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Cablegate: Assistant Secretary Shannon's Meeting with Mfa

VZCZCXYZ0003
PP RUEHWEB

DE RUEHMU #2614/01 3351803
ZNY CCCCC ZZH
P 011803Z DEC 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 8329
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHCV/AMEMBASSY CARACAS PRIORITY 0838
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY

C O N F I D E N T I A L MANAGUA 002614

SIPDIS

SIPDIS

DEPARTMENT FOR WHA A/S SHANNON AND WHA/CEN

E.O. 12958: DECL: 12/01/2016
TAGS: PREL PGOV PINR KDEM NU
SUBJECT: ASSISTANT SECRETARY SHANNON'S MEETING WITH MFA
CALDERA

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

1. (C) Summary: On November 28, Assistant Secretary Thomas
Shannon discussed with Nicaraguan Foreign Minister Norman
Caldera the outcome of Nicaragua's November national
elections, predictions for the Ortega government and its
regional implications, and Caldera's future plans. While
Caldera believes that Ortega's stance and tone thus far are
encouraging, he doubts that the new president will hold this
position for long, as the conflicting demands of maintaining
sound economic policies will collide with the unrealistic
social expectations generated during the campaign period -
including lowering bus fares in Managua. Caldera has
encouraged Ortega's technical advisers to take a slow and
steady approach, including maintaining the current Foreign
Assistance Secretariat under the Foreign Ministry instead of
starting from scratch. End Summary.

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2. (C) Before his lunch meeting with President Bolanos,
Foreign Minister Caldera, and other senior presidential
officials, A/S Shannon and Caldera briefly discussed the
November 5 election outcome and predictions for the incoming
Sandinista National Liberation Front (FSLN) government,
including how President-elect Daniel Ortega will handle
foreign assistance inputs. Caldera remarked that Ortega's
stance and tone thus far are encouraging and applauded our
efforts to engage the President-elect. Caldera, however,
doubts Ortega will be able to maintain his calm, conciliatory
position for long. Soon the conflicting demands of
maintaining sound economic policies will collide with the
enormous, unrealistic social expectations generated during
the FSLN campaign. For example, the Managua mayor's recent
lowering of municipal bus fares is untenable as there is no
budget to sustain the subsidy and it will create problems
with the IMF.

FOREIGN ASSISTANCE SECRETARIAT - IF IT AIN'T BROKE, DON'T FIX
IT
- - - - - - - - - - - -- - - - - - - - - - - - - - - - - - -
- -

3. (C) Caldera recounted his recent meeting with UNDP
official Paul Oquist -- a former U.S. citizen who worked for
the Sandinista regime in the 1980s and renounced his
nationality in the 1980s to become a Nicaraguan citizen.
According to Caldera, Oquist was impressed by the Bolanos'
government's management of foreign aid via the Foreign
Ministry-coordinated Foreign Assistance Secretariat,
especially after Caldera explained that the Secretariat can
distinguish the interests and funding capabilities of each
donor and direct these interests towards the appropriate
projects. He had urged Oquist to maintain the current
mechanism, as starting from scratch by establishing a
separate Ministry of Planning and Cooperation would incur
additional costs, confuse donors, and delay assistance
inputs.

BANANAS COMPLICATE CENTAM-EU TRADE TALKS
- - - - - - - - - - - - - - - - - - - - -

4. (C) Confirming his plans to continue as Central America's
lead negotiator/spokesperson in the region's free trade talks
with the EU, Caldera noted that only the Costa Ricans had
fussed about his role. He predicted that negotiations would
take 1 1/2 years or more, noting that bananas are a
particularly contentious issue. Caldera explained that while
Nicaragua is not usually sympathetic to Costa Rica's trade
positions, it must support Costa Rica on the banana issue
because some 50,000 Nicaraguans labor in Costa Rica's banana
industry. For Caldera, Honduras' interest in participating
in an Ecuadorian-sponsored case before the WTO alleging the
EU's unfair treatment of banana exports from Latin America
(in favor of former African colonies) was another detour. He
had recommended that the Hondurans stay out of the case and
let Ecuador carry the water for the region.

WHO'S COMING TO THE INAUGURATION?
- - - - - - - - - - - - - - - - -

5. (C) Caldera mentioned that the FSLN hopes to attract 15
heads of state to the January 10 presidential inauguration,
including Chilean President Bachelet. However, he believes
Ortega will be lucky if six or seven show. Certainly the
other Central American presidents, except for Belize, will
attend, and probably the Brazilian, Ecuadorian, and Bolivian
presidents. He reported that while the heir to the Spanish
throne has confirmed, Venezuelan President Hugo Chavez has
not.

6. (U) Participants:

Nicaragua:
Foreign Minister Norman Caldera

U.S.:
A/S Thomas Shannon
Ambassador Paul Trivelli
DCM Peter Brennan
Polcouns Victoria Alvarado (notetaker)

7. (U) Assistant Secretary Thomas Shannon cleared on this
cable.
TRIVELLI

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