Nicaragua has obtained a substantial increase in international assistance, including a $100 million loan from Libya, a large-scale expansion in Mexico's aid program and Soviet wheat shipments, since a U.S. decision early this year to suspend aid to the leftist revolutionary government.
The Libyan deal, a balance of payments loan on what were discribed by Nicaraguan officials as extremely favorable terms, marks a significant expansion of the radical Arab state's heretofore limited activity in Latin America. Libya previously had granted considerably smaller amounts of aid to politically diverse countries in Africa and Asia.
Nicaraguan officials said that their government had made no political concessions in exchange for the loan from the government of Col. Maummar Qaddafi, which the Reagan administration has accused of promoting international terrorism. "We don't think we should be ashamed of it," Nicaraguan Ambassador to the United States Arturo Cruz said.
The Libyan loan, Cruz said, will help soften the blow of what he called the "Damocles sword" of an estimated $300 million balance of payments deficit the government expects this year.
The Reagan administration has accused Nicaragua of aiding guerrillas, which it also describes as terrorists, trying to overthrow the U.S.-backed junta in nearby El Salvador. That charge, which the administration has backed up with what it has said are captured guerrilla documents outlining Nicaraguan assistance, was the justification, under U.S. law, for the suspension of aid to Nicaragua's Sandinista government.
Although the approximately $15 million that the United States is withholding -- the remainder of a $75 million appropriation made last year -- is relatively insignificant in terms of Nicaragua's economic health, Nicaraguan officials fear the suspension will affect "our relations with Wall Street, London and the international business community."
The funds initially were frozen in January, whenthe administration said it suspected that Nicaragua had facilitated the shipment of weapons to Salvadoran guerrillas. U.S. officials since have said that the alleged arms flow through Nicaragua, the existence of which the Sandinistas publicly have denied, has largely ceased. But the aid program has not been restarted, and a permanent suspension was announced last month, although disbursement of funds for a number of development programs has continued without halt.
There is little indication that other international donors to Nicaragua have followed Washington's lead, however. In addition to the Libyan loan, which was signed by a Nicaraguan delegation in Tripoli on April 2, the day of the U.S. announcement, Mexico has substantially boosted its assistance.
During a state visit to Mexico last week by Sandinista leader Daniel Ortega Saavedra, President Jose Lopez Portillo, in an obvious reference to his own disapproval of the U.S. aid cutoff said that "we will always be at [Nicaragua's] side." During Ortega's tip, Mexican officials signed agreements increasing their economic and technical assistance to a total estimated at $200 million over the next two years.
In what both Nicaraguan and U.S. officials described as "taking advantage of an opportunity," the Soviet Union last month announced it would send Nicaragua 20,000 tons of wheat, worth about $4 million and enough to fill its needs for several months to make up for the U.S. cutoff of at least $7 million in wheat shipments.
When the Sandinistas ousted Anastasio Somoza in July 1979, the country's external debt stood at $1.6 billion, equal to the average annual gross national product throughout most of the 1970s, and Central Bank reserves were enough for only one day's worth of imports.
Since then, most aid to Nicaragua has come from Western Europe, Scandinavia, Latin America, the Inter-American Development Bank and the United States. The last two have by far been the largest donors, with a total of approximately $160 million each, with the bulk of IADB funds coming from the United States.
Although the Eastern Bloc has contributed substantial amounts of military aid, its economic assistance has been minimal, primarily made up of personnel -- doctors and teachers from Cuba -- and supplier credits from Eastern Europe that require the Nicaraguans to buy specific Eastern European goods.
Nicaragua's internal financial picture remains bleak. Poor weather conditions leading to poor harvests, what Cruz described as continuing "revolutionary trauma" that has impeded private local investment by businessmen who mistrust the government's intentions, and increased imports -- the result both of poor internal production and a rising standard of living for the lower economic class -- have caused high inflation and a severe cash-flow problem.