ORTEGA,S FIRST 100 DAYS -- AUTOCRATIC TRENDS DRAW

C O N F I D E N T I A L SECTION 01 OF 05 MANAGUA 001067 SIPDIS SIPDIS WHA/CEN, DRL, NEA, USAID FOR AA/LAC E.O. 12958: DECL: 04/25/2017 TAGS: PGOV PHUM PINR PREL KDEM NU SNAR IR SUBJECT: ORTEGA,S FIRST 100 DAYS -- AUTOCRATIC TRENDS DRAW CONCERN REF: A. MANAGUA 1028 ¶B. MANAGUA 0583 Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). ¶1. (C) Summary: In its first 100 days, President Ortega's government was characterized by a blur between party and state; autocracy and secrecy; dependency on Chavez; disregard for law and human rights; the dismissal of thousands of government employees; and, a pointed effort to financially "starve" independent media and threaten certain foreign business interests. The administration's most resounding and uncontested success was its refusal to back the Japanese on whaling, while the downtick in electrical blackouts came at a steep price: political and economic bondage to Chavez. The announcement of free health and education looked good on paper, but these sectors lack the required infrastructure, qualified personnel, and material resources to provide adequate services. The National Police's flawed interception of a Mexican drug cartel was partly due to its failure to coordinate with the DEA. We also note a downturn in cooperation from airport, immigration, and customs authorities in terms of access and information sharing. ¶2. (C) Ortega exploited every available media opportunity to laud Chavez and their common allies Cuba and Iran, while he criticized the United States for being the root cause of narcotrafficking, failing to compensate Nicaragua for mining its harbors in the 1980s, violating human rights in Iraq and Guantanamo, and releasing Posada Cariles on bond. Countries on good terms with the United States also came under fire, even Brazil for having the "moxy" to cooperate on ethanol. The rudderless opposition was increasingly vocal, while Nicaragua's frightened business elite curried Ortega's favor and avoided confrontation. Signs emerged that left and right-leaning civil society and political leaders are starting to coalesce to counter Ortega's authoritarian tendencies and apparent ambitions to turn Nicaragua into an autocratic, populist regime. Sandinista dissidents tended to be the most vigorous critics of the government, while to Ortega's delight, Liberals spent most of their time bickering. The opposition faces a foe flush with Chavez petrodollars, thus far free from the scrutiny of the National Assembly -- the only partially independent government institution remaining. End Summary. Whales the Most Solid Beneficiaries - - - - - - - - - - - - - - - - - - ¶3. (C) During its first 100 days, Ortega's government was characterized by the blur between party and state; a close association with the Chavez axis; autocracy and secrecy; disregard for rule of law and human rights; the dismissal of thousands of government employees; and, a pointed effort to financially "starve" independent media and threaten certain foreign (and domestic) business interests. Likely, Ortega's most resounding and uncontested success was his refusal to back the Japanese on whaling. The downtick in electrical blackouts was welcome, but came at a price: the Venezuelan diesel burning gensets produce some of the country's most costly power, whether or not Nicaragua has to pay for them. While the government decided to negotiate a new IMF deal, Ortega also declared that Nicaragua will be "IMF free" within five years through a home grown, Chavez-financed "Zero Poverty" initiative, whose centerpiece is a project that provides chicks and a pregnant cow and pig to poor families. ¶4. (C) The new government's decision to reduce senior-level government official salaries and offer free health and education for all citizens sounded good on paper, but thus far has produced dubious results. Cynical Nicaraguans claim that Ortega's cuts in the salaries of senior officials will also force out high-level civil servants, who do not support the Sandinista National Liberation Front (FSLN). Those who remain will ultimately receive bonuses or supplemental FSLN salaries behind the scenes. (Note: This was a common practice during previous governments.) Skeptics also note that inadequate infrastructure, insufficient personnel, and a scarcity of a number of basic medicines make Ortega's promises for free education and health care ring hollow. ¶5. (C) The spate of education and health worker protests for MANAGUA 00001067 002 OF 005 higher wages and the Ortega administration's heavy-handed response in some cases, also drew well-merited fire from human rights organizations. In its 100-day report, the Nicaraguan Human Rights Center (CENDIH) -- a left-leaning, traditionally pro-Sandinista human rights NGO -- lambasted Ortega for allowing an armed mob led by a Cuban-Nicaraguan to raid one of the secondary schools and physically remove its besieged director while the National Police looked on. Similarly, the inaction of the Ortega government in responding to the right-leaning Permanent Human Rights Commission's (CPDH) repeated pleas for protection after a number of its leaders received death threats caused CENIDH to question the new government and prompted it to file an appeal on behalf of the CPDH before the OAS Inter-American Human Rights Commission (IAHRC). Ortega's insistence on running the Presidency from FSLN headquarters, which is also his private residence, drew considerable fire as well. ¶6. (C) Opposition media continued to feel the heat. As government-sponsored advertising dried up, some media outlets were forced to lay off employees, including journalists. In President Ortega's latest public appearance the evening of April 23, he launched a five-minute tirade against "the other media, we know who they are, who are guilty of censorship and attempting to limit freedom of expression." He praised all Nicaraguan television stations for covering the event, except for one, Channel 2, which he did not mention by name, but blasted for refusing to broadcast unedited versions of Ortega's increasingly frequent and long diatribes. Daniel Slips Some in the Polls - - - - - - - - - - - - - - - - ¶7. (C) According to an M and R poll released on April 24 (septel),President Ortega's popularity slipped somewhat in comparison to the results of a February Cid Gallup poll. In the April poll, 42.5% of the respondents opined that that Ortega is leading the country in the right direction, down from 57% in February. While 27.9% believe the president's performance is good to very good, 63.7% believe he is doing a fair to terrible job. First Lady Rosario Murillo received lower marks: only 22.7% believed her performance is good-very good. Over 64% of the respondents either do not support or have their doubts about the government. Over 50% of the April respondents questioned Ortega's authoritarianism, including 26.6% of the Sandinista respondents. About 78% rejected Ortega's substitution of the state seal with a psychedelic party-based emblem, 77.8% opposed presidential reelection, 73.3% disapproved of Cardinal Obando's participation in the Ortega government, and 70% think Ortega has not delivered on his campaign promise to reduce unemployment. Economic Picture, Business Climate - - - - - - - - - - - - - - - - - - - ¶8. (C) As promised, Ortega has made few changes to fiscal and monetary policy since taking office, and the government, of its own volition, is negotiating a new program with the IMF. By most accounts, consumer demand has remained strong, tax receipts are up, and people continue to deposit money into their bank accounts. Large investments announced before the elections, most noticeably ITG/Cone Denim's $100 million textile plant, are going forward. Exports continue to grow in number and volume as the result of CAFTA and Central American economic integration. Ortega's presence is felt on his "Zero Hunger" program (which has yet to take shape), "free education and health care," and forging cooperative agreements and off-budget financing with "new friends." (Note: Free and universal education and health care systems have been in place in Nicaragua for years. The difference now is that the Ortega government has eliminated the system of supplemental payments for school supplies, medicines, etc.). ¶9. (C) This otherwise bright picture contrasts with the consistent drum beat of Ortega's political message that liberal economic policies have not worked and that the role of government must be enhanced. Ortega compares the fraternal, socialist nature of his relations with Venezuela, Cuba, Bolivia, and Iran with the self-interested, capitalistic nature of the United States. This has been MANAGUA 00001067 003 OF 005 coupled with an agency-by-agency review of the activities of the previous administration to drum up accusations of corruption and discredit "neoliberalism." Highly educated technocrats who do not support the FSLN have been forced out of key positions in economic ministries and replaced by party hacks. Major government contracts with the private sector have come under review, especially foreign companies in the energy sector, with frequent revelations to the press that one or the other contract is null and void. La Prensa recently reported on an internal government document proposing that all public services in which the private sector participates be "renationalized". ¶10. (C) The result has been that investors, both domestic and foreign, have begun to re-evaluate their presence in Nicaragua. Ortega's political discourse and embrace of self-declared enemies of the United States is unsettling. Legal challenges to long-standing government contracts raise questions about the motivation of government, the rule of law, and the sanctity of contracts. While foreign investors with ongoing concerns continue to do business, they have started to consider contingencies. Others who once contemplated Nicaragua have put their investment plans on hold. The perception of rising political risk is affecting business decisions. (Comment: Three different Nicaraguan investors have told us that they have been shifting their holdings and assets outside of the country, mostly to Costa Rica and the United States.) Venezuela, Cuba, and Iran Can Do No Wrong - - - - - - - - - - - - - - - - - - - - - ¶11. (C) Ortega consolidated his alliance with Venezuela, Cuba, and Iran. While the Venezuela and Cuba connection drew some criticism, of even more concern was Ortega's association with Iran following the Iranian President's visit to Managua on the heels of Ortega's inauguration in January. Then during the Iranian Foreign Minister's "surprise" visit to Managua on April 22, Ortega publicly endorsed Iran's efforts to enrich uranium and rejected the UN-imposed sanctions. (Note: To date, the National Assembly has not ratified the GON's agreement with the Government of Iran. Nicaraguan Liberal Alliance (ALN),Sandinista Renovation Movement (MRS), and many Liberal Constitutional Party (PLC) National Assembly deputies oppose the agreement, in large part because of the clause that stipulates mutual support in international fora.) "Gringo Bashing" is Back . . . - - - - - - - - - - - - - - - - ¶12. (C) President Ortega exploited every available media opportunity to laud Chavez and their common allies Cuba and Iran, while he criticized the United States for being the root cause of narcotrafficking and much of the region's other criminal activities, failing to compensate Nicaragua for mining its harbors in the 1980s, violating human rights in Iraq and Guantanamo, and releasing Posada Cariles on bond. Countries on good terms with the United States -- including Costa Rica, Honduras, and Colombia also came under fire, and to a lesser degree, Mexico and Brazil -- the latter for its "moxy" in cooperating with the United States on ethanol. .. . And Bilateral Cooperation Dips - - - - - - - - - - - - - - - - - ¶13. (C) The Nicaraguan National Police's (NNP) recent interception of a Mexican drug cartel (septel) at first drew rave reviews, but then the facts came to light. Instead of cooperating in operational planning as it had in the past, this time, the NNP failed to share critical information before mounting the operation. Their lack of cooperation and information sharing resulted in the arrest of insignificant, low-level "laborers and enforcers" for the Mexican trafficking organization. Due to the flawed police intervention and lack of evidence, these subjects will probably be released shortly. The preemptive arrests of these individuals could jeopardize current investigations and future operations throughout Central America. Similarly, cooperation from airport, immigration, and customs authorities also declined, specifically increasingly limited access to facilities and information, including eliminating our access to the immigration data base. Since Ortega took MANAGUA 00001067 004 OF 005 office on January 10, there have also been no resolutions of property claims filed by U.S. citizens. Divide and Conquer - - - - - - - - - - ¶14. (C) One of President Ortega's overarching objectives was to keep the opposition divided, and encourage new fissures within the church and private sector. As part of these efforts, Ortega revitalized his political power sharing pact with PLC leader/convicted money launderer Arnold Aleman as a means to deter PLC unity with the ALN. In March, the Nicaraguan government released Aleman on country-wide "house arrest" and PLC and FSLN caucuses voted jointly for a slate of judicial appointments, all along party lines. In April, "pact" caucuses made revisions to money laundering definitions and sentence terms that, if passed as is, could allow Aleman to walk free by December. Ortega's insistence that Archbishop Obando y Bravo head a new "peace and reconciliation" council caused the Vatican and local church authorities to scramble -- clearly pitting Archbishop Leopoldo Brenes against Obando y Bravo. Similarly, Ortega attempted to drive a wedge between economic heavy hitters like Carols Pellas and the owners of medium enterprises by courting the former and attacking the latter. Opposition - - - - - - ¶15. (C) Despite the growing skepticism, even alarm, political opposition leadership remained largely rudderless, while the once-fearsome business class curried Ortega's favor and avoided confrontation. Sandinista dissidents tended to be the most vigorous critics of the government, while to Ortega's delight, Liberals spent most of their time bickering amongst themselves. Nonetheless, there were some encouraging signs that left and right-leaning civil society and political leaders are starting to coalesce to defend Nicaragua from Ortega's apparent ambitions to turn the country into an autocratic, family-run regime under Venezuelan President Chavez's sphere of influence (Ref. A). On the legal front, ALN, MRS, and PLC caucuses drafted a joint bill that would establish the Taiwanese-donated "Mamon" building as the official Office of the Presidency, the site of the Bolanos presidency. ALN, MRS, and PLC caucuses also inserted a clause in the 2007 national budget reiterating the requirement that government to government transactions be included in the budget and subject to Assembly scrutiny. Discord and Discontent within Ortega Ranks - - - - - - - - - -- - - - - - - - - - - - ¶16. (C) While Ortega attempted to sow discord among his rivals, his own party unity has also come under strain. First Lady Rosario Murillo appeared to be in the middle of much of the discord and discontent. Nicho Marenco, the Mayor of Managua was told to mind his own business after he publicly suggested that the Presidency operate in installations separate from FSLN headquarters and most recently indicated that he might not run for the presidency in 2011 because he feared for his life. During the period, three ministers, all female, were summarily fired, while Ortega insisted on defending the most controversial figure, Education Minister Miguel de Castilla, despite education sector work stoppages and calls for his resignation. The Minister of Culture was fired after questioning Ortega's gift to Chavez of valuable poems written by famed Nicaraguan poet Ruben Dario. The Minister of Family's dismissal appears to be linked to a personal spat between economic advisor Bayardo Arce and Murillo. About Ortega's Health - - - - - - - - - - - ¶17. (C) Rumors continued to percolate regarding President Ortega's health. According to stepdaughter Zoilamerica Narvaez, for years now Ortega has traveled to Cuba for blood cleansing treatments to treat a rare cholesterol problem. CENIDH's Vilma Nunez commented that as Ortega ages, these ozone blood cleansing procedures must be administered more frequently and are less effective. Other contacts claim Ortega suffers from a form of lymphoma or leukemia. Heart MANAGUA 00001067 005 OF 005 trouble and high blood pressure round out Ortega's reported health problems. Comment - - - - ¶18. (C) The opposition confronts a power-hungry foe flush with Chavez petrodollars, thus far free from the scrutiny of the National Assembly -- the only partially independent branch of government remaining. If the Ortega administration replaces private Albanic with state-owned Petronic to run its oil operations, then by law these revenues must be included in the national budget and the National Assembly is required to monitor the agreement. The growing rejection of Ortega's abrasive rhetoric may eventually prompt him to tone down his public discourse. Nonetheless, we expect Ortega's natural belligerent instincts towards the United States will continue to surface and Chavez will continue to pressure him to confront us. TRIVELLI