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" - - - - - - - - - - - - - - - - - ¶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 - - - - - - - - - - - - - - - - - - - - - ¶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 - - - - - - - - - - ¶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 - - - - - - - - - - - ¶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 - - - - - - - - - - - - - - - - - - - - - - - ¶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 - - - - - - - - - - - - - - - - ¶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 - - - - ¶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 - - - - ¶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