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2007-01-19 21:19:00
Embassy Managua
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DE RUEHMU #0155/01 0192119
P 192119Z JAN 07
						C O N F I D E N T I A L SECTION 01 OF 04 MANAGUA 000155 




E.O. 12958: DECL: 01/19/2016



C. 2006 MANAGUA 2059

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

1. (C) Summary: Sergio Ramirez, a renowned author and Vice
President during the 1980s Sandinista National Liberation
Front (FSLN) era who is estranged from the FSLN, paints a
discouraging map of the course the new Ortega government has
set over the past week. He recently warned the Ambassador
that President Ortega is bent on a course to transform
Nicaragua's democratic system to mirror Venezuela's
authoritarian regime. He believes that most of the Ortega
government's ministries will serve as mere "shells" and
exercise little authority, while a shadow government
controlled directly by Ortega and his inner circle will call
the shots via the tutelage and funding of the Chavez regime.
End Summary.

Ortega Incapable of Governing, Chooses Loyalty over
Capability -- with Some Exceptions
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2. (C) On January 16, Sergio Ramirez, a renowned author and
Vice President during the 1980s Sandinista era, provided
Ambassador, DCM, and PolCouns a discouraging prognosis of the
course the new Ortega government has set over the past week.
Ramirez -- who has long since broken with Daniel Ortega and
who first endorsed the Sandinista Renovation Movement (MRS)
presidential candidate and closer to election day called for
Nicaraguans to rally around Nicaraguan Liberal Alliance
candidate Eduardo Montealegre - - asserted that President
Ortega is "incapable of running a government." He coincided
with the Ambassador's description of typical Sandinista
traits: informality, improvisation, disorganization,
tardiness, and a strong bent for secretiveness.

3. (C) Ramirez remarked that most of Ortega's cabinet picks
are lackluster: Central Bank President Antenor Rosales is a
"fifth-rate" official, new Minister of Environment Amanda
Lorio is Ortega spouse Rosario's personal foot masseuse, and
Minister of Health Maritza Quant's main qualification is her
"handling" of fellow Sandinista union leader/National
Assembly deputy Gustavo Porras' medical clinics, claimed
Ramirez. Ramirez noted that one encouraging exception in
Ortega's choices is Arturo Cruz, Jr., who will represent the
GON in Washington. According to Ramirez, shortly after his
election, Daniel Ortega consulted with President Carter
regarding a suitable choice. Carter raised the matter with
some members of the Carter Center's "Friends of the
Democratic Charter," including Ramirez and Antonio Lacayo.
The consensus was that Cruz, the "man for all seasons," would
be an excellent choice. (Note: This version of Cruz's
selection has been confirmed to us by Cruz and others as
well.) At this juncture, Ortega appeared to seek a

pluralistic cabinet that would promote unity and
reconciliation as he had promised during his campaign, but
events over the past week suggest Ortega is now taking
another course of action, remarked Ramirez.

Red Flags: Efforts to Control Police and Military
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4. (C) Ramirez concurred with the Ambassador that President
Ortega's recent attempts to secure direct control over the
military and police and emasculate the powers of the Defense
and Government Ministries are disconcerting. Ortega's
vigorous efforts to consolidate his power through drastic
changes in Nicaraguan legislation (Laws 290 and 228) present
a stark contrast to his apparent delays and bumbling in
standing up his cabinet, remarked Ramirez, who added that
Ortega appears to be concurrently expanding the central
government apparatus, while removing a number of government
entities from ministries and placing them under his direct
control through new "councils" that will report to Ortega and
oversee the ministries. Ramirez warned that Ortega intends
to directly oversee defense, security, and foreign affairs
interests; the Ministers of Defense, Government, and Foreign
Affairs will serve as mere placeholders. He concurred with
reports we have received from other interlocutors that Lenin
Cerna - "the fixer" - - will play an "inevitable" role in the

MANAGUA 00000155 002 OF 004

Ortega government, even though Rosario Murillo clashes with

Rosario Reigns Supreme
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5. (C) Continuing on the subject of Rosario, Ramirez noted a
shift in the Ortega-Rosario relationship, citing the fact
that she spoke before her husband at Ortega's popular
inaugural event held at the Plaza La Fe. This breach of
protocol was remarkable and signals her growing influence,
opined Ramirez. (Comment: Rosario's sway over Ortega is
evident, both in public and private venues. Ortega's
reported health problems and the information Rosario holds
over him on his reported pedophilic inclination may explain
her dominance.) Ramirez predicted that Rosario will command
considerable influence through her position as
"communications director."

Chavez Calls the Shots
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6. (C) For Ramirez, Venezuelan President Hugo Chavez "calls
the shots" in the new Ortega government, remarking that
Iranian President Ahmadinejad's recent visit to Managua was
likely hosted by the new GON on Chavez' "instructions." As
for ALBA, Chavez' counteroffer to CAFTA, nobody has seen the
document and it will require a "careful peeling away the
leaves of this ALBA 'cabbage' to get to the heart of it," he
said. (Note: We have asked Foreign Minister Samuel Santos
to provide a copy of the document.)

7. (C) Ramirez warned that while most Nicaraguans are
focusing on Venezuelan President Hugo Chavez' many offers of
assistance to their country, they do not realize that sudden
cash inflows could spur a 2%-3% inflation spike, a phenomenon
that in turn could create panic, as many Nicaraguans and
their trade partners would likely fear a return to the triple
digit inflation of the 1980s.

8. (C) Ramirez concurred with the Ambassador that Chavez'
"philanthropic" treatment of Nicaragua is clouded by the fact
that, while Chavez has offered Ortega seemingly attractive
loan terms to purchase Venezuelan oil, he is also lobbying to
raise world oil prices. High oil prices especially hurt the
world's poor, the very people Chavez claims he champions. On
the other hand, Chavez feels pressed to maintain high world
oil prices or risk losing his "revolutionary project," opined
Ramirez. As for building a refinery in Nicaragua and
possibly a trans-coastal pipeline, Ramirez predicted that
Chavez will use the refinery's excess production to help
supply China's growing energy needs.

The Decline of a Sandinista Alternative
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9. (C) Ramirez termed the Sandinista Renovation Movement's
(MRS) decline "an unfortunate turn of events,' citing the
recent expulsion of MRS National Assembly Deputy Juan Ramon
Jimenez from the party after Jimenez reportedly colluded with
rival FSLN and PLC parties to gain a seat in the Assembly's
Board of Directors (Junta Directiva) behind the backs of his
party's formal negotiations to select another MRS lawmaker.
Ramirez, who was surprised by Jimenez' apparent betrayal,
commented that Jimenez is a strong, capable, and respected
leader in Carazo department. He conjectured that the FSLN
may have offered to help Jimenez obtain medical treatment for
his wife who is seriously ill with cancer. (Note: Political
parties need at least four National Assembly seats to form a
caucus and receive the corresponding administrative

10. (C) Comment: On the evening of January 16, MRS caucus
leader Monica Baltodano told the press that, while Fernandez
may have been expelled from the MRS, he remains in the MRS
National Assembly caucus. Jimenez has previously publicly
asserted he wishes to remain within the party, but on January
17 he indicated his plans to be "independent" instead. The
FSLN is renowned for its ability to target weak political
opponents and buy or blackmail them to the point that they
bend to the FSLN's wishes. Salvador Talavera's desertion
(Reftel) from the ALN to the Sandinista camp is an example of
this tactic. End Comment.

MANAGUA 00000155 003 OF 004

Keeping the Opposition off Balance
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11. (C) In addition to the MRS crisis, the continuing spat
between the Liberal Constitutional Party (PLC) and the
Nicaraguan Liberal Alliance (ALN) advantages the Ortega
regime, opined Ramirez. The FSLN is taking advantage of the
opposition's disarray to bombard the National Assembly with
alarming proposed revisions to Laws 290 and 228. If
promulgated, these changes would further consolidate the
FSLN's power by allowing Ortega to directly control the Armed
Forces and the National Police, as well as a number of
socially-oriented state entities, warned Ramirez.

Low Regard for Nica Private Sector
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12. (C) In response to the Ambassador's query regarding the
possible role Nicaragua's private sector could take in
ensuring Ortega does not stray off the democratic path,
Ramirez offered mostly disdain for what he called "a bunch of
rent-seeking individuals," who place their narrow personal
business interests above anything else. He contrasted
Nicaragua's politically "shortsighted" private sector with
the its more mature counterparts in other Central American
countries, especially El Salvador, where the private sector
rallied around one candidate (Saca) and provided him the
financial backing he needed to win. Ramirez also warned that
the short-sighted Nicaraguan private sector may be tempted in
the near future to support Ortega's reasonable economic
policies in exchange for turning a blind eye towards creeping

Holding Ortega's Feet to the Fire on Democracy
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13. (C) Concurring with the Ambassador that Ortega may not
be content with merely assuming the leadership of the new
government, but instead, attempt to transform the democratic
system into an authoritarian regime, Ramirez noted the
important role of international donors, who must hold Ortega
accountable to his campaign promises that he would govern
democratically. It is not enough for the Ortega government
to improve economic indicators and adhere to IMF standards.
For example, if Ortega begins to erode basic freedoms and
institutions, or restricts the media, donors should tie their
assistance to the GON's remedying these behaviors.

14. (C) Ramirez outlined three poles of influence that can
help check Chavez' influence on Ortega: the EU, Latin
American democratic left-leaning countries, and other Central
American countries. As major donors, the EU and a number of
member countries should tie their assistance to the GON's
continuation along a democratic path, while the leftist
governments of Brazil, Chile, Uruguay, and Argentina could
help offer Ortega an alternative to the Chavez'
populist-authoritarian model. Similarly, as neighbors, the
other Central American countries can "corral" Ortega within a
democratic context and regional instruments such as CAFTA and
SIECA. Ramirez cited Honduras President Zelaya and
Panamanian President Torrijos as leaders who "are on the good
side of Ortega," and can influence him, while Ortega
considers Saca his adversary, Guatemalan President Berger is
"on his way out," and Costa Rican President Arias suffers
longstanding personal issues with Ortega.

U.S. Approach on the Mark, Vatican off Base
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15. (C) Ramirez lauded the USG's approach towards President
Ortega thus far, terming President Bush's call to Ortega days
before the inauguration an "excellent move." He suggested
that an Ortega visit to Washington "sooner rather than later"
would also be effective. Ramirez criticized the Vatican's
passive stance vis a vis Ortega confident Cardenal Obando y
Bravo, decrying Obando's unabashed ingratiation before
President Chavez, including seeing him off at the airport.
He added that many Nicaraguans were insulted by the hypocrisy
of the Cardinal's inaugural prayer to combat corruption,
while one of Ortega's "guests of honor" -- Liberal
Constitutional Party (PLC) caudillo/convicted money launder
Arnoldo Aleman -- looked on.

MANAGUA 00000155 004 OF 004

Municipals Elections - or Bust
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16. (C) Ramirez warned that the FSLN-PLC pact will thrive
under the Ortega government; pact leaders Ortega and Aleman
will pre-arrange the 2008 municipal election results to favor
their candidates, as they did in the 2005 national elections.
Thanks to Supreme Electoral Council President Roberto Rivas,
the FSLN and PLC probably stole four to five Assembly seats
from the ALN and probably two from the MRS, calculated

Cuban Scenarios
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17. (C) Touching on Cuban leader Fidel Castro's apparent
imminent death, the Ambassador outlined three possible
scenarios: Raul Castro will remain in power and maintain the
party line; Raul Castro will remain at the helm, but as a
pragmatist, he will gradually open the economy and implement
other modest reforms; or, Cuba will experience a
transformative change of government in response to popular
cries for democracy. Ramirez predicted that Raul Castro and
a number of fellow Army cronies will likely remain in power,
but because of their pragmatism and business interests, they
will be inclined to take steps to open the Cuban economy.

- - - -

18. (C) Ramirez' assessment of the current political
dynamics tracks with the views of a number of other
interlocutors, including third country ambassadors resident
in Managua (reftels). Since our meeting with Ramirez,
pressure from opposition parties, the media, civil society,
and the diplomatic community thankfully prompted the FSLN to
"reconsider" some of its proposed modifications to Laws 290
and 228. Under these latest modifications, the supervision
of the Police will remain under the Ministry of Government.
However, the FSLN has not retracted the revision mandating
the formation of "advisory councils" reporting directly to
the President and "guiding" ministerial operations, as well
as the establishment of popular community councils that will
"orient" the National Assembly committees and inform the
national councils. How Nicaragua will pay for and organize
these new councils is unclear, but if the Assembly accords
Ortega the authority to create them, he will be well on his
way towards establishing a parallel government network, which
would facilitate his apparent efforts to transform
Nicaragua's political model to one more to his liking -- and