A sharp dispute over assertions that the United States is pressuring the Inter-American Development Bank to stall a $60.3 million agricultural loan to the Sandinista government of Nicaragua has split the professional staff and the executive directors of the bank.
The Reagan adminstration denies that it is stalling the loan, which apparently would pass despite U.S. opposition if it were to come to a vote by the bank's executive directors. The multilateral bank was formed in 1959 to promote economic and social development in Latin America.
But confidential minutes of the bank's executive board meetings, unusual on-the-record statements by one of the directors and interviews with staff members responsible for processing the loan indicate that there is strong concern that the bank's reputation for impartiality is being undermined by the appearance of a politically motivated delay of the loan, which needs to be approved by March to be used for this year's planting season in Nicaragua.
"We understand it in that way," said Jorge Alexey de Synegub, a Guatemalan who was elected last year by the finance ministers of Costa Rica, El Salvador, Guatemala, Haiti, Honduras and Nicaragua to represent each of them on the decision-making executive board. "There is no technical problem but the political influence of the United States," he said.
A technical staffer at the bank who worked closely on the proposal, submitted by the Nicaraguans in June 1982, said the loan "was supposed to reach the board of directors the last week in November."
"It's very difficult now, everything with Nicaragua," said the staff member, who asked that his name be withheld. "Everything was covered. Not only the technical part but the operational part as well."
Until a meeting last week, the bank management had contended since November, when the directors began to criticize the loan's delay, that the loan had not been approved by the regional management group responsible for approving the data and analysis in the loan application.
But according to bank records dated Dec. 7, 1984, the loan had been completed by the group Oct. 10 and, following bank procedure, was to be sent to the executive vice president's office soon afterward to be put on the director's agenda for discussion and a vote.
Emil Weinberg, head of the department responsible for passing on the loan to the regional management group, would not comment on the procedure, except to say, "I would suggest that it would not be helpful to this bank or any of its member countries to attempt to make any sense out of the internal process." Weinberg is a Dominican who has worked in the bank for more than 15 years.
The rift between the bank management and the eight directors who represent the Latin American and the Caribbean members has become so charged that at an executive board meeting on Thursday, the directors demanded, as a group, that the bank staff set a precise date for bringing the loan to them and that the bank management hold extra meetings if necessary to complete the loan before the bank's annual meeting in March. Faced with the group's demands, bank officials admitted for the first time that the loan had been completed by the regional management group, said an official who attended the meeting.
The loan application is Nicaragua's largest request since 1980. It asks for financial credits for small and medium-size farmers in the private sector to cultivate fields, build housing and corrals and purchase farm machinery and work animals needed to increase production of basic foods for domestic consumption.
Although there are serious food shortages, agriculture and livestock products accounted for more than 24 percent of Nicaragua's gross national product and 75 percent of the country's exports in 1983, according to a bank report. The government has imposed price controls and rationing of basic commodities and import controls on luxury items. It subsidizes, at a great cost to its national budget, both farm production and consumer products. The Treasury Department, which sets U.S. policy at the bank, strongly objects to such macroeconomic policies because they discourage private initiative and investment.
The Inter-American Development Bank, one of four regional multilateral development banks in which the United States participates, lent about one-third of a record $3.5 billion overall last year to agricultural improvement programs.
The bank's 12 directors, who represent the 43 member countries, generally stay above the political disputes between countries and evaluate loans on their financial viability and importance to development.
Partisan politics, however, occasionally is a factor in international lending policy. The United States has used its participation in the banks and the International Monetary Fund to condemn apartheid, punish human rights violators and pressure governments it opposes or aid those it supports. Officially, it does this through its appropriations to the banks or by the way it votes on loans.
Using international lending as leverage began in earnest during the Nixon administration, when the United States succeeded in cutting off new credits from the World Bank to Chile, whose Marxist president, Salvador Allende, the United States opposed. Loans resumed after Allende was overthrown in a military coup despite reports that the economy was in serious trouble. In 1982 the U.S. successfully lobbied the IMF to approve a $85 million loan to war-torn El Salvador despite staff recommendations against it.
During the Carter administration, Congress passed legislation instructing U.S. representatives to vote against loans to governments that were serious human rights violators. As a result, the United States voted against or abstained from voting on 118 loans to 20 countries. The Reagan administration reversed this trend. In 1981 it announced it would no longer oppose loans to Argentina, Chile, Paraguay and Uruguay and from 1982-83 abstained or voted against only five loans -- to Angola, Yemen and Laos -- because of human rights violations.
James Conrow, an official at the Treasury Department, announced in 1983 that the administration would oppose loans to Nicaragua until the Sandinista government made major changes in its domestic economic policies. That year the United States used its veto power to block a $2.2 million Inter-American Development Bank loan to complete a road-building project there. At the time, some of the directors criticized the U.S. vote as an "attempt to evade [the] ideal" of the bank.
The fear now is that the "ideal" of the bank is being subverted by the bank staff, known for its professional, nonpartisan work. According to the unpublished minutes of three executive board meetings in November and December, some directors have criticized the bank for delaying the loan without explanation. "I wish only to urge the management to put all its cards on the table for discussion and that the discussion be on purely technical grounds," said Luiz Barbosa, executive director for Brazil, Ecuador and Suriname, at a Dec. 6 meeting.
At a Nov. 14 meeting, Bent Wittrup Christensen, then executive director for West Germany, Italy, Britain and several Scandinavian countries, spoke of his "deep concern at the continuing problems . . . affecting the approval of [bank] loans to Nicaragua."
"My concern goes beyond Nicaragua," he said at the meeting. "It is a serious and unacceptable circumstance if any of the borrowing members of the bank is unable to maintain at least a minimal level of continuity in commitments. The bank has a particular responsiblity to ensure that this flow of commitments is maintained to the smaller economies of the region, which may be least able to cope with the consequences of severe economic crises that the region has undergone."
Concerned that the loan was being unduly held up, former congressman Jerry M. Patterson (D-Calif.), chairman of the House banking subcommittee on international development institutions and finance in the last session of Congress, sent a letter to the bank and the Treasury Department asking for an explanation. The subcommittee authorizes U.S. appropriations to the bank.
"The situation at the bank has caused increasing concern over the past year," said Jan Shinpoch, an aide to Patterson who drafted the letter. Patterson was not reelected.
In a recent interview, Jose Paiz Moreira, a Nicaraguan who is the alternative executive director for de Synegub, said pressure on the technical staff "is very heavy from [U.S. executive director Jose Manuel] Casanova."
"All of them know any loan about Nicaragua is a hot potato, so they don't move until they receive a green, green light," he said.
Casanova said he has never spoken to anyone on the technical staff about the Nicaraguan loan. "I don't think that is a fair statement or an accurate one," he said.
Casanova, who has been the U.S. executive director at the bank since 1981, said that he had only "heard of" the Nicaraguan loan. "As far as dealing with loans. I deal with them in an official capacity," he said. "We deal with the loans when they come to the attention of the board. I get the document for the first time [then]. That's when I deal with it. That's when the U.S. determines what its position is."
Treasury Department spokesman Robert Levine said the loan had not been discussed. "Nothing has come to the attention of the United States concerning loans to Nicaragua." Because the Reagan administration already has stated its intention to vote against Nicaraguan loans, Levine said, "they don't have to look for anything to stall. If U.S. officials are not "satisfied with the economic policies of the Sandinista government, they don't have to resort to subterfuge."
In an attempt to speed the loan's approval, the Nicaraguan government asked the bank last year to delay a $18.9 million loan request for a geothermal project submitted in June 1980.
"Something is going wrong at the administrative level," said de Synegub. "It's the worst thing that could happen to any development institution. The main reason we're fighting for Nicaragua is not purely for Nicaragua; it's for the purity of the [bank]. The 43 members gave us replenishments to develop Latin America, not to play with" politically.