Financial Institutions Should Not Fuel Nicaragua’s Crisis
says the human rights organization Race and Equality
The Institute on Race, Equality and Human Rights reports a little over US$5 billion granted to the Ortega-Murillo regime between 2018 and 2024
By Carlos F. Chamorro (Confidencial)
HAVANA TIMES – The new report by the international human rights organization Institute on Race, Equality and Human Rights (Race and Equality), “International financial support to Nicaragua and the democratic and human rights crisis”, assessed that a little more than US$5 billion in loans was granted to the Ortega-Murillo regime between 2018 and February 2024, by the Central American Bank for Economic Integration (CABEI), the Inter-American Development Bank (IDB), the World Bank (WB), and the International Monetary Fund (IMF).
The report also documents the grave human rights violations and crimes against humanity perpetrated by the regime during this same period, and recommends that these international financial institutions (IFIs) “[place] condition[s] or suspend the granting of loans to the Government of Nicaragua,” because of its violations of international law.
In an interview on the program Esta Semana, the authors of the report, Carlos Quesada, executive director of Race and Equality, and Marcelo Azambuja, researcher for the Institute’s Legal Program, explained that “by recognizing that the situation created by these crimes against humanity isn’t legal, [these IFIs] should not offer [the Nicaraguan government] support or help that perpetuates [such a situation]. On the contrary, they should act to put an end to this kind of situation.”
“Much of the loan money is used to pay salaries of people who are aligned with the dictatorship. At the same time, there is really no possibility of independent monitoring to know [how] loans for public works, for example, or for other investments [are being used],” said Carlos Quesada.
Race and Equality researchers appealed to the governments that are part of the Boards of Directors of the four IFIs, arguing that the suspension of loans to a dictatorship “is a purely political issue, that has to do with the political will of those who run these international financial organizations,” claimed Race and Equality’s executive director.
In its recommendations, the Race and Equality report “International Financial Support to Nicaragua and the Democratic and Human Rights Crisis” demands that international financial organizations condition or suspend funding to the Nicaraguan regime for human rights violations and crimes against humanity. How did you come to this conclusion?
Carlos Quesada. We spent a year working on this report based on public information. What we tried to find out was how, in the midst of a political crisis like the one in Nicaragua, with more than 355 people murdered and 141 political prisoners at the moment, these international financial institutions were still giving loans to the Nicaraguan government to pay public employees, build public projects, or invest in other activities, when it has already been recognized by the United Nations that it has committed crimes against humanity.
We wanted to expose the international financial institutions and call on them to say that they have to be aware that civil society is also monitoring how they are giving money to Nicaragua.
Some officials of these organizations, such as the now former president of CABEI, Marcelo Dante Mossi, alleged that they grant loans based on technical criteria, and at one point he said: “We are not a human rights organization.” What do you think of this assertion, and why should they be obliged to suspend their loans?
Marcelo Azambuja. Yes, it is true that according to the establishing agreements [of the institutions], the IFIs cannot engage in political activities, according to their internal rules. They must guide their decisions and activities impartially by economic criteria, without being influenced by political issues or intervening in the internal affairs of its members. However, respect for democracy and human rights are economically relevant and [therefore] must be considered by the IFIs when making decisions and carrying out activities in countries such as Nicaragua.
But is there some kind of binding rule? Are they bound by their own bylaws that require them to suspend loans? Can they be accused of being complicit in the actions of a government in the violation of human rights?
Marcelo Azambuja. International law establishes that IFIs have specific obligations in relation to crimes against humanity and respect for human rights. They must act within the framework of their mandates and in accordance with their internal rules. “by recognizing that the situation created by these crimes against humanity isn’t legal, [these IFIs] should not offer [the Nicaraguan government] support or help that perpetuates [such a situation]. On the contrary, they should act to put an end to this kind of situation.”
CABEI gives 64% of the total financing
The report provides exhaustive information on the loans that have been granted to Nicaragua in the last decade by the World Bank, the Monetary Fund, the IDB and the Central American Bank for Economic Integration. CABEI has granted more than 20 loans to Nicaragua, amounting to more than US$3.2 billion, or 64% of the total financing, while the IDB and other investment-related IDB agencies have granted more than US$1 billion, representing 20%. Has there been any response from these agencies to your report and to other claims that have been previously presented?
Carlos Quesada. Unfortunately, not yet. We hope to present our report in Washington at some point. The report was initially presented during the General Assembly of the Organization of American States in Asuncion, Paraguay, and the idea is to present the report in Washington and have a dialogue with them to know not only their reactions, but also what they are going to do with respect to the recommendations contained in the report, specifically regarding the strengthening public access to information.
On what does it depend for an international organization such as CABEI, IDB or the World Bank to accept these recommendations? Is it a technical-legal decision that its executive director makes, or is it a political decision that corresponds to the governments that are part of the Boards of Directors of these organizations.Principio del formulario
Carlos Quesada. This is a purely political issue, which has to do with the political will of those who run these international financial organizations. In the case of Africa, for example, in Uganda, with its legislation against the LGBTI population and their rights, conditions were placed [on the Ugandan government] if they wanted to continue getting funding from international financial organizations. So, in the case of Nicaragua, it is a purely political decision of those who are part of the Boards of Directors of these banks.
Does your study also analyze the social impact of these projects, whether funds have been diverted for other uses or even for acts of corruption?
Carlos Quesada. It’s interesting to see, for example, that much of this money is being spent on government employees. Much of the loan money is being used to pay salaries to people who are aligned with the dictatorship.
At the same time, there isn’t really any possibility of independent monitoring to know [how] loans for public works, for example, or for other investments [are being used],” said Carlos Quesada. Who wins the bids? What are the procedures for these bids? And there is no independent control and monitoring policy of the companies that have won the bids to work with the regime. That is the most worrying thing.
“They shouldn’t treat Nicaragua as a democratic government”
Marcelo Azambuja. We are struck by the concentration of power in Nicaragua, in the Executive branch and especially in the Presidency. There is no separation of powers or checks and balances, and there is confusion between the government and the party in power. It’s no longer possible to identify what are state actions and what are political actions by the party.
Another issue that we’re concerned about is that Nicaraguan civic space has been completely closed due to the persecution of civil society organizations, human rights defenders, and journalists. And it’s impossible for citizens to request public information and audit governmental public policies without being persecuted by the regime. That’s why we believe that IFIs can’t continue to treat the Nicaraguan regime as they treat democratic governments.
The United Nations Group of Experts on Human Rights, in its last report, placed a lot of emphasis on recommendations similar to the ones you are making now. Is your study related in some way to the human rights investigations carried out by the Group of Experts?
Carlos Quesada. The important thing is that we’re building on each other. The different organizations working on human rights in Nicaragua are trying to systematize human rights violations and look at particular cases, for example, of people who are imprisoned for political reasons. We were very surprised that a government that has committed crimes against humanity continues to be treated like any other government. So we thought that since all dictatorships have to finance themselves economically, let’s see what the sources of financing are for the Nicaraguan State, ranging from foreign investment to loans from international financial institutions and remittances. We concentrated on international financial institutions.
But to give you an example, foreign investment in Nicaragua last year was almost 10% of the gross domestic product. The awarding of contracts to companies, many of them mining companies, has been done illegally and yet nobody says anything.
We didn’t know that the UN Human Rights Expert Group on Nicaragua was also concerned about this. We initiated this investigation last year. We were looking to see if those institutions were working to strengthen human rights due diligence policies by identifying, preventing, addressing and remedying the potential negative impacts of these loans, which in the case of Nicaragua is more than obvious because it is a dictatorship –the Ortega-Murillo duo– who is deciding how the loans are used. Things can’t go on like this.
Who sounds the alarm? Right here, close to home, the main partners in the Central American Political Integration System (SICA) and the Central American Bank for Economic Integration are the Central American countries plus the Dominican Republic and Panama, and now Nicaragua occupies the pro tempore presidency of SICA, violating the statute of Central America. Do the Central American countries have any ability to take action with regards to this crisis?
Carlos Quesada. They should be able to do so. They’re also responsible in all of this. In fact, our recommendations are a tool for advocacy work. I can’t really answer your question right now because phase two of this work is to take the data we have and initiate political advocacy campaigns to independently expose those who are involved in some way or another in propping up the Ortega-Murillo regime, and to make the relevant denunciations.
We hope that it’s not only Race and Equality, but that Nicaraguan civil society and Nicaraguan organizations in exile can join in this fight against impunity, because the granting of loans, as well as foreign investment and other mechanisms, what they do is simply perpetuate the Ortega-Murillo regime, and with that we are perpetuating impunity, while crimes against humanity continue to be committed. We are going to initiate political advocacy work to make Central American states, American states and the states of the world to be accountable and face consequences for supporting the Ortega-Murillo regime.