MONTEALEGRE TO A/S SHANNON: I WILL GIVE ORTEGA THE

C O N F I D E N T I A L MANAGUA 002615

SIPDIS

SIPDIS

DEPARTMENT FOR WHA A/S SHANNON, WHA/CEN

E.O. 12958: DECL: 12/01/2016
TAGS: PREL PGOV PINR KDEM NU
SUBJECT: MONTEALEGRE TO A/S SHANNON: I WILL GIVE ORTEGA THE
BENEFIT OF THE DOUBT, BUT NO ROOM FOR EXCUSES

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


1. (C) Summary: On November 28, Assistant Secretary Tom
Shannon discussed with former Nicaraguan Liberal Alliance
(ALN) presidential candidate Eduardo Montealegre the election
outcome, the future of bilateral relations, and Montealegre's
future role in ensuring Nicaragua remains on a democratic
path. Montealegre, who assured Shannon he will "give Ortega
the benefit of the doubt, but no room for excuses," noted
that Nicaragua has changed, and Ortega's powers are now
limited. As the leader of a "constructive opposition,"
Montealegre will honor his campaign commitments to defend
human liberties and help Nicaragua's most needy, and will
support the Ortega government so long as it remains within a
democratic framework. The Assistant Secretary noted our
commitment to working with the new government and our
determination not to abandon the Nicaraguan people, its
democracy, and civil society -- including helping the ALN and
its allies who represent Nicaragua's future. End Summary.

GIVE ORTEGA THE BENEFIT OF THE DOUBT, BUT NO BLANK CHECK
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2. (C) Over breakfast, Assistant Secretary Tom Shannon and
former Nicaraguan Liberal Alliance (ALN) presidential
candidate Eduardo Montealegre discussed the election outcome,
the future of bilateral relations with an Ortega government,
and Montealegre's future role in ensuring Nicaragua remains
on a democratic path. Montealegre assured A/S Shannon he
will "give Ortega the benefit of the doubt, but no excuses,"
noting that Nicaragua has changed and Sandinista National
Liberation Front (FSLN) Daniel Ortega's powers will now be
more limited. He explained that a series of checks and
balances that have emerged over the past 15 years will
restrict Ortega. Montealegre added that as a minority
president, Ortega must learn to negotiate with those who did
not support him, meet high expectations of those who did, and
inform a savvier populace of his plans. Further, Ortega --
who must operate within the framework of international
financial institution (IFI) limitations -- realizes his
relations with the United States will be determinant in his
success or failure.


3. (C) The Assistant Secretary noted the U.S. commitment to
work with the new government and our determination not to
abandon the Nicaraguan people, its democracy, and civil
society -- including helping the ALN and its allies who
represent Nicaragua's future. A/S Shannon ventured that
Ortega will attempt to fragment the ALN and civil society; to
counter these efforts, the ALN and civil society must
strengthen and build leadership. Montealegre lauded the
USG's constructive posture towards Ortega, opining that
neither "cornering Ortega nor giving him a blank check" would
be productive at this juncture. Montealegre said he will
lead a "constructive opposition" and honor his campaign
commitments to defend human liberties and help Nicaragua's
most needy, and remarked that he will support Ortega's
government efforts so long as it remains within a democratic
framework.

ALN BROKE THE PACT BUT DID NOT KILL IT
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4. (C) For Montealegre, the ALN's participation in the
November election broke the Aleman-Ortega pact, or at least
"detoured" it, but the cost was Ortega's victory.
Nonetheless, the pact is not dead and Aleman will do his
utmost to continue it, predicted Montealegre. He suggested
that the USG can capitalize on Ortega's desire to maintain
positive relations with the United States by driving a wedge
between Ortega and Aleman. According to ALN legal advisor
Mauricio Montealegre, the election outcome "would have been
worse if the PLC had won." Now no party will represent the
simple majority in the National Assembly required to pass
most legislation (47 votes) and the FSLN can seek support
from the ALN to pass legislation and will no longer be forced
to rely exclusively on the PLC.

BREAKING THE PACT IN THE SUPREME COURT
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5. (C) Regarding the appointments of three Supreme Court
justices whose terms expire, the ALN legal advisor explained
that the FSLN, PLC, and ALN will each put forth one
candidate. However, the ALN is considering "sacrificing" its
candidate by eliminating the position, which would reduce by

one the number of judges (currently 16) and break the tie
between the PLC and FSLN. Under this scenario, the FSLN
would have 8 CSJ magistrates and the PLC only 7, and the FSLN
could no longer use the excuse that it cannot rule on any
case -- e.g., PLC caudillo Arnoldo Aleman --- without PLC buy
in. Moreover, PLC designated Judge Edgar Navas now
sympathizes with the ALN, claimed Mauricio Montealegre.

PLC HAS ONE MASTER - ALEMAN
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6. (C) To A/S Shannon's comment that he would meet with
former PLC presidential and vice presidential candidates Jose
Rizo and Jose Antonio Alvarado (septel),Montealegre replied
that Rizo may be well intentioned, sharing that he had called
Rizo to congratulate him for challenging Aleman's misguided
leadership of the PLC. However, Alvarado cannot be trusted,
warned Montealegre, adding that Alvarado's wife Gloria was
instrumental in convincing Rizo and her husband to stay in
the race. As for Aleman, he treats the PLC as his property
and the party is no longer democratic.

CENIS -- THE ISSUE THAT WON'T QUIT
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7. (C) Mauricio Montealegre next raised the debt bonds
(CENIs) issue, which the PLC (and the FSLN) held over Eduardo
Montealegre's head to lower voter support for the ALN
candidate. He warned that the PLC will continue hammering
the CENIs case to erode the ALN and remove Eduardo
Montealegre from Aleman's path to the presidency in 2011.
(Note: Aleman has publicly implied he will run for the
presidency in 2011. End Note.) Eduardo Montealegre added
that if the CENIs issue resurfaces, a number of FSLN leaders,
including International Affairs Secretary Samuel Santos,
could be dragged into the quagmire, as he was a member of
failed Interbank's board of directors. He said that Santos
and other Sandinistas might halt the CENIs case to protect
their own hides, noting he had warned Santos and FSLN
Assembly Deputy Edwin Castro that if the CENIs issue becomes
a crisis, it could trigger an investor stampede and capital
flight.

HELPING THE MOVIMIENTO POR NICARAGUA WILL HELP US
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8. (C) Eduardo Montealegre ventured that civil society will
be his party's and democracy's best ally, noting that the ALN
could be best boosted by our continued support for the
Movimiento por Nicaragua (MpN). Specifically, enabling the
MpN to open departmental and municipal branches would help
the ALN compete in the 2008 municipal elections.

IN SEARCH OF A FEW SALVAGEABLE PLC DEPUTIES
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9. (C) Montealegre shared his party's plans to convince six
to seven PLC lawmakers to join the ALN. He asserted that PLC
National Assembly Deputy Enrique Quinonez is not one of them,
as Quinonez' short-lived call for PLC reform and his
overtures to the ALN were probably decoys sent to confuse the
ALN. Montealegre suggested that Freddy Torrez, Maximino
Rodriguez, Porfirio Castro (all representing Matagalpa
department); Rodolfo Jose Alfaro Garcia (Madriz); Gabriel
Rivera (Esteli); Luis Ortega Urbina Ortega; and, possibly
Francisco Aguirre Sacasa, (national level deputy) are
salvageable, although Aguirre's ambitions to become president
might cloud his decision-making. Montealegre argued that
weakening Aleman is crucial to this effort and the U.S. can
play a vital role. However, Montealegre said the U.S. needs
to use "actions and not words." He asserted that the verbal
attacks have enhanced Aleman and the lack of substantive
steps against him has eliminated any fear he might have had
of the United States. He said that Aleman has called the
U.S. a "paper tiger" that talks tough but does not act.

WE NEED TO KEEP THE PRESIDENTIAL SYSTEM
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10. (C) Montealegre does not support nor trust Daniel
Ortega's interest in installing a parliamentary system of
government, starting with allowing five constitutional
reforms to enter into force on January 20, 2007 -- reforms
that would erode executive powers and bolster the power of
the legislature. Rather, Nicaragua should improve on its
presidential system, opined Montealegre, and he has proposed

that the constitutional reforms be suspended for another year
to allow time for further deliberation within the incoming
National Assembly and public debate. (Note: The reforms -- a
result of the Aleman-Ortega crusade to limit President
Bolanos' executive powers and bolster the PLC-FSLN pact --
include the establishment of a new property, public utility,
and social security entities, allowing the legislature to
partially modify a presidential veto, and requires Assembly
approval of presidential cabinet and other senior-level
appointments. The National Assembly's approval of a
"framework law", or Ley Marco, in fall 2006, postponed to
January 20, 2007 the implementation of these laws. End
Note.)

A PUSH FOR JUDICIAL AND ELECTORAL REFORMS
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11. (C) In addition to plans to consolidate his party and
prepare for the 2008 municipal elections, Montealegre will
advocate for profound judicial and electoral reforms. He
said he will start his electoral reform initiative based on a
2004 draft that the Conservative Party had supported.
Objectives include raising the threshold to win the
presidential election back to 45%, or perhaps even higher,
requiring all parties to conduct primaries, and the direct
election of Assembly candidates. (Note: On the afternoon of
November 28, Montealegre announced the ALN's proposal to
reform Nicaragua's electoral law, which would include raising
the percentage required to elect the president to 51%. End
Note.)

RELATIONS WITH VENEZUELA AND TAIWAN
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12. (C) Montealegre predicted that Ortega will maintain
close ties with Venezuelan President Hugo Chavez. However
Chavez' support to his government will be limited by legal
parameters requiring direct foreign assistance to pass
Assembly approval. Regarding relations with Taiwan,
Montealegre predicted that Ortega will continue to recognize
the Taiwanese for now, but in exchange for a hefty "fee."
Eventually, however, Ortega will recognize Mainland China to
Taiwan's detriment.


13. (U) Participants:

Nicaragua:
Eduardo Montealegre
Azalea Aviles (president of ALN-allied Conservative Party)
Mauricio Montealegre (ALN legal adviser, former CSE
magistrate)

U.S.:
Assistant Secretary Tom Shannon
Ambassador Paul Trivelli
DCM Peter Brennan
Political Counselor/notetaker Victoria Alvarado( notetaker)


14. (U) This cable was cleared by A/S Shannon.
TRIVELLI