UNITED STATES EFFORTS TO UNDERMINE AND destabilize the Nicaraguan economy have been ongo- ing since shortly after the overthrow of Somoza. Bilateral U.S. aid stopped in February 1981, when $15 million ofa $75 million package approved by Carter was blocked by the Reagan administration. In March of that year, $10 million in wheat credits was suspended, and in April an $11 million loan for rural education and health care was cut. That month the United States also ended Export-Import Bank guarantees for U.S. exports to Nicaragua. In May 1983 the United States increased economic pressure by cutting Nicaragua's sugar quota by 90% and reallocating it to Honduras,Costa Rica and El Salvador. On May 1, 1985, President Reagan announced a total economic embargo on trade with Nicaragua, an em- bargo that remained in effect until March of 1990. In addition todirecteconomic pressure, the United States systematically vetoed loans to Nicaragua by multilateral sources such as the Inter-American Development Bank (1DB) and the World Bank. Nicaragua received no aid from the World Bank after 1981, andassistance from the IDB declined from $113 million in 1979 to $1 million in 1983. Economic warfare against Nicaragua was only one component of a U.S. policy aimed at toppling the Sandinista government. In March 1981, the Reagan administration secretly authorized the CIA to spend $19.5 million to aid Sandinista opponents, and in November of that year Presi- dent Reagan signed National Security Decision Directive #17 authorizing the CIA to create a paramilitary force to oppose the Sandinistas. In March of 1982 the Contra war unofficially began with the blowing up of bridges in Chinan- dega and Nueva Segovia. The military aspect of theContra war was also, of course, an extension of economic warfare. Damages and economic losses resulting from Contra actions increased from $31.3 million in 1982 to more than $143 million in 1983. This was only a portion of the total economic damage that also wreaked havoc with social and economic development plans and infrastructure. By 1987, economic damage from the war was estimated at between $S1.5 billion and $4 billion. That same year, 62% of government expenditures were for defense purposes. Many of the most capable and talented Sandinista activists went into the army, and were unavailable for other development and management purposes. * This phrase is from the Sandinista anthem.
