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Cablegate: Ortega Administration at Six Months

VZCZCXRO1304
PP RUEHLMC
DE RUEHMU #1622/01 1831735
ZNY CCCCC ZZH
P 021735Z JUL 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 0686
INFO RUEHMU/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RUEKJCS/SECDEF WASHDC
RHEHAAA/WHITE HOUSE WASHDC

C O N F I D E N T I A L SECTION 01 OF 05 MANAGUA 001622

SIPDIS

SIPDIS

DEPT FOR WHA/CEN

E.O. 12958: DECL: 06/18/2017
TAGS: PGOV PREL PINR ECON NU
SUBJECT: ORTEGA ADMINISTRATION AT SIX MONTHS

REF: A. MANAGUA 1566
B. MANAGUA 1562
C. MANAGUA 1537
D. MANAGUA 1318
E. MANAGUA 1311
F. MANAGUA 1273
G. MANAGUA 1067
H. MANAGUA 1495

Classified By: Ambassador P. Trivelli for reasons 1.4 (b and d)

1. (C) Summary: During his first six months in office,
President Daniel Ortega has expanded executive powers and
used them to destroy or give away pieces of Nicaragua's
cultural patrimony; to threaten opposition media and freedom
of expression; to fire large numbers of government officials
and replace them with party loyalists; and to centralize the
powers of the ministries under the Presidency. He has also
reoriented Nicaragua's foreign policy by reestablishing ties
with ideological bedfellows from the 1980's and other leaders
of anti-American bent. Although "national sovereignty" is a
favorite leitmotif of Ortega's, he continues deferring to his
Venezuelan counterpart. The lack of transparency and open
disregard for legal limitations point to an administration
that relies increasingly on promising popular democratic
reforms while taking significant steps towards
authoritarianism and a blending of party and state. Recent
polls indicate that the Nicaraguan people are not happy with
Ortega's management of the country. End Summary.

Ortega Strengthens and Forms Alliances with Fellow Ideologues
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

2. (C) Eager to reap the benefits of oil-rich Venezuela's
largesse, over the past six months, Ortega has followed
Venezuelan President Hugo Chavez' lead on almost every issue
of importance (ref F). When Chavez refused to renew the
contract of RCTV (ref E), Ortega voiced support for Chavez's
decision and strongly criticized counter-protests by
Venezuelan students. First Lady Rosario Murillo, head of the
increasingly influential Council of Citizenship and
Communications, correspondingly began the process to convert
Nicaragua's state-owned Channel 6 to a source of
Venezuela-friendly media by partnering with Telesur. Ortega
has also followed in Chavez's footsteps outside of the
Americas, visiting many of Chavez's allies in Africa and the
Middle East. On July 19 the President will reportedly
announce the "Five Pillars" of the FSLN strategy, which are
modeled directly on Chavez's "Five Motors" of 21st Century
socialism. (Septel)

3. (C) During a recent 15-day marathon tour, Ortega visited
Venezuela, Cuba, Iran, Libya, Algeria, and Senegal on a
private jet provided for the occasion by Libyan dictator
Moammar Gadhafi. (Note: A visit to Italy to meet with a group
of investors was canceled at the last minute, while Senegal
was added to the agenda. A senior MFA official, in a meeting
coinciding with Ortega's visit to Senegal, joked that "not
even we know where he might go next," and admitted that the
MFA -at the office director level at least- had received
virtually no updates or reports from the President's party
during his trip. Contacts reported that Alvaro Robelo,
Ortega,s choice for ambassador to the Vatican, bungled the
Italy visit and forced its cancellation -- a further
humiliation for Robelo, a banker implicated in various
financial scandals, who earlier failed to gain agrement as
ambassador to the Vatican. End Note)

4. (C) Since returning to Nicaragua on June 18, Ortega has
been sharply criticized by National Assembly deputies for not
publicly discussing the results of his 15-day trip. Thus far,
Ortega has only commented publicly on a possible energy deal
with Iran. Deputies from the Liberal Constitutional Party
(PLC) and Sandinista Renovationist Movement (MRS) decry the
President's silence and insist that the public has a right to
know what issues were discussed and what agreements or
accords were signed. In addition, legislators are
questioning why Ortega did not visit Rome after having
announced meetings with Italy's president and Italian
business leaders prior to his departure from Nicaragua.
Foreign Minister Samuel Santos weakly (and falsely, according
to the Italian Ambassador in Managua) justified the decision
by stating that Rome was simply a "stopover for the pilots to

MANAGUA 00001622 002 OF 005


rest" and was never part of the official agenda.

5. (C) In the month leading up to his recent trip, Ortega was
also visited by the Vice Chancellor of the Russian National
Assembly Serguei Kislyak. During the visit, Ortega expressed
his desire to revitalize relations, stating that, "when we
speak of cooperation with Russia, we are speaking of taking
into account the relation that we had with the Soviet Union,
when Russia was one of our supporters."

Allies in Asia
- - - - - - - -

6. (C) Not content to hobnob only with dictators in Latin
America and the Middle East, Ortega decided to reinforce ties
to North Korea and Laos. In regard to Korea's nuclear arms,
Ortega has declared "that it isn't fair," that some countries
continue to be armed, "then want to prohibit others from
arming themselves in self-defense" (ref D) In meetings with
Laotian officials, he recalled that, "In the 1980s we had
exceptional relations with Laos and with all the peoples of
Indochina."

7. (C) The possibility of adding yet another ally, mainland
China, is still on the table. In early June, Costa Rica's
announcement of the cessation of its 60-year formal
diplomatic relationship with Taiwan in favor of mainland
China created uncertainty in Nicaragua. For the moment, the
official line is that all ties are firm; however, the Free
Trade Agreement between Nicaragua and Taiwan remains stalled
in its final stage because the Ortega government claims not
to have the $5,000 necessary for publication, which would put
it into legal effect. Dollar diplomacy may ensure Taiwan's
continued presence in the medium term as the Taiwanese have
pledged to send multiple energy plants, scheduled to go
online in January 2008, to assist Nicaragua in addressing its
chronic electrical power crisis. Thousands of Nicaraguans
are also employed in Taiwanese-owned maquilas in Nicaragua's
Free Trade Zones.

Mixed Messages
- - - - - - - -

8. (C) While Ortega visited allies abroad, publicly
criticizing "American imperialism", his Vice President, Jaime
Morales Carazo, was at the Americas Competitiveness Forum in
Atlanta assuring the business elite that Nicaragua was an
ideal setting for investment. (Note: For a two-day period,
while the President and Vice President were out of the
country, there was no acting Head of State named, a further
indication of the improvisation and secretive nature of the
Ortega regime.) On June 19, President Ortega met with members
of the private sector for the second time since his
inauguration. The private sector repeated its concerns
regarding the sanctity of private property, the lack of
support for foreign and local private investment, the need to
fight corruption, and the lack of a coherent economic
plan/direction from the government. The meeting launched a
series of public-private working groups to develop strategies
addressing the energy, infrastructure, and tourism sectors
and the sustainable management of the environment

9. (C) These efforts have not received as much publicity and
Presidential support as Ortega,s proposed "citizen
councils." According to Ortega and Murillo, any plans which
the citizen councils develop will become GON policy and must
be advocated by Ministers before the National Assembly. In
contrast, the work of these public-private groups has not
been given any such political weight, and will most likely be
contradicted by the more populist economic pronouncements
likely to come out of the Sandinista-dominated citizen
councils. (Comment: Since his election, Ortega has stated
several times that he welcomes foreign investors because they
are the engines which will create the jobs to help raise the
country out of poverty. In reality, however, the FSLN
government has displayed a cavalier attitude toward
contracts, particularly in the energy sector. On three
different occasions the GON claimed that contracts with
private sector energy companies were "injurious" to Nicaragua
and would be canceled. This hardline forced the companies to
the negotiating table. End Comment.)

Citizens' Councils

MANAGUA 00001622 003 OF 005


- - - - - - - - - -

10. (C) The newly established "Citizen Empowerment Councils"
("Counsejos de Poder Cuidadano") have been a source of much
opposition concern in recent weeks. These Councils, which are
a direct evolution of the "Sandinista Defense Committees" of
the 1980's, while officially not party-affiliated, are widely
considered to favor hard-line Sandinistas and exclude all
others with questionable ideological affiliations. Their
stated goal is to increase citizen participation within the
system by encouraging active debate within small, local fora.
Charges of FSLN bias are rejected by members of that party,
who say that positions are often filled with FSLN
representatives because they are unpaid; therefore, there
have been very few volunteers for the job. The same logic
applies to the location of the council offices, many of which
are run out of FSLN campaign houses, apparently for lack of
another, more neutral space. More moderate Sandinistas have
declined to participate in (or been excluded from) the
councils, which they regard as usurping existing civil
society groups nurtured over the years by the Sandinistas
themselves (ref B). Whatever the origin of the divide, the
result is that the councils are composed primarily of Ortega
loyalists.

First Lady, First Citizen
- - - - - - - - - - - - -

11. (C) With her allegedly illegal appointment (according to
Nicaragua's nepotism laws) to Executive Secretary of the
Council of Citizenship and Communications, First Lady Rosario
Murillo has become an integral part of the Presidential
powerhouse. Murillo has centralized under her control all
official communication from the government, often writing
press announcements for specific ministries, then ordering
the ministry to issue them unedited. She personally approves
all travel abroad for government officials, a policy which
has generated considerable confusion and often caused
Nicaragua to be absent at regional meetings related to the
Sistema para la Integracion Centroamericana (SICA) and CAFTA,
as well as several USG-funded workshops that are part of
long-running programs. She controls the entire government
budget for publicity, and has co-opted the professional
journalist association in Nicaragua, even reviewing the
weekly schedules for the VP, all Ministers and Vice-Ministers
to decide which events should be publicized and who will
cover them (ref A). Any ministers who dare to speak publicly
without her explicit permission are quickly removed. In
addition, the First Lady reportedly siphons $11 million
monthly from state airport revenues, Free Trade Zones, and
Immigrations and Customs charges. This money is supposed to
fund FSLN-sponsored aid projects, but as of yet none have
been announced. (Comment: One project possibly funded by
this illicit capital is the series of billboards reading
"Arise the Poor of the World!" alongside a prominent photo of
Ortega, which have recently popped up around Managua. The
billboards bear the government's logo, but the government
claims that the funds to erect them were not drawn from
national coffers. End Comment.)

12. (C) Despite the apparent illegitimacy of her position,
Murillo personally signed an agreement with Telesur,
Chavez,s propaganda channel, to develop the Nicaraguan
Channel 6, which had remained dormant since 2002. The station
will require approximately $30 million to be reopened,
according to Education Minister De Castilla. The stated goal
of the partnership is to increase the "democratization" of
the media.

Poor Financial Planning
- - - - - - - - - - - - -

13. (C) The Ortega administration is also running into
difficulties in signing an accord with the IMF. The major
sticking points are the IMF,s insistence on accounting for
Venezuela's assistance in the budget and on Nicaragua,s lack
of clarity on how it plans to achieve its economic and social
goals.

14. (C) Furthermore, it is becoming clear that due to
paralysis and ineptitude at all levels, the current budget
has been poorly managed. At the close of the first trimester
only 12% of the capital spending allocated in the budget had

MANAGUA 00001622 004 OF 005


been spent. Delays are attributed in part to confusion caused
by the investigations of corruption within some of the major
infrastructure ministries during the previous administration,
and by the wholesale firing of thousands of technical workers
in the ministries by the current administration. As a result,
the projects that capital expenditures are tied to have not
gotten off the ground.

Undermining Independent Institutions
- - - - - - - - - - - - - - - - - - -

15. (C) As the opposition remains paralyzed, Ortega has used
his power to attempt to consolidate security forces under
executive control. Most recently, Ortega appointed Ruth Tapia
Roa, a friend of the First Lady's with little background in
defense or security, as "Secretary General with the rank of
Minister" to head the Ministry of Defense, but he has so far
preferred to run Ministry policy directly from the
Presidency. According to an internal memo, Tapia's primary
goals are to purge the Ministry of the few remaining
technical functionaries left from the previous administration
and monitor the "ideological purity" of the armed forces.
(ref C).

16. (C) The army has assumed the primary security
responsibilities of the President's residence, a task which
in the past has belonged to the National Police, an
organization which Ortega feels is too "somocist" in origin.
However, armed forces chief General Moises Omar Halleslevens
has repeatedly stated that the army will remain apolitical
and continue to support the constitution.

Security Breaches
- - - - - - - - -

17. (C) The Nicaraguan National Police continue to cooperate
with the U.S. on counternarcotics efforts and resist efforts
to be "co-opted" by Ortega. The police continue to work with
the Embassy, particularly through programs such as the vetted
unit, the mobile inspection unit and the vehicle inspection
station at Penas Blancas. Chief of Police Aminta Granera
told POL officers during a recent meeting that her
relationship with Ortega is a "balancing act" and that she
continues to push for police autonomy. She claims that
Ortega does not interfere with police operations. However,
she further elaborated that she is often required to attend
events with Ortega where his rhetoric is "anti-gringo" and
that this makes her "uncomfortable."

18. (C) Even though airport security has been completely
compromised and is regularly bypassed by the FSLN, the
President has issued orders to give the appearance of
security, heavily searching and double-checking documents on
U.S. personnel who are likely to report that security
measures are "in force." One example that highlights the
weakness in the system is the continued use of false "letters
to board" provided by illegal immigrants arriving from "C
class" countries that are regularly accepted by Nicaraguan
immigration officials. Additionally, the Director and
Assistant Director of Immigration no longer routinely share
information with the Embassy regarding possible TIP cases.
There are indications that these officials have also accepted
payments from local Muslim organized crime figure Ismat
Khatib for facilitating documents and visas and for
permitting Iranian, Libyan and other Middle Eastern nationals
to pass through the airport without documentation or
registration.

A Battle of Symbols
- - - - - - - - - -

19. (C) In what has become ground zero for a back-and-forth
battle of symbols between administrations, the musical
fountain that had been installed by former president Arnoldo
Aleman on the old "Plaza de la Revolucion" (actually just an
old parking lot) was removed by order of the First Lady.
According to Aleman,s detractors, the fountain was intended
to block FSLN protests in front of the Presidential Palace.
In the face of public outcry, the Ortega Administration
announced plans to relocate the fountain, but then scrapped
them. Besides being a deplorable use of public funds, the
fountain's removal was allegedly illegal, as no one bothered
to obtain a permit from the Mayor's office as is required by

MANAGUA 00001622 005 OF 005


law, prompting criticism by the Sandinista Mayor of Managua,
Dionoso Marenco. (Comment: This episode is reminiscent of
Ortega's previous faux pas with Nicaragua's cultural
patrimony, the gift of two original manuscripts by Ruben
Dario, Nicaragua's most well-known and beloved poet, to Hugo
Chavez. End Comment.)

The Honeymoon Is Over
- - - - - - - - - - - - -

20. (C) The shenanigans of the Ortega-Murillo family have not
been well received by Nicaraguans, including certain segments
of the Sandinista party. A CID/Gallup poll published on June
20 indicated that Ortega,s popularity has dropped
exponentially since his inauguration, from a 51% approval
rating to -10%. A majority feels that Ortega has not governed
democratically or in the best interests of the people.
Nevertheless, most respondents were still optimistic about
the country's future (a more thorough analysis will follow
septel).

Opposition Still Divided
- - - - - - - - - - - - -

21. (C) With a corrupt judiciary and an electoral authority
increasingly packed with FSLN hacks, the National Assembly is
increasingly pointed to as the last stronghold for democracy
in Nicaragua. Although Ortega's erratic and authoritarian
behavior has frightened the opposition, there are still
several factors that continue to impede a united front
against the FSLN. In the PLC, the continued influence of
former President and party caudillo Arnoldo Aleman isolates
the party from other segments of the opposition. The
Sandinista Renovation Movement (MRS) has the difficult
position of wanting to oppose Ortega without risking the loss
of core supporters by appearing to submit too much to the
Liberals. There is, however, a general agreement among all
parties on certain issues; for example, condemnation of First
Lady Rosario Murillo's role within the government; Ortega's
poor fiscal policy; his slavish following and allegiance to
Chavez; and the removal of the fountain in front of the
presidential palace. The organization of unions and other
labor groups in their struggle to raise the minimum wage
could also be a point of unity for the Liberals (ref H).

Authoritarianism with a Facade of Democracy
- - - - - - - - - - - - - - - - - - - - - -

22. (C) Ortega,s primary goal remains the destruction of the
ALN and the election of the majority of mayors in the
November 2008 Municipal elections. So focused has this effort
been that the only expenditure outside of these objectives
has been propaganda costs to cover their remarks and maintain
political support amongst the populace. For example, the
administration has been dropping hints about a new plan to be
announced July 19, but a leaked document revealed that the
"Five Pillars of the FSLN strategy", (SEPTEL) contains no
significant changes, merely an alternative presentation of
the same objectives and rhetoric that the FSLN has utilized
consistently throughout the last 6 months.

23. (C) A group of four political analysts speaking with
embassy representatives on June 13, 2007 commented on what
Ortega's actions over the last six months might indicate for
the future. One described the likely arrangement as
"authoritarianism with a facade of democracy". They
pinpointed the source of FSLN power to three party
characteristics: organization, devotion, and experience in
harnessing the system to its advantage. These are all
characteristics that the opposition parties regrettably lack.
TRIVELLI

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