Oenerrl Aarrembly Distr

UNITED NAT13NS

Oenerrl Aarrembly Distr. GENERAL

A/44/492 30 August 1909 ENGLISH ORIGINAL; ENGLISH/SPANISH

Forty-fourth session Items 26 and 83 of the provisional agenda*

JUDGMENT OF THE INTERNATIONAL COURT OF JUSTICE OF 27 JUNE 1986 CONCERNING MILITARY AND PARAMILITARY ACTIVITIES IN AND AGAINST NICARAGUA8 NEED FOR IMMEDIATE COMPLIANCE

DEVELOPMENT AND INTERNATIONAL ECONOMIC CO-OPERATION , I Letter dated 29 Auaust 1989 from the Charm d affair- aA gf the Permamw of Nicar&gua to the United Natiou addressed

I have the honour to transmit herewith a copy of an article published in Tha Washinaton Post on 27 August 1989, entitled "Uncle Sam's Money War against the Sandinistas",

I should be grateful if you would arrange for this letter and its annex to be circulated as a document of the General Assembly under items 26 and 83 of the provisional agenda.

(Signed)Daysi MONCADA Ambassador Charg6 d'affaires a,i.

* A/44/150.

89-20624 10758 (E) / I . . ANNEX Uncle Sam’s Money War A9ainst the Sandinistas

By Peter Kornbluh

HE CON1’dAS’ IJ.S..rupplled gunr may loon fall silent for good, but ‘an equally devartating economic war waged by Washlngton contin- ue8 to lnfllct aevere damage on Nicaragua, The protracted campaign-based on ember. T~,.eccnomic irolation and rabotage-ham attracted 5”ar Icaa opposition and far fewer headlined tha,* !he con. tns’ shooting war. But now, more than eight years al. ter it began under Ronald Reagan, the full atory 01 the US, effort to drsfabilize the Nicaraguan economy ia gradually emerging. A variety of national.recurity di. rectivo and Internal government memoranda ahow clearly that the United Tales was indeed using CEO- nomic aa well as paramtlit~ry muscle to force the San- dinlrtnr, aa Reagan put ,:. “to say uncle.” At leadt part of the campaign-a full trade embargo-continue8 under George Bush. Ironrally, with the contra8 now expected to be de- mobilited by the end of the year, Washington’s econom. ic preaaurr may well prove to have been the more im- portant component of the U.S. “low4ntensity” war againat the Ssndinrutar. By all anounts, Nicaragua’s economy 18 in dirrstrour straits. After a promismg ini- tial effort to rebuild the country-despotled for decade8 by the corrupt Somora family dynasty-any hope that the Sandini8tas can alleviate the poverty and socto.economic neglect suffered by moat Nics*aguans is all but gone. Nicaragua’s rltghtmare is an cery rrnnnder of Chtle’s erpertence with Wnshrngton during the brref SocLtlist government of Salvador Allend?. Congressronnl mves- ttgations Into CIA covert ilcttvlttes in the mtd.lY7Os revealed that President Nixon had directed the CIA to “make the (ChtleanJ economy scream,. whtle nottonal security advlaer Henry Kissmger supervised on economic “destablllzatron”canlpalgifthat rontrlbuted to the econonnc chaos that preceded the overthrow and as. sassuxttton of Allende in a mlita~. qup led by the du. rable and brutal Gen, Augusta Pinochct. As III Chile, U.S. economic warfare against Nicaragua ha8 followed a clear blucprmt of pressures: l Turrrrinofton of bliaftrul ~ruJe urrd JIM. After Anas- tazio Somota wns overthrown 10 yearr ago, the Carter admmistratton used U.S. economic atd and trade as a carrot to mfluence the direction of the Sandintsta rev. olution. Under Reagan, i! became a sttck. Shortly after taking office m 1991, Reagan termmated aid and began gradua$ curtailing LJS~Nicaraguan trade. A full em. bar% was~mvokt&&lav~1985, / . . . l .:n Ynvtiblo blorCirdi” 01 m~rltilal~raldrv~lopm~n~ &nC fMf8) loans. The Reagan admlnlatrrtlon almbly vetoed or atopped eome loans by the World Bank and the Intsr.Amerlcan Development Bank (IDB). In other cawa, Wnah;ngton moved to “persuade the Manage. ments of the [MDBa) not to bring these loans forward, according to an internal 1983 memorandum to Treasury see NICARAOUA, C4, COI, 1

Uncle Sam% Mor.ey War J NICARAOUA, Cl It alsd denled N1cPragu.n US. Export4mport From Bank trade crdks-needed by merchants in- Qcsetuy Donald Repan, Since that year, Nks dwtrlalhts and farmers to import US IMIIU. am ban nccelved no multilateral bank loens, factured go&- and Dveraeas Private (nve& l I?pbnrorti @sun on alliar With ‘hlted ment Corporatin guaranteee, whkh underwrite B the State DepPrtment twisted gov. U.S. corporate Investment8 h the Third World. a& urn, h Western Europe to curtall And h Novemk;. tk preeldent dfpted NSDD Nkamuan trade end old: ln Latin Amerks, 17 secretly authoL?p the CIA to create a a&d&q b a mret 19S4 National Security countermvdullonvy umy of edlea. Jklakn Dkcetlve (NSDD), the White Housr In 1982, when Nkoragua WY abut to r& dagbd out M&o for pmaure because d it8 celve b tlmt dgniflcant private MC bpn from a# to Nkarague and I(u kademhlp of the 1883 the Bank d Ameria, State Depadmwt obkiab Crmradom peace Lnitlatrve, which p,lvcd cne made the& oppxitlon known to Ihs buJI’a ds 0110 k M Central Amcncan oretldcnta’ de. ken. The $Jhnika loan wan canceled. Then C~UQI three uwb ago to d&and the contra& the adninhtralion tar eted Nkuagus’r prhvly l . fkki la #fabdm AI LKloeed In docu* emort to tk United t~8te+aueo~, On March manta rekaaed during the Irationtra hvcr* Id,1983 the White Houw anno& tit Nk- tigatbn, the contraa were dlrscted to attack aft,ua’a sugar quota would b cut by 90 p ecomrnk &rgete In Nicaragua. However, the cent. its a nrling by the General Am m6l dnmatk par\militoy rwultcr~ ment O(I9a& and Trade (GA’I’TI, the Inter- natititrade quivaknt of the Unitr I Natbna, porn,, fuel &mge bcilltin and ahippinp- that the United St&a’ action had v&led the wbre anled out by tk CIA it&l. GATT Treaty, tk Reagan Admi&ration re- he Reagan odminietrrtion repeatedly fused to restore Nicaragua’s sugar quota. T de&dthat itrNicarauua wlkv included For more than two yearn, the National s6 A ptitivseonomk ob&zt&ca k March cuity Council weighed turther econo& op 198s b&et, ‘Misconception, About U.S. Pal. lions, including Ihe ultlmte m *; full ky Toward Nicaragua,’ published by the slate trade tmbup. In January lC&. national r* Demtment’r Gffke d Public Diplomacy, de. ciruty adviser Robert MCI’ ‘yIe received . c&d thnt ‘tk U.S. govemmenl’haa ti im. *menu of snnctiotu’ memorandum that included posed any foml d a=omlic boycott on Nice. trade cutoffs and pnwuc on West Eumpean rag& ad wa wt %ying to strangle Nicara. ah to wane their trade and aid to Nkaragua, according to one high Reagan a-lion w WY. But eamding to the fit published report d offkial. NSDD 124, *!o.R by Reagan in Feb. US. dorta to undermine the Nicaragurn gov. nuuy 1984, called for SecreL/ d Sste George Shui& in caxdination mth Defenae emmcmt (In the June 20, 1981 issue of The Secretary Cap Weinkrger and CtA Director New Reoublich White Houss oMcW benan to William Casey, to “review and recommend such contemplate a Vestabilizat~ program” “Lthin economic sanctions against Nicarattua tit are weda d Ronald ReagRn’r inauguration. Thev likely to budd prmrur; on thha * An- @an called far Waahmgton to undemune Nice other NSDD dr,nftpd a vcar later bv National mlgua’s fragtle ecnmmy--rttil recovering from Secutity Cauncil aides dliver North; Raymond Somozo’s deslructive effort8 to stay in power- Burghardt %d Donald FortIer called C %c* by ending U. S. rssistmtc, blocking multilateral nonuc sanclrone against the Svdinutas’ that bank bans snd prc3aunng other rtationa .3 i* would include “placing embargoes on U.S..Ni. Late tk Sandbustas. The resultrng economic caraguan imparta and exportn. distmu, it wan hoped, would tile intemal op Basic differences of opti over the use of pcuitkm and blossom into an uptisin~ led by trade cmbargoea ktwecn the NSC Nld the U.!Lbacked contra invading from Honduras State Dcp;vtmcnt delayed implementation of a and cwtr Rica. N embargo. Indeed, Reagan’s announcement Not~~hstanding the farlure of the Contras, of the embargo on May 1,1985 appeus to have US. pdicy over the last eight yeam has closely been timed to help wstaul the contns in Hm followed that !xenario, and Its ecolK!mic uprts duraa after Congress in Apnt ~:dtsed the press have had the acquicsence of Congress. Within ident’s rqucsl for more contm aid In a secret six wwh after Reagan took ofice, the adnun. I\pnl 25 mc-morandum releasrd during-the istratian had ended econonuc dud. b &rt order, _ -Nqtththi& McParlane recommended that Rea. ‘MDB management not to kh9 the bum forward, ‘Sina Januw d 1982, Uta U&d 3t5tea asHondurul PNidant Robelt suaw COP five bm, to Mcuagw from h ba and 7naiu cbu the ex&utive branch’5 hw r 3Efand the htwhrian Bmnk ’ abb pohkelcommitmenttomlintrhln~pNwmon zw. J 1 1993 menwndum to &onrld the!3u&k&,reg5rdleaadwhatactbnCen* %a hlJnber 04 pmgomb tawelluy b- mmbkeh”‘-- %bneaddedtktSuuo%Ui ~8p~pued IF the MDB( lnch~de nine horn tha ID%andthrrlmnitheWor#Ebnk,...h* inp Mthl &it the IcOntNl,’ one Gcll Jnn wddbto%paerindeenib5r ’ - sb dam htor. decluinr the IKDowt5had ntkn d 5 W-h uwiil and kaor&uy UINP tmdw um lnttmatbMi Emergency PWWUACt,RhBpmhplWd~NltX8d~Ollk buyo rgaimt Niaraw he Jwtke hptmnmt ¥ bit it mu 5 dubbu5 uae State Shulb intervenad ponody to atop 4 dthelmw,uKltheNscmdSbbugueduntli $s&mUbn ban loi ~grkuitunl aedita to Nice theendabout%ontNtmnctlty’-whetJlertha ‘a private fumn Shuita met with IDB embrgo would abrogate abnding cmtmcb Skn Antonb Ortb Mona and aant him 5 bttu Vunhp that the Us. could atop &lin between US b&e5e5a and Nhprr. Ultl= of nobly, Rwgm Mad with the NSC pceltbn that theIDBifU~~banwu~DnebYJ( khi told I Wa5hbfion Post reporter, “we 8ucJlwntNbwouidbehutidmtdligniuantly it)rrthmt.*,,‘YoutmWt0~ ptJuemberpoandhurtin I~III L dry, d AIierde, and eve (thq11 2P AmefbncunpuhWewn t& Et ib’ rtthallthhcw:myronefomerNSCoffldrL aacmbry d abte.’ gyw&~dp’m- WY since Just u tlm Nixon White How ahut down the tlowdMDB b to Chiir, the Rea@n admb* ddr fmm tb U&d Sbbe itwlf, Nk. btmtkn cut lrkarqu off bin thb Impo~nnl u&a chid IOUN for bud cunency source d extemd ~pltal. ln November 1982, A utddoveb9inent8uhncahadbeen UWtWorldEUlklroZa5ilMun km appu= muitlbted lading inatltutbna such 55 the atlom Afta Saptember 19txr, tha IDE rp World Bank and the ID&htematlon4 a en- proved no more b5na to Nkpneu. deaIlrl,htum, onu.shnd8fortR, ir vtwwn 1979 and leea cc etwam 1981 and 191, scmdmlvlr, W55tem Europs 5nd multUnter5l !a- kt!?$Fahd 24 percent d it6 extemai rlltutkw provided the Sandiniat5a fbancbl mbtmce from MDBa B Tim Sadbkba received hlnh mprk for their with grant: and conceAonal credit totallng uwdMDB~Evenrc&fklantbla5se~~ approxlmateiy $826 million, recording to m5nt from the oflk5! d ti U.S. executive dl- nctw to UKJ worid Bali-noted that “projwt irnpkmenbtbn Ius been extroordin5fy aucc- Rof:er Roblmon, former NSC aenior dlrector hl h Nkangua ie aome rscton, bsttu thrn for internatIonal economic affaira, &~a1155 ol anywhere else in tim wAd. such ati, W55tern European aiiie5, aa well II Nevertheie~, beghint in early 1982 the mm Ltin Amerkan countrlee, bacame tar- Unitad Sbtw uu t to block rll MDB b5na to gete d US re5aure to curtall economic re- Nbngua, Since ifDB charter5 date that oniy iatlona with Ricaragua. %momk wMidentbm” u-0 relevant to hMn Among Latin American ntbna, the Rca- decbha US, 08lriaia cifad Nkuam’a &aw gnn adminlstratlon locuaed on Mexko. Until proptiate nwmmmmk pikiw~‘u the ri- mid*l985, Mexico waa Niarrgua’r chiaf rup tionnle for Waahlngton’s mtbn, But the tme olier of oetroieum on credit. The Mexican ralwn wl1pdw.Ib1 former NSCofkill bovemmbnt a&o irked Waahlngton by lendhi ha9 ackmwkdgcd, We did help ekt Trtaa- the Contadora group’8 search for 5 peaceful urv Dawurmentl intervention5 in the IdB 5nd aolutbn to the criaia in Central America, Wbrld hnk to riot go ahead and lend to Nica- fn NSDD 124, Reagan authorircd U.S. rrgur.’ national-murily agencies to ‘intensify dip. The United States hoida veto power over bmatic efforta wtth the Mexican government low-intereat ‘concea&na$ bana rt the IDB to redw it5 , , . conomlc and diolomatk and Wdd BII& 5nd crsily bbckcd Srndiniata auport for the Nicaraguan oveinmcnt.* 5cce55 to smaller gr5nta from th555 in5itulitiona. NSDD 124 also mandated the t!tats Deorrt- On lolvg that Washington could not veto, it u5ed ment to take the lead in an immediate inter- a variety of methoda--organizin~ votinp blocks, agency study of way5 in which we can sup- delaying paper work 5nd directly prewg plement our perawaive efforta with the [go+

I . . . A/44/492 Bngliah Page 5

ernment of Mexico] bearing in mind overrii armed opposition has attacked very few eco- U.S. interests and relation5 with Me&o, nomio targets” auerted the State Depart- /Adminatrotlon herd4ners 5ub:equently ment tract “Mi5concepti@n5 About US, Poi. complalned thot the dlreJ.live was never fully icy Toward Nicarogur. im lemonted.) In reality, the contra5 frequent1 attacked kestern Europe also caught the ottentlon unprotected economic targets of alr klnds. Aa of White House strategists. “We were vet early a5 July 1982, the Dbfenaa lnteilijence active in ttyin to reduce Western financial flowa? asys a 4ormer adminl5trotlon offlciol. One N!X “action elan” dnted July 8, 1983 called on Shuits to oreaa Western Europcan ovcrnmente at thd highest level to cease financlai suawrt for Ihe bndinlatsa.” In Sew Oliver North in July 198S, the Contras were temlmr 19& Shulta ubilciy called for (tie directed “to repeatedly,, , disrupt the eco. European Economic Pommunity to exclude Nicaragua from Its regionri~ssaistance pack. age for Central &c.rlca. “We strongly urge that au.:h region+xeglon resistance does nomic infrastructure ‘of Nicrragur with prim not lead to increnead economic aid or any orlty to the electrlcai grid, watir, transpOr- political support for the Ssndinistaa,” Shuita tatkm end communlcations systems,” ‘T’heae wrote EEC ministers, attacb, North adviwd, youId be a ‘ahow~f- The impact of U.S. pressure IS difficult to ~;rfita$ion with maximum psychological aacertaln. Some members of the Reagan White House believe that whatever ‘de= But &e most dramatic attackaon the scona marches’ the secretsty of state gave to the omy were conducted not by the contra5 but ailie5 were more like ‘demrrche~msliowa,” Except for Great Britain, which followed Washington’s lead on Nicaragua policy, Wea .. conducted at least 21 direct ttbcka din European nation5 largely resisted U, S. on Nicaraguan targets hT:iween September demands to isolate Managuo. According to 1985 and April 1984. Port infrastructure, top Sandinista oflic~als, Mexico did retreat fuel tanks, grain storage facilities-aii were from its generous approach to Nicaragua, objects of a concerted ClAlNSC campaign of effectively ending its access to Menicrn oil on destruction that culminated in the notorious credit in April 1985. However, the Mexican minin of Nlcarogua’a horbore. government reversed its decision later that N& documents reieaecd during the Iran. spring after the US. imposed its \nde em- Contrn inveetigotions confirm whot woo wide- hargo. By then Nicaraguan President Daniel ly believed at the time: Ihe objective a’ thr Ortega had made hir famous foray to Moss CIA mining operations was not miiitPry but COW in R sucu~~fui Yr;irch of a steady supply economic. “Our intention is to severely dia. of pctroieum. rust the flow of ehiooinn essential to Ni- ca;?guan (rode durinh’ thi peak export pe- ircct CIA operations inside Nicaragua riod.” North and his colleague, Constantine both complemented and supplemenled Menges, reported to McFarlane in a March D the economic war from abroad. AC- 2, 1984 “top secret. actlon memorandum on cordi~rg to Bob Wocldward’s book ‘Ved,” CIA the sowing of minea in the port of Corinto, director William Casey once demanded of Even more egregious acts of aaboagc CIA oHicials, “What [more] can we do about were in the offing, including a direct aasauit the economy to make these bnstards sweat?” on an 011 tanker in Nicaragua’s hrrbors, ‘It i5 Using rho Contras as a weapon offered one our judgment that destroying Ihe vessel and method. Roth directly and Indirectly, IheIr its cargo will be far more effecrlve in accom- attacks aHerred all sectors of rhe Nicaraguan plishmg our overall goalof applymg stringent economy. As a June 1983 CIA National In- economic pressure,’ North and Menges telligence Es~enalr on the contra insurgency wrote. ‘It IS entirely likely that once a ship noted, “Fear and uncertnmly stemrnrng from has been au&, no insurers WIII cover ships the vinlence have crippled investment, ex- calling in Nicaraguan ports. This WIII eHec- acerbated cnp~tal flight and cut off commer- t~vely limit thelr sea-e trade 1o that which clai lending. Fighlmg in Ihe ruuntryslde. has can be carried on Cuban, Soviet Bloc or their reduced tradlllonal seasonal labor mlgratlon own [ships).’ and cut :nlo harveuls.” McFarlane authorized this sabotage plan For public: consump(lon, however, the and briefed Reagan on Xlarch 5. But 11 never “freedom IlNhtcrs” thdn’t enRaRe m economic came to fruition, perhaps because of the M- des1ructlun. ‘IJnhke the hl,~rx~;t guerrdlrs In tlunal scandal that erupted four week5 later Ei S,llradnr who have cuncpn(rntrd att~41s when defalls of the CIA mmmg qenbons on econonuc u\frasttucture, the Nicaraguan were revealed in the press. A/44/093 Ennli8h PIRO 6

he U,9, psllcy of economic pun& While conse~vnlive cridcs will hold that the I men& coupled wllh the devastatkxt of San&&tar’ rsdlcal policke nre responalbk for T nntural dlaasters such M HumlcPne Nlugua’a economic choc% the reality la Uut Joan and Bsndlniata mismsnsgement of the we will never know how the Ssndinlsla economy, has token a toll on every fawl of lmcnr might have turned out wlfhout theTi Nicaraguan political, social and economic life. deslablllration campsllpl: OM thhg la CkpT, ‘Tie full unpsct of such (I pollcy on a nmsll however: Nkarogun’a mnomk re$overy wlU (mpoverished Mth &I S&I@)’ it’leakuhbb, depend on arcem o forelgn capital, snd the states Nkaragum’r “Memorial on Compensa- United !Mu holds the key to whether il wlU tion*submitted to the World Court hsl March. be fnrthcoming, “Given the trsde embargo and Acc~~rdlng to a conIldentisl report prepved dfectlve blockade of multilateral bpnr, by M lntcmtianol tesm of economista at the Imposed... by the UnIted Statea, Nlcamguaa request of the Nlcaroguan government last authorida besr an unusual burden in their spring, the country is beset by “hyperinnptlon, attempt, to rsise Uquki external fund&” states ‘fiiancld dlxqtibrts,’ critkal prod& the confldentisl study repsred for the M- losses, rrade defIcits,,and unpayable foreign cmguan government, fherefore, the ‘pm- d$y..aw&g~ Kgy doJo[g$ pests for succeos we far from certain unfus eatemol circumstances improve.” thsn H&i%. The crisis has forced the guvem- Even if the Bush admAnlstratlon backs the menl to abandon ira socialisl, welfare&e&d d .t~obiiUon of the Contras, PI the tinti economic program8 ond to adopt a ri@xous American prsaiden~s have ssked, the war will st~bilktion progmm, chancterlrtd by strkt not be over. Unless Washington *Iso abandona swtarity measures, severe slsahea In th8 pub lb economic blockode, Nlcnragua could b lk payroll, supply-side economla and efforts to come another country brought to ruin by the reach a rnodvr o#amndi with the private MC- United States under the pretext of trying 10 car. saw iL

Preventing Net Profits . How UbSqwhedAidto Nicaragua’s fishermen

130,?.MlL~lON Inter-American Developmenl Bank grant to rehabilitrtc Nicaragua’s Ashing indu&y provides a case study of U.S. economic ohstnxtion. A The Treaaruy Departmenr’s Working Group on Multilateral Aid (WGMA) “did not ident& any problems with this roja3 itself so serious sa’ to require U.S. opposition,’ auxrdjng to WGMA minutes. iiut Trcowry oppwed the losn on ‘macr~ononuc* grounds. For two years the Reagan administration delay.4 consideration of the loan by orgohing a voting block with Argentina and ChJs to keep iC OK the table. After this co= alition broke up in the wake of the FaUdanda/Malvinas war between Britain and Argen- @a, Treasury Department officials considered other ways to stop the loan. Whrle it would be desirable to sfop the distribution of the loan documents for the fishing loan, we do nol believe there is much chance for suc.ces9,* an Aug. 2, 1983 strategy memorandum from Assistant Secretary Marc Leland to Secrelary Donald Regan stated. Therefore. the memo recommended that UndcrsecreLuy Beryl Sprvlkel go directly to IDB Chairman Antonio ortie Mena and inveke the threat of fmsncwl blacti: “Dr. Sprinkel should alao emphasize to him the impohvla we atoch to avolding a con- lronrarron wrlh Nicaragua and IDB at tJtis time,. , , We also are concerned about the effects 51 such a loan on the Conmional a propriation for the new TDB replenishment .lnd, over the long run, continued support in on a for the institution.* According to the memorandum, Spnnkel woul$7‘rqueat that the Bank continue to hold this loan up, f&g that, &yl should stress that we hop Ott& Mena can prevent any future loans from coming forward in the forclccable future , . . . Sptiel sdys he does not recall that specific meeting but i~Ids: 1 can imagine that we ‘bed 10 hdd lip the loan. We tned to influence policy as the [bank’s) largest donor. We would have been irresponsible othetwiae.” Despite U.S. pressure, the lDB approved the fishing loan. But the administration suc- c+ed ~1 its longer cbiective. of bloclung new loans to Nicaragua. -Petar Korpblub