Identifier
Created
Classification
Origin
06MANAGUA1180
2006-06-02 17:08:00
CONFIDENTIAL
Embassy Managua
Cable title:  

REARRANGING THE DECK CHAIRS ON THE TITANIC: RIZO

Tags:  PGOV PREL PINR KDEM KCOR NU ECON 
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PP RUEHWEB

DE RUEHMU #1180/01 1531708
ZNY CCCCC ZZH
P 021708Z JUN 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 6447
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0688
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
C O N F I D E N T I A L MANAGUA 001180 

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN TPIERCE

E.O. 12958: DECL: 06/02/2016
TAGS: PGOV PREL PINR KDEM KCOR NU ECON
SUBJECT: REARRANGING THE DECK CHAIRS ON THE TITANIC: RIZO
CAVES TO FEAR, ALEMAN PRESSURE

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

C O N F I D E N T I A L MANAGUA 001180

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN TPIERCE

E.O. 12958: DECL: 06/02/2016
TAGS: PGOV PREL PINR KDEM KCOR NU ECON
SUBJECT: REARRANGING THE DECK CHAIRS ON THE TITANIC: RIZO
CAVES TO FEAR, ALEMAN PRESSURE

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


1. (C) SUMMARY: Fear and ambition got the better of Liberal
Constitutional Party (PLC) presidential candidate Jose Rizo,
who set aside his earlier commitment to withdraw his
candidacy and join Eduardo Montealegre if PLC caudillo
Arnoldo Aleman and the party's leadership did not remove
undesirable National Assembly candidates and the Aleman
family refused to end its hegemony over the party. Thus, by
the May 31 deadline, five presidential candidates and their
legislative slates were registered to run in the November 5
elections: Herty Lewites (MRS); Eden Pastora (Alternativa por
El Cambio); Daniel Ortega (FSLN); Jose Rizo (PLC); and
Eduardo Montealegre (ALN). The fact that Rizo could neither
successfully challenge Aleman nor abandon the PLC and join
Montealegre has apparently convinced financier Carlos Pellas
and several other members of his "capital set" once and for
all that the PLC is not a viable option and that he should
exclusively back Montealegre. END SUMMARY.

REARRANGING THE DECK CHAIRS ON THE TITANIC
- - - - - - - - - - - - - - - - - - - - - -


2. (C) On May 31, fear and ambition got the better of PLC
presidential candidate Jose Rizo, who set aside his earlier
commitment to withdraw his candidacy and join ALN candidate
Eduardo Montealegre. In meetings with Ambassador and other
Embassy officials over the past week, Rizo and his envoys
insisted that Rizo would ultimately "do the right thing":
either convince Aleman and his family to step aside and
remove undesirable candidates from the party list, or
withdraw his and running mate Jose Antonio Alvarado's
candidacies and join Eduardo Montealegre's alliance.
However, the saga ended on May 31 with Rizo's decision to
remain with the PLC. Thus, by the May 31 deadline, five
presidential candidates and their slates registered before
the Supreme Electoral Council (CSE): Herty Lewites (MRS);

Eden Pastora (Alternativa por El Cambio); Daniel Ortega
(FSLN); Jose Rizo (PLC); and Eduardo Montealegre (ALN). A
summary of events follows:

MAY 11 - A BOLD IDEA
- - - - - - - - - - -


3. (C) Rizo confidante/AMCHAM VP Terencio Garcia met with
polcouns and expressed his and Rizo's frustration over
Aleman's continued hold over the PLC. Polcouns suggested
that Rizo could demonstrate his leadership by rallying PLC
politicians disgruntled with Aleman's control to press the
caudillo to step aside and allow the party to reform its
leadership. She noted that if successful, these steps could
lead to an alliance with Liberal dissident Eduardo
Montealegre, who has publicly stated his interest in a broad
alliance if the conditions are right. Polcouns added that if
the effort failed, Rizo could still ally with Montealegre
under the ALN umbrella. Garcia was receptive to the idea and
promised to raise it with Rizo.

MAY 12: RIZO PROPOSES TO CHALLENGE ALEMAN
- - - - - - - - - - - - - - - - - - - - -


4. (C) Terencio Garcia shared with Ambassador and polcouns
Rizo's plan to convince Aleman and his family to distance
themselves from the PLC, reform CEN leadership, and to
appoint suitable legislative candidates, meaning that
Aleman's daughter Maria Dolores -- along with U.S. visa-less
politicos Eduardo Mena and Donald Lacayo -- would be removed
from the party slate.

MAY 19: RIZO APPEARS COMMITTED
- - - - - - - - - - - - - - - -


5. (C) Garcia reiterated to Ambassador and polcouns that
Rizo was committed to challenging Aleman. He shared that
Rizo and Alvarado would hold a press conference by the middle
of the following week to challenge Aleman if he insisted on
an unsuitable list of National Assembly candidates and
refused to step aside.

MAY 24: WEAK-KNEED RIZO BALKS AT DRASTIC MEASURES
- - - - - - - - - - - - - - - - - - - - - - - - -


6. (C) In Ambassador's early morning meeting with Jose Rizo
and Jose Antonio Alvarado (at their urgent request),Rizo and
Alvarado appeared unwilling to go far enough to break Arnoldo
Aleman's hold on the PLC. The reluctant pair admitted that

the press conference they had planned to hold to challenge
Aleman had slipped and might not occur at all (Note: The
conference never materialized, although Rizo made a few
half-hearted references following the PLC's May 28 convention
regarding the need to modify the candidate list.)


7. (C) Ambassador reiterated that the U.S. will consider the
PLC a viable, democratic party only if Aleman publicly
resigns from the leadership of the party, the PLC forms a
list of National Assembly deputy candidates who are not part
of the Aleman family or his inner circle, the party replaces
its current directorship (CEN),and it no longer meets at
Aleman's El Chile residence. Rizo replied that sidelining
Aleman must be done gradually and suggested that he might
succeed in convincing Aleman to allow him to appoint
"palatable" deputies to lead the Assembly list and relegate
Aleman family members plus his inner circle to Parlacen,
where they will exercise little influence. Ambassador
replied that this action would not resolve the problem.


8. (C) Alvarado supporter Ariel Granera, who met later in
the morning with polcouns, agreed that Rizo and Alvarado
should go public and challenge Aleman in a press conference.
However, Granera also argued that sidelining Aleman would
"take time." According to Granera, Aleman and Ortega have
already agreed that Ortega will win the presidency and they
have determined which FSLN deputies and "Arnoldista" PLC
deputies will win seats in November.

MAY 27: RIZO AND ALVARDO GET COLD FEET
- - - - - - - - - - - - - - - - - - -


9. (C) Rizo and Alvarado met again with Ambassador, this
time fretting over their lack of progress in convincing
Aleman to step aside and to agree to a suitable slate of
Assembly and Parlacen candidates. Ambassador urged them to
persevere for the good of their country.

MAY 30: HOPE FOR A RIZO-MONTEALEGRE MERGER UNDER ALN BANNER
- - - - - - - - -- - - - - - - - - - - - - - -- - - - - -


10. (C) Rizo confidante Terencio Garcia shared with
Ambassador, DCM, and polcouns that Rizo and Alvarado were now
poised to ally with Montealegre, with or without the PLC.
Garcia recounted that, as a result of a marathon meeting of
Rizo, Alvarado, and others, Rizo had sent a letter of
ultimatum to the PLC's CEN and Aleman via Bishop Abelardo
Mata. In the letter, whose terms Garcia claimed are
non-negotiable, Rizo set the deadline of midnight May 30 for
the CEN and Aleman to agree to the following terms:

--Aleman and all of his family must immediately and
publicly withdraw from the party.

--The CEN must replace undesirable Assembly candidates with
individuals who are honest and qualified.


11. (C) According to Garcia, Rizo and Montealegre -- who had
met earlier in the morning -- had agreed to collaborate in
either of the following political scenarios:

--Scenario One: Aleman and his family retreat from the party
leadership and the CEN agrees to remove undesirable
candidates (visa revocation cases like Donald Lacayo and
Eduardo Mena and Aleman daughter Maria Dolores) from its
slate of Assembly candidates. If this scenario occurs, Rizo
and Montealegre will follow the terms of a May 9 proposed
alliance brokered by former El Salvador President Calderon
Sol. (Note: The terms included the following: Eduardo
Montealegre would run as Rizo's VP candidate and Jose Antonio
Alvarado would head the Assembly slate. Montealegre would be
given 20 Assembly seat slots, and the PLC and ALN would
negotiate possible government positions. End Note.)

--Scenario Two: Aleman refuses to leave the PLC; the CEN
supports Aleman's position (CEN president Jorge Castillo
Quant is the first national deputy candidate). If this
scenario prevails, Rizo and Alvarado will resign from the PLC
and join Montealegre's alliance. Alvarado will be accorded
the VP slot or an Assembly position and Rizo will be given a
position that recognizes his merits. Rizo would also be
given four to five deputy positions for his followers.


12. (C) Garcia added that if either scenario materialized,
the parties would sign a document of alliance. He noted that
it would be helpful if the Ambassador served as guarantor of

the agreement. Ambassador declined, and offered instead to
observe the signing and keep a copy of the signed document.
According to Garcia, Rizo and Alvarado would next meet with
the CEN to explain their position. Journalist/politico Jaime
Arellano -- who attempted for days to convince Rizo and
Montealegre to form an alliance -- shared similar details
with polcouns of the Rizo-Montealegre meeting, mentioning
that the second scenario appeared to be the most likely to
occur.


13. (C) Montealegre contacts, including chief of staff
Edmundo Leal, confirmed these discussions, but they were
skeptical that Rizo's determination would prevail over
Aleman's, or that Rizo would resign and join Montealegre's
alliance. Leal was adamant that Alvarado was problematic,
noting that the ALN would not accept him to run as its vice
presidential candidate; to eliminate this possibility,
Montealegre had already named Conservative Fabricio Cajina to
the position.

MAY 31 - RIZO FOLDS CLOSE TO THE ZERO HOUR
- - - - - - - - - - - - - - - - - - -- - -


14. (C) Rizo and Alvarado met early in the morning with the
PLC CEN to present their position. According to Arellano who
was present at many of the discussions, Rizo and Alvarado
next submitted a letter of resignation to the CEN. However,
the CEN was unwilling to sideline Aleman, and later called on
Aleman and Rizo's and Alvarado's wives to persuade them to
reconsider their resignation. Note: We never saw the letter,
nor did Montealegre; we warned Montealegre to avoid falling
into a "Chavez trap.") By mid-afternoon, the rumor mill was
working overtime, with some contacts claiming that Aleman had
pre-empted Rizo's and Alvarado's resignations by replacing
them with Francisco Aguirre Sacasa and Maria Auxiliadora
Aleman.


15. (C) When it became clear that Rizo might indeed keep his
word and withdraw his candidacy, Aleman brought in PLC
heavyweights to press Rizo to reconsider -- including
desvisado/Fiscal General Arguello Poessy. According to
Senior Bolanos adviser Frank Arana, Rizo's and Alvarado's
wives were also trotted in to convince them to remain with
the PLC. (Note: Many of the meetings were held in the
residence of Aleman's father-in-law Flores Lovo, who took the
first plane out of Miami after learning of the Panama judge's
May 17 detention order of him and a number of Aleman family
members. End Note.)


16. (C) In an effort to appease Rizo, Aleman made a few
minor "concessions" to Rizo: "downgrading" daughter Maria
Dolores from the second to the fourth position on the
National Assembly list and moving "desvisados" Noel Ramirez
and Eduardo Mena from the National Assembly list to the
Parlacen list. The CEN also agreed that from now on all of
their meetings will be held at PLC headquarters rather than
at Aleman's El Chile residence.


17. (C) Around 6 PM, PLC candidates Jose Rizo and Jose
Antonio Alvarado retracted their supposed commitment to
withdraw from the PLC and join the Montealegre alliance and
they registered their candidacies soon thereafter. Leading
PLC candidates are the following (brief bios will follow
septel):

National Candidates:
Jorge Castillo Quant (CEN President)
Francisco Aguirre Sacasa
Enrique Quinonez
Maria Dolores Aleman
Guillermo Osorno (Camino Cristiano)
Noel Pereira Majano
Jose Castillo Osejo
Martha McCoy
Roberto Sarrias
Carlos Carache

Managua Candidates:

Wilfredo Navarro
Leopoldo Navarro
Miguel Melendez
Ana Julia Balladares
Maria Auxiliadora Aleman
Adolfo Calero (PRN)
Orlando Mayorga

Guillermo Montenegro
Fernando Avellan

Parlacen Candidates:

Maria Haydee Osuna
Noel Ramirez
Fabio Gadea
Diana Urbina
Adolfo Garcia
Blanca Rojas
Eduardo Mena
Leonel Panting


18. (C) According to Montealegre's chief of staff, Edmundo
Leal, Rizo called Montealegre to convey his decision to
remain in the PLC. Montealegre confirmed to DCM that he had
indeed talked to Rizo and Rizo had thrown in the towel. In
Arellano's view, Rizo's fears of the risks he would face if
he left the PLC prevailed over his desire to do the right
thing. Rizo rationalized his decision by claiming that he
could not disappoint his many followers who had entrusted
their confidence in them (read: people who would find no
place in Montealegre's alliance).

ALN LIST REFLECTS ITS DIVERSITY
- - - - - - - - - - - - - - -


19. (C) Montealegre's alliance was the last to register --
around 9:30 PM. Montealegre underscored the fact that the
ALN is the option that offers young leaders, new faces, and a
varied alliance of Liberals and other political streams that
is determined to win and transform the country. Commenting
on Rizo's decision to remain with the PLC and the minor
concessions Aleman granted to Rizo, Montealegre likened these
efforts to "rearranging deck chairs on the Titanic," a futile
effort. Principal ALN candidates are the following (brief
bios will follow septel):

National Candidates:

Maria Eugenia Sequeira
Jamileth Bonilla
Salvador Talavera (PRN)
Jorge Matamoros (PC)
Indalecio Rodriguez
Azalia Aviles (PC)
Miguel Lopez Baldizon (APRE)
Eduardo Chamorro
Delia Arellano (Camino Cristiano)

Managua Candidates:

Pedro Joaquin Chamorro (Violeta Chamorro's son)
Pedro Solorzano
Ramiro Silva
Carlos Garcia
Adolfo Martinez
Luciano Garcia
Adolfo "Popo" Chamorro

Parlacen Candidates:

Eliseo Nunez, Jr.
Alejandro Solorzano
Comandante Max
Enrique Gasteazoro
Ariel Montoya

VIEWS AFTER THE FALLOUT
- - - - - - - - - - - -


20. (C) Montealegre and his followers were disappointed but
not surprised that Rizo ultimately caved to Aleman. They
also expressed relief that the political landscape is now
clearer. Leal commented to polcouns that Rizo's waffling did
not go unnoticed by the public, adding that Rizo's lack of
courage will advantage Montealegre's campaign as it
demonstrates that the PLC remains beholden to Aleman and the
Ortega-Aleman pact. A number of private sector supporters of
Rizo shared with us their frustration over Rizo's decision to
remain in the PLC; some may renounce their support for him.
Similarly, Senior Foreign Affairs Adviser Minister Ariel
Granera, who fervently supported Alvarado's candidacy,
acknowledged to DCM that his support for Alvarado had been a
mistake. Financier Carlos Pellas, who had been urging Rizo

and Alvarado to "close the deal" with Montealegre, confided
in DCM his frustration with Rizo and indicated he would not
support him.

COMMENT
- - - -


21. (C) Rizo's sincerity can be questioned, and even if his
intentions were genuine, clearly he is too weak to stand by
his stated principles. On the positive side, the fact that
Rizo could neither challenge Aleman nor abandon the PLC and
join Montealegre may have convinced financier Carlos Pellas
that the PLC is not an option and that he should back
Montealegre instead. However, the path to the presidency
will not be easy for Montealegre, as he and his team will
also face accusations of corruption.


22. (C) The PLC continues its crusade to besmirch
Montealegre by alleging that he unduly profited from the 2001
issuance of bonds (CENIS) to facilitate the takeover of
failed banks by sounder financial institutions, in one of
which he has been a minority shareholder. Also, they imply
that as finance minister and Central Bank Board member when
the bonds were renegotiated in 2003, Montealegre is in part
responsible for the large total domestic debt Nicaragua
bears. The media immediately glommed on to Montealegre's
selection of former Transport Minister Pedro Solorzano, whom
the PLC has accused of mismanagement and corruption during
his tenure as Transport minister, particularly regarding the
cost overruns and significant delays in major donor-funded
highway construction projects.
TRIVELLI