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Cablegate: Nicaraguan Port Authority Signs Grant with Ustda

VZCZCXRO3300
RR RUEHLMC
DE RUEHMU #2152 2631606
ZNR UUUUU ZZH
R 201606Z SEP 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1313
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 002152

SIPDIS

SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, AND EEB
TREASURY FOR SARA GRAY
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR
STATE PASS TO USTDA

E.O. 12958: N/A
TAGS: EAID EWWT PREL ECON PGOV NU
SUBJECT: Nicaraguan Port Authority signs grant with USTDA

REF: A) MANAGUA 2116, B) MANAGUA 327

1. (U) Summary: On August 23, the National Port Authority (EPN)
signed a $510,000 grant agreement with the United States Trade
Development Agency (USTDA) for technical assistance in drafting a
National Ports Law. The new law will allow, for the first time,
public-private investment in the country's small and inadequate
ports. Noting that almost 60% of all Nicaragua maritime trade must
pass through either Honduras or Costa Rica, EPN President Silva
asserted that private investment in this sector is vital for
modernization and for Nicaragua to be competitive. In his remarks
at the event, the Ambassador sent a strong message about the
importance of a clear and stable legal environment in attracting
foreign investment. End Summary.

2. (U) On August 23, the National Port Authority (EPN) hosted a
signing ceremony to publicize a grant agreement between EPN and the
United States Trade Development Agency (USTDA) for technical
assistance in drafting a National Ports Law. The $510,000 award
will help create a law which would allow, for the first time,
public-private investment in the country's small and inadequate
ports (Ref B). The Ambassador signed the grant agreement on behalf
of USTDA and EPN President Virgilio Silva signed the agreement on
behalf of EPN. Vice Minister of Foreign Affairs for Cooperation
Valdrack Jentske and Minister of Finance Alberto Jose Guevarra
topped the list of Nicaraguan officials attending the ceremony.

3. (U) EPN President Silva used the ceremony as a political platform
to both criticize the previous EPN administration for "bankrupting"
the maritime agency (a charge that has not been proven) and promote
the development of a National Ports Law. Silva asserted that
private investment "is vital to the modernization of the country's
port" and that the creation of National Ports Law is "a necessity to
be competitive." A brief slide show featuring photos of a
dilapidated Port of Corinto on the Pacific coast and the lack of a
port of the Atlantic coast supported Silva's message. "Almost 60%
of all Nicaragua maritime trade must pass through either Honduras or
Costa Rica and travel overland to Nicaragua," Silva asserted. "This
demonstrates a profound lack of shipping capacity and economic
competitiveness in the region."

4. (U) In his remarks, the Ambassador addressed the misuse of a tax
lien to attach Exxon assets at the Port of Corinto (Ref A) and sent
a strong message about the importance of clear and stable law in
attracting foreign investment. "We are supporting the creation of a
port's law because foreign investment can only be achieved inside a
stable legal framework, where the rules of the game are clear,"
stated the Ambassador. While Exxon is a large company able to
weather the storm, other smaller investors "see the horror of the
government taking private property and using it for their own
purposes." "How does this impact the perception of foreign
investors?" the Ambassador asked the audience of 25 Nicaraguan
officials and maritime industry leaders.

5. (U) The USTDA grant is the third in Nicaragua under USTDA's
Commercial Integration Initiative. Currently in Nicaragua USTDA is
funding a $470,000 feasibility study for the expansion of the Port
of Corinto and a $320,000 study for the expansion of cargo handling
facility at Managua International Airport. USTDA has invested more
than $6.2 million in Central American countries via its Commercial
Integration Initiative.

TRIVELLI

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