When President Reagan's economic embargo forced Nicaraguan trade officials to shut down operations in the United States, the Canadian government unhesitatingly allowed them to resettle in a quiet suburb of this city.
But the Sandinistas, who had predicted confidently last summer they would be able to use Canada to circumvent the U.S. embargo, have been seriously disappointed. Far from finding new markets here to make up for the termination of the more than $300 million a year two-way trading relationship with the United States, Nicaragua has seen a steep drop in its trade with Canada.
Reagan administration officials had worried that U.S. businesses would use Canada as a conduit for shipping goods to Nicaragua, but Canada promised it would not allow that. On the other hand, the Canadian government refused to place similar restrictions on the numerous Canadian subsidiaries of U.S. firms. But that opening seemed not to have made a difference.
The fact that Canada has not become the end run around the U.S. embargo is explained largely by Nicaragua's financial and logistical problems. The intense economic pressure that the Reagan administration has applied against the Sandinistas is also having a strong effect.
Canadian banks have begun refusing to provide financing for trade deals because Nicaragua has failed to pay either principal or interest on outstanding loans for more than two years. Although Nicaragua has been negotiating continually with Canadian banks to make arrangements for paying off the more than $50 million in loans, bankers said in interviews they are unwilling to extend further credit now.
"They're not considered a good risk -- unless you want rubles," said a vice president at one of Canada's major banks. "They don't have what is known as hard currency, and that's a problem in this country." A Canadian diplomat added, "Canadian businessmen are willing to export. Their major concern is getting paid."
In 1984, Canada imported about $32 million in goods from Nicaragua and exported about $16 million. Last year, Canadian imports from Nicaragua dropped to about $18 million and exports to about $14 million.
Jorge Chamorro, the head of the Nicaraguan trade mission here, said the drop in Nicaragua's exports to Canada last year was due in part to a beef quota that has since been lifted. But he said he has found Canadian businessmen to be more conservative than he expected, and sees the need to "educate them to the possibilities of the [Nicaraguan] market."
The other major problem he has encountered, he said, is transportation. Few Canadian shipping lines go to Nicaragua and the trade mission here has yet to organize a system in which ships are fully loaded in both directions. Typically, the refrigerated vessels bringing Nicaraguan seafood arrive on Canada's Atlantic coast. The Canadian cargo being sent to Nicaragua departs from Canada's Pacific coast.
Shipping costs are 50 percent higher than when the trade office operated from Miami, he said. Air freight costs have doubled. In order to move cargo by air from Toronto to Managua, he said, they have sometimes had to resort to a circuitous route through Madrid.
It is difficult to find open support for Reagan's Nicaraguan initiatives here. Canadian religious leaders, farmers, labor unions, artists and intellectuals not only regularly voice strong opposition but they have also organized a series of efforts to send supplies and labor to Nicaragua.
The government of Prime Minister Brian Mulroney has also registered dissent, though it has been mostly polite and muted. Quietly, it has argued that the crisis in Central America stems largely from social and economic disparities and that the best way to address those problems is by stimulating economic development.
Not only did Canada provide a home for the Nicaraguan trade officials, they have continued giving modest economic aid of about $4 million a year and have softly opposed the largely successful U.S. efforts with international organizations to cut back aid to Nicaragua.
Although External Affairs Minister Joe Clark has said pointedly that Canada views its role in the conflict as that of "supporter not leader in the search for peace," he has given frequent assurances to Central American countries that Canada is ready to advise on verification and control of any truce.
Pastor Valle Garay, Nicaragua's consul general in Toronto, spoke enthusiastically about the support from groups such as Farmers for Peace, an ad hoc organization in the Canadian prairies that has collected agricultural equipment and parts and shipped them to Nicaragua, and the Electric Brigade, 10 union electricians and helpers from Ontario and Quebec who have gone twice to Nicaragua to wire buildings at dams and electric power stations, donating their tools and other materials when they left.
"Canadians have responded tremendously," he said. "They are not easily swayed by Reagan's rhetoric. Often there is a feeling of kinship. They often see in Nicaragua what they would like to do in Canada but cannot because they are far too deep in the relationship with the United States."
But this assistance seems not to have made much of a dent in Nicaragua's worsening economic troubles. According to a report earlier this year in The Economist Intelligence Unit, a British publication, the inflation index for Nicaragua soared to about 270 percent last year as growth in real gross national product was a negative 2.5 percent. Hard currency reserves were dwindling as Nicaragua was running a current accounts deficit of more than $500 million for the first six months of the year.