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The Beginning of the End of the "Bank of Dictators" at CABEI

Eduardo Trejos: Imposing limits on credits to Nicaragua and El Salvador is the "right decision", but at CABEI "we need more actions than words"

Eduardo Trejos Lalli, former director of CABEI-Costa Rica. Photo: Taken from La Nación, Costa Rica / Melissa Fernandez

Carlos F. Chamorro

12 de marzo 2024


The new executive president of the Central American Bank for Economic Integration (CABEI), Gisela Sánchez, told Redacción Regional [a network of journalists and media organizations] on March 7 that there are limits to the Bank's ability to grant new loans to Nicaragua and El Salvador. The reason, she says, is that both countries "have already exceeded the limits of the credits they can receive." Three days later, a "clarifying statement" from CABEI reaffirmed that the bank's objective is to diversify its loan portfolio in Central America "and thus open more financing possibilities for all countries in the region." 

In an interview on the program Esta Semana, broadcast on March 10 on CONFIDENCIAL's YouTube channel, we asked Eduardo Trejos, former CABEI-Costa Rica director, if this decision represents the end of the era of Dante Mossi, "the dictators' banker" at CABEI. He responded that this was a "right decision" that had been under consideration for more than two years due to the concentration of the bank's portfolio in both countries. 

However, Trejos says, "We need to see more actions than words" at CABEI to reestablish transparency under a new governance system.

This week, CABEI Executive President Gisela Sanchez announced that CABEI will not grant new loans to Nicaragua and El Salvador because these two countries have already reached the bank's exposure and portfolio concentration limits. How should this decision be interpreted?

It is the right decision. We had seen it coming for two and a half years, given that both El Salvador and Nicaragua had reached their limits. At that time, under Mossi's management, they pulled some technical tricks so that those limits would not be directly reflected and the bank could continue granting credit.

But obviously, it's not up to the president to limit these margins, there needs to be technical arguments that are backed by the Board of Directors.

Can it be said that with the implementation of this new decision, the Mossi era at CABEI is coming to an end?

I would hope so, but we need more actions than words. For example, what I read [from the new president] is that she wants to respond to media requests for information within 24 hours. That is unrealistic. When she says this and then I see that she also says that this will not be the case when files are requested, it's clear that the consistency –or lack thereof– between the rhetoric and the institution's affirmative actions [related to transparency] is what marks the difference.

Obviously, this cannot be done in three months and she has to show that these policies and the new form of governance she is promoting is not really some kind of selective transparency or only related to some programs.

What is the scope of the audit being carried out at CABEI?  Is there really an effort to establish full transparency? There is talk about loan enforcement, but there are also complaints, some even from businessmen who say that they have been vetoed in specific bidding processes in Nicaragua in which the bank has favored companies allied with the Ortega regime.

Yes, I think it's very important that the bank carry out an evaluation of its loan management over the last ten years. But the president doesn't even have to go back that far. She just has to look at the loans that are currently being developed in the area. She'd have more than enough work and it would reap many more benefits, because she would find actors to potentially sanction within the organization itself and in the courts in the countries where they are, rather than looking at things that have already been closed out. 

The reaction of the Nicaraguan Finance Minister has been to question the statement made by CABEI's president [Sanchez], alleging that it lacks technical substantiation. At the same time, he claims that the Nicaraguan government voted to elect her, as if this implied that she owes Nicaragua something in return. How will CABEI view this type of complaint by the Nicaraguan government?

It's terrible, but I'm not surprised that a government like that of Ortega and Murillo would resort to such tactics, nor to these kinds of fringe communication strategies. 

I would have preferred that technical actions been taken earlier, to determine the guidelines for the portfolio ceilings of the founding countries. What happens, for example, when you have uncovered limits? What happens with Guatemala's quota? All these provisions, which have to exist within a multilateral bank, need to be put on the table to technically determine what is going to be done with those resources, because it is not in the bank's interest to have idle loans. 

Therefore, there has to be more efficient management of disbursements of the allowed amounts. We need to look for businesses in the countries we are linked to and not wait for Nicaragua and El Salvador to be the only ones to ask for credit.

Coincidentally, it was also announced this week that the Green [Climate] Fund suspended the $116.6 million Bio-CLIMA project to the Nicaraguan regime, for non-compliance with environmental and social safeguards. In this project there was a $46 million CABEI loan. Was this a decision of CABEI or the United Nations?

I understand it was the United Nations. In the interview I saw that UNOPS [United Nations Office for Project Services] was involved in the management of those loans in Nicaragua. But they are not exempt from also having made some mistakes in a very complicated management situation such as the one in Nicaragua, where the Ortega-Murillo regime can put into writing any argument to support their interests. If [UNOPS] is only going to ask for documents, the regime will give them the documents they need – they're experts at that. But it's also necessary to go and see the projects in situ, to make surprise visits, to make short-term audits to be able to avoid being deceived and lied to in the projects that are being developed.

Last week, the report by the United Nations Group of Experts on Human Rights, which has documented crimes against humanity in Nicaragua, made a recommendation to the International Monetary Fund and other international financial institutions that in any dealings with the Government of Nicaragua, violations of human rights and the rule of law should be incorporated into their assessments. Could this have any impact on relations between the Fund –and other financial institutions– and Nicaragua?

I hope so, but from what I've seen, the [analysis in the] IMF's annual reports about [Nicaragua's] progress [is] terrible. The [quality of the reports] is not getting better, they're getting worse, in terms of their assessment of the Ortega-Murillo government's economic management. They're becoming more and more complacent in their tolerance of the closing of NGOs, making it seem as if the closings are the result of a transparent process. Any action aimed at promoting better governance of Nicaragua's international loans is welcome, but I have not seen any progress in that sense.

What can be expected in terms of the impact of this recommendation on the Central American Integration System (SICA) and its organizations?

First, I would hope that SICA doesn't appoint a front man for Ortega and Murillo to the General Secretariat. SICA has enough institutional and governance problems and dilemmas that it needs to embark on a path of constant improvement and leave behind the dark moments it's been in over the last few years.

How much does this depend on the political balance among the countries that make up SICA? For example, the new president of Guatemala, Bernardo Arévalo, told us in an interview that, due to the authoritarian nature of some governments, he believes that no progress can be made in political integration in Central America, and that the relationship will be restricted to technical and commercial matters.

Yes, I agree with [President Arévalo]. By the way, they have just announced the departure of Guatemala's representative to CABEI, who will likely be replaced in the next few days.

And that [the impossibility of integration because of the authoritarian nature of some governments] is what leads to very concrete, very specific, and not very far-reaching agendas. It's what happens when you have regimes like El Salvador's or Nicaragua's or the shortcomings of the Honduran regime and the management problems we have in Costa Rica and Guatemala.

So any light that is being shed is going to be short-lived. There's no basis for making great advances. Maybe it [SICA] can hold on, so that the whole process of Central American integration doesn't end up being torn apart.

At the end of February, the Secretary of the Russian Security Council, General Nikolai Patrushev –who is very close to Vladimir Putin–, visited Nicaragua and met with Ortega and with the head of the Army, and reiterated a military and security alliance between the two countries. What impact does Russia's alliance with Nicaragua have in Central America?

Yes, it's becoming more and more complicated, not only with Russia, but also with Iran and other countries that have the propensity to infringe on the internal processes of Latin American countries.

Costa Rica has always played an important role in containing and monitoring these movements, and it is essential that Costa Rica not slow down in this regard, and that it closely follows what is happening in the region.

Can Costa Rica and Guatemala represent a kind of counterweight to the rest of the region?

This is the task of countries that want to continue representing a governance process, where they can be accompanied by Panama, the Dominican Republic and other hemispheric alliances. 

It's essential that all these countries generate the necessary inputs and resources so that attention to this doesn't become scattered, given all the other problems we have that are also very far-reaching.

This article was published in Spanish in Confidencial and translated by our staff. To get the most relevant news from our English coverage delivered straight to your inbox, subscribe to The Dispatch.


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Carlos F. Chamorro

Carlos F. Chamorro

Periodista nicaragüense, exiliado en Costa Rica. Fundador y director de Confidencial y Esta Semana. Miembro del Consejo Rector de la Fundación Gabo. Ha sido Knight Fellow en la Universidad de Stanford (1997-1998) y profesor visitante en la Maestría de Periodismo de la Universidad de Berkeley, California (1998-1999). En mayo 2009, obtuvo el Premio a la Libertad de Expresión en Iberoamérica, de Casa América Cataluña (España). En octubre de 2010 recibió el Premio Maria Moors Cabot de la Escuela de Periodismo de la Universidad de Columbia en Nueva York. En 2021 obtuvo el Premio Ortega y Gasset por su trayectoria periodística.