Envío Digital
Central American University - UCA  
  Number 93 | Abril 1989


United States

US Policy: Economic Embargo: The War Goes On

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US Secretary of State James Baker told congressional representatives on March 2 that the Bush Administration may offer to lift the nearly four-year-old US trade embargo against Nicaragua if Managua “moves toward democracy.” The same day, Baker said the administration intends to ask Congress for more “non-military” aid for the counterrevolutionary forces in order to “maintain pressure” on the Nicaragua government.

Congress has the authority, under the National Emergencies Act, to nullify the “state of emergency” that had to be declared before the embargo could be imposed or to simply lift the embargo itself by a majority vote in both houses. If Congress did vote to nullify, the President could veto that move. A two-thirds vote would be necessary to override the veto. One Washington observer doubted that Congress would take either of these actions, saying that President Bush is expected to renew the embargo on May 1. A House resolution to lift the embargo, H.R. 418, was introduced in January by Representative Ted Weiss (D-NY), but it is unlikely to attract sufficiently widespread support.

US Turns Economic Screws

As the US-Sponsored contra military activities wind down, the war facing Nicaragua is being fought increasingly on the economic plane. Economic aggression against Nicaragua is no novelty, and low-intensity-warfare proponents in the Pentagon were successful in imposing an integrated package of military, political, economic and ideological tactics against Nicaragua since 1981. Nearly four years ago, one of the most visible manifestations of the ongoing economic war against Nicaragua was put into place.
"I, Ronald Reagan, President of the United States of America, find that the policies and actions of the Government of Nicaragua constitute an unusual and extraordinary threat to the national security and foreign policy of the United States and hereby declare a national emergency to deal with that threat." With that May 1,1985 declaration, Ronald Reagan imposed a commercial embargo against Nicaragua, prohibiting all trade between the United States and Nicaragua and stripping the country's national airline, Aeronica, of its right to land on US soil.
Nicaraguan ships were also banned from landing in US ports and in conjunction with declaring the embargo, Reagan abrogated a longstanding Treaty of Friendship, Commerce and Navigation between the United States and Nicaragua. That treaty states, in part, that "neither party shall impose restrictions or prohibitions on the importation of any product of the other party, or on the exportation of any product to the territories of the other party."

Because it breached that treaty and other charters and agreements (see Appendix 2 for a partial list), the embargo was denounced by the Nicaraguan government as a violation of international law. Reagan Administration Chief of Staff Donald Regan admitted that the measure was not popular with many European nations and Canada, among others, and some congressional representatives worried that it would further escalate tensions in the region as a whole.

A Blow to Free Trade

Nicaragua's main purchases from the United States at the time the embargo was declared were fertilizer, pesticides and irrigation equipment, along with some industrial machinery. Nicaragua's sugar quota to the US had been cut by 90% in May 1983, and was entirely slashed one year later. By 1985 Nicaragua's principal export to the US was bananas. In 1984 Nicaragua bought about $110 million worth of goods from the United States while its exports to the US that year totalled $57 million.

Economic sanctions have long been used by the United States as political weapons against countries considered unfriendly or threatening to the 'United States. The use of this type of sanction increased during Ronald Reagan's two terms as president. But, while the embargo was a very visible measure against Nicaragua, it did not have nearly as devastating an impact as did similar measures against Cuba in the early 1960s. When the embargo was officially announced, Alejandro Martinez Cuenca, head of the President's Secretariat of Planning, commented that "years of tensions have already obliged us to seek other commercial ties. The United States has become a market of last resort." However, the embargo served a political purpose in Washington, giving many in

Congress a chance to "do something" and directly confront the Sandinista government. Only days before the embargo was declared, Senator Lloyd Bentsen (D-TX) was quoted as saying, "It doesn't make any sense for us to buy their goods and finance with our dollars the export of their revolution." Langhorne Motley, then-Assistant Secretary of State for Inter-American Affairs, said I the embargo that President Reagan was "looking for different ways to get the attention of Nicaragua."

Ironically, the Nicaraguan private sector (long held up by I US government as those most hi by the revolutionary process in Nicaragua) has also been hard 1 by the US embargo. COSEP, staunchly anti-Sandinista private business association, has expressed concern in the past that the embargo is affecting the private sector more adversely than the government, its intended victim. In early March, COR-DENIC, another private business grouping more moderate than COSEP, called on the US government to lift the commercial embargo.

The Embargo Up Close

Dr. Fernando Silva, a poet and director of La Mascota, the children's hospital, led a visiting US group through the hospital in mid-1986. The group stopped to peer into a small storeroom, as Silva described the contents of each shelf. Then he paused dramatically as he gestured towards several barren shelves. "And here," he said, "we have the embargo." After the US-Nicaraguan Sister Cities Conference held in Managua last June, a Managua city official described the effects of the embargo to a visiting sister city delegation. “Sometimes a factory has to stop producing for lack of a single part. Marchinery will go out of whack because of a lack of oil filters, for example.”

Bananas from Chinandega province which used to be sold to California now must make their way down Central America’s Pacific Coast through the Panama Canal and across the Atlantic Ocean to Europe. In 1984, Nicargua marketed bananas in several Scandinavian countries on an experimental basis, and, after the embargo was declared, began to ship bananas previously sold in the United States to Belgium, the Netherlands, France and Ireland. Several weeks after the embargo was imposed, Jack Pandol, a US banana importer, reported that 25% of his total business would be affected by the embargo, adding that “the US lost and the Nicaraguas did not lose anything.”

It is true that, to a large extent, Nicaragua has been able to get around the embargo by getting some necessary US-made parts and equipment through third countries. Neverthelsess, the costs to Nicaragua are significant (see Appendix 1), and while the embargo has not brought Nicaragua economy very severe blows.

Breaking the Blockade

The embargo stipulates that Nicaragua products can be imported to the US only if they are “substantially transformed” in a third country. So, even after the embargo was imposed in 1985, Nicaraguan coffee continued to be sold in the United States. The coffee, grown in Nicaragua, but roasted and packaged in third countries (principally Belgium and Canada), was not affected by the embargo.

However, in April 1988, the Treasury Department's Office of Foreign Assets Control issued a new ruling that defined the coffee as Nicaraguan. Jim Goetsch of the Indiana-based Friends of the Third World, which sells Nicaraguan coffee, noted that the coffee his organization sells is clearly labelled as Nicaraguan coffee processed in Canada. "We're a nonprofit development agency, [working] with Nicaragua in assisting them to market their coffee." Friends of the Third World, like other groups selling Nicaraguan coffee, attaches a "solidarity surcharge" to each pound of coffee it sells. In the end, the April ruling was not signed into effect by the Treasury Department.
A group based in Madison, Wisconsin, responded to the 1985 sanctions by openly challenging the embargo through imports and sales of Nicaraguan coffee that had not been processed in third countries, stamps and craftwork. The organizers of Trade for Peace acknowledge that their effort was largely symbolic and educational, and intended to call public attention to the embargo. Between 1985 and mid-1988, Trade for Peace imported about $3,000 worth of Nicaraguan goods. Even this sparked the administration's ire, and on September 1, 1988, US Customs officials raided the home of one of Trade for Peace's organizers, seizing all the Nicaraguan goods and confiscating a number of political files as well. In a statement issued after the confiscation, Trade for Peace charged that "the embargo is an immoral war waged on civilians. It has led to child malnutrition and shortages of critical medical supplies."

A "Cleaner" War?

Along with the embargo, Nicaragua has been the target of other, far more damaging, economic sanctions, designed, as were the US pressures against Chile in the early 1970s, to "make the economy scream." Economic measures are often lauded by congressional representatives as civilized, somehow more humane ways to impose the will of the United States on other countries and sidestep the thorny political entanglements into which an issue like contra" aid can lead.

Before the trade embargo was announced, the US had already terminated US bilateral assistance to Nicaragua, significantly reduced its imports of Nicaraguan products, and discouraged investment and loans from private US companies and banks. The US was also effective in blocking loans and credit lines from powerful multilateral funding agencies, such as the Inter-American Development Bank (IDB), the World Bank and the International Monetary Fund. Some assistance did trickle in, but Nicaragua was virtually cut off from these important funding sources.

In April 1986, Joaqui'n Cuadra Chamorro, president of Nicaragua's Central Bank, charged that the US was making it impossible for Nicaragua to get a $58.4 million agricultural loan from the Inter-American Development Bank. The loan was to have been used in assisting small agricultural producers. "The bank has completely caved in to pressure

from the American Administration," Cuadra complained. "It is ceasing to be an honest international lender and is becoming a political agency of the United States government." In 1984, Nicaragua was the only Latin American nation that received no assistance from the IDB; it has received none since.

Bashing Blockade Busters

In June of 1988, the Esquipulas Peace Plan was nearing its one-year anniversary and the Nicaraguan countryside was perhaps the calmest it had been in years in the wake of a short-lived ceasefire agreed to by the Nicaraguan government and contra forces in March at the Sapoa talks. Yet US commitment to economic sanctions seemed, if anything, to be even firmer.

That same month, the Veterans' Peace Convoy, carrying donations of humanitarian aid to Nicaragua, was stopped and held at the US-Mexican border by US Customs agents who claimed that the supplies violated the 1985 embargo. It was only a few months later that US Customs officials raided the Trade for Peace offices in Wisconsin.

Less than two weeks after that, on September 9, US Customs officials seized a cargo container of tools, medical supplies and building equipment due to leave Vancouver, Canada, the following morning. The shipment originated in Los Angeles and had been sent by the US-based group APSNICA, (Architects and Planners in Support of Nicaragua). Also seized was the Nicaraguan National Art Show (legally exempt from the embargo).

What Next?

It remains to be seen whether George Bush will lift the embargo against Nicaragua this May. Secretary of State Baker's hints that it may be hinged on changes in Nicaragua that, presumably, would have to be verified by the US itself. Whatever happens with the embargo, it is highly unlikely that Nicaragua will be receiving either development or reconstruction assistance from the United States in the immediate future. If the embargo is lifted, one scenario predicted by many Central American activists is a sudden influx of US monies to Nicaraguan opposition groups, some of which have already been receiving ongoing assistance from US government-funded organizations such as the National Endowment for Democracy.

The US Agency for International Development (AID) requested $5.1 million in Economic Support Funds for the Nicaraguan private sector. An AID official called the proposed loan “a symbol of political and moral support” for Nicaraguans who “desire to be free.” The Nicaraguan government turned down the loan, due, it said in a latter to AID, to the proposal’s “motivations designed to promote resistance and destabilize the revolutionary government.”

Destabilization measures are sure to step up, whether in conjunction with an ongoing shooting war or as the centerpiece of US policy in Nicaragua. Ongoing and careful analysis of the intertwined facets of the war is essential if the US movement is to respond effectively to the changing face of the war in Nicaragua.

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