Cablegate: Assistant Secretary Shannon,S Meeting with Mfa


DE RUEHMU #1505/01 1911629
P 101629Z JUL 06 ZDK

C O N F I D E N T I A L MANAGUA 001505




E.O. 12958: DECL: 07/10/2016

Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D).

1. (C) Summary: On June 26, A/S Shannon discussed with
Foreign Minister Norman Caldera election concerns and the
OAS' role, the Hugo Chavez factor, and how best to "stop the
clock" on constitutional changes due to go into effect in
January 2007. Caldera believed the OAS and other observers
should monitor FSLN presidential candidate Daniel Ortega
closely to ensure he did not rig the electoral outcome in
November. The Nicaraguan Government (GON) was also seeking
OAS intervention to block the Ortega-Aleman inspired
constitutional changes, possibly convincing all parties to
agree to postpone their implementation with the understanding
that a constitutional assembly would eventually address these
and other issues. Caldera agreed with A/S Shannon that the
Chavez oil deal is a political ploy to favor Ortega's
candidacy. Still, he believed the GON can exploit Ortega's
need for GON cooperation on the initiative to gain FSLN
support for other objectives, while the GON stalls on
facilitating the oil deal. End Summary.

2. (C) In the absence of President Bolanos (who was in the
United States helping his son Javier move to Duke University
Medical Center for cancer treatment), A/S Shannon met on June
26 with Foreign Minister Norman Caldera, the Nicaraguan
Ambassador to the United States, and two of Bolanos's senior
advisers. Leading Caldera's list of issues were the November
elections and the importance of a robust OAS presence during
the electoral process. Caldera sought A/S Shannon's views on
how best to stop the clock on the constitutional changes due
to go into effect in January 2007. He also raised Venezuelan
President Hugo Chavez's overt support for Sandinista (FSLN)
candidate Daniel Ortega and the possibility of taking
advantage of Chavez's oil offer.

- - - - - - - - - - - - - - - - - - - - - - - -

3. (C) Nicaragua's November 5 election led Foreign Minister
Caldera's list of concerns. Senior political adviser Frank
Arana noted that an OAS technical and political presence was
required to offset the efforts of Daniel Ortega and Arnoldo
Aleman's pact to use fraud to enable Ortega to win the
election and Aleman to secure enough National Assembly seats
to protect his interests. While Arana opined that
technically speaking the OAS had been adequately effective,
he noted that a political mission would be crucial to
checking the FSLN and PLC. He suggested that representatives
from the prestigious Madrid Club, including former presidents
Lagos, Paniagua, Hurtado, and Sanguetti, are the types of
heavy-lifters who could convince Ortega and Aleman that
committing electoral fraud would cost them legitimacy.
Shannon and Trivelli supported the Madrid Club initiative.
Trivelli noted that a group of mid-level notables - former
foreign ministers - had already visited Managua and would
return as needed. Trivelli added that the Supreme Electoral
Council (CSE) pledged to grant the OAS access to its
software, which should reduce opportunities for fraud.

4. (C) Foreign Minister Caldera said Ortega knew he would
lose unless he rigged the electoral outcome. He said the OAS
and other observers should monitor Ortega every step of the
way. He explained that over 200,000 individuals on the voter
roster were deceased, even though the CSE, controlled by the
FSLN and PLC, could draw on Health Ministry death
certificates to remove the deceased voters. Further, 300,000
national/voter ID cards (cedulas) had not been delivered to
their owners. An encouraging development was that party poll
watchers representing Eduardo Montealegre's ALN alliance were
omni-present during the recent vote verification process.
Still, additional challenges remain. The three-member voter
tables were controlled by the FSLN and PLC (Note: The first
two members are FSLN and PLC. A disproportionate number of
third members belong to the tiny Alternative for Change (AC)
party, which is largely sympathetic to the FSLN.) Moreover,
the CSE had added the Council of Latin American Electoral
Experts (CEELA) to the observer mix to further confuse.
Caldera warned that because the CEELA was paid in part by the
CSE, it would be less likely to challenge the CSE's policies
or practices. CSE President Roberto Rivas had also
challenged the UN offer to send a particular Panamanian
observer (presumably Aristides Royo) because of the
observer's reported "pro-Gringo" orientation.

- - - - - - - - - - - - - - - - - - -

5. (C) Assuming a clean, fair, and transparent election
outcome, the new Nicaraguan government would face a crisis
within days of its inauguration, warned Arana. Although
polls showed that 75% of Nicaraguans rejected the
constitutional changes set to go into effect on January 20,
the FSLN was bent on implementing these constitutional
reforms. The FSLN would oppose a referendum on the reforms -
unless it was broadened to include a vote on CAFTA, Hugo
Chavez's petroleum deal, and the Chavez alternative to CAFTA
- ALBA, explained Arana. If Montealegre won the election,
Ortega will be certain to impose the constitutional changes
and Montealegre, like Bolanos, would become another president
unable to govern. (NOTE: After the OAS brokered a
governability agreement between Bolanos and Ortega last fall,
the National Assembly passed a framework law (Ley Marco) that
postponed the implementation of the constitutional changes
until January 20, 2007. Soon thereafter, the ALN and
President Bolanos called for a referendum on the changes. In
recent months, PLC candidate Jose Rizo has come out in favor
of the referendum in an effort to distance himself from the
Ortega-Aleman pact. END NOTE.)

6. (C) Arana mentioned the possibility of another OAS
intervention on the constitutional issue. This could include
an effort to convince all parties to agree to postpone their
implementation until 2008 or later, with the understanding
that a constitutional assembly would eventually address these
and other issues. He added that Dante Caputo has expressed
interest in pursuing these possibilities when he returns to
Managua on July 12. Trivelli concurred that delaying
implementation of the constitutional changes and holding a
constitutional assembly would be positive steps.

- - - - - - - - - -

7. (C) Shannon raised the issue of Venezuelan President Hugo
Chavez's influence, specifically his proposed oil deal with
the Sandinistas. Bolanos's Chief of Staff, Nayo Somarriba,
remarked that the issue was not the offer, but how to play it
to the GON's, and not Ortega's, advantage. (NOTE: The offer
entails paying for 60% of the oil up front and the remaining
40% at a 2%-interest rate over a period of several years.
The GON opposed the Chavez initiative because, as it
currently stands, the agreement was clearly linked to the

8. (C) Somarriba explained that given the FSLN's inability
to store and distribute the Venezuelan oil without GON and
national oil company Petronic action, Ortega was demanding
GON support for the initiative in exchange for the passage of
the Tax Reform Bill and other economic reform legislation as
well as assurances that crippling demonstrations and work
stoppages sponsored by the FSLN would abate. Caldera said
that in a recent OAS meeting in the Dominican Republic, the
Venezuelans offered to work on the oil deal with the Bolanos
government and to sweeten the deal with $27 million in debt
forgiveness. Caldera recounted how he was noncommittal but
open to the offer. He opined that the GON could use the
situation to its advantage if it tacitly agrees to consider
the offer in exchange for FSLN cooperation for the remainder
of Bolanos' term. In fact, the GON would stall on any real
progress on the oil project. Shannon remarked that the GON
must do what it must, but noted that the Venezuelan oil deal
would not reduce the cost of gasoline at the pump. Caldera
concurred with Shannon's assessment, remarking that the
Chavez deal is a political ploy to bolster the FSLN.

9. (U) Participants:

Foreign Minister Norman Caldera
Ambassador Stadhagen
Frank Arana
Nayo Somarriba
MFA senior adviser Ariel Granera

A/S Thomas Shannon
Ambassador Paul Trivelli
Senior Advisor Maria Tamburri
DCM Peter Brennan
Polcouns Victoria Alvarado (notetaker)

10. (U) Assistant Secretary Tom Shannon cleared on this


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