Image: Daniel Ortega greets Dante Mossi. Source: Infobae.
The dire human rights situation under the Ortega-Murillo regime in Nicaragua has prompted a search for pressure points, sets of sanctions, and diplomatic actions that can induce behavior change or, barring that, at least drain the regime’s machinery of repression. Persistent human rights abuses and a police state have led the United Nations Group of Human Rights Experts on Nicaragua to recently accuse the Ortega-Murillo regime of committing crimes against humanity. The “crimes against humanity” label is unique—reserved for widespread, systematic abuses of the gravest nature. Indeed, this category puts Nicaragua in rare company occupied by only a handful of countries.
Despite the obvious need to curtail its revenue sources, squeezing the Ortega-Murillo regime has proven more difficult than anticipated because it has been able to access funds in institutions where funding should be blocked. For instance, the Central American Bank for Economic Integration (CABEI), the region’s international financial institution tasked with pursuing development and economic links, has been the single largest source of financial support for the Ortega-Murillo regime at USD $3.5 billion in projects since 2017. Nicaragua’s population is smaller than that of Guatemala and Honduras, but has received nearly 26 percent of CABEI’s lending portfolio. Moreover, during CABEI’s strongest years of lending to Nicaragua, the budget for the National Police grew every year, sometimes doubling, demonstrating how CABEI helps to provide offsets that Ortega leverages to fund his repressive apparatus. For this reason, CABEI’s Executive President, Dante Mossi, has earned the moniker “banker to dictators.”
Mossi has justified his lending to the Ortega-Murillo regime by hiding behind technicalities—i.e., the technical board approves the projects—and declaring that CABEI is “not a human rights body.” Never mind that all projects that come before the technical board have been approved by Mossi beforehand. We must move beyond the excuses of ‘just following orders.’ Furthermore, paragraph 127 of the report by the U.N. Group of Experts addresses the need for CABEI and other banks to consider human rights when lending to Nicaragua: “When negotiating development cooperation and investment projects in Nicaragua, governments and multilateral organizations should include human rights guarantees and prioritize actions aimed at improving the situation in Nicaragua.” Mossi has abused the discretionary power vested in him as Executive President to evade restrictions and lend to Nicaragua despite the risk of complicity in human rights abuses.
At a recent event with Mossi, held at the Washington think tank Inter-American Dialogue—prompted by Mossi’s own debate challenge to the author, following an article that placed CABEI’s support for the Ortega-Murillo regime in an unflattering light—the Executive President showed neither signs of regret nor a disposition to change tack. Significant pieces of U.S. legislation, such as the Nicaraguan Investment Conditionality Act (NICA Act), which seek to curtail international financial institution lending to the regime, do not apply in CABEI’s case. The U.S. has no director at the bank to vote against funds going to Ortega, which has allowed Mossi to remain a steadfast supporter of the Ortega-Murillo regime.
In an attempt to assuage some of these concerns, Mossi promised at the Inter-American Dialogue event to seek consultation on the bank’s shortcomings and to build greater transparency and anticorruption safeguards. But unfortunately, I have not been consulted by Mossi or his subordinates.
Beyond Mossi’s problematic ties to the Ortega-Murillo regime, under his leadership, abuses, privileges, and management issues abound at CABEI. Insiders who spoke to me in preparation for the event at the Inter-American Dialogue described Mossi akin to the ruler of a provincial fiefdom, running the bank to suit his personal interests and benefit those closest to him, all while eroding important internal checks and balances. Top leaders enjoy exorbitant salaries, lavish trips, and other privileges—all in a region comprised of some of the poorest countries in the world. Mossi’s case for a capital increase at the bank should be seen within this context of patronage networks.
Transparency is a major issue at CABEI. Perusing CABEI’s website is like taking a time machine back to the earliest days of the internet. Minutes of the Board of Directors meetings are unavailable. The status of the loans granted by the institution and updates on those loans through their execution, monitoring, and evaluation periods are not readily available. When the Board of Directors recently moved to impose greater transparency by ordering an internal audit of expenses and demanding greater information, Mossi threatened to resign (putting at risk the privileges many at the bank enjoy under his leadership). Mossi’s leadership style has landed CABEI in hot water over its funding of a bio-clima project in Nicaragua that contributes to violence and lack of prior consent with indigenous communities.
Additionally, Mossi has proven a poor steward of the bank’s resources. Standard & Poor’s has warned of liquidity management challenges, and Mossi disbursed more than 80 percent of the annual operating plan in the first three months of 2023, totaling $1.5 billion in the first quarter. In addition, key budget indicators increased, despite a negative budget recommendation from the budget committee. Administrative costs have skyrocketed at the bank, and the institution’s operational efficiency has worsened. These actions put CABEI’s credit rating in doubt, which in turn risks its ability to operate effectively by offering affordable loans (in many cases, with lower interest rates than countries receive on their own). This is to say nothing of the risky loan portfolio CABEI maintains with Nicaragua, or the very real prospect that a democratically elected government in Managua would refuse to pay back loans incurred by such an obviously illegitimate regime.
Lastly, the bank has become untethered from its primary goal—i.e., fomenting development projects to integrate Central America as a region. Instead, the bank’s current modus operandi is to sync with national development plans and fund country leaders’ political projects. In other words, CABEI has become an embedded part of the region’s clientelist politics. Fortunately, there is an opportunity to correct CABEI’s wayward path and elect a leader who will take real responsibility. Mossi will seek reelection at a Board of Governors meeting in Punta Cana, Dominican Republic, on May 12, 2023. If CABEI as an institution desires accountability, it should reject Mossi’s bid for a second term. A change at the top is the only way to ensure CABEI reverts to its founding mission and reaches its full potential.
CABEI can and should do better—but it will fail to do so if it sticks with the current leadership. The Board of Governors has an important choice to make on May 12. It should vote to return to CABEI’s original mission, reduce funding to regimes accused of crimes against humanity, and do so all within a framework of greater transparency. If recent years have taught us anything, none of that appears achievable under Dante Mossi’s leadership.
Ryan C. Berg is the Director of the Americas Program at the Center for Strategic and International Studies (CSIS).