SCENESETTER FOR VISIT OF STATE DEPARTMENT

S E C R E T MANAGUA 000432

SIPDIS

SIPDIS

DEPARTMENT FOR WHA, A/S THOMAS SHANNON, WHA/CEN

E.O. 12958: DECL: 02/24/2016
TAGS: KDEM NU PGOV PINR PREL ECON ETRD MARR
SUBJECT: SCENESETTER FOR VISIT OF STATE DEPARTMENT
ASSISTANT SECRETARY THOMAS SHANNON

REF: MANAGUA 0394

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


1. (S) Summary: Your visit to Nicaragua allows you to
reiterate U.S. opposition to the PLC-FSLN pact and assure the
Nicaraguan people we share their desire for free, fair,
credible, and inclusive elections. Your engagement will also
facilitate progress on CAFTA-DR implementation and MANPADS
destruction. We can conclude from the Sandinistas' (FSLN)
fraudulent tactics and its dominance over the Supreme
Electoral Council (CSE) that the outcome of the Atlantic
Coast regional elections will likely favor the Sandinistas.
Robust civil society and international pressure on the CSE to
cease its partisan actions may improve the odds that the
November elections will have a more credible outcome. A
four-way presidential race remains the most likely scenario,
but a unified Liberal alliance, not necessarily under the
PLC, remains a possibility if political stakeholders can
agree on joint primaries independent from Liberal caudillo
Arnoldo Aleman's control. President Bolanos' decision to
endorse Liberal dissident Edua
rdo Montealegre and our continued pressure on Alvarado to
ally with Montealegre could swing the pendulum in his favor.
End Summary.

Bolanos Likely to Complete Term -- But No Carte Blanche
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2. (C) President Bolanos is reasonably certain of completing
his term. Nonetheless, the political machinations of the
Sandinistas (FSLN) and the Liberal Constitutional Party (PLC)
under the clutches of caudillos Daniel Ortega and Arnoldo
Aleman, respectively, continue to hinder Bolanos' ability to
push through important security and economic legislation in
the National Assembly. In retaliation for President Bolanos'
call in his January 18 State of the Union message for a
referendum on the Ortega-Aleman pact-driven constitutional
changes eroding the Executive authority, Ortega launched
crippling and costly nation-wide medical and Managua
transport strikes in January and February. The
transportation strike was temporarily resolved, at the cost
of tacit GON acceptance of a confiscatory tax on oil company
profits, but could resurface (reftel); the medical strike
continues in some areas. While there were economic reasons
for the transport strike, the timing and methods used clearly
indicate that Ortega is trying to milk the stoppage for his
political advantage.


3. (SBU) Nicaragua missed the February 24 deadline to pass
the legislative package of CAFTA-DR, which would have allowed
Nicaraguan entry into force on March 1. The Assembly's next
plenary sessions will be held during the second and third
weeks of March. The Nicaraguan government (GON) and a number
of Assembly lawmakers expect the CAFTA-DR legislative
packages will pass during the second and third weeks of
March, the Assembly's next plenary cycle. The National
Assembly continues to drag its feet on MANPADS destruction,
while the military and Defense Ministry's efforts have thus
far been ambiguous. Ambassador met recently with Armed
Forces Commander General Moises Omar Halleslevens and
impressed upon him that the success, or not, of his upcoming
visit to Washington following the fourth MPC meeting in
April, is tied to progress on MANPADS destruction. In
addition, President Bolanos needs reminding that destroying
all the MANPADS (as per his commitment to President Bush in
2002) could allow financing furth
er military programs and training.


4. (S) President Bolanos has confided that PLC dissident
Eduardo Montealegre is his most appropriate successor, and
that he will endorse him at the "right moment." Firm
encouragement on your part could prompt Bolanos to act.
Although Bolanos realizes that the U.S. will not publicly
endorse a particular candidate, he desires both our "visto
bueno" before he proceeds and our engagement with the private
sector to encourage them to support a Montealegre campaign.
Some financiers, like Carlos Pellas, have contributed to
Montealegre's campaign, but contributions thus far have been
paltry, while we hear that Pellas is lending Montealegre
rival Jose Rizo his helicopter. We can expect Pellas and
others -- most of whom would prefer any Liberal candidate,
even Aleman, over Daniel Ortega -- to continue hedging their
bets and funding all political factions until they witness
"white smoke" from the Presidency and our tacit approval of a
Montealegre candidacy.


5. (S) Your meeting with President Bolanos will enable you
to reiterate our support for his government; thank him for
his government's support in international fora; congratulate
him for supporting CAFTA-DR and urge him to do all he can to
get the Assembly to pass remaining legislation so Nicaragua
can implement CAFTA-DR by April 1; press him to act on his
commitment to destroy all remaining 1,051 MANPADS in the
Nicaraguan Army's inventory; and urge him to decide on and
make known his successor. You can expect President Bolanos
and Foreign Minister Norman Caldera to thank your for yet
another extension of Temporary Protective Status (TPS) for
some 4,500 Nicaraguans residing in the United States.

Media Opportunities
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6. (SBU) You will have two media opportunities during your
visit: a press conference following your meeting with
President Bolanos and an exclusive interview with
right-of-center daily La Prensa. A media "blackout" will be
in place vis a vis political campaigning for the March 5
Atlantic Coast elections (the blackout is in effect starting
five days before the election). While general comments
urging people to express their views at the ballot box are
acceptable, no comments supporting or opposing candidates or
parties are theoretically permitted.

Serious Concerns about CSE Remain
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7. (SBU) After much foot dragging, CSE president Roberto
Rivas extended a written invitation on January 27 to U.S.
Embassy Managua to participate as international observers in
the March regional and November national elections. Rivas,
who reassured Ambassador February 10 that he would allow IFES
to provide technical assistance to the CSE, invited IFES on
February 16 to participate in the national elections.


8. (SBU) After robust pressure by non-FSLN political
parties, civil society, and the international community, CSE
Sandinista magistrates retracted their suppression of
Electoral Law articles 41 and 116 for the Atlantic Coast
elections. Thus, voters may vote in a voting table (JRV)
even if they are not listed there, so long as their cedulas
or supporting documents demonstrate they reside in the area.
Notwithstanding the FSLN's change in heart over articles 41
and 116, their agreement to abide by these articles applies
only to the regional elections for the moment, and how they
will apply these articles remains dubious.


9. (SBU) Also disconcerting was the CSE's February 17
decision to replace absent PLC magistrates with Sandinista
substitutes, a decision upheld by a Sandinista-controlled
constitutional tribunal of the Supreme Court. Non-Danielista
parties are challenging these decisions. Additionally, Herty
Lewites' followers denounced on February 23 what they term a
deliberate manipulation of the South Atlantic Coast
Autonomous Zone's (RAAS) ballot by not including Lewites
candidates on the ballot. (Comment: If all political
parties enjoyed representation on the CSE, this type of snafu
would be highly unlikely. As it stands, it is unclear
whether the error was an act of feigned incompetence to
further a particular political interest, or mere human
error.)

Status of OAS, U.S./CEPPS and Civil Society Participation
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10. (C) USG/Embassy: Our support for free, fair, inclusive
and transparent elections is crucial, but achieving this
objective will be difficult with the current PLC and FSLN
control over the National Assembly, the courts and the
Supreme Electoral Council (CSE). Aleman and Ortega benefit
from the current crisis; it distracts Bolanos and the
international community from focusing on the 2006 elections,
which Aleman and Ortega seek to "fix" for their respective
benefits. Timely international technical assistance and
monitoring are essential to stemming the efforts of the
Sandinistas, and to a lesser degree, the PLC, to fraudulently
manipulate election results.


11. (C) OAS Mission: In mid-January the CSE belatedly issued
invitations for the OAS to observe the March and November
elections. The OAS sent a technical team in January,
followed by a technical-political team led by Gustavo
Fernandez in mid-February. Fernandez concurred with our
assessment that the March Atlantic Coast regional elections

are "lost," but they will serve as an object lesson to press
the Supreme Electoral Council (CSE) to correct it
shortcomings for the November national elections. He pledged
total information sharing with us and will ask Insulza for at
least a pair of additional "notables," so that all the local
pressure is not concentrated on him. OAS consultant Patricio
Gajardo is directing the technical components of the OAS
March elections effort. The team arrived too late to deal
effectively with ongoing voter identification and voter
registry manipulation by the FSLN on the Atlantic Coast.


12. (C) CEPPS/Embassy Atlantic Coast Regional Elections:
Embassy Managua will send 20 people to observe the March 5
Atlantic Coast regional council elections. The USG, through
CEPPS, is also sponsoring larger observation efforts
coordinated by the Institute for Democratic Development
(IPADE),Etica y Transparencia, and the Movimiento por
Nicaragua. IRI and its partners are providing training for
party poll watchers, sponsoring opinion polls, and organizing
a civic education campaign. NDI and IPADE conducted an
audit of the official voting list on the Atlantic Coast,
which revealed serious deficiencies.


13. (SBU) Donors: Donors maintain close cooperation on
election support activities. In the traditional donor
community, there is consensus in support of the democratic
sector winning the election. Although the German embassy
hosts a bi-weekly coordination meeting of election donors,
most missions have not yet defined their contribution. The
Danes are working through electoral NGO groups; Japan is
providing equipment and plans a small observation mission for
the regional elections. Sweden, the Netherlands, and Denmark
are working with UNDP to provide training for political party
candidates; the EU is likely to provide funding now that the
CSE has invited them to observe. The UN has also offered to
provide technical assistance and possibly observers for the
November national election.


14. (C) Movimiento por Nicaragua (MPN): USAID has channeled
through IRI some $400,000 to MpN to help launch election
activities. The MpN's initial focus against the pacto lost
some momentum in October after Bolanos and the FSLN signed
the framework agreement. The MpN has now set new priorities,
including pressing for primaries, monitoring cedula issuance,
reviewing voting registries, lobbying for voting abroad and
observing elections. IRI, working with MpN and Hagamos
Democracia, has introduced the concept of inter-party
political party primaries for the first time in Nicaraguan
history. However, to date, there is no concurrence on the
form and timeline of primaries and they may not occur at all.
Your engagement with MpN will encourage them to continue
efforts to increase public participation in the political
process and clean up government. Urging the MpN to continue
its fine work by focusing on a few objectives and reiterating
our commitment to support the organization according to our
priorities wi
ll reassure them.


15. (C) Meeting with Archbishop Brenes: Unlike his
predecessor Cardinal Miguel Obando y Bravo, Managua
Archbishop Brenes has largely refrained from using his office
to engage in politicking. Instead, Brenes has urged dialogue
and national consensus. Your encouraging him to continue
this constructive, apolitical role would be helpful. You may
clarify with him that our concern over a possible Ortega win
in the elections stems from Ortega's anti-democratic
rhetoric; his long record of complicity in human rights
abuses - including against the Miskito Indians; and, his
probable sexual abuse of his own stepdaughter.

Four-Way Race Remains the Likely Scenario - For Now
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16. (C) A four-way presidential race remains the most likely
scenario, as the rift between the PLC and Montealegre
continues and Lewites refuses to rejoin the Ortega-controlled
FSLN. While many Liberals and other anti-Danielistas concur
that the only certain way to prevent an Ortega victory and
ensure a Liberal presidency is via a united Liberal ticket
(not necessarily under the PLC),getting there is the
problem. So long as Aleman controls the PLC, Montealegre
refuses to ally with the PLC, claiming, with justification,
that while Aleman controls the PLC, Ortega controls Aleman.
The National Assembly and the CSE remain beholden to the
longstanding FSLN-PLC pact; the PLC maintains a false edge in
the former and the FSLN holds a clear upper hand in the
latter. Ultimately, Ortega controls Aleman's freedom and


will continue to do so unless the PLC garners the 47 votes
required for Aleman's amnesty. Thus, not only would a broad
Liberal alliance under Aleman's thumb provide Ortega
ammunition to discredit the
Liberal alliance because of its corrupt leadership, Aleman
could even conceivably permit an Ortega victory in exchange
for his freedom and a sizeable number of Assembly seats.
This arrangement would ensure the continuity of the
Ortega-Aleman pact and sound a death knell for democratic
reform.

Montealegre-Alvarado Alliance Still Possible
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17. (C) Many political analysts believe that the only
possible way around a split Liberal ticket is a
Montealegre-Alvarado candidacy, which could attract a number
of PLC affiliates and possibly persuade Aleman to reduce his
grip on the party. In early February, Alvarado presented
Montealegre his terms for forming an alliance: Alvarado will
run as Montealegre's VP, serve as his campaign manager,
receive a share of the National Assembly seats, hold
primaries to select departmental deputies; and, be
Montealegre's successor. Catching wind of the
Montealegre-Alvarado rapprochement, the PLC offered Alvarado
and Montealegre joint primaries among the presidential
candidates of the three political groups. Alvarado submitted
his counter-offer, which expands the number of voters, moves
the date to late April or early May, and includes
departmental deputies. Montealegre has declined any PLC
primary proposal directed by Arnoldo Aleman.


18. (C) According to IRI country director Gilberto Valdez,
Alvarado's counterproposal is in line with the IRI-MpN
primary offer, and he thinks that if the PLC accepts these
new terms, Montealegre may be willing to participate. While
members of Montealegre's and Alvarado's teams continue
negotiations, Alvarado's incessant flitting away from
Montealegre and flirting with Aleman have caused Montealegre
to doubt his sincerity. Your meeting presents the
opportunity to underscore U.S. support for a unified,
democratic platform. Conveying to Montealegre and Alvarado
our support for the efforts of the "Third Way" to promote
true democracy and rule of law in Nicaragua and recognizing
that Montealegre, with Alvarado, are a ticket representing
these principles, may encourage Montealegre and Alvarado to
finalize their alliance. Suggesting to Alvarado that he
could be an excellent presidential candidate for the 2011
elections would be helpful.

The Herty Factor
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19. (C) Lewites has been effusive in his desire to maintain
cordial, constructive, and cooperative relations with the
United States. He has requested that, if elected, a
high-level U.S. delegation attend his inauguration to
demonstrate that the two governments will be strong allies.
Lewites has also been supportive of CAFTA, with the
observation that small farmers and small business must in
some way be assisted. He also favors MANPADS destruction,
asserting "they are of no good use to anybody." On the other
hand, some Embassy contacts do not trust Lewites' intentions,
noting that members of Lewite's immediate circle are
"orthodox" Sandinistas. Others insist Lewites could
eventually rejoin the Ortega fold; still others claim the bad
blood between them is such that they will never form an
alliance. We believe that for now, encouraging the
Sandinista division and focusing USG criticism on the FSLN
specifically instead of "Sandinistas" as a group is
appropriate.


20. (S) Your meeting with Lewites will allow you to
reiterate that we have no election favorite. Lewites also
needs to know that we support democratic candidates who
desire responsible government and constructive relations with
the United States. Encouraging Lewites to outline his
political platform and querying him on where he stands in
relation to Venezuela would be helpful.

Private Sector Continues Hedging its Bets
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21. (S) Meeting with Nicaraguan Financiers: Some
financiers, like Carlos Pellas, have contributed to
Montealegre's campaign, but their contributions thus far have
been insufficient to truly advantage Montealegre. Pellas,

for example, is also supporting PLC competitor Jose Rizo. In
his heart of hearts, Pellas prefers any Liberal candidate,
even Aleman or his designate, over Daniel Ortega. A few
financiers are also reportedly clandestinely supporting the
FSLN in an effort to "cover the bases" no matter who wins the
election. Your message that supporting the anti-pact
candidates is the only way to ensure a free, prosperous and
democratic Nicaragua could encourage them to redirect their
resources.


22. (C) Meeting with Foro Liberal: The Foro Liberal is a
group of liberal business executives and owners who meet
informally to share political and economic ideas. During
election periods, the Foro facilitates fundraising for
democratic candidates, sponsors debates among candidates, and
funds polls. While the Foro maintains ties with the PLC,
some of its members have broken with the PLC. Your meeting
accords you the chance to reiterate our commitment to helping
Nicaragua hold free, fair, credible, and inclusive elections.
You can also underscore our support for a presidential
candidate and lawmakers who will shed Nicaragua's caudillo
political culture, replace it with honest, democratic
institutions, establish a truly representative balance among
Nicaragua's political powers, and reinforce a productive
bilateral working relationship.

Meet and Greet
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23. (U) Your meeting with the Embassy community will show
USG support for their efforts to ensure Nicaragua holds free,
fair, and transparent elections in 2006. The Mission has 80
American employees, 11 Family Member employees, 310 local
engaged staff (LES),and 280 local guards. In addition to
State and USAID, DAO, Mil Group, DEA, OBO, RLA,
USDA/FAS/APHIS, Peace Corps, and Millennium Challenge Account
offices are present. Construction began on the New Embassy
Compound in February 2005. The new embassy is situated on 13
acres; the former Ambassador ("Casa Grande") and DCM
residences (currently Marine offices) are on the site. The
expected date of completion of the Embassy is around spring

2007. The new USAID complex will be co-located on the land
and completed in mid-2007.
TRIVELLI