AMBASSADOR DISCUSSES NEXT STEPS WITH FSLN

C O N F I D E N T I A L MANAGUA 002624

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN

E.O. 12958: DECL: 12/04/2016
TAGS: PREL PGOV PINR KDEM NU
SUBJECT: AMBASSADOR DISCUSSES NEXT STEPS WITH FSLN
INTERMEDIARY SANTOS

REF: A. MANAGUA 2611


B. MANAGUA 2608

C. MANAGUA 0632

D. MANAGUA 0579

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


1. (C) Summary: Following up on Assistant Secretary Thomas
Shannon's recent meeting with President-elect Daniel Ortega
(Ref. B),Ambassador, DCM and polcouns met with Sandinista
National Liberation Front (FSLN) Foreign Affairs Secretary
Samuel Santos to discuss next steps in our bilateral
relationship with the incoming Sandinista government. Over
dinner at the Santos residence, Ambassador reiterated our
firm commitment to Nicaragua's democracy and its people, and
our interest in working with the new government on issues of
mutual concern. He also explained that most of our aid
programs are tied to a number of legislative requirements.
Santos related that Ortega was very pleased with his first
dialogue with A/S Shannon. Santos was pleasantly surprised
by the myriad of development projects the USG promotes in
Nicaragua and eagerly accepted the Ambassador's offer to
present an overview of our programs and their parameters to
Ortega's transition team during the week of December 11. End
Summary.


A PROMISING BILATERAL "TAKE-OFF"
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2. (C) As part of our follow on to A/S Shannon's November 28
meeting with President-elect Daniel Ortega (Ref. B),
Ambassador, DCM and polcouns met with FSLN Foreign Affairs
Secretary Samuel Santos, whom Ortega designated as his
intermediary to discuss next steps in our bilateral
relationship with the incoming Sandinista government. Over
dinner at his residence -- on a ridge overlooking both
Managua and Granada and formerly a lodging for coffee pickers
-- Santos related that Ortega was very pleased with his first
dialogue with A/S Shannon and the Ambassador. "The plane
took off smoothly, and I hope the flight will be a good one,"
offered Santos, who asserted that Ortega's interest in
maintaining a respectful and constructive relationship with
the United States is genuine. He assured the Ambassador that
Ortega and his followers will avoid the public display of
negative, offensive rhetoric that could damage the
relationship.


3. (C) Concurring with Santos' assessment of the
Shannon-Ortega meeting, the Ambassador noted that while some
of the presidents of other Central American countries had
offered to serve as intermediaries between the USG and the
new FSLN government, he believed that direct relations are
possible, as evidenced by the Shannon-Ortega meeting and the
present dinner, and advisable. Polcouns suggested that
contentious issues be addressed outside of the media
limelight, as the media often seeks political scandal rather
than good-news development stories. The DCM remarked that
refraining from "double discourse" in public is the most
effective way to avoid misunderstanding and to foster
positive engagement.

EMOTIONAL TIES WITH FIDEL, HUGO, THE FLMN
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4. (C) After reiterating his intention to be frank with us
on all issues, Santos asserted that he and other FSLN leaders
will not abandon their friendships with Fidel Castro, Hugo
Chavez, the FMLN, or other left-leaning allies. However,
(unlike the policies of the 1980s Ortega regime) the FSLN
will not meddle in the internal affairs of other countries or
movements, and instead, focus on resolving Nicaragua's
daunting social problems, claimed Santos. The Ambassador
replied that A/S Shannon had alluded to our respect for
Nicaragua's sovereignty and the FSLN's right to maintain
relations with its allies. However, if the FSLN government
were, for example, to recruit hundreds of Venezuelans to man
its ministries, we would be concerned. Santos dispelled this
possibility, noting that more likely Nicaraguans would be
sent to Venezuela. Further, U.S. experts will be most
welcome in Nicaragua to help with development projects.

A TWO-CHINA POLICY
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5. (C) Santos, who is among the possible candidates to head
the Ministry of Foreign Affairs, asserted that Ortega is
determined to maintain a "two-China policy." For Santos, it
is incumbent upon the two Chinas to resolve their
differences, not Nicaragua. He recounted that in his
meetings with the Taiwanese and Mainland Chinese, both groups
are eager to resolve their differences and enjoy strong trade
and investment ties, in addition to their close cultural and
historical affiliations. Santos mentioned how impressed he
was by the efficiency of Taiwan's agricultural sector, noting
that only 9% of its population works the land. The
Ambassador remarked that in the United States, which is the
world's largest exporter of agricultural products, less than
1% of the population lives on farms.

FOCUS ON DEVELOPMENT
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6. (C) The Ambassador reiterated our firm commitment to
Nicaragua's democracy and its people, specifically, our
interest in working with the new government on issues of
mutual concern -- including mitigating poverty, improving
health and education, building infrastructure, strengthening
rule of law, and helping Nicaraguans take full advantage of
CAFTA. The DCM suggested that focusing on development rather
than on politics would offer a constructive point of
departure. Echoing the DCM's perspective, Annelly Santos
added that Nicaragua's younger generations are tired of the
political rhetoric and seek concrete solutions to real
problems.


7. (C) The Ambassador referenced the Millennium Challenge
Compact (MCC) as an example of our countries' close bilateral
development partnership. He cited the MCC's emphasis on
building roads and other infrastructure as especially
valuable as these activities address Nicaragua's dire need
for highways and secondary roads, which are needed to
transport agricultural products and other goods to market in
a timely manner. Santos mentioned Nicaragua's energy crisis
as another challenge. The Ambassador commented that to
attract and keep foreign investment a steady and reliable
energy supply is essential, observing that the problem is
largely political, not technical.


8. (C) The DCM sought clarification on Ortega's reference to
the possible need for some "amendments to CAFTA" (Ref. B).
Santos replied that while the FSLN supports CAFTA, it is
concerned that small farmers and producers are ill equipped
to compete with U.S. agribusiness. The Ambassador explained
that then-U.S. Trade Representative Robert Zoellick had
conceived CAFTA as a development vehicle to capacitate trade
partners in this globalized world, reduce poverty, integrate
the Central American region, and complement the region's
political progress over the past decade. He highlighted
CAFTA's USD 10-million TCB fund and a Michigan State
University initiative that help Nicaraguans compete and
increase their exports by improving crop quality and
diversification.


9. (C) The Ambassador also cited USG support for Nicaragua's
"Cup of Excellence" (Taza de Excelencia) program, which has
helped small Nicaraguan coffee producers increase the quality
and quantity of their coffee production and exports. Santos
was bowled over and pleasantly surprised by the myriad of
development projects the USG supports in Nicaragua. The
Ambassador related how his comments on Liberal Constitutional
Party (PLC) caudillo Arnoldo Aleman make front page news,
while his inauguration of an assistance project, if covered
at all, is relegated to the 14th page. Santos eagerly
accepted the Ambassador's offer to present an overview of our
programs to Ortega's transition team during the week of
December 11.

DEALING WITH ALEMAN AND FIXING THE JUDICIARY
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10. (C) Polcouns remarked that independent, non-partisan
judiciary is also crucial for development, investment, and
governability. The Ambassador mentioned Liberal
Constitutional Party (PLC) caudillo Arnoldo Aleman's appeal
before the Supreme Court as a case in point. Santos conceded
that Nicaragua's judiciary is in dire need of reform and that
Aleman is problematic. He assured us that the FSLN is
already "starting to address these issues," but will take a
gradual approach. He added that President Bolanos had erred
by confronting Aleman on corruption before he had
consolidated his leadership in government and over the PLC.


SLOW GO ON CABINET APPOINTMENTS
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11. (C) According to Santos, Ortega will take his time in
selecting his cabinet leadership, noting that thus far only
the Minister of Education has been appointed (de Castillo).
However, he is certain that he and Bayardo Arce will occupy
ministerial positions, Arce most likely the Ministry of Trade
and Commerce. Ortega will also respect civil servants and
intends to appoint only 200 FSLN supporters to government
positions.

BIODATA
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12. (C) Samuel SANTOS Lopez was born December 13, 1938. His
grandfather was Somoza's National Guard Chief of Operations
and Intelligence. However, his father later opposed the
Somoza regime and Santos soon followed in his footsteps when
he was not yet 18, abandoning architectural studies in Mexico
to join the rebellion. Santos was incarcerated on several
occasions for a total of over two years. During the
Sandinista era, he served as chief of the FSLN Finance
Department and was a member of the FSLN Assembly. He also
served as Mayor of Managua and Minister of Managua
Reconstruction. Santos helped divert GON funds to arm the
FMLN in El Salvador. An economist and wealthy businessman,
Santos was a member of the failed Interbank and lost
considerable money in the bank scandal. Santos owns a hotel
in Managua and is the General Manager of Best Western,
Nicaragua. He is a major proponent of building a canal
through Nicaragua and is a close business partner of Bayardo
Arce's. He has relatives in the United States, including a
sister in Los Angeles and sons in San Francisco.

COMMENT
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13. (C) Santos is a pragmatist who likely believes that his
role in brokering constructive bilateral relations at this
stage will increase his chances of becoming Foreign Minister.
BRENNAN