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

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

By Carlos F. Chamorro (Confidencial)

HAVANA TIMES – 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.

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.

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.

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. 

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.

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.

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.

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.

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.

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.

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.

Read more from Nicaragua here on Havana Times.