BUSINESS MAGNATE CARLOS PELLAS CLAIMS MONTEALEGRE

C O N F I D E N T I A L MANAGUA 000970

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN
PLEASE PASS TO USAID FOR AA/LAC

E.O. 12958: DECL: 05/02/2026
TAGS: PGOV PREL KDEM ECON NU
SUBJECT: BUSINESS MAGNATE CARLOS PELLAS CLAIMS MONTEALEGRE
UNLIKELY TO WIN FOUR-WAY RACE


Classified By: AMBASSADOR PAUL TRIVELLI. REASONS 1.4 (B,D).


1. (C) Business magnate Carlos Pellas claims that statistics
from past elections "prove" that Eduardo Montealegre is
unlikely to win a four-way race in November and argues that
Montealegre must thus come to terms with Arnoldo Aleman and
his Liberal Constitutional Party (PLC). Both Pellas and
President Bolanos are working to negotiate an alliance
between the PLC and Montealegre's ALN-PC; all of the specific
that we have seen thus far would require Aleman to step aside
from politics, a highly questionable prospect. Pellas
presented the Embassy with an analysis of various scenarios
that could arise in a four-way presidential race, arguing
that all these scenarios result in continued PLC-FSLN control
of the National Assembly and that there is a real risk of a
Daniel Ortega victory in the first round. However, Pellas'
analysis does not take into account the historical tendency
of Nicaraguan voters to rally around whatever candidate seems
most able to defeat Ortega, nor does he consider that the
best way to prevent an Ortega victory would to marginalize
Aleman immediately in order to make possible a broad Liberal
alliance and avoid a four way race in the first place. END
SUMMARY.


2. (C) At an April 28 breakfast at the Ambassador's
residence with President Bolanos and business magnate Carlos
Pellas, Pellas presented a political analysis of past voter
behavior that he claimed "proves" that an Eduardo Montealegre
victory in a four way race is very unlikely. Pellas also
suggested that under any scenario, "pacto" forces will retain
control of the National Assembly. Pellas reported that the
FSLN is counting on four pillars for its victory: Cardinal
Miguel Obando y Bravo, Hugo Chavez, a divided right, and a
vice presidential candidacy by liberal maverick/loose cannon
Jaime Morales (to calm the private sector).


3. (C) Regarding current efforts to unite the center-right,
Pellas reported that discussions are focused on Montealegre's
taking the PLC vice presidential slot in exchange for 15-20
deputies, with each side enjoying a limited number of slots
they can veto from the other's list, to ensure that the most
odious PLC Assembly candidates do not run. PLC admitted that
this deal will only work if Aleman agrees to step aside from
politics. Pellas stressed that "big capital" has made it
clear in private that neither the PLC nor the ALN-PC will
receive funds unless a deal is struck.


4. (C) President Bolanos told the Ambassador that he will
travel to El Salvador the first week in May to talk to
President Saca and ex-President Calderon Sol regarding the
Nicaraguan political mix. Bolanos believes that the best
strategy is to publicly merge Montealegre's ALN-PC, the
Alliance for the Republic (APRE),the Resistance Party (PRN)
and Jose Antonio Alvarado, and then go to Rizo, telling him
he must make a deal or face sure defeat in November. Again,
Aleman would have to step aside. Both Bolanos and Pellas are
convinced that a deal must be struck by May 11, the last day
to register alliances with the CSE. Neither offered any
sure-fire way of forcing Aleman to step down; both hinted
they could live with an Aleman amnesty following the
elections and both stressed that the Assembly races are
almost more important than the Presidency given the dreaded
constitutional reforms set to go into effect 10 days after
the inauguration in January.

PELLAS' ANALYSIS
- - - - - - - - -


5. (C) As a follow up to the meeting on the morning of April
28, late that afternoon Pellas had a copy of his electoral
analysis of the possible outcomes of a four way race
delivered to the Embassy. Based on data from the 2001
national elections and the 2004 municipal elections, along
with a handful of assumptions, Pellas sets out three
scenarios: Best-Case ALN-PC, Best-Case PLC, and Best-Case
FSLN. All three scenarios assume that 2.4 million ballots
will be cast on election day (compared to 2.2 million in 2001
and 1.665 million in 2004). Pellas scenarios follow.


6. (C) BEST-CASE ALN-PC:

-The PLC holds its 2004 municipal vote (600,000) but gains
nothing.
-The FSLN holds its 2004 municipal vote (728,000) but gains
nothing.
E

-Herty Lewites takes 100,000 votes from the 2001 Sandinista
vote and receives 200,000 independent votes.
-The ALN-PC takes 648,000 votes.
-Minor parties take 100,000 votes.

This scenario leads to a presidential runoff between Ortega
and Montealegre (which Montealegre would certainly win),but
leaves the PLC and FSLN with a majority (56%) in the National
Assembly.


7. (C) BEST-CASE PLC:

-The PLC only loses 300,000 votes from 2001, leaving it with
900,000.
-The FSLN receives the same number of votes as in 2001
(900,000).
-Herty Lewites takes 200,000 independent votes.
-Minor parties receive 100,000 votes.
-The ALN-PC takes the leftovers: 300,000 votes.

In this scenario, Rizo and Ortega face a runoff, and the PLC
and FSLN control 75% of the new National Assembly. Although
Pellas does not analyze the results of a runoff between Rizo
and Ortega, polls have shown that Rizo is the only major
candidate that Ortega could possibly beat in a head-to-head
contest.


8. (C) BEST-CASE FSLN:

-The FSLN receives the same number of votes as in 2001
(900,000).
-Herty Lewites takes 200,000 independent votes.
-The PLC holds its 2004 municipal vote (600,000) but gains
nothing.
-Minor parties take 100,000 votes.
-The ALN-PC takes the leftovers: 576,000 votes.

In this scenario, the ALN-PC and PLC divide the Liberal vote
almost evenly, leaving Ortega and the FSLN far out in front
with 37.5% of the vote--enough for Ortega to win the
presidency in the first round.

COMMENT
- - - -


9. (C) It is the third scenario (Best-Case FSLN) that alarms
Pellas and leads him to conclude that a four way race is
unacceptable. However, Pellas does not factor in the
tendency of Nicaraguan non-FSLN voters to turn to whatever
candidate seems most likely to beat Ortega as an election
nears. It is highly likely that as election day approaches,
non-Sandinista voters will move en masse towards either the
PLC or the ALN-PC, depending on which appears to be the most
viable force. Pellas also does not factor in that the best
way to ensure an FSLN defeat would be to sideline Arnoldo
Aleman and his corrupt clique in the PLC in order to make
possible a viable liberal alliance and avoid a four-way race.
TRIVELLI