business as usual’ approach with the Ortega-Murillo regime,” they wrote.

The brutality of the Ortega regime and the ever growing contributions from the CABEI, which financed 47 percent of public investment in Nicaragua last year, help explain why the statement came from both chambers and parties in Congress. Menendez and McCaul signed the letters on behalf of the other members of their committees.

In recent years Menendez has been one of the most aggressive U.S. politicians in his criticism of the Ortega regime and the democratic deterioration in other Central American nations. In a Senate hearing in December 2021, he publicly called on the Biden administration to analyze the suspension of Nicaragua and El Salvador from the Central American Free Trade Agreement (CAFTA). He was also one of the primary sponsors of the RENACER Act, which expanded the sanctions against Ortega’s inner circle that had been implemented in the 2017 NICA Act and gave the White House new powers to try to “restrain the loans [to Nicaragua] in multilateral banks and to curb the corruption of the regime.”

Since the approval of RENACER in November 2021, the letter notes, the United States has ratcheted up pressure so that multilateral cooperation with Nicaragua is conducted through entities with “full technical, administrative, and financial independence from the Government of Nicaragua.” The congressional leaders urged the leaders of the four countries to apply similar policy to CABEI’s financial operations.

“Until Daniel Ortega and Rosario Murillo are willing to engage in negotiations that restore democratic governance, respect for human rights, and a timeline for free and fair elections, we urge your government to take steps to increase the transparency and scrutiny of CABEI’s lending,” they wrote. “In the event that Ortega and Murillo are unwilling to permit a political opening, it will be imperative that your government use its voice and vote to suspend funding for their criminal regime.”

An advisor in Washington told El Faro that the letter to the Central American presidents was signed “after months of monitoring the situation and stemming from widespread concerns about the relationship between the CABEI and Nicaragua.” It’s ironic, though, that the letter was sent barely 24 hours after CABEI President Dante Mossi visited Washington on Thursday to participate in a public event at the think tank Inter-American Dialogue and tried with little success to respond to criticism of the financing of the Ortega regime.

In various moments of the conversation, Mossi insisted that the Central American bank “has no human rights clauses” and attributed all final decisions regarding the approval of loans to the members of the executive board, representatives from the countries in the region. “I work for everyone. They are the owners,” he said.

He added that in any review of bank policy “the key is CABEI’s model of governance.” The moderator, CNN journalist Gabriela Frías, asked him if what he was insinuating was that pressure for a change in course at the bank should be directed toward the member countries, rather than at him. “That’s right,” Mossi responded. 

Mossi washes his hands

The activity on Thursday stemmed from a flurry of tweets in mid-February between Mossi and Ryan Berg, the Americas Program Director of the Center for Strategic and International Studies (CSIS). The latter had just published an article proposing, among other U.S. actions toward Nicaragua, diplomatic coordination with Spain, South Korea, and Taiwan —non-regional shareholders of the bank— to “cut off CABEI’s financing” to the country. Mossi challenged him to a debate, and Nicaraguan researcher Manuel Orozco, director of the Migration, Remittances, and Development Program at Inter-American Dialogue, immediately offered his organization’s facilities as the venue.

Mossi, a Honduran economist who worked for 15 years for the World Bank before taking the reins of the CABEI in 2018, earned the nickname of the “dictators’ banker” for the support of the regional bank for the Ortega regime. Minutes into the event, he tried to deny that in an interview in July of last year he said that the international sanctions against Nicaraguan officials were unjust because “people are being accused and judged without due process” nor the right to defense. Frías and Orozco responded almost in unison, citing verbatim the transcript of his interview with Nicaraguan outlet Canal 12 and offering to play the video. Orozco —one of over three hundred Nicaraguans, including dozens of journalists and writers like Sergio Ramírez and Gioconda Belli, whose citizenship was stripped and properties in Nicaragua seized three weeks ago— responded, with palpable indignation, that the banishment was indeed handed down without any legal process.

The banker tried to present himself as a mere cog in the international political and financial machine, repeating six times that the CABEI operates under the same rules as the World Bank and Inter-American Development Bank. But while the World Bank has increasingly restricted its support to the Ortega regime in recent years, the regional bank has multiplied its financing in lockstep with the systematic repression of opposition members and the violation of human rights. In 2021 alone, the election year in which the regime incarcerated seven opposition candidates, the CABEI issued $455 million dollars in loans to Nicaragua. In 2022, with almost 300 political prisoners in Nicaraguan prisons, the government received $482 million more from the bank, most of the money earmarked for public works. The bank’s contributions currently account for 70 percent of international contributions to the country.

Berg reproached Mossi for deflecting responsibility under the argument that decisions about loans are made by the board of directors and asserted that any proposal must first be approved by a technical committee also presided by Mossi. “You can’t say that you’re just following orders,” Berg told him. “I feel that you don’t know how the CABEI works,” Mossi responded. A former U.S. diplomat in attendance compared the banker’s responses to those of the accused at the Nuremberg trials.

When Orozco asked Mossi whether he thought that Nicaragua is a dictatorship, his response drew cries of protest throughout the room: “It doesn't matter what I think,” he said. dijo. “It is not for me to designate who is a dictator and who is not. That's not my job.” He was, in essence, arguing that his opinion had no bearing on the criteria —purportedly technical in nature— on which the bank weighs its funding to Nicaragua. But it also hinted at a second analysis, one consistent with his other statements at the event: the CABEI is not concerned with whether the countries of the region are democratic or whether they commit human rights violations.

One attendee asked Mossi whether he sees a “tipping point” at which the bank would stop financing the Ortega-Murillo government. He responded that, as policy, the bank does not finance arms and munitions, drawing sarcastic laughs in the audience. “That’s a relief,” someone joked. Then Mossi referenced the possibility of sanctions against the country, comparable to those imposed against Russia for the invasion of Ukraine: “If the sanctions regime continues to increase, the bank would be even more limited in terms of what it can finance and, in the case of extreme sanctions, it would apply for a license from the U.S. Treasury’s Office of Foreign Assets Control (OFAC) in order to work on strictly humanitarian issues. That is our plan.”

At the end of the event, El Faro asked Mossi again for his personal opinion on whether Nicaragua is a dictatorship, regardless of whether or not it affects CABEI policy. “I don’t have the elements to judge. I’m an economist,” he dodged. “I look at the facts, and with those that I have in front of me, Nicaragua is a country that has been subject to a disputed election, but we have to live with it. According to the documents that I have in front of me, it is a legitimate government.”

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