ALN PLANNING FOR A ROUGH ROAD AHEAD

C O N F I D E N T I A L MANAGUA 002180 SIPDIS SIPDIS E.O. 12958: DECL: 10/02/2026 TAGS: KDEM NU PGOV PINR SUBJECT: ALN PLANNING FOR A ROUGH ROAD AHEAD REF: A. A. MANAGUA 002160 ¶B. B. MANAGUA 002158 ¶1. (C) SUMMARY: Drawing on Emboffs' recent meetings with various members of the Nicaraguan Liberal Alliance (ALN), this cable provides a comprehensive view of where the party stands five weeks before election day. Although most local polls continue to show Eduardo Montealegre as the second-strongest candidate after Daniel Ortega, his ALN faces real obstacles to expanding its base. Internal communication and organization problems undermine the party's efficiency and unless additional resources pour in, the ALN may not be able to make significant inroads against the Liberal Constitutional Party (PLC) in the all-important rural sector. Given these challenges, the deciding factor in the election may not be how strong/popular the ALN is, but how vehement the anti-Ortega sentiments run. Contacts in the ALN, Sandinista Renovation Movement (MRS),the private sector, and from various NGOs maintain that a significant portion of voters will vote not for their preferred candidate, but for whichever candidate seems best placed to defeat Ortega on election day. END SUMMARY. ¶2. (C) Over the last two weeks Emboffs have met with several members of the Nicaraguan Liberal Alliance (ALN) to guage where the party stands now, what it plans to do in the remaining five weeks of the campaign, and how it will respond to the challenges posed by opponents in the Liberal Constitutional Party (PLC) and Sandinista National Liberation Front (FSLN). Among those we met with were Eduardo Montealegre's uncle and ALN legal adviser Mauricio Montealegre, Azucena Castillo (a former Cabinet minister who is running as the first substitute deputy on the ALN's National Assembly ticket),ALN campaign chief of staff Edmundo Leal, and campaign consultant Mario Elgarresta (Ref A). This cable also draws on Eduardo Montealegre's recent meeting with Congressman Burton (Ref B) and the Ambassador, and on Emboffs' conversations with an array of contacts in the private sector and from various NGOs. A TIGHT RACE ACCORDING TO THE POLLS - - - - - - - - - - - - - - - - - - ¶3. (C) According to an M&R poll released on 29 September, Daniel Ortega (30.9%) and Montealegre (26.4%) are the two leading candidates, followed by Jose Rizo (16.3%),Edmundo Jarquin (15.9%) and Eden Pastora (0.9%). The percentage of people who will not vote or are still undecided stands at 9.6%. The poll was conducted between September 15 and 21, with a sample size of 4,204, and a margin of error of 1.5%. According to the poll, 66% of voters declared themselves "anti-Ortega." (Comment: In this poll, Montealegre is gaining on Ortega, and the most likely outcome is that these two candidates will compete in a second round. In a second round, Montealegre would win with 44.2% of the vote - 9 points over Ortega's 35%. The surprise in this poll is that Jarquin's numbers appear to be slipping and Rizo is now in third place. End Comment.) ¶4. (C) In a recent meeting with Poloff, Edmundo Leal was optimistic that Montealegre will win the November 5 elections, claiming that the ALN receives more and more support with each poll bolstering Montealegre as the only serious challenger to Ortega. He claimed that, unlike any other party, the ALN has registered enough party poll watchers (fiscales) to provide 100% coverage of the voting tables (JRVs) on election day - putting to rest the PLC assertion that only that party has the "machinery to defend the democratic vote." That said, the ALN faces some tough obstacles that could undermine the party's efforts to expand its base or even erode some of its support. ORGANIZATION REMAINS A CHALLENGE - - - - - - - - - - - - - - - - - - ¶5. (C) Emboffs have heard from several sources that the ALN still suffers from problems of internal organization and communication problems, although ALN campaign consultant Maria Elgarresta believes that ALN has recently tightened up its organization. Public statements by various party members occasionally appear uncoordinated or contradictory, and members of the alliance have told us that they often do not receive clear communication from party headquarters. In a meeting on 29 September with Pol TDYer, Azucena Castillo described the ALN's central campaign coordination efforts as weak and reported that people often go about their activities without first talking with colleagues or checking to see whether the work has already been done, or really needs to be done at all. ¶6. (C) Castillo said that much of the problem lies with the party's poor management structure. Castillo accused some Assembly candidates of not working hard enough to back the campaign and finds that party structure in some places around the country to be lacking. She said that while the ALN has campaign chiefs in both Matagalpa and Managua, the ALN needs someone in each department to take on a more hands-on role in coordinating the party's local efforts -- something akin to a chief executive officer. She blamed campaign manager Adolfo Arguello for much of the management difficulties. A former bank manager, he does not have a strong political background and comes across as uncharismatic and demanding, she claimed. ¶7. (C) To reinforce her point about the ALN's internal problems, Castillo cited a 25 September meeting of senior party members. Called in part to improve internal communication, Castillo said the group broke down several times in arguments over strategy. The chief "propaganda" officer spoke up saying that regional campaign offices feel "abandoned" because they lack resources and materials. Castillo reported that Arguello essentially told these people to 'deal with it' because "we are out of money." This standoffish attitude came across as disrespectful, according to Castillo, and many attendees began to grumble. The meeting was saved in large part thanks to Mario Rapacciolli's intervention. He took the floor, delivering an animated speech that went a long way toward lifting morale. ¶8. (C) Castillo cited the ALN's strategy in the Atlantic Coast region as an example of how poor planning and resource constraints have undermined the effectiveness of the campaign. She claimed that right after the Atlantic Coast elections in March, the ALN closed its campaign offices in the area, ostensibly because it lacked funds to remain. Castillo said the move showed a lack of forethought that has proven detrimental to the campaign. She noted that the ALN lost much of the inroads the party had made in this area and has had to work almost from scratch. (COMMENT: The fact that Castillo has been frustrated because she does not comprise Montealegre's inner circle when she believes she should be included may have colored her views on the ALN campaign. Early in the campaign, she was talked about as a potential running mate for Montealegre, but was passed over. END COMMENT.) ¶9. (C) Nevertheless, Castillo ended on a somewhat optimistic note, saying that the ALN still has time to turn things around and get its house in order. She mentioned that the return to the campaign of Mario Elgarresta could have a positive effect. An astute campaign adviser with longstanding ties to Nicaragua, Elgarresta served the campaigns of Arnoldo Aleman and Enrique Bolanos. Castillo said that Elgarresta - a Cuban living in Miami - has the trust of Montealegre, with whom he worked on the Bolanos campaign, and could have a positive impact on Arguello's management of the campaign. WEAK PUBLIC STANCE - - - - - - - - - - ¶10. (C) Eduardo Montealegre's efforts to attack his opponents have been erratic at best and counterproductive at worst, according to Castillo. While early in the campaign Montealegre vowed to focus his energies against Ortega, he has recently allowed himself to be dragged into lashing out at the PLC, which he continues to publicly maintain as an entity that has no chance of winning. Meanwhile Montealegre only takes an occasional swing at Ortega and is doing an inadequate job of defending himself against the attacks of his opponents. Castillo asserted that Montealegre's failure to take a strong public stance on the CENIS issue and his lack of attacks against Ortega have earned him a weak public image - "he always appears on the defensive." Moreover, Montealegre's attacks against the Liberals have often been misguided and clumsy. Instead of taking direct aim at Aleman, Montealegre on the campaign trail has several times broadened his critique to include Liberals in general - a tactic that alienates many voters who would consider voting for Montealegre, but who consider themselves as Liberals. Castillo argued that Montealegre shares the same Liberal ideology of many voters, including herself, so his anti-Liberal message comes across as confusing and schizophrenic. Castillo said that she has told Montealegre, "Liberalism is your flag and you need to carry your flag." ¶11. (C) Despite facing a number of legal hurdles with the Supreme Electoral Council (CSE),the ALN has taken a relatively quiet approach to dealing with the body rather than attempting to call public attention to what are blatantly politicized decisions. Mauricio Montealegre told Pol TDYers on 27 September that the ALN will seek to work with the CSE to "iron out" disagreements. In those cases where the CSE has ruled against the ALN, Montealegre said they would exhaust all the means of appeals. He argued that the alliance needed to avoid prematurely antagonizing the CSE so that the ALN will be freer to take a more critical approach at crucial later stages in the election process. Part of this hesitance also stems from the desire to avoid scaring voters away from the polls. Montealegre explained that one of the reasons for taking a toned-down approach toward the CSE on the issue of potential vote fraud is to prevent voters from getting the idea that fraud will be inevitable, which might prompt some not to vote. ¶12. (C) COMMENT: The desire to work within the confines of the system for now makes sense. However, calling out the CSE with allegations of favoritism and the possibility of a manipulated vote is unlikely to alienate many voters. For one thing, this dialogue has now become a constant part of the political din in Nicaragua. Also, strong statements linking CSE mismanagement to the interests of the PLC-FSLN pact probably help to stoke anti-establishment (and thus pro-ALN or pro-MRS) sentiments. END COMMENT. ¶13. (C) Castillo also criticized Eduardo Montealegre's toned-down persona and aloof image, which she says hurt the party's outreach efforts. Castillo told Pol TDYer that Montealegre is something of an introvert and that he has a very "mathematic and exact" personality that makes him seem uncomfortable around people. She said, for example, that when on the campaign trail he does not engage in the traditional prolonged embrace, often pulling away from such encounters to move on to the next person. According to Castillo, this is not intentional, but a reflection of an inability to understand why it is so important to spend more time with individuals. His stance is akin to 'ok, I have greeted this person, time to move on.' He thus comes across as uptight and aloof. MONEY REMAINS AN ISSUE - - - - - - - - - - - - ¶14. (C) Most of our ALN contacts have complained about a lack of campaign finances . While Post recognizes that these comments are made in part to solicit USG support, it is obvious that the party is truly hurting for resources. Montealegre told Congressman Burton and the Ambassador during their meeting on 23 September that the ALN has only spent about one-third of what was spent on the Bolanos candidacy at the same point in its 2001 campaign. While admitting to having received support from private sector sources in Guatemala and El Salvador, Montealegre and his campaign advisers noted that most Nicaraguan donors are only giving in small amounts. Post has heard the same thing from our private sector contacts. One member of the Nicaraguan-American Chamber of Commerce (AMCHAM) told Pol TDYer on 25 September that many wealthy Nicaraguans have been hesitant to donate to Montealegre's campaign out of fear of prompting reprisals from the Sandinistas. (Comment: The candidates are required to declare all thei r donations and their sources. Businesses fear that the FSLN could use their muscle in the courts to 'punish' those who give significant amounts to Sandinista opponents. End Comment.) ¶15. (C) The lack of funding also appears to have forced the ALN to rely increasingly on borrowed money. Edmundo Leal told Poloff recently that the ALN is operating in the red, having failed to receive the promised level of support from the Nicaraguan private sector. The ALN is probably hoping to repay its debts from monies earned from a strong showing in the elections. The government sets aside a fund equal to 1% of the ordinary budget to distribute to those political parties who gain more than 4% of the vote - to be disbursed after the elections. These parties then split this pot in amounts proportional to the number of votes they receive. The AMCHAM member said that this has prompted the parties to approach banks for loans based on how many votes they think they will be able to receive. However, Montealegre and his advisers hinted during their meeting with Congressman Burton that they were now having trouble persuading banks to lend them more money. In the meantime the ALN will continue to appeal to international sources as well as domestic ones. Castillo said that Rapacciolli and Montealegre were headed to El Salvador over the weekend of 30 September in order to drum up additional contributions. ¶16. COMMENT: Despite its financial challenges, the ALN appears to have been able to spend more than any other party other than the Sandinistas. According to an Etica and Transparencia study published in the press (El Nuevo Diario) on 30 September, the ALN spent 3,153,571 cordobas on its campaign between 1 July and 15 August, compared with 2,622,635 spent by the PLC during the same period. The FSLN was listed as having spent 7,858,120. END COMMENT. ALN CONCERNED ABOUT ELECTORAL FRAUD - - - - - - - - - - - - - - - - - - ¶17. (C) Mauricio Montealegre told POL TDYers and POL FSN that the ALN is aware that Sandinista influence in the CSE and judicial sectors put that party in a strong place to commit fraud. He listed four ways the Sandinistas could steal up to 5% of the election and avoid a second round: --Annul a handful of votes from each JRV: Montealegre said that if the FSLN can use its clout at the JRV to annul 3 votes in each JRV around the country, this could void as much as 30,000 votes overall, potentially throwing out up to 1% of the total vote. --Raton Loco: The FSLN-controlled electoral authorities can change the registered address of some voters, forcing them to have to vote in other polling centers at the last minute. This strategy has unfolded in previous elections, and could prompt between 1-2% of the electorate to abstain (i.e. people will give up and decide not to vote rather than go through the hassle of having to travel to another polling place). This result would favor Ortega as a high voter turnout improves the chances of the anti-Ortega vote. --Voiding entire JRVs: FSLN clout over the three-member JRVs would give them an upper hand to challenge the results in particular polling centers - where they are losing. Through the challenge process, the entire results from each JRV (up to 400 votes) can be negated. --Virtual fraud: Montealegre warned that FSLN influence over the CSE gives them control over the means by which the vote tallies will be transmitted (mostly by fax) to local vote tally centers. He offered few specifics, but Embassy officers will follow up on this. THE OAS VIEW ON THE GROUND - - - - - - - - - - - - - - ¶18. (C) POL TDYers met on 29 September with OAS official Patricio Gajardo to discuss the latest numbers of JRVs and the size of the voter list. According to Gajardo, the CSE has said there will be 11,274 JRVs and that the total voter list numbers 3.6 million. Gajardo, however, says this is likely inflated and expects that the number of voters will be between 2.6-2.8 million. Assuming a voter base of 2.7 million, each 1% of the vote is 27,000 votes, or approximately 68 JRVs (assuming that each of the JRVs contains the maximum of 400 votes). FENDING OFF ATTEMPTS BY OPPONENTS TO LURE, SCARE PARTY MEMBERS - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶19. (C) Over the course of the last few weeks the ALN has suffered several high-profile defections from within its ranks. It is clear that the FSLN and PLC are attempting to seed chaos within the ALN in an attempt to undermine the public's confidence in the alliance as a viable political entity. Most notable of these has been the decision in mid-September by former Contra and Nicaraguan Resistance Party (PRN) leader Salvador Talavera - who is the third candidate on the ALN's slate of national-level Assembly deputies - to publicly announce his support for the FSLN. Despite an ongoing appeals process, the CSE has so far prevented the ALN from replacing Talavera. The damage this could cause to the ALN's Assembly slate is significant as Talavera will almost certainly win a spot in the Assembly given his senior spot on the slate. While he would continue to be counted among the ALN bank of supporters, he would probably vote with the FSLN. ¶20. (C) Mauricio Montealegre told POL TDYers that the slate system of electing Assembly deputies opens doors for opponents to attempt to encourage defections. He argued that low-ranking ALN supporters are unlikely to get a seat in the legislature, and are prone to the temptations or threats made by the PLC or FSLN. A party as new as the ALN, which lacks strong resources, may find it hard to maintain the loyalty of these people who would be tempted by the opportunity to gain a stronger position with a more established party. (COMMENT: Each party has a list of twenty names to fill the twenty national-level seats in the Assembly but that as no party has a chance of winning all the seats, which are divvied up based on the proportion of the vote, most of the nominees from a party slate will not gain a position. Moreover, the number of likely disappointed persons is actually 40 because with each deputy candidate comes a spot for an alternate or substitute candidate ("suplente"). END COMMENT.) ¶21. (C) Anecdotal evidence also suggests that the PLC and FSLN have offered money and other incentives to entice these 'weak links' away from the party. The ALN's Department heads in Leon and Chontales publicly decried on 27 September that the PLC and FSLN are trying to lure, bribe, or blackmail ALN members to join forces with the PLC and FSLN. Both regional leaders said they had been offered money from these parties to switch sides. Several PLC figures disenchanted with party leadership and advocating either liberal unification under Montealegre or outright support for his candidacy have told Emboffs that they have received personal threats. ALN Assembly deputy candidate Ariel Montoya told Poloff on 28 September that leaders of the internal PLC movement to support Montealegre's candidacy (GANARAM) have received personal threats. ¶22. (C)The ALN has been able to weather Talavera's departure, and that of several other "suplente" candidates - at least for now. Edmundo Leal and Azucena Castillo have told Poloffs that Talavera's defection was a 'wake-up call' for the ALN, and that other PRN members have since rallied around Montealegre. (Comment: Castillo has also said that Talavera's defection took many by surprise, but that party management had ignored warnings from four or five sources within the ALN against choosing him as a candidate in the first place due to his personal baggage. End Comment.) LEGAL SHOALS AHEAD - - - - - - - - - - ¶23. (C) The ALN is expecting the FSLN to exploit its leverage in the CSE, National Assembly, and the courts to lash out at the ALN to handicap, and possibly derail, Montealegre's campaign. Castillo said that the likelihood that the FSLN and PLC will try to undercut Montealegre's campaign (or a Montealegre administration) through legal cases is the ALN's "achilles heal." She said that Montealegre received a message from Comptroller Arguello Poessy in which Poessy told Montealegre that he regarded the candidate as a friend, but that he could not permit him to continue to divide the Liberals. She said that the PLC-FSLN attacks on Montealegre tend to coincide with the release of polls depicting Montealegre as the strongest center-right candidate. ¶24. (C) To counter these efforts Mauricio Montealegre told Poloffs that the ALN is attempting to work closely with the CSE wherever possible. He said that they have contacted former CSE employees to seek help on how best to work with the institution. The ALN is also mounting an intense effort to place as many party observers at the polls on election day as possible. The specific legal cases facing Montealegre - and some hypothetical ones - are listed below: --Removing Talavera from the party slate: Numerous ALN contacts have told Poloffs that the CSE's refusal to allow the ALN to replace Talavera is yet another example of how politicized that body is. Mauricio Montealegre said that because Nicaragua's system of electing representatives to the Assembly via slate (vice voting for individual members) should give the party the right to replace these members at will. Montealegre says that jurisprudence points to several legal precedents in which both the PLC and FSLN have been able to switch out members as late as ten days before the elections. Mauricio said that the party would continue to appeal the case to the CSE knowing that "we do not have the slightest hope [of winning]." (COMMENT: With the suicide of one of the PLC's substitute Assembly deputy candidates, the PLC has requested that the CSE allow the PLC to replace him. If the CSE approves the request, the ALN will have a bit of leverage to argue its appeal to E replace Talavera. However, the CSE is likely to counter that the cases are very different. END COMMENT.) --The CENIS case: However convoluted the CENIS bank-buyout scandal might be, the FSLN and PLC will almost certainly continue to hold this case over Montealegre's head. To summarize the issue, Montealegre has been accused of personally profiting as part of a deal in 2000-2001 where the government issued "Negotiable Indemnization Certificates" (CENIS) to facilitate the takeover of failed banks by other Nicaraguan banking institutions - including one in which Montealegre may have had a personal stake as he was General Director and minority shareholder. Montealegre counters the accusation with the assertion that he was not Finance Minister when these decisions were made and was never in a position of authority to influence the decision, the exception being when the CENI rates and time periods were renegotiated in 2003 during his tenure as Finance Minister. The lead agency in the renegotiations was the Central Bank, where Montealegre was ex oficio chairman. They negotiated lower interest rates for the CENIs to the benefit of the Nicaraguan public. (COMMENT: We suspect Montealegre's opponents will re-engage this issue closer to the election when it can do more political damage. END COMMENT.) --Accusations over printing fake ballots: When asked about the sample ballot issue currently before the CSE, Leal explained that the ballots are blacked out except for the ALN "casilla" and could never be mistaken for the real thing. The whole "scandal" has been trumped up by the FSLN and CSE, he claimed. --Campaign finance allegations: A quick look at the law also reveals potential Achilles' heels for some of the campaigns. Article 177 of the Electoral Code states that candidates found guilty of violating finance-related rules laid out in Chapter 4 (articles 99-106) or any of the other electoral violations cited in Title 14 (articles 173-178) are required to renounce their candidacies and are prohibited from exercising public functions for a period of between one and three years. Should they be charged with having committed these offenses during their campaigns after they have already taken office, then they must step down. This provides an obvious opening for the pactistas to use their influence to hamstring opponents. CHANCE OF LIBERAL ALLIANCE UNLIKELY - - - - - - - - - - - - - - - - - - ¶25. (C) Eduardo Montealegre told Congressman Burton and the Ambassador during their meeting in late September that he was still open to offering Rizo a chance to join his campaign, and has considered giving him the inducement of a desirable ambassadorial position in Chile or Spain. Nevertheless, as time gets short, Montealegre's firm refusal to join a party controlled by Aleman, and Rizo's inability or unwillingness to challenge his party leader, make an alliance increasingly unlikely. Castillo said that the idea is losing traction within the ranks of both the PLC and the ALN. ABILITY TO SUSTAIN STRONG NUMBERS KEY TO THE ELECTION - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶26. (C) Multiple contacts from both the ALN, MRS, and the private sector have told Emboffs that the key to the election will be the anti-Ortega vote. Many people may consider voting for whichever candidate appears most capable of defeating Ortega. According to the M&R poll released on 29 September of the 66% of respondents who described themselves as against Ortega, 74.7% said they would consider voting for a candidate other than the one they preferred in order to avoid an Ortega win. Thus, much of the population may pay a high degree of attention to the polls produced near election day, regardless of how credible they might be. ¶27. (C) COMMENT: Despite its challenges, the ALN still has a good shot of finishing the campaign at a strong pace. Elgarresta, Leal, and Casillo all commented that the campaign has identified its weaknesses and insist that they are taking steps to address their shortcomings and reinforce their strengths. Assuming the party stays strong in the polls, the ALN can probably count on their numbers receiving an additional boost from voters from other parties who might see the ALN as the best chance of E defeating Ortega. END COMMENT. TRIVELLI