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Cablegate: Nicaragua: Staffdel January 9-11 Visit to Review Millennium

VZCZCXRO0405
RR RUEHLMC
DE RUEHMU #0074/01 0241845
ZNR UUUUU ZZH
R 241845Z JAN 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1953
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC

UNCLAS SECTION 01 OF 02 MANAGUA 000074

SIPDIS

STATE FOR WHA/CEN

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON NU
SUBJECT: NICARAGUA: STAFFDEL JANUARY 9-11 VISIT TO REVIEW MILLENNIUM
CHALLENGE CORPORATION PROGRAM

REFS: A) 07 MANAGUA 2032 B) 07 MANAGUA 2044 C) 07' MANAGUA 2070 D)

07 MANAGUA 2168

SUMMARY
-------

1. (SBU) Two staff members of the U.S. House of Representatives
Committee on Foreign Affairs saw first-hand implementation of the
Millennium Challenge Corporation's (MCC) Program in Nicaragua on
January 9-11. The staff members were pleased to learn that a high
percentage of women are participating in MCC's projects as rural
entrepreneurs and as staff members of the Millennium Challenge
Account-Nicaragua Foundation (MCA-N), which is the accountable
entity for the MCC Program. MCA-N staff noted that despite the
initial delays in getting the MCC program up and running in FY 2006,
they anticipated continued, full budgetary execution for their
projects in the coming fiscal years. In addition, prominent
Nicaraguan intellectuals, business leaders and former Government of
Nicaragua (GON) ministers said that MCC projects are a critical tool
to foster Nicaragua's economic development.

EMBASSY AND DONOR BRIEFINGS
---------------------------

2. (SBU) On January 9-11, Ms. Robin Roizman and Ms. Robyn Wapner,
professional staff members for the U.S. House of Representatives
Committee on Foreign Affairs, visited Nicaragua to review project
implementation of the Millennium Challenge Corporation (MCC). Upon
arriving in Managua on January 9, the staff delegation (staffdel)
met with the Ambassador and Embassy Country Team for a briefing, and
had an afternoon roundtable discussion on development assistance to
Nicaragua with bilateral and multilateral donors, including the
Canadian Embassy, the Inter-American Development Bank, the
International Monetary Fund, and the United Nations. The donor
community felt that cooperation with the Ortega administration
improved during the latter part of 2007. They said that initially
the GON wanted to impose its own way of coordinating donor
assistance, but Hurricane Felix and the floods required the GON to
take a more cooperative approach with donors (reftels). Donors
remain concerned that the Ortega administration will pursue
ideologically-driven fiscal and economic policy goals instead of
prudent economic policies that promote economic growth, attract
investment and reduce poverty.

SITE VISITS AND MEETINGS IN CHINANDEGA AND LEON
--------------------------------------------- --

3. (SBU) On January 10, the staffdel met with the Women's Council of
the Northwest region and conducted site visits to three MCC projects
in Chinandega and Leon, two departments in western Nicaragua. The
staffdel visited a plantain farm/processing plant and a dairy plant
in Chinandega, and the municipal property registry in Leon. The
Staffdel met with the MCA-N staff to understand the Compact's
disbursement trajectory, including an explanation of plans to
disburse more rapidly in the coming fiscal year as a result of the
Infrastructure Project. Their visit concluded with a discussion on
Nicaragua's economic and political climate with several prominent
Nicaraguan economists, business leaders and former GON ministers.


LOCAL COMMUNITIES SUPPORTIVE OF MCC ASSISTANCE
--------------------------------------------- -

4. (SBU) During the staffdel visit, a number of themes emerged. One
was that beneficiaries of the MCA Program thanked MCC for its
support and enthusiastically lobbied the staffdel for more
assistance. Entrepreneurs, community leaders and citizens said that
the MCC had helped to provide their communities jobs, business and
export opportunities for their products, and confidence to expand
their production for existing and new crops. One local producer
from Chinandega told the Staffdel that MCC has provided his
community with hope for a better future, which was nonexistent
before the implementation of these projects.

NICARAGUAN WOMEN ACTIVELY INVOLVED IN MCC PROJECTS
--------------------------------------------- -----

5. (SBU) Another highlight of the visit for the staffdel was to see
the active participation of Nicaraguan women in MCC programs.
During their meeting with the Women's Council of the Northwest
region, the Staffdel was pleased to learn that women represented 20
percent of the participants in MCC's program as rural business
entrepreneurs. Marina Maradiaga, leader of the Indigenous Women's
Association of Sutiaba Xochilt Acatl (an indigenous community in
Leon), told the Staffdel that women must become more involved in
Nicaragua's economic development. She noted that 52 percent of
Nicaragua's population are women, and that they and their children
are disproportionately affected by poverty, lower levels of formal
education, and a lack of jobs and professional development
opportunities.

MCC PROJECT IMPLEMENTATION
--------------------------

6. (SBU) Juan Chamorro, General Manager for MCA-N, briefed the
staffdel regarding project implementation for MCC programs.
Chamorro and MCA-N board members told the Staffdel that although
there were delays in getting the MCC program up and running in FY
2006, they anticipated continued, full budgetary execution for their
projects in the coming fiscal years. He explained that hiring new
staff, resolving logistical issues such as acquiring office space,
and fully understanding the procurement process caused delays in
implementing MCC projects.

NICARAGUANS VOICE CONCERNS ABOUT ECONOMIC DEVELOPMENT
--------------------------------------------- --------

7. (SBU) Several prominent Nicaraguan economists, business leaders
and former GON ministers told the staffdel on a number of occasions
that MCC projects are a critical tool to help foster Nicaragua's
economic development. They believed that the MCC's focus on
infrastructure development, export promotion, small and medium
enterprise development, and the rule of law (property rights)
targeted important economic areas that needed assistance, and
encouraged the United States to invest more money in these areas via
MCC. They said the GON must do more to help infrastructure
development, particularly in the energy sector.

8. (SBU) The Staffdel's Nicaraguan interlocutors also expressed
concerns that Nicaragua's economic growth, estimated at 3.4 percent
in 2007, must reach 8-10 percent over a sustained period of 10-15
years to alleviate poverty and create jobs. They noted that
investment in the tourism and real estate sectors has declined
slightly because both foreign and local investors are waiting to see
what kind of investment climate the Ortega administration will
promote. The Nicaraguans agreed that their country has the natural
resources and labor force to attract significant investment to
foster Nicaragua's economic development, but they questioned whether
the Ortega administration will provide the necessary political
leadership, and macroeconomic, investment, and trade policies to do
so.

9. (U) This cable has been cleared by staffdel.

TRIVELLI

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