NICARAGUA: COMMENTS ON NIC WATCH LIST OF INTERNAL

S E C R E T MANAGUA 001434

SIPDIS

NOFORN
SIPDIS

DEPT FOR S/CRS: BRENDA HAZZARD, WHA/CEN

E.O. 12958: DECL: 07/03/2026
TAGS: KDEM MARR MOPS NU PGOV PINR PREL
SUBJECT: NICARAGUA: COMMENTS ON NIC WATCH LIST OF INTERNAL
INSTABILITY

REF: STATE 94960

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


1. (S/NF) Post concurs with the bulk of the NIC Watch list's
assessment of internal instability in Nicaragua. However, we
recommend that the following clarifications and recent
political developments be considered:

CALL FOR A PUBLIC REFERENDUM ON CONSTITUTIONAL REFORMS
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2. (S/NF) Post notes that not only President Bolanos, but
also a number of pro-democratic presidential candidates and
their parties/alliances, have called for the referendum on
the so-called constitutional reforms (setbacks, really),
which once in effect on January 20, 2007, will further erode
the Executive's powers. Indeed, Eduardo Montealegre's
Liberal Nicaraguan Alliance-Conservative Party caucus
(ALN-PC) was the first to call for the referendum. Daniel
Ortega's FSLN opposes the referendum, while recently Liberal
Constitutional Party (PLC) presidential candidate Jose Rizo
has endorsed it. It is unclear whether PLC strongman Arnoldo
Aleman would in fact support the referendum measure, should
it create tensions with the FSLN. The issue of National
Assembly approval is not that debating it would revive
inter-party hostilities; these hostilities are already active
and we can expect them to increase in the lead up to the
November 5 election, referendum or not. Rather, debate
continues over whether the Ass
embly's call for a referendum requires 47 votes or 56 votes;
the latter is unobtainable without the FSLN votes.


3. (S/NF) If the Assembly does not call for a referendum, it
could become a campaign issue, and voter preferences may
reflect their views on the issue. There is also the
possibility that the OAS may broker an agreement with the GON
and the National Assembly to postpone the constitutional
changes until a much later date and perhaps broaden the
debate to other issues in a constitutional assembly.

REMITTANCES, MCA, CAFTA
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4. (S/NF) Post believes that the inputs of remittances,
Millennium Challenge Account (MCA),and Free Trade Agreement
(CAFTA "could," not/not necessarily "will," have a
significant stabilizing effect over the next two years. Much
will depend on the policies of the new government.

EFFORTS TO UNITE ANTI-FSLN FORCES/POSSIBLE ORTEGA VICTORY
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5. (S/NF) Efforts to unite Liberals behind a single
presidential ticket have failed. On May 31, PLC presidential
candidate Jose Rizo jettisoned his earlier inclination 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.
Five presidential candidates and their respective legislative
slates are registered to run in the November 5 elections:
Herty Lewites (MRS, FSLN dissident/anti-Ortega); Eden Pastora
(Alternativa por El Cambio, also likely to appeal to some
Sandinista voters); Daniel Ortega (FSLN); Jose Rizo (PLC);
and Eduardo Montealegre (ALN). A possibility still exists,
however, that if Rizo fails to climb in the polls, he could
withdraw from the race in September or October and back
Montealegre.


6. (S/NF) Regarding a possible Ortega victory, at this stage
it does appear unlikely that he could win on the first round,
and in a second round Ortega would probably lose. However,
given Ortega's party's control over the Supreme Electoral
Council and the courts and a five-candidate race, if Ortega
stole 3% to 5% of the votes, he could obtain enough votes to
win on the first round (according to Nicaraguan electoral
law, a candidate requires 35% of the vote with a 5% advantage
over the closest competitor to win the election). An Ortega
victory could not only result in significant capital flight
and increased political factionalism, it could also hurt
counternarcotics, counterterrorism, and mil-mil cooperation,
and substantially increase concerns over Nicaragua's stock of
1,071 MANPADS.

EFFECTS OF THE ORTEGA-ALEMAN PACT ON THE ELECTORAL LANDSCAPE
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7. (S/NF) Although Nicaragua enjoys inclusive suffrage,
freedom of expression and organization, and associational
autonomy, the country remains a quasi-democracy. Its long
legacy of strongman-dominated ("caudillo"),authoritarian
rule permeates its political culture, a culture where the
rule of impunity, not rule of law, prevails. The
Ortega-Aleman pact, dating from 1998, has virtually subjected
all branches of government other than the Executive to
Ortega's and Aleman's control and seriously eroded Executive
authority. To stay out of jail, Aleman appears willing to
cede his party and country to Daniel Ortega, possibly to the
point of "allowing" Ortega to win the presidency in exchange
for his freedom.

NARCO PRESENCE AND PROBLEMS
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8. (S/NF) While Nicaragua's growing narcotrafficking problem
along its Atlantic Coast draws the most attention, its
Pacific coastline has also experienced an increase in
narcotrafficking and related problems. Certainly inadequate
law enforcement contributes to the problem; however,
Nicaragua's judiciary is equally, if not more, at fault. The
courts routinely release narcotraffickers and money launders.

VULNERABILITY TO NATURAL DISASTERS
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9. (U) In addition to Nicaragua's vulnerability to
earthquakes, it is also prone to devastating hurricanes and
occasional volcanic eruption.


TRIVELLI