NICARAGUA: INITIAL REACTION TO US SANCTIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00447R000100340001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 22, 2016
• Document Release Date: March 4, 2011
• Sequence Number: 1
• Publication Date: May 23, 1985
• Content Type: MEMO

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? ~cnual in[eilr~en~c ~~enty
23 May 1985
MEMORANDUM FOR: (See Distribution List)
SUBJECT: Nicaragua: Initial Reaction to US Sanctions,
is also reviewed. As thin
review of the im act the s
gs now stand, we
anctions are havi
plan to publish amore detailed
ng on Nicaragua sometime this
summer.
~
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2. This report was prepared by
Middle
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m rica-Caribbean Division, Office of African and Latin American Analysis.
1. This report provides a quick overview of Managua's initial reaction
to US economic sanctions. As such, it covers not only the moves Nicaragua
already had underway, but also initiatives that were implemented in the
immediate aftermath of the US decision. While most of the emphasis is on the
economic side, Managua's political maneuvering--both domestically and abroad--
addressed to the Chief, Central America South Branch,
3. Your comments and suggestions on this report are welcome and may be
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Deputy Director
African and Latin American Analysis
US Sanctions
Attachment:
Nicaragua: Initial Reaction to
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SUBJECT: Nicaragua: Initial Reactions to US Sanctions) 25X1
(Attachment:
External Distribution
Copy 1 -- The Honorable Fred Ikle, Under Secretary of Defense for Policy
Copy 2 -- Mr. Donald Gregg, Assistant to the Vice President for
National Security Affairs
Copy 3 -- Director, NSA
Copy 4 -- Mr. Nestor Sanchez, Deputy Assistant Secretary of
Inter-American Affairs, Defense
Copy 5 -- Mr. Constantine Menges, Senior Staff Member, NSC
Copy 6 -- Mr. Francis McNeil, Deputy Director, Bureau of Intelligence and
Research, State
Copy 7 -- Mr. Douglas Mulholland, Special Assistant to the Secretary,
(National Security), Treasury '
Copy 8 -- Mr. Fred Demech, President's Foreign Intelligence Advisory Board
Copy 9 -- Mr. Manny Rubio, Director, White House Situation Room
Copy 10 -- Designate, White House Situation Room
Copy 11 -- Mr. Byron Jackson, D/Office of Intelligence Liaison, Commerce
Copy 12 -- Garnetta Phillips, Staff, Dept. of Energy Operations Center
Copy 13 -- Mr. David Wigg, Assistant Director, International Economic Affairs
Copy 15 -- SSCIV. James Fazio, Jr., Bureau of Intelligence and Research, State
PY
Copy 16 -- HPSCI
Internal Distribution
Copy 17 -- DCI
Copy 18 -- DDCI
Copy 19 -- Executive Secretary
Copy 20 -- SA/DCI/IA
Copy 21 -- DDI
Copy 22 -- Vice Chairman, NIC
Copy 23 -- NIC/AG
Copy 24 -- NIO for Latin America
Copy 25 -- NIO for Economics
Copy 26 -- D/EURA
Copy 27 -- D/BONA
Copy 28 -- Chief, Policy Plans Staff/DO
Copy 29 -- Chief, Economics Division, OGI
Copy 30 -- DDI/CPAs/IBS
Copy 31 and 32 -- D/ALA
Copy 33 -- C/MCD
Copy 34 --
Copy 35 --
Copy 36 --
Copy 37 and 38 -- MCD
Copy 39 and 40 -- ALA
Copy 41 -- ALA/Research Director
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DDI/ALA/MCD/S~
(23 May 1985)
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Contra Intel igence rl~ency
DIRECTORATE OF INTELLIGENCE
NICARAGUA: INITIAL REACTION TO US SANCTIONS;
23 May 1985
ALA M-85-10057C
Copy
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Nicaragua: Initial Reaction to US Sanctions
Summary
On the economic side, the embargo came at a time when trade with the US was
slowing. Even as trade was falling off, Managua--before the embargo--was making
contingency plans to cut back its economic ties with the United States. Eor
example:
will sharply reduce the effectiveness of the sanctions.
Managua, apparently anticipating the recent US embargo, has for some time
been reducing its economic links to the United States. In the ,immediate
aftermath of the recent US action, the regime has intensified its efforts with a
'diplomatic offensive to play up international opposition to the US moves, win
economic assistance, and find new markets for its goods. Domestically, the
Sandinistas have tried to use the embargo to rally popular support, shift blame
for economic problems to the United States, and coopt the opposition. The loss
of US markets, imports, and managerial expertise will cause some serious
disruptions in the near term. The experience of other states embargoed in the
past, however, suggests that Nicaragua over time will find alternatives that
the Sandinistas
a begun negotiating for agricultural equipment, pesticides
and herbicides with the USSR, East Germany, and Czechoslovakia.
-- The Central Bank recently made back payments of $6.2 million on its
rescheduled debt with a group of commercial creditor banks to improve
its fiscal image.
Following the US decision to impose sanctions, Managua took further steps:
-- Ortega added Western capitals to his Soviet and East European trip.
Several West European governments gave some indications that they might
provide Nicaragua with alternate markets for its produce.
Chief, Middle American-Caribbean Division, ALA
This Paper was prepared by Office of African sand Latin
American Affairs, with a con r u on by Office of African and Latin
American Affairs. Comments and queries are welcome and should be directed to the
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es a s ng ron compan es n anama.
Managua began
Looking ahead, perhaps the most immediate problem facing the Sandinistas
will be on the export side. Managua has yet to secure new markets for
perishable exports, and losses are likely to mount at least in 'the short run.
The Sandinistas claim to have commitments from Belgium to buy bananas and the
Canadians to purchase beef. Canada's External Affairs minister, however, has
stated Ottawa will not raise its quota of Nicaraguan beef at this time. Another
problem area for Mana ua could rove to be its oil refinin and distribution
s stem.
Earlier, Brazilian and Cuban consultants had been brought
in to assess requirements for operating the plant,
Domestically, the regime has tried to use the embargo to its advantage to
try to garner popular support, justify further economic sacrifices, deflect
discontent over economic issues to the United States, and coerce opponents.
Diplomatically, the Sandinistas have tried to put Washington on the defensive in
various international forums such as the UN Security Council and the World
Health Organization. Managua will also be especially aggressive in exploiting
any splits between Washington and Western Europe in an effort to win additional
Despite all these moves, the US embargo will put additional' strain on
Nicaragua's already limited managerial skills in the near term~as the regime
adjusts to the sanctions, and material and parts shortages further erode
industrial capacity. In economic terms the direct costs of the embargo to the
Sandinistas could reach $25 million as exports are disrupted--an amount equal to
nearly 1 percent of the country's economic output and about 10 'percent of 1984
Communist economic aid. In political terms, the problems caused by the
sanctions probably will add to popular discontent.
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Contents
Summary
Economic Conditions at the Time of the Embargo
Trade and Aid Picture
Dealing with US measures
Initial Preparations...
...And Subsequent Moves
On the Domestic Side
The Diplomatic Offensive
Likely Next Steps
On the Economic Side
On the Political Side
The Medium and Longer Term Outlook
Text Table: A Snapshot of Select Commodity Exports 14
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Nicaragua: Initial Reaction to US Sanctions
Economic Conditions At the Time of the Embargo
Nicaragua's economic difficulties have mounted over the past few years and
have become critical in recent months. Last year, for example, official
statistics and US Embassy reporting indicated that the Nicaraguan economy was
buffeted by an array of problems including serious hard currency shortages, an
annual inflation rate of 60 percent, and a general deterioration in production.
Indeed, the Sandinistas' emphasis on military spending--which rose from 25 to at
least~40_percent of the budget in January 1985--and general mismanagement of the
economy had directly and indirectly depleted dollar reserves by February. The
hard currency shortage in turn led to a severe petroleum crisis that further
reduced agricultural and industrial output, sharply cutting exports. By the
time US sanctions were imposed, Nicaragua's foreign exchange and oil situation
had improved slightly because of foreign assistance--lar el from Soviet bloc
sources--but domestic production continued to decline. 25X1
Faced with hard currency constraints, the Sandinistas over the past six
months have imposed austerity to limit import demand, further eroding an already
falling standard of living. In addition, Embassy reporting indicates the regime
has attempted to squeeze most hard currency holdings out of the private sector
by controlling all export sales and requiring dollar payments for most imported
goods, all international phone calls, expatriate rents, real estate purchases,
and international airline tickets. Managua also has established a multi-tiered
exchange rate system and devalued the Cordoba, although the neN official rate
(28 cordobas per dollar) still significantly overvalues the currency--the black
market rate is over 600 cordobas per dollar. All of these moves to check the
loss in hard currency came on top of other official actions to limit
demand--including the Sandinistas decision to quadruple the price of basic
commodities since January while only doubling government-controlled wages. 25X1
Trade and Aid Picture
By the time US sanctions were imposed, Managua had seen its trade and aid
picture change dramatically from the early days of the revolution. On the 25X1
export side barter and resale operations had become increasingly important.
During the past year, for example, Managua sold crude oil from Libya, Iran, and
Algeria on the spot market for dollars. The Sandinistas agreed to a for the 25X1
curde over several years.
Even with this help Managua had to rely on
ar er an arrearages to make ends meet. Indeed, based on Embassy reporting, 70
percent of the country's trade was on a barter basis at the time the embargo was
announced. Moreover, by the end of 1984, Nicaragua's overdue foreign debt
payments, had approached x500 million on a total
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debt of $4.3 billion. Nicaragua's debt service for the coming year will be
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roughly equal to its projected export earnings of about $350 million. 25X1
Another striking change in Managua's trade pattern was the marked drop in
the US market share. According to US trade statistics Nicaraguan sales to the
United States decreased from $214 million in 1980 to $58 million in 1984. US
ex o~rts to Managua declined from $247 million in 1980 to $110 million in 1984.
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Foreign aid has remained the lone bri$ij sot in Managua's .overall financial
situation. Since 1982, aid and grants replaced revenues earned from exports as
the Sandinista's principal source of-import financing. According to our
estimates, based largely on US Embassy and press reporting, Managua during 1984
received a total of approximately $510 million in official loans and grants,
including Soviet oil deliveries--50 percent greater than the amount earned
through exports. Half of this aid--$250 million--came from Communist sources.
Communist aid agreements do not provide foreign exchange, but are tied to
equipment purchases. The Soviet Union, Cuba, and East Germany ,were the major
suppliers. Managua also received about $250 million in military
e ui ment--largely in the form of grants--from Warsaw Pact countries and Cuba.
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In 1984 and early 1985, several Western nations, including Canada, Denmark,
France, Spain, and the UK, agreed to maintain aid levels already promised but 25X1
declined to increase grants and new low interest project funding
Italy, which was financing the construction of two 25X1
geothermal plants, increased its commitments because of cost overruns in late
1984 but has insisted that Nicaragua adhere to repayment schedules. 25X1
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Dealing with US Measures
Inital Preparations...
While Nicaragua's shifting trade picture has in part been .a result of debt
and other economic problems, it can also be seen as a calculated effort to shift
away from economic reliance on the United States. The Sandinistas' actions
indicate they anticipated the imposition of US sanctions and had already taken
some preliminary steps in trade, finance and logistics to deal with them.
Trade. As early as last year Managua began looking for new import and
export markets in an apparent attempt to reduce US trade connections. For
example:
in late 1984
Managua shipped 600-800 boxes of bananas as a market feeler to the
UK and Netherlands, although no plans for future shipments were
specified.
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had begun negotiating for agricultural equipment, pesticides and
herbicides with the USSR, East Germany, and Czechoslovakia.
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We expect that Managua will claim publicly that several trade deals already in
progress were in response to US actions. Managua has already claimed, for
example, that two Soviet ships that arrived on May 6 with donations
of diesel oil, tallow, and wheat were in response to the US embargo, but the
ships would have had to set sail well before the beginning of May.
Finance. Managua has also taken a number of steps to enhance its fiscal
image in order to secure new credit lines for hard currency imports. Since the
end of March, Managua used proceeds from a sale of Algerian crude to make at
least $23 million in overdue payments to key creditors. Specifically:
-- The central bank also made back payments of $6.2 million on its
.rescheduled debt with a group of commercial creditor banks.
-- Nicaragua paid $2.1 million on its debt to a Libyan-Kuwaiti-Spanish
;joint venture bank.
Logistics. Managua did 'not limit its attention ,just to trade and financial
flows. Before the US actions were taken a number of operational shifts were
begun., For example:
Nicaragua's airline, Aeronica, has been 25X1
studying contingency plans since early April, in anticipation of
losing US landing rights. it bought $100,000 25X1
in spare parts in Miami and chartered five cargo flights to transport
them.
the airline may
also establish service to Merida. Mexico and the Cayman Islands with
Cuba and Nicaragua are
also forming a ,joint venture trading company in Spain.
..and Subsequent Moves
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consolidate and protect their interests in the US intensified. ~ 25X1
Immediately after the embargo took effect, Nicaraguan effor o
Trade and Aid. Managua had hoped that Ortega's trip to the Soviet Union
and Europe would open additional trade doors. While Ortega found widespread
opposition to the US sanctions, this support apparently translated into only
marginal additional economic assistance. Even so, he gained:
-- Public assurances from the Soviets that they would help Nicaragua
confront US aggression.
-- A commitment from East Germany to increase current levels of economic
assistance.
-- Assurances from West European governments that they would not
participate in the embargo and some indications that several might
,provide Nicaragua with alternate markets for its produce. Sweden told
US embassy officials it. would probably increase aid.
the debts, ranging from a few thousand to several million dollars,
The Sandinistas have also taken initial steps to define a strategy on how to
deal with debt owed in the United States. They have already announced that they
will not make payments on their debt to one US pharmaceutical company, and more
such repudiations may follow. Currently, they are behind on payment of numerous
debts to US companies. Many of these firms have already privately written off
Logistics. As far as the mechanics of trade and finance are concerned
several moves have been made by Managua since 1 May:
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Managua has 25X1
already begun establishing front companies in Panama.
the Sandinistas are completing
arrangements to purchase two cargo vessels to be used in trade with
Eastern Europe.
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On the Domestic Side
While sanctions will cause Managua numerous economic problems, the
Sandinistas are attempting to use the .embargo at home to rally popular support
for the regime, ,justify further economic sacrifices, and press the opposition to
back their policies, according to the US Embassy and press reports. In the wake
of severe consumer shortages caused by hoarding immediately prior to the US
announcement, the government warned Nicaraguans in a tough May Day speech that
the US embargo would lead to further economic difficulties and listed various
steps the population could take to help the country through the crisis,
including increases in productivity and decreases in demands for wage hikes. The
Sandinistas also warned the opposition to stand with them or risk losing "their
place in-the ranks of national dignity."
Managua has not limited its internal response to words. The regime has
also announced some more concrete proposals:
-- A few days after the imposition of the sanctions Managua declared
that it would increase its controls over the internal distribution
of all goods produced in the private sector.
-- At the same time the Sandinistas declared that producers would
receive partial payment in dollars as an incentive to increase
production.
-- In addition the regime announced that to obtain spare parts the
government would oversee the cannibalizing of all worn out machinery
For their part, the domestic opposition has been generally cautious on the
sanctions issue. The politicians have limited their remarks to blaming the
embargo on Ortega's trip to Moscow. Private sector representatives have told US
Embassy officials that the economy was already in shambles and that the embargo
would add only marginally to their problems.
The Diplomatic Offensive
With official international sentiment firmly opposed to the sanctions, the
Sandinistas moved rapidly on a variety of fronts to put Washington on the
defensive and undercut US efforts to isolate Managua economically and
politically. Managua labeled the sanctions an act of war and a prelude to
military invasion,
In the immediate aftermath of the embargo, Managua also played
hard on regional peace themes that were aimed at engendering international
support.
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-- The Sandinistas have publicly reiterated their willingness to meet with
US officials despite the embargo.
-- They renewed their pledge to send 100 Cuban military advisers home
and to consider reducing the Cuban presence further.
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Managua has also tried to internationalize the sanctions issue, arguing that
the sovereignty of the entire Third World is at stake. The government has
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presented its case before various international organizations, regardless of
their relevance to the embar o issue such as the UN Securit Council and the
World Health Or anization.
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The Coordinating Bureau of the Nonaligned Movement has already
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approved a resolution condemning the sanctions.
In our view, President Ortega has tried to limit the international damage
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from his ill-timed trip to the Soviet bloc. Indeed, Ortega's decision to extend
his trip to include West European capitals was probably a dual effort to offset
perceptions of Nicaragua as a Soviet client state and garner additional support
from sympathetic governments.
The Sandinistas have been more circumspect, however, in looking for a
favorable consensus among their Latin neighbors. Managua has backed away from
earlier statements that it would take its case to the OAS. Publicly, it has
stated that using the OAS was "inconsistent with its strategy." We agree with
other observers that the decision also reflects the regime's recognition that it
would be unlikely to gain anything more than a mild anti-US resolution in the
OAS. Even so, to shore up their regional support the Sandinistas have sent a
high level delegation to key South American countries and have held bilateral
meetings with the other Central Americans.
Likely Next Steps
Based on their reactions to date, we expect the Sandinistas to continue to
appeal to domestic and international audiences for political and economic
support while taking concrete steps to soften the blow of trade, sanctions.
On the Economic Side
Regarding exports, Nicaragua has four basic ways to respond to the
US-directed cutoff of trade. To offset the direct cost of the embargo, which we
estimate could reach X25 million as export markets are disruptetl, Managua could:
--Try to divert previous US purchases to other hard currency markets,
such as Western Europe.
--Try to increase its sales to the Soviet bloc, realizing that
hard currency payments would be unlikely, but that Nicaragua could
use the limited East European markets to make aid repayments in
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goods.
--Ask the Cubans to sell goods through their sales networks.
--Sell to middlemen in neighboring countries who, in turn, would try
to sell the items in the United States or elsewhere.
In our view, Managua will operate actively on all these fronts~to minimize
losses of foreign exchange.
One of the Sandinistas' highest priorities will be to continue their search
for new export markets for Nicaraguan commodities displaced by'US
sanctions--bananas, meat, seafood and tobacco. The first target will probably
be sympathetic countries in Western Europe and secondarily Nicaraguan allies in
the Soviet bloc who would offer barter options. Indeed, in a press release,
Nicaragua's Agriculture Minister announced that his country would now sell its
bananas to Belgium and meat to Canada, but this has not been confirmed by either
country. In Fact Canada has stated it will not increase its quota of any
Nicaraguan imports at this time. The EC has only a limited ability to absorb
additional agricultural imports, and already has stockpiles of meat. As for
tobacco Bulgaria seems a likely target, as that country recently has become
increasingly involved in Managua's tobacco industry.
,just before the embargo, Nicaragua replaced its Cuban
o acco a v sons w th Bulgarians and also enlisted Soviet aid in building a leaf
processing plant. Managua will also probably try to sell its goods such as
shrimp and spiny lobster, which when packaged are not indentifiably Nicaraguan,
to the United States through both witting and unwitting third countries.
On the import side; we expect the Sandinistas to take a two-track approach.
First, Managua will continue to press countries opposed to the embargo to make
new credit lines available. Although in most cases the government may not
obtain any extensive new aid, it will probably receive a few one-time gifts of
food or other consumer products. In addition, we expect the Nicaraguan
Government to turn to Mexico and other Western nations to obtain many of the
spare parts required for the US-made machinery used in Nicaraguan industry. If
the embargo continues to exclude international subsidiaries of US companies,
Managua will be able to find some parts through these sources.
On both the export and import side Nicaragua may also tap into Cuban-run
front companies to increase sales of goods to the United States as well as
obtain needed US spare parts--especially those difficult to obtain from other
suppliers, such as specialized oil refinery equipment. Havana already has a
well-established network of foreign based front companies designed to help evade
the US trade embargo as well as earn hard currency, acquire Western technology,
provide cover and funding for intelligence operations. and satisfy consumer
demand for other Western goods.
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Havana has been able over the years to purchase US-origin products including
microcomputers, semiconductors, video and photocopier equipment, automobiles,
and spare parts, tape recorders, medical supplies, agricultural machinery,
tools, construction materials, and clothing. These companies have also sold
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The Sandinistas, of course, will have to deal with more than ,just a
disruption in the flow of goods and money. Although Nicaragua already relies
heavily on many industry advisors from Communist and newly industrialized
nations, finding satisfactory replacements for the few key US managers in
country will be difficult, if their companies choose to withdraw them. Perhaps
the greatest problems in this area centers on the .oil sector, which was
experiencing difficulties well before sanctions were imposed.(1) Nicaragua will 25X1
probably seek assistance in substituting US managers in its oil industry with
Mexican, West European, Cuban, or Iranian teams.
(Moreover, the Sandinistas had 25X1
Brazilian and Cuban teams examining the refinery in late 1984., As far as the
oil sector is concerned, the sanctions could offer the Mexicans an excuse to
move toward reinstatement of normal deliveries, but we believe political and
financial considerations will preclude such a development. 25X1
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On the Political Side
On the international front, Nicaragua will almost certainly continue its
diplomatic maneuvering, using a variety of forums to build pressure on the
United States to remove the sanctions. The Sandinistas will also try to exploit
splits among Western allies in an effort to isolate the US and~win economic
assistance. The Sandinistas will probably hope to gain from this split,
believing that the Europeans' concern about appearing to support the US embargo
may inhibit them from pressing the regime on other key issues, especially
domestic political liberalization.
At home, the Sandinistas will continue to use the external threat to
galvanize popular support and redirect anti-regime sentiments toward the United
States. As the effects of the embargo take hold and Further erode living
standards, the government will increasingly try to use the United States as a
scapegoat for its own mismanagement. In our view neither of these strategies is
likely to broaden the regime's popular base in the near term.
Further, we expect the regime to continue making conciliatory gestures to
internal political opponents. The Sandinistas, however, will move carefully
looking for ways to demonstrate flexibility to the international community
without appearing to cave in to United States economic pressure. Because
gestures represent no real change in government policy, however, the opposition
will continue to move cautiously to avoid provoking the government--any public
statement would almost certainly have to focus on the implicitly off limits
issue of the difficulties posed by the embargo. As a result, opponents will
have less maneuvering room to criticize the regime on any issue. For their
part, private sector opponents of the regime are unlikely to turn against the
United States because of the sanctions, but they may decide to leave Nicaragua
if government controls over production and distribution become still more
burdensome.
The Medium and Longer Term Outlook
We believe the Sandinistas will have to expend considerably greater energy
to cope with the additional strain economic sanctions will place on their
already thin managerial pool. Export cutbacks will have to be ,assessed,
alternative markets located, middlemen found, prices and terms arranged,
shipping organized, and delivery and export dates coordinated. At the same
time, the Sandinistas will have to obtain more foreign loans and make important
decisions on the distribution of import reductions. While coping with these
direct impacts will be a challenge, dealing with the indirect effects, such as
the possible disruption of other exports, will only add a new level of
complexity to the situation.
On balance, we ,judge from the experience of most other embargoed countries
that the economic disruptions initially caused will ease as Managua finds
avenues around trade sanctions. Given the relatively low level of US-Nicaraguan
trade, it is likely that lost US markets, for the most part, will be replaced
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within two to three years. As the Sandinistas continue to redirect the economy
away from the United States, they will need fewer embargoed goods. Moreover,
any problems in getting spare parts should be eased as US equipment is replaced
with machinery from other countries. The transition of course will be smoother
and quicker if the Soviets and Bloc allies are willing to increase their
assistance still faster to offset Nicaragua's economic losses.'
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Text Table: A Snapshot of Select Commodity Exports
Bananas:
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Nicaragua would have to
abandon bananas as a crop and grow other vegetable products instead if the US
were to ban banana imports. Prior to the embargo, almost all of Nicaragua's
banana export crop was sold to the United States, generating a hard currency
profit of $4-8 million per year. Nicaragua had exported about four million
boxes a year to the United States at a price of $6 per box. Estimates place
shipping and production costs per box at $4-$5, leaving $1 to $2 profit per box.
If Belgium or another European country agrees to purchase the bananas, Nicaragua
will have to pay added shipping costs leading to a reduction in profits. We
believe the added shipping costs would be between $.40 to $.60 per box and could
substantially offset profits, possibly eliminating incentives to produce the
It is very likely that Bulgaria will be one of the first alternate markets
for Nicaraguan tobacco even though Managua may receive barter goods and not hard
currency. Nicaragua's overall sales of tobacco to the US amounted to
approximately $3.5 million in net hard currency earnings in 1984. While the US
was Managua's largest tobacco importer, Bulgaria was also an importer, and is
becoming more involved in Nicaragua's tobacco production and processing in 1985.
Nicaragua with petroleum.
Tobacco?
Meat:
Managua will probably search only for hard currency sales and not for
barter arrangments as it looks to markets in Western Europe and also neighboring
countries. In 1984 Nicaragua earned $10 million from beef exports to the United
States, and would likely have earned closer to $20 million if the USDA had not
stopped imports during four months for noncompliance with health regulations.
Nicaragua's profit margin on meat is much larger than on bananas because
trans ortation and production costs are a smaller percentage of the sales price.
Seafood?
Nicaragua sold nearly $10 million worth of seafood to the United States in
1984. The Sandinistas are likely to continue searching for hard currency
markets for their seafood exports, which are fairly profitable. While seafood
exports are subject to transportation costs similar to those of beef and
bananas, their production costs are lower. Seafood value per pound is higher
making additional shipping costs to Europe less significant, assuming the fish
can be kept fresh. Since 1977, Nicaraguan shrimp and lobster production has
declined steadily, but their overall values have been rising. Part of the
production loss stems from lack of spare parts and petroleum to maintain the
fleet. Actual hard currency costs of exporting shrimp will be limited to the
transport costs and brokera a fees as long as the Soviets continue to supply
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