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Cablegate: Nicaraguan Foreign Minister: U.S. Behind

VZCZCXYZ0002
PP RUEHWEB

DE RUEHMU #0831/01 2332148
ZNY CCCCC ZZH
P 212148Z AUG 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 4477
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUMIAAA/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

C O N F I D E N T I A L MANAGUA 000831

SIPDIS

E.O. 12958: DECL: 08/20/2019
TAGS: PREL PGOV EAID EFIN NU
SUBJECT: NICARAGUAN FOREIGN MINISTER: U.S. BEHIND
CONSPIRACY TO BLOCK IFI LENDING TO NICARAGUA AND THE
HONDURAS COUP

Classified By: Ambassador Robert Callahan, Reasons 1.4 (b,d)

1. (C) Summary. On August 5, Ambassador met with Foreign
Minister Samuel Santos to discuss the ongoing Honduras
crisis, Nicaragua's efforts to secure international lending,
and bilateral relations. Santos acknowledged that
Nicaragua's financial situation had worsened severely,
threatening key social programs. He accused the U.S. of
maintaining an "unofficial policy" of blocking IFI financing
for Nicaragua. On Honduras, he asserted that Nicaragua has
done everything possible to reduce tensions and encourage
Zelaya to avoid confrontations. He claimed that the U.S. was
behind the coup, or at least knew of it in advance and could
have stopped it. He warned that any failure to restore
Zelaya to the presidency would lead to bloodshed in Honduras
and the U.S. would be held responsible. End Summary.

U.S. HAS "UNOFFICIAL POLICY" TO BLOCK IFI FINANCING
--------------------------------------------- ------

2. (C) Santos expressed serious concern about Nicaragua's
worsening financial and economic situation. The economic
crisis will force the Ortega administration to revise again
the national budget and is threatening advances in key FSLN
social programs. He noted that Deputy FM Valdrack Jaentschke
had been dispatched to Europe to visit several countries to
ask that budget support and other financial assistance,
suspended after the fraudulent November 2008 municipal
elections, be resumed. Santos recited his previous claims
that the Ortega government has made the greatest gains among
all the countries in the region in areas of governability,
counter-narcotics, security, and health. All this, he
claimed, was threatened by the cuts in aid and the inability
to secure further financing and disbursements from the IFIs.

3. (C) Santos then complained that the Ortega government had
obtained "evidence" that the U.S. has an "unofficial policy"
to block lending and disbursements from the IMF, World Bank
and IDB. Santos asserted that "some U.S. officials" had
stepped up their opposition to aid to Nicaragua following
Ortega's anti-U.S. comments on the July 19 celebrations of
the anniversary of the 1979 revolution and as a consequence
for Nicaragua's continued close relations with Venezuela and
Cuba. Santos called the supposed policy an "economic
boycott" that threatens Nicaragua.

4. (C) Ambassador rebutted Santos' claim of a U.S. conspiracy
in the IFIs, noting the U.S. was interested in avoiding a
financial crisis in Nicaragua just as much as the GoN.
Nicaragua needs to comply with the requirements and standards
set forth by the IFIs, but that did not amount to an
unofficial policy to block lending. Ambassador cautioned
Santos that continued criticisms of the U.S. by the most
senior officials of the GoN raised questions about what kind
of relationship the Ortega administration wants with the U.S.
Public harangues against the U.S. created a negative
perceptions in the U.S. that continue to make it difficult
for those who want to help Nicaragua.

NO NEW AMBASSADOR TO THE U.S.
----------------------------

5. (C) Ambassador noted that Nicaragua remained at a
disadvantage in Washington without an Ambassador to represent
its interests and queried whether the GoN intended to
nominate anyone soon. Santos bluntly reported that his
suggested candidates for the position had been rejected by
the First Couple (Ortega and Rosario Murillo) and no further
progress had been made on selecting a new Ambassador to
Washington. Similarly, Santos' own efforts to resign due to
ill health had likewise been rejected by Ortega and he would
remain Foreign Minister for the foreseeable future. (Note.
In a previous conversation with the Ambassador, Santos
confided he intended to resign. He had open heart surgery
several months ago in Cuba and is still on a limited work
schedule, restricted diet and exercise regimen. In the
meeting, he appeared unhappy with the rejection of his
resignation, noting the need to focus attention on his
business interests now that his daughter is attending a U.S.
university. End Note.)

U.S. BEHIND HONDURAS COUP AND IS TO BLAME IF BLOODSHED
--------------------------------------------- ---------


6. (C) Santos claimed to have "proof" that the U.S. knew
about and was involved in the coup. Santos cited
unidentified "sources" in the Honduran military that
reportedly demonstrate the USG was aware of what was going to
happen in advance and didn't stop it. He also claimed that
Costa Rican Foreign Minister Stagno told him that "someone
from the Department of State" had called him and asked Costa
Rica to give Zelaya refuge, proving to Santos that the USG
was behind the effort to get Zelaya out of the country.
Moreover, Santos claimed to "know" the Honduran mindset and
found it impossible to believe political and business leaders
would have taken such actions without at least the implicit
approval of the USG. (Note: President Ortega has
subsequently asserted in public that the USG was involved in
the coup, citing the fact that the plane carrying Zelaya
stopped at the Soto Cano airbase in Honduras before departing
the country. End Note.)

7. (C) Nonetheless, Santos asserted that the GoN wants the
Obama administration to succeed in Latin America and
particularly with the Honduras crisis. The Ortega government
thus has been "pushing" other ALBA countries to give the U.S.
more space and time to deal with a resolution of the
situation, including with Venezuela's Hugo Chavez. Santos
emphasized that Nicaragua has put pressure on Zelaya to step
back from the Nicaragua-Honduras border, go on the diplomatic
circuit, and has taken steps to re-open the border crossings
and re-secure the frontier area. Santos claimed that
Nicaragua has "taken concrete steps and it is now up to the
U.S. to act." He dismissed the announced visa sanctions as
insufficient and that the U.S. needed to bring its enormous
power to bear in order to force the de facto regime to
concede. "Your power is the only one that can do it," he
asserted. Furthermore, if this problem is not resolved
quickly, the people will lose faith in a peaceful resolution
and will resort to violence. If this happens, Santos warned,
the blame will fall of the U.S.

8. (C) Santos reported that Nicaragua will not publicly
endorse the Arias process because it violates the UN's
principle that Zelaya should be restored to office "without
conditions." However, he claimed that Nicaragua has
privately been urging Zelaya and the other ALBA countries to
accept the Arias plan in order to resolve the crisis quickly.
Again, it is now up to the U.S. to use its influence,
including through stronger visa sanctions and economic
measures, on the de facto regime to accept the plan and the
immediate return of Zelaya.

9. (C) Ambassador rebutted claims of U.S. involvement in the
coup, noting the U.S. was as surprised as everyone else.
Ambassador made clear that U.S. policy has been to work
multilaterally, through the OAS, to support the Arias
process. Ambassador emphasized that it remains critical for
both sides to avoid bloodshed and provocations and allow the
process to move forward. Ambassador noted ongoing U.S.
efforts to strengthen the process, including our clear
statements of support recognizing Zelaya as the President of
Honduras. He urged Santos to help encourage Zelaya to avoid
impulsive and provocative actions.

COMMENT
-------

10. (C) The Ortega administration is clearly feeling
financial pressure, in part due to the global economic
downturn, its own mismanagement of the public sector, and the
cut in foreign aid, particularly European budget support,
following the November 2008 municipal elections. According
to our European contacts, DFM Jaentschke's European trip was
a failure. He refused to address electoral reform issues and
promised only to invite European governments as "visitors" to
monitor the 2010 regional elections. Unfortunately, rather
than respond to domestic and international pressure to enact
reforms that would lead to a resumption of aid, the GoN is
inventing conspiracies and hoping that appeals to social
advances will break the lending logjam. A visit by senior
officials from the European Commission in September will
determine whether European aid remains frozen, but the GoN
appears to be doing little to strengthen their appeal for
renewed assistance.

11. (C) On Honduras, it seems clear that Ortega has grown
weary of Zelaya and would prefer to have his activities and
time in Nicaragua limited. Santos' comments indicate that
that Ortega is trying to position himself to claim victory
regardless of how the crisis is resolved. Should Zelaya be
returned, it will be another victory for direct democracy and
the ALBA states. Should Zelaya not return to power, Ortega
is prepared to say he and his ALBA allies did everything
possible and lay the blame at the feet of the USG.
CALLAHAN

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