Bulgarian Meat and Soviet Cars : Nicaragua Looks East to Offset U.S. Boycott

On the sparsely stocked shelves of a supermarket here, the most abundant item is canned meat from Communist Bulgaria. Among the newest cars in the streets is the Lada, made in the Soviet Union.

A trend is clear: the leftist Sandinista government is turning increasingly to the Communist Bloc for trade and aid.

The Reagan Administration’s trade embargo against Nicaragua, which went into effect last Tuesday, is expected to accentuate the trend.

“This boycott by the United States is what obliges us to go to the socialist countries,” Xavier Gorostiaga, a pro-Sandinista economist, said the other day.

To what extent the Sandinista government will expand its economic relations with Communist countries depends on the way other Western governments respond to the U.S. embargo, according to Foreign Trade Minister Alejandro Martinez Cuenca.

Diversified Trade

He said Nicaragua wants to keep its trade diversified in order to avoid over-reliance on the Soviet Bloc, adding that this objective is in keeping with Nicaragua’s policy of nonalignment.

If Latin America and Western Europe move to help fill the trade gap caused by the embargo, he said, changes in Nicaragua’s economic relations “are not going to be very radical.”

The Communist countries have indicated that they will help Nicaragua adjust to the embargo, he said, adding: “It is yet to be seen what the response of the rest of the world will be to this escalation of aggression by the current government of the United States.”

A Western diplomat here said Nicaragua is reluctant to shift the bulk of its exports to the Soviet Bloc because “the Soviets can’t supply the hard cash that this country still needs.”

Ortega Flies to Moscow

Nicaraguan President Daniel Ortega went to Moscow last week, before the embargo was announced, to seek about $200 million in aid from the Soviet Union. Tass, the official Soviet news agency, said Moscow will make it possible for Nicaragua to solve its “urgent” economic problems.

Since he left Moscow, Ortega has been visiting Eastern European capitals seeking additional aid. He arrived in East Germany on Thursday, met with East German leader Erich Honecker and, according to the official East German news agency, received a pledge of continued support.

Sandinista officials are aware that Ortega’s trip has been used by the Reagan Administration to emphasize Nicaragua’s ties to the Soviet Union. As if in response, the trip has now been extended in what appears to be an effort to give it a “nonaligned” look. Before he returns to Nicaragua, Ortega will visit Spain, West Germany and France, according to Barricada, the Sandinista newspaper.

Trade Minister Martinez said that Nicaragua’s trade with Western countries accounts for about 81% of the total. Before the embargo, 16% or 17% was with the United States.

Martinez added that 19% of his country’s trade is now with Communist countries, but other sources said the figure is considerably higher.

Gorostiaga, the economist, said that 26% to 27% of Nicaragua’s trade is with Communist countries, up from almost none when the Sandinistas took power in 1979.

“If it is 26%, it should be up to about 35% by the end of the year,” a Western diplomat said.

Behind on Debt Payments

Nicaragua is behind in payments on its $4.6-billion foreign debt, it is struggling with a trade deficit of about $500 million a year and its credit in the West has all but dried up. A foreign diplomat described the Nicaraguan economy as “moribund.”

“It is becoming a beggar economy,” the diplomat said. “Daniel (Ortega) is begging from country to country.”

The Soviet Bloc will keep the Sandinistas afloat but will not invest as much in Nicaragua as it has in Cuba, the diplomat predicted. For Moscow, he said, the main return on its investment in Nicaragua is Washington’s continuing preoccupation with the Sandinista government.

“The Russians have a marvelous stick to beat the Americans with,” he said. “The President of the United States spends half his time talking about Nicaragua. Those guys love it.”

According to a report published here last year, Soviet Bloc countries gave Nicaragua $635 million in economic aid during the first five years of the Sandinista government. Western diplomats estimate that the Sandinistas received about the same amount from Communist countries in military aid.

At the end of Ortega’s visit to Moscow, the Soviet Union said that two-way trade between the two countries increased from $67 million in 1983 to $193 million in 1984. Oil, provided at concessionary prices, accounted for an estimated $50 million of Nicaragua’s 1984 imports from the Soviet Union.

Imports from East Bloc

Nicaragua imports much more from the Communist countries than it exports to them. It pays for some of the imports by means of barter arrangements, sending sugar, coffee, tobacco and other goods. No detailed figures are available.

Two Soviet ships arrived recently with 12,000 tons of wheat, 12,000 tons of lard and 7,000 barrels of diesel fuel. Other recent arrivals have brought in tractors, rice and wheat from the Soviet Union, farm trucks from East Germany and food, clothing and medicine from Hungary and Bulgaria.