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Completely ignoring the issue of authorization for use of Puerto Cabezas or the question of permlsSlon for airstrikes which had previously been brought to his attention, Barnes chose to focus on the economics and the potential loss of US inventories which might be moved into Puerto Cabezas and lost -- that is, appro- priated by Somoza -- if the decision should be made either to move the training activity to United States bases and/or to back off from the use of the Nicaraguan air base. What motivated Barnes to suggest this approach is unknown; and in view of the real problems requiring decisions it was a unbelievable performance. Even as the Agency ~as seeking policy guidance with respect to utilization of Puerto Cabezas, Robert- son alerted Headquarters that the Nicaraguan situation would soon be complicated by requests from the Govern- ment of Nicaragua for a $(US) 2 million loan to rebuild motor and railroads which had recently been flooded -- a request which the Nicaraguan Ambassador Oscar Sevilla- Sacasa would present to the Department of State. In addition, a Development Loan fund of $(US) 8 million was also pending. 41/ When General Anastasio Somoza - 125 - TOP~RET