Although it had provided substantial support to UNO forces for the elections, the United States did not prove a staunch and uncritically supportive ally of the Chamorro government. Although initially the United States did gave signals that it was willing to support the Chamorro government strongly, the relationship deteriorated, when some officials within the United States government began to object to the Chamorro government's conciliatory policy toward the Sandinistas.

On March 13, 1990, in a first gesture to the Chamorro government-elect, United States president George H.W. Bush lifted the United States trade embargo imposed five years earlier. Bush also announced that he was presenting the United States Congress with a proposal for US$300 million in emergency supplemental appropriations for Nicaragua for the 1990 fiscal year (FY), which would extend through September 30, 1990. He also asked the United States Congress to add more than US$200 million for Nicaraguan aid to the budget request for FY 1991, which began on October 1, 1990. The emergency supplemental proposal included US$128 million for immediate economic needs and US$75 million for other economic, social, and political programs. The United States also contributed US$50 million to help clear Nicaragua's US$234 million arrearages with international financial institutions, in the hope that other countries also would contribute sizable funds. For repatriation efforts, the Bush administration's request included US$32 million for the demobilization and repatriation of the Contras and their families, and US$15 million for the repatriation of other Nicaraguan refugees.

In addition, Bush announced an immediate US$21 million aid package for the Chamorro government. The package included US$650,000 toward the Chamorro government's transition period expenses, US$13 million in surplus foodstuffs, and US$7.5 million for Contra repatriation. The Bush administration also announced that it had begun the process of restoring Nicaragua's sugar quota, its eligibility for preferential treatment under the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences, and its access to benefits of the Export-Import Bank and the Overseas Private Investment Corporation.

In its first action to assist President Chamorro, the United States Congress, although not acting as quickly as the Chamorro government wished on funds critical to its spring planting season, approved the emergency supplemental package on May 24, 1990. For FY 1991, the United States Congress did not specifically earmark funds for Nicaragua, but it indicated in the report accompanying the foreign aid legislation that it expected to provide Nicaragua with as much as possible of the administration's US$200 million request for the country. (The United States Congress also specified that no funds were to be provided for Contras who had not disarmed and were not abiding by the terms of the April 1990 cease-fire.) Continuing resolutions from October 1, 1991, through September 30, 1992, providing appropriations for FY 1992, allowed the Bush administration to continue funding Nicaragua at the FY 1991 US$200 million level, just under the administration's US$204.7 million request. The Bush administration obligated US$262.2 million in FY 1990, US$268.9 million in FY 1991, and an estimated US$185.5 million in FY 1992.

As a result of the actions, during FY 1991 and FY 1992 Nicaragua was the second-largest recipient of United States aid to Central America, behind El Salvador. In addition, in September 1991, the Bush administration signed an agreement with Nicaragua cancelling US$259.5 million in bilateral debt to the United States.

In exchange for its assistance, however, the United States expected the Chamorro government to adopt free-market reforms, privatize industries, restore property to former owners, and drop the international lawsuit that the Sandinista government had brought against the United States for the Contra war. All these provisions proved highly problematic for the new government. Complicating the matter, the United States conditioned disbursements of certain obligated funds on progress toward fulfillment of economic objectives. At times, pressures from the Bush administration and members of the United States Congress for political reform in Nicaragua appeared to be prerequisites for further aid from the United States.

United States discomfort with the continuing Sandinista leadership of the Nicaraguan military was highlighted in late 1990 and early 1991. During this period, Salvadoran guerrillas shot down two Salvadoran air force aircraft and a United States helicopter with Soviet surface-to-air missiles obtained from the Nicaraguan military. The ancients resulted in the deaths of three United States soldiers. Even though the Chamorro government arrested four officers in connection with the October 1990 sale of the missiles to the Salvadorans and the Nicaraguans said that the Salvadoran guerrillas would be forced to return unfired missiles, the incident accentuated United States fears that the Chamorro government was being used by the Sandinistas.

Subsequent reports that Nicaraguan army soldiers had tried to smuggle arms and munitions to a Marxist group in Honduras, the assassination in Managua of former Contra leader Enrique Bermúdez, and the Salvadoran guerrillas' continued use of Nicaragua as a safe haven exacerbated United States concerns. For its part, the Nicaraguan government objected to the United States request to the Soviet Union that it cut the supply of spare parts needed by the Nicaraguan army to maintain its helicopters and trucks.

In April 1991, President Chamorro paid a state visit to the United States. She addressed a joint session of Congress in the hope of easing growing United States doubts about her administration and obtaining a long-term commitment for United States aid. Although President Bush and the United States Congress praised and applauded President Chamorro. she received no commitments other than a promise that the United States would lead efforts to obtain aid to clear Nicaragua's arrearages with international financial institutions, opening the way for new support.

At the time of President Chamorro's visit, a central issue in United States-Nicaraguan relations was unresolved. The United States wanted the Chamorro government to drop the suit that the Sandinista government had brought against the United States in the International Court of Justice (ICJ) on April 9, 1984. In the suit, the Sandinista government charged that the United States had violated international law in recruiting, training, arming, equipping, financing, supplying, and otherwise encouraging, supporting, aiding, and directing military and paramilitary actions in and against Nicaragua. The ICJ ruled against the United States on June 27, 1986. But because the United States rejected the decision the case remained unresolved in April 1991.

In its decision, the ICJ ruled, twelve to three, that the United States had violated obligations not to intervene in another state's affairs, not to use force against another state, not to violate the sovereignty of another state, and not to interrupt peaceful maritime commerce. The ICJ also ruled that the United States had not abided by its 1956 Friendship, Commerce, and Navigation Treaty with Nicaragua. The ICJ ordered the United States to make reparations to Nicaragua but left a first attempt at setting the form and amount of reparations to agreement between the two parties. Because the United States rejected the ICJ's decision, no attempts were ever made at agreement, and in the 1990 transition period the National Assembly passed a law requiring future governments to proceed with the claim. Although the Chamorro government initially resisted spending its political capital to meet United States demands to drop the claim, President Chamorro told President Bush during her April 1991 state visit that she had introduced legislation to the National Assembly to repeal the law. In June 1991, forty-nine to one after the Sandinista deputies had walked out, the UNO coalition in the National Assembly voted to revoke the law. The Chamorro government subsequently notified the ICJ that it was dropping the claim.

Despite the Bush administration's public words of firm support for the Chamorro government's ongoing economic reforms, the Nicaraguan government's relations with the Sandinistas were a continuing irritant and a cause for the Bush administration's difficulties in shaping and implementing its Nicaragua policy. As Nicaragua sought foreign funds to help sustain the army, in late 1991 the United States discouraged an offer from Taiwan to give between US$2 million and US$3 million for nonlethal assistance to the Sandinista military. Earlier, the United States apparently had ignored a request from the Chamorro government to help fund retirement and retraining benefits for 2,700 army officers. Without indications that the Sandinista military and police were firmly under President Chamorro's control, there seemed little prospect in 1992 that the United States would endorse her reconciliation policy.

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Source: U.S. Library of Congress