NICARAGUA: AMBASSADOR CALLS ON NEW MINISTER OF

C O N F I D E N T I A L MANAGUA 000194

SIPDIS

SIPDIS

WHA/CEN/GSCHIFFER, WHA/ESPC, EB/TPP/BTA, EB/CBA

E.O. 12958: DECL: 01/22/2017
TAGS: ECON EAID EINV NU
SUBJECT: NICARAGUA: AMBASSADOR CALLS ON NEW MINISTER OF
FINANCE


Classified By: AMB Paul Trivelli, Reason: E.O. 12958 1.4 (b) (d)


1. (SBU) Summary. In a January 22 introductory meeting with
the Ambassador, newly minted Minister of Finance and Public
Credit Alberto Jose Guevara Obregon sressed that the clear
intention of the Ortega administration is to maintain
macroeconomic stability. Guevara reported that he is talking
to the IMF, World Bank, Interamerican Development Bank, among
other institutions, about continuing programs. In his view,
an IMF program is particularly important to send the right
signals to international investors and donors. He said that
the government has no plans to expropriate property, close
off investment in sensitive sectors, nor to do anything that
might damage the investment environment. Guevara assured the
Ambassador that his Ministry will continue to work with the
Embassy to resolve property expropriation cases from the
1980s, though it may "take a while to become acquainted with
the cases." He expressed interest in USAID's program with
the Ministry of Family on results-based budgeting, stating
that improving ministry performance is his "number one
priority." Throughout, Guevara reiterated the intention of
the Ortega Administration to fulfill its promise to reduce
poverty in Nicaragua. End Summary.


2. (U) On January 22, the Ambassador paid a courtesy call on
new Minister of Finance and Public Credit Alberto Jose
Guevara Obregon. The meeting was cordial and at the end
staff took a photograph of the two shaking hands. Guevara
commented that President Bush's telephone call on the eve of
Daniel Ortega's inauguration was well-received. He said that
his door is always open to address any topic that the
Ambassador would like to raise. Guevara did not invite any
staff to attend the meeting, and took his own notes. The DCM
and Econoff attended.

U.S. Assistance
--------------


3. (SBU) The Ambassador mentioned several areas where U.S.
technical assistance intersected with the Ministry of
Finance, including U.S. Treasury and USAID-sponsored
technical advisories in the areas of debt management and
taxation. In addition, USAID and nongovernmental
organization ProNicass had worked with the Ministry of Family
on results-based budgeting. This effort had oriented 50% of
the ministry's budget toward achieving ministry objectives,
up from 20%. The Ambassador said that USAID and ProNicass
are willing to work with Guevara to help other ministries
manage their resources better. Guevara took note of the
technical advisories and the ProNicass program, adding that
improving ministry performance is his "number one priority."
Guevara also praised the U.S. Millennium Challenge Account
model, commenting that it is one that Nicaragua should
replicate.

Property Claims
--------------


4. (SBU) The Ambassador stressed the need to resolve property
claims stemming from expropriations that took place in the
1980s. While the number of cases had been reduced from
around 4500 to less than 700, it is still necessary to finish
the job. The Ambassador handed over a list of high profile
cases nearing completion. Guevara assured the Ambassador
that his Ministry will continue to work with the Embassy to
resolve outstanding claims, "though it may take a while to
become acquainted with the cases."

Economic Policy
--------------


5. (SBU) After the events following President Ortega's
inauguration, where Ortega signed a series of political and
economic agreements (still not publicly available) with
Venezuelan President Hugo Chavez, Bolivian President Evo
Morales, Cuban Vice President Jose Ramon Machado Ventura, and
then Iranian President Maumoud Ahmadinejad, the Ambassador
noted that U.S. investors had begun questioning what sort of
economic model the new government plans to pursue. Guevara
stressed that the overriding objective of the Ortega
administration is to reduce poverty. As a poor country,
Nicaragua is open to any investment that would help to
develop the country. In this vein, the government's clear
intention is to maintain macroeconomic stability and a sound
investment climate. Guevara said that he is talking to the
IMF, World Bank, Interamerican Development Bank, among other
institutions, with respect to continuing programs to ensure
macroeconomic stability. In particular, he noted the
importance of maintaining an IMF program as a way of
signaling to investors and donors that the Ortega
administration is not contemplating a break with the past.


6. (SBU) Guevara added that the Ortega government has no
plans to expropriate property (as in the 1980s) nor do
anything that will damage the favorable investment climate
that currently exists. In answer to a question as to whether
the government is thinking about limiting foreign investment
in sensitive sectors, such as energy or coastal property,
Guevara hesitated a moment before saying that "Nicaragua is
not going to shut the door on anyone ( (nor) obstruct
investment in any sector." The Ambassador pointed out that
Nicaragua's weak judicial system and corruption continue to
negatively influence investor perception of the country, and
that these areas need attention. Guevara responded that the
government is working in this direction, but offered no
specifics.

Guevara's Bio
--------------


7. (U) Guevara's official curriculum vitae is not yet
available. However, we understand that he holds two Masters
Degrees from the National University of Nicaragua, one in
Economics and Development and the other in Public Finance.
At one point during his academic career, he received a
scholarship from the Interamerican Development Bank to attend
the Pontifical Catholic University of Chile, where he
completed a course in macroeconomics. More recently, Guevara
worked at the Central Bank, where he concentrated on debt
sustainability, national income accounting, and statistical
programs for the management of information systems.

Comment
--------------


8. (C) We are unsure about Guevara's ability to manage the
Ministry of Finance, as he appears to lack managerial and
political experience. While we are encouraged by his
openness, we see the meeting in terms of what appears to be a
dual communications strategy. By keeping distance and
criticizing the United States in public, the Ortega
Administration retains its revolutionary stature at home and
in the region. By pursuing a moderate economic policy course
and programs with international financial institutions, the
Ortega Administration placates investors and avoids
alienating donors. Viewed in this context, Guevara may
simply have been following orders rather than expressing his
own views. Still, promises and expectations of the
Sandinista faithful, combined with inherent contradictions
and jitters created by the administration's foreign policy
alliances, may make it difficult for Guevara to maintain the
macroeconomic stability and fiscal responsibility he seeks.
TRIVELLI