CHONTALES, NICARAGUA: WHERE CATTLE AND LIBERALS

UNCLAS MANAGUA 000721

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR WHA/CEN

E.O. 12958: N/A
TAGS: ECON EINV ELAB PGOV SOCI NU
SUBJECT: CHONTALES, NICARAGUA: WHERE CATTLE AND LIBERALS
ROAM (FIRST OF TWO)


1. (U) Summary: The Department of Chontales is renowned for
its cattle and Liberal Constitutional Party (PLC) members.
Forty percent of all cows in this cattle nation are raised in
this small region, wedged between Lake Nicaragua to the West
and the Autonomous Southern Atlantic Region (RAAS) to the
East. With high beef prices, easy travel to Managua and
beyond on a good highway, and lots of attention from the last
two presidential administrations, Chontales is relatively
more prosperous than the rest of the country. ECONOFF held
meetings recently in Chontales with civic and political
leaders, as well as cattle ranchers and business owners.
Virtually every political leader was also a cattle rancher
and every rancher/business person was a Liberal or
Conservative. There are very few Sandinistas in this region.
This cable will primarily focus on the economy of Chontales,
while a separate message will specifically address the
political situation. The general economic themes of the
meetings were contentment with the current economy of
Chontales, cautious optimism for the opportunities presented
by DR-CAFTA, concern about high energy prices, and fear that
a Sandinista Party (FSLN) victory in November could wreak
havoc upon the national economy. See Paragraph Seven for a
list of meeting participants. End Summary.


2. (U) All interlocutors agreed that the economy of Chontales
is booming, primarily thanks to historically high beef
prices, which have more than doubled since 2000. According
to the Ministry of Agriculture (MAGFOR),a kilogram of beef
paid an average of US $.83 in 1994, $.90 in 2000 and $1.86 in

2005. These figures are all the more impressive considering
that the exchange rate between the Nicaraguan Cordoba (C$)
and the dollar nearly tripled from 6.72 C$/US$ in 1994 to
12.68 in 2000 to 16.73 in 2005. Dairy prices, however, have
not kept pace. The price of a liter of milk has fluctuated
on a narrow band from US $.277 in 2000 to $.303 in 2002 and
back to $.277 in 2005. Fortunately for the region, a great
deal of the dairy output is used for value added products
such as the famous Chontaleno cheese and ice cream for the
successful Nicaraguan ice cream company, Eskimo. Evidence of
the booming economy in Chontales - both in comparison to the
rest of Nicaragua and in real terms - was evident during
ECONOFF's visit. The cities were clean and had well
maintained infrastructure and were full of bustling, modern
shops. People in the cities were well fed and neatly
dressed. Construction of homes and businesses was a common
sight. Comment: Areas of extreme poverty remain in rural
Chontales. On another recent trip to the region, ECONOFF
observed families living in near feudal conditions on the
ranches of large property holders. End Comment.


3. (SBU) The fact that Chontales is a PLC stronghold has
translated into many public works projects over the last
decade, especially during the Aleman period. The most
expensive project, and one which has paid important financial
dividends, is the highway from El Rama to Managua. This once
long and painful journey now takes just a few hours, and the
highway provides direct access to the Atlantic Ocean via the
river port at El Rama. The road had been mostly unpaved and
its many bridges had been the frequent target of Contra
attacks during the 1980's. Reconstruction of the highway,
undertaken during Aleman's presidency, is a prime example of
how the ex-president mastered the art of practicing retail
politics while lining his own pockets, allegedly via the
granting of bloated contracts to several of the president's
cronies. Participants in one meeting also noted the
different approaches between Aleman and Bolanos in how public
works projects have been handled. They said that under
Aleman, supplicants lined up at the presidency to get
approval so that Aleman could get personal credit for every
project. Under Bolanos, however, money has been devolved to
the municipalities, allowing them to identify their own
priorities and keep the political credit at the local level.
Comment: This is not due solely to Bolanos' reform
mindedness, but also to the National Assembly stripping power
from the presidency to benefit the Aleman-PLC/Ortega-FSLN
pact. Since most municipalities nationally are currently led
by Sandinista mayors, this economic development policy has
resulted in political benefits for the FSLN. End Comment.


4. (U) The consensus in the meetings was that DR-CAFTA offers
a great opportunity for Nicaragua as a whole, and Chontales
in particular. Business, civic, and political leaders are
eager to increase exports to the United States, as well as to
Central America, and are convinced that they will be able to
do so. Nevertheless, participants stated that agricultural
practices in Chontales are not sufficiently modern to ensure
the quality necessary for competition at the international
level. They requested as much U.S. assistance as possible in
order to build capacity. When ECONOFF mentioned several

current programs administered by USAID, USDA, and MCA,
Chonteleno interlocutors were pleased, but poorly informed
about these opportunities. In a presentation last year to
the international donor community, the Chontales Development
Council (CDC) identified several projects such as a milk
production plant, assistance with commercialization, and a
soil rejuvenation program to assist rural subsistence
farmers.


5. (U) Although Chontales is strikingly beautiful, with a
backdrop of mountains and clear rivers to the east and the
shores of Lake Nicaragua to the west, its tourism potential
has yet to be tapped. There are few quality hotels and
limited tourist destinations seeking to attract international
visitors. The CDC recognizes this deficiency and is seeking
to develop Chontales as a center for adventure tourism.
Other CDC priorities include improving the quality of primary
education; providing secondary education for the 70% of rural
children for whom it is currently unavailable; continuing
infrastructure improvements, especially in the delivery of
potable water; upgrading of deteriorating healthcare
facilities; and, supporting programs that assist neglected
and abused children.


6. (SBU) Despite the general spirit of optimism, there is
palpable concern about rising energy prices. Participants
stated that in addition to limiting their own economic
potential, the situation threatens political stability in the
country. Along the same lines, these strong Liberals and
Conservatives (whether they were reform-minded supporters of
PLC breakaway-candidate Eduardo Montealegre or staunch
traditionalists) are truly frightened by the prospects of an
FSLN victory in November. They worry that such an event
would devastate the national economy and that Chontales would
suffer economic reprisals from the new government.


7. (SBU) Meeting Participants - 'Vamos Con Eduardo' Meeting:
Elman Urbina, Municipal President of Juigalpa and PLC
activist; Luis Garcia, businessman and PLC activist; Agusto
Ayala, businessman and PLC activist; Lombardo Madriz,
journalist, city councilman, and chief of the PLC in
Juigalpa; and Juan Carlos Bravo, cattle rancher and PLC
activist. Supreme Electoral Court Meeting: Marcio Gutierrez,
President of the CSE for Chontales and strong supporter of
Aleman and the PLC/FSLN pact. Chontales Association of
Cattlemen Meeting: Nardo Sierra, President and PLC member;
Manuel Fernandez, Treasurer and Conservative Party (PC)
member; Martin Hernandez, PLC member; and Maria Fidelina
Castro, PLC member. Santo Tomas Cattlemens' Cooperative
Meeting: Orlando Bravo, general manager and PC member;
Hilario Vargas, former mayor of Santo Tomas and Vamos Con
Eduardo member; Vincente Sirias, PLC member; Jose Saborio,
PLC member.
TRIVELLI