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Cablegate: Economic Implications of "Cuaderno Sandinista, No.1"

VZCZCXRO2515
RR RUEHLMC
DE RUEHMU #1720/01 1942023
ZNR UUUUU ZZH
R 132023Z JUL 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 0794
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC 0849

UNCLAS SECTION 01 OF 02 MANAGUA 001720

SIPDIS

SIPDIS
SENSITIVE

STATE FOR WHA/CEN, WHA/EPSC, AND EEB
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR

E.O. 12958: N/A
TAGS: ECON PGOV PREL NU
SUBJECT: ECONOMIC IMPLICATIONS OF "CUADERNO SANDINISTA, NO.1"

REF: A) MANAGUA 1621, B) MANAGUA 1622

1. (SBU) Summary. "Cuaderno Sandinista No. 1," a propaganda piece
produced by the FSLN Department of Political Education, claims to
outline a new plan of reconciliation and national unity for
Nicaragua. The plan is anchored by three pillars: improving the
well-being of citizens, equitable economic development, and social
transformation. From an economic perspective, the document focuses
on fostering growth among small- and medium-sized producers in the
agro-industrial sector, all while promising to respect private
property and encourage foreign investment. The Cuaderno ("copy
book") also envisages intervention in key economic sectors such as
energy and "disruption" of the current tax structure. Even if the
GON does not follow through on these pledges, the persistent use of
highly-charged rhetoric could frighten away potential investors from
what they perceive to be an uncertain business environment. End
summary.

The Cuaderno Sounds Familiar
----------------------------

2. (SBU) On June 11, the embassy received a copy of "Cuaderno
Sandinista No. 1" from the FSLN Department of Political Education.
It was presented as a "document of consultation and debate" that
seeks to generate dialogue about the "New Sandinista Project." The
Department of Political Education claims that such "cuadernos" will
be released periodically so that the Nicaraguan people can remain
informed on the government's progress. This effort appears to be a
reincarnation of the work of the Department of Propaganda and
Political Education, which published numerous articles and books on
FSLN history and ideology during the first Sandinista regime. The
name "Cuaderno Sandinista" is reminiscent of the "Cuaderno de
Educacisn Sandinista" that the FSLN distributed as part of its mass
literacy campaign in the 1980s.

Three Pillars
-------------

3. (SBU) The document outlines a new "plan of reconciliation and
national unity," one that it alleges is distinct from the
"neoliberal project" of recent years as well as the Sandinista
regime of the 1980s. The plan is anchored by three "pillars"
(versus the five presented in reftel A): improving the well-being of
citizens through the provision of basic services, equitable economic
development through agro-industrial growth, and social
transformation through participative democracy and the creation of
community councils. The document proposes an immediate action plan
for the project's first trimester (identified as May - July 2007)
that consists of a series of national propaganda seminars to be
replicated at the departmental and district level.

4. (SBU) The document focuses on the need to foster equitable
economic growth in the agro-industrial sector, with an emphasis on
small- and medium-sized producers. It proposes replacing the
current system of "vertical accumulation," in which all stages of
production and distribution are controlled by a "privileged elite,"
with a system of "horizontal accumulation" that will protect the
private property of individual producers while encouraging
collective channels of distribution. The document contends that the
FSLN is interested in foreign investment from large corporations,
but only so long as these firms respect labor rights, take adequate
environmental protection measures, contribute to national income
taxes, and promote the agro-industrialization of the economy.

5. (SBU) The document discusses the need for state intervention in
the most strategic sectors of the economy, identified as energy and
construction. It also contends that many public services must be
re-nationalized and ongoing and future privatization must be
stopped. Additionally, the document discusses the need to "disrupt"
the Nicaraguan tax system to create a more progressive structure.
It argues that the rise of globalization has necessitated the
integration of the region's economies, but only specifically
mentions Cuba and Venezuela as economic forces with which the FSLN
has joined in solidarity (through the Bolivarian Alternative for the
Americas, or ALBA).

Comment
-------

6. (SBU) It is unclear who is the target audience for this tract or
how frequently similar "cuadernos" will be published. The document
consists primarily of the standard FSLN political and ideological
rhetoric and lays out few concrete plans for accomplishing its lofty
goals. The FSLN claims that it will "protect private property,"
while simultaneously ranting about the "savage capitalist system,"
asserting that it will prioritize the "popular economic bloc," and
endorsing state intervention in key economic sectors. Although
Ortega often employs similar inflammatory language in his public
speeches, the GON has yet to convert rhetoric into policy.
Meanwhile, the moderate regular statements and policy pronouncements
of the VP, President of the Central Bank, and other GON economic
policy makers contradict the rhetoric framework of the Cuaderno.
However, even if the GON does not follow through on the three
"pillars," the persistent use of such highly-charged rhetoric by
Ortega could frighten away potential investors from what they
perceive to be an uncertain business environment. End comment.

TRIVELLI

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