A/S SHANNON'S MEETING WITH BUSINESS LEADER KRUGER

C O N F I D E N T I A L MANAGUA 002616 SIPDIS SIPDIS E.O. 12958: DECL: 11/29/2016 TAGS: ECON KDEM PGOV PREL NU SUBJECT: A/S SHANNON'S MEETING WITH BUSINESS LEADER KRUGER Classified By: Amb. Paul Trivelli for reasons 1.4 (b and d) ¶1. (U) Summary: On November 28, Assistant Secretary Thomas Shannon, Ambassador Paul Trivelli, and Nicaraguan business leader Erwin Kruger briefly discussed a broad spectrum of post-election business and political topics relevant to President-elect Ortega's upcoming presidency, including the frailty of Nicaragua's macroeconomic state; the need for stability through remittances, export expansion, observance of International Monetary Fund (IMF) guidelines and access to international donor funds; the impact of a corrupt judiciary on investor confidence and poverty reduction; and, the likelihood that Ortega will respect CAFTA. End Summary. ¶2. (C) A wide-ranging conversation with A/S Thomas Shannon and the Ambassador, President of Nicaragua's Private Enterprise Council (COSEP) Erwin Kruger, enumerated several issues likely to impact on President-elect Daniel Ortega's upcoming presidential tenure. These included: --the frailty of Nicaragua's macroeconomic state and the importance of maintaining stability through remittances, export expansion, observance of International Monetary Fund (IMF) guidelines and access to international donor funds; --the impact of a corrupt judiciary on investor confidence and poverty reduction; --the likelihood that Ortega would respect CAFTA despite Venezuela's efforts to promote rupture between the U.S. and Nicaragua; tradeoffs required while trying to protect vulnerable sectors; other-than-CAFTA markets such as the European Union; ALBA (Venezuela's counter-offer to CAFTA); Mercosur, India and China; ¶3. (SBU) Kruger announced that an investment forum jointly sponsored by government and social sectors will bring private sector entities, including COSEP members and the American Chamber of Commerce, to discuss "Investment for Nicaragua, 2007-2012: A Strategic Alliance for the Future." A/S Shannon suggested that the Council of the Americas be invited to the January 10-12 forum. He also recommended that the forum provide a corporate "first-hand look" for companies seeking business access and a perspective on democracy, stability, free trade agreements, and post-electoral political party stances. A/S Shannon characterized Nicaragua as a "country positioned to do well," predicting that President-elect Ortega will find a "table already set" for positive regional participation, barring a return to caudillo leadership. ¶4. (C) Kruger noted that SandinisQeSM}Q'Iwresident elect Jaime Morales Carazo as the "best chameleon you can find." Kruger underscored the new administration's acknowledgment of its base, the perils of mismanaging mandates, and the need to develop electricity. Finally, he agreed with our engagement strategy regarding Ortega, saying, "Ortega should get an early message that the United States can be a friend." ¶5. (U) Participants: Nicaragua: COSEP President Erwin Kruger U.S.: A/S Thomas Shannon Ambassador Paul Trivelli Econoff Grace Brunton (notetaker) ¶6. (U) Assistant Secretary Thomas Shannon cleared on this cable. TRIVELLI