Spanish authorities have suspended trade with Nicaragua for what were called "technical" reasons, despite the Madrid government's official opposition to the U.S. trade embargo against the Sandinista government.
A Spanish Foreign Ministry spokesman said today that the state export credit insurance agency has refused for the past three months to cover deals with Nicaragua until the government in Managua repaid interest on loans extended by the Spanish government.
A blacklisting of a country by the export insurance company effectively blocks Spanish exporters from seeking business in that country. The March move against Nicaragua means that for the past three months trade between the two countries has been at a standstill.
The spokesman said that the decision had been made on March 12 but that "it had been kept discreet" to avoid political repercussions. The spokesman said the decision was "a purely technical matter" and was in no way linked to the U.S. trade embargo.
He said that similar measures had been taken against other Latin American countries with overdue interest payment problems, including Peru, Bolivia and the Dominican Republic.
The measure did not alter official Spanish support for the Nicaraguan government, the spokesman said.
The decision had been made by the Spanish Export Insurance Co., known by its Spanish initials CESCE, which is jointly owned by the government and by private Spanish banks. The move was prompted by Nicaragua's failure to pay interest totaling close to $7 million that is due on Spanish loans dating to 1981.
The official stressed that what was at stake was "hard interest" and exports and that the decision did not in theory touch on "humanitarian aid" and government-to-government loans.
The official said, however, that the government's economic advisers would be certain to oppose any new credit lines at least until overdue payments had been made.
The move is potentially a political embarrassment for the government of Socialist Prime Minister Felipe Gonzalez, who is one of the most vocal supporters of the Sandinistas among Western European leaders.
The Spanish Foreign Ministry issued a note last month that was sharply critical of the U.S. trade embargo. Gonzalez and other leading Spanish Socialists have argued consistently that sanctions against the Sandinistas will only serve to isolate the Nicaraguan government and make it more like Cuba.
The export insurance company is controlled by the Finance Ministry and is the key institution providing export credit insurance in Spain.
The Madrid authorities were unable to provide a breakdown of actual trade between Spain and Nicaragua, but it is understood to be limited. The main impact of the measure is seen as psychological in addition to the its potential effect on future credits.
According to the export insurance company, payments are due on loans totaling $164 million. The first major loan was extended by the Spanish government in 1981 and it was provided, in part, to allow the Sandinistas to honor debts with Spain contracted by the government of Anastasio Somoza, which they had overthrown.
Foreign Ministry officials said the difficulties posed by the Nicaraguan failure to make payments had been raised by Gonzalez when Nicaraguan President Daniel Ortega visited Madrid two weeks ago.
It was suggested to the Nicaraguan officials traveling with Ortega that about $4 million of the latest loan, which had not been delivered yet, be set aside to meet the existing debts.
The signal given by the Spanish economic officials was that the export insurance embargo would be reconsidered as soon as the repayments were seen to be progressing. So far, however, Nicaragua has failed to comply with such suggestions.