Export credit subsidies to Nicaragua

by Don Henry

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This study calculates the level of subsidies in officially supported export credits that have been advanced to the government of Nicaragua. U.S.-Nicaraguan relations have deteriorated steadily since 1981. U.S. actions have included various forms of aid to antigovernment forces within Nicaragua, and economic sanctions, including a trade embargo. A number of West European countries, however, continue to provide assistance to Nicaragua. These governments feel that the Nicaraguan regime is not as threatening as the United States portrays it. This Note examines one form of economic assistance to Nicaragua in detail: export credit subsidies. Because Nicaragua receives credit on favorable terms from major industrialized nations, it is able to expand its military efforts beyond levels otherwise possible. These subsidies exceed the size of nonlethal aid that the United States is providing the anti-government forces within Nicaragua. If European governments are alerted to the costs of providing export credits to Nicaragua, they might reduce these flows.

This report is part of the RAND Corporation Note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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