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Ortega’s isolation from the OAS will “indirectly affect” the financial entities

Dante Mossi always argues that the CABEI is an apolitical institution, but the actions he’s taken as president are political

Daniel Ortega and Rosario Murillo. Photo: Government

Redacción Confidencial

2 de diciembre 2021


The extent of the economic repercussions Nicaragua could eventually face from their departure and/or suspension from the Organization of American States (OAS) remains to be seen, warned economist and political analyst Enrique Saenz. Similarly, its effect on the socio-political crisis in which the country has been immersed is still unknown. These outcomes will depend on how the representatives of the different governments that partner with the multilateral organizations view these developments. That view, in turn, is conditioned by each government’s ideological leanings and geopolitical interests.

In an interview broadcast on the online Nicaraguan news program Esta Noche, Saenz stressed that recent political events in Nicaragua, including the November 7th electoral farce and the dictatorship’s continuing wave of detentions, will influence these decisions. Organizations to watch include the Inter-American Development Bank (IADB), the Central American Economic Integration Bank (CABEI) and the World Bank, as their partners make the necessary determinations. 

The interview with Enrique Saenz, as well as all contents broadcast on Esta Noche, are transmitted via YouTube and Facebook Live due to the censorship of the Ortega regime.

During the program, the economist explained that there’s no direct or automatic repercussions from the international financial institutions following Nicaragua’s decision to begin the process of withdrawing from the OAS. Nor are there automatic repercussions if the country ends up suspended from the OAS as a result of measures taken by the General Assembly of Foreign Ministers on November 12.

No matter which of these two scenarios become effective, there’ll be no automatic replication from the financial entities, including the Inter-American Development Bank. Even though the latter functions within the framework of the same inter-American system, it operates with autonomy from the OAS processes.

Despite this, Saenz cautions that we shouldn’t lose sight of what are called “indirect effects” in the votes to approve loans cast by the governments that partner with the multilateral organisms.

“Although there’s no direct or automatic relationship, obviously there’s an indirect connection, in the sense that the largest body of votes in the IADB includes the United States. A part of Latin America has some relative weight, but there are also members from Europe. Seen that way, then – yes – there’s some correspondence between the political declarations of the governments in the OAS framework, and the decisions of the related financial institutions like the IADB. Hence, there will certainly be some repercussions, but not as an automatic reaction,” Saenz explained.

This scenario is slightly different in the Central American Bank for Economic Integration (CABEI). This has become the regime’s principal financial lifeboat, having awarded them US $2.28 billion dollars between 2017 and June 2021.

The United States – the country that has exerted the most political and diplomatic pressure on the regime in demand of civil liberties – is not a part of this financial body. Its principal partners are Honduras, Guatemala, El Salvador, Nicaragua, Costa Rica, Panama, the Dominican Republic and Taiwan.

 “CABEI’s governing structures are its Board of Governors and Board of Directors. Those serving on these boards represent governments that are each guided by specific interests and political inclinations. Clearly, the president of the CABEI plays a very important role in processing and implementing the credits, and in speeding up the transactions, but the CABEI president isn’t the one who approves [the disbursements]. That’s done by the representatives of the different member governments. We’ll have to watch the political evolution of these governments and the real way that the crisis evolves,” noted Saenz.

Dante Mossi has assumed an inappropriate position

The CABEI presidency is currently held by the Honduran Dante Mossi. He’s been accused of extreme complacency with the Ortega regime, despite their atrocities. Under his influence, the regional financial entity has become the principal financial provider for the Ortega-Murillo administration, after multilateral organizations such as the IDB, the World Bank and the International Monetary Fund distanced themselves from the regime due to its brutal repression of the 2018 civic protests. 

Mossi is currently seeking reelection as CABEI president. According to Otton Solis, formerly the Costa Rican representative to this financial body, Mossi “promoted credits for Nicaragua. He came to the board of directors for this, because Dante Mossi is maneuvering for his reelection. In the coming year, the presidency of CABEI is up for a vote. [Mossi] wants to be reelected, so he’s anxious to assure Nicaragua’s vote,” Solis stated in an interview published in the Confidencial news site.

Saenz also questioned the tolerance Mossi has shown towards the Ortega regime. He brushed aside the arguments the Honduran bank president has used to justify his posture.

“It must be said: the CABEI president has assumed an inappropriate position. He always argues that the CABEI is an apolitical institution, but the actions he’s taken as president are political,” Saenz expressed.

The economist explained that a large part of the resources that CABEI receives and channels to its members come from the international capital markets. This allows the financial entity access to resources under more favorable conditions than what an individual government can achieve. The bank then transfers these as credits to those countries that require them.  

As a CABEI partner, Nicaragua is causing instability

“A large part of CABEI’s resources come from outstanding loans. They’re not concessional resources, like those of the Inter-American Development Bank or the World Bank, which are extended on substantially more generous terms. If the partners granting these resources are paying attention to the political evolution [of Nicaragua], and to the credit transactions being realized with their members, evidently this can have an impact, if it hasn’t already, on the reputation and the risks that these lenders perceive,” the economist noted.

“We’re talking about a political situation that’s generating instability in the region, beginning with the confrontation between one of the CABEI members [Nicaragua] with the United States and the European Union, which are Central America’s main commercial partners,” Saenz added.

The economist is among those who believe that Ortega’s actions on November 7th, when he declared himself the electoral victor, after a process with no political competition, doesn’t represent political consolidation, much less economic stability.

Saenz estimates that the regime will face many difficulties in the economic arena. These will be visible, even as the dictatorship’s propaganda apparatus focuses on emphasizing the fact that Nicaragua is experiencing a stage of constant economic growth.

“At present, Ortega doesn’t have any instruments at his disposal to reverse the political crisis. He may seek a summit with his allies in January, to demonstrate that he has some backing. However, he has no means of reversing the international isolation, nor the grave economic situation and its social impact in Nicaragua. Where will he receive economic help? It will either have to come from the multilateral financial institutions, or fall from the sky,” was Enrique Saenz’ final verdict.

This article was originally published in Spanish in Confidencial and translated by Havana Times



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Redacción Confidencial

Redacción Confidencial

Confidencial es un diario digital nicaragüense, de formato multimedia, fundado por Carlos F. Chamorro en junio de 1996. Inició como un semanario impreso y hoy es un medio de referencia regional con información, análisis, entrevistas, perfiles, reportajes e investigaciones sobre Nicaragua, informando desde el exilio por la persecución política de la dictadura de Daniel Ortega y Rosario Murillo.