IRANIAN ASSITANCE TO NICARAGUA

UNCLAS SECTION 01 OF 04 MANAGUA 001987

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, AND EEB
TREASURY FOR SARA GRAY
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR

E.O. 12958: N/A
TAGS: EAID PREL ECON PGOV CVIS NU IR
SUBJECT: IRANIAN ASSITANCE TO NICARAGUA

REF: A) MANAGUA 914


1. (SBU) Summary: From July 31 to August 5, an Iranian technical
delegation headed by Iranian Deputy Minister of Energy Hamid
Chitchian visited Nicaragua to follow-up on assistance promises made
by President Mahmoud Ahmadinejad. The two government will meet
again in November in the first meeting of the "Nicaraguan-Iranian
High-Level Mixed Commission." The agreements from this visit
covered Iranian assistance in the areas of energy and mines,
agriculture and forestry, health, ports, urban and rural housing,
water and sanitation, fisheries, small- and medium-sized industry,
and foreign relations. While some concrete projects in housing and
agriculture emerged from this visit, there was little specificity on
overall size (funding and scale) of the assistance effort. The
assistance which would have the most significant effect on
Nicaragua's development - ports, hydroelectric power and industry -
is limited to feasibility studies and vague promises. End Summary.

The Iranians Who Came
--------------

2. (U) From July 31 to August 5, an Iranian technical delegation
visited Nicaragua to follow-up on agreements signed during the
January visit to Nicaragua of Iranian President Mahmoud Ahmadinejad
(Ref A) and Ortega's June visit to Iran. The Iranian team, which
visited at least seven cities during its stay, was headed by Iranian
Deputy Minister of Energy Hamid Chitchian and included 20 additional
representatives from the Iranian public and private sectors (For
full list see paragraph 15). Together with counterparts from
Nicaragua the Iranian delegation was divided into work teams
focusing on nine areas: energy and mines, agriculture and forestry,
health, ports, urban and rural housing, water and sanitation,
fisheries, small- and medium-sized industry, and foreign relations.
The two government teams will meet again in November 2007 for the
first meeting of the "Nicaraguan-Iranian High-Level Mixed
Commission," which will formalize the remaining details on the
Iranian assistance package so the projects can be launched
immediately. Below we lay out the project areas that will form the
basis for the discussion in November. The project outlines were
signed on August 4 by Chitchian and Nicaraguan Vice Minister of
Foreign Cooperation Valdrack Jaentschke.

--------------
Future Areas of Cooperation
--------------

Energy and Mines
--------------

3. (U) Energy and Mining: The Nicaraguan delegation presented six
potential hydroelectric projects to the Iranians, all located near
Rio Grande in Matagalpa and Rio Escondido in the Atlantic coast.
The projects together represent a generation capacity of 616 MW and
an estimated investment of $1.2 billion. (Note: Ortega has also
presented these projects to the Brazilian government, Mexican
investors such as Carlos Slim, North American companies, and the
Libyan government. End Note.) The Iranian delegation showed
interest in four of the projects, and undertook site visits to all
of them with Nicaraguan experts from the Ministry of Energy and
Mines. The Iranians took with them the pre-feasibility studies for
all four projects, even though they admitted to having only the
capacity to invest in one. On mining, both parties expressed
interest in compiling the geologic information necessary to
determine the mining potential of Nicaragua, as well as possibly
establishing geological databases.

Agriculture and Forestry
--------------

4. (U): The Iranian government has committed to support the
Nicaraguan agricultural sector in a variety of ways, including:

- Supplying 4,000 tractors to farming cooperatives at interest rates
of no more than 6% (in addition to studying the feasibility of
building a tractor production plant in Nicaragua);

- Constructing five milk processing plants and ten milk storage
centers;

- Supplying modern irrigation equipment;

- Providing training courses and workshops on agricultural
development issues;


MANAGUA 00001987 002 OF 004


- Constructing industrial meat packaging plants;

- Supporting the export of Nicaraguan agricultural products to Iran,
including coffee, meat, and plantains;

- Supplying agro-industrial teams specialized in grain processing
and packaging; and

- Permanently installing Iranian companies in the Nicaraguan
agricultural and industrial sectors.


5. (U) The Iranian government and private sector representatives
also agreed to provide agricultural machinery to the Nicaraguan
private sector at preferential prices, with a special focus on
serving cooperatives and small- and medium-sized producers.

Health
--------------

6. (U) Both countries signed a detailed agreement on the creation of
a health clinic in Managua that will offer patient services, medical
consultations, and medical supplies. The Iranian delegation also
promised at some point in the future to:

- Reconstruct health centers;
- Supply of medical services in places where they do not currently
exist;
- Disease control assistance;
- Health personnel training;
- Health-related scientific research; and
- High-tech laboratory services.


7. (U) Additionally, the Nicaraguan Ministry of Health (MINSA)
requested the Iranians consider expanding cooperation in the area of
prosthetics and burn research to help the handicapped.

Ports
--------------

8. (U) The Iranian delegation expressed interest in a joint-venture
for the first phase of the construction of two docks at the Port of
Corinto--a project with an estimated value of $36 million, according
to Ortega (a financing mechanism for the investment will be
established during future negotiations). The Iranians also
expressed interest in a Nicaraguan proposal for a deep water port at
Monkey Point on the Caribbean Coast of Nicaragua, on the proviso it
include other countries and a feasibility study is completed.
(Note: Joint-venture countries were not released, but Ortega later
suggested Venezuela. End Note.)

Urban and Rural Housing
--------------

9. (U) The Iranian delegation agreed with the GON on a plan to
construct 10,000 affordable housing units within the next five
years, with the construction of the first thousand homes beginning
in October 2007. (Comment: This is probably the most concrete
project offered by the Iranian delegation. End Comment.) A
long-term financing mechanism for the homes will be worked out over
the next few months. For its part, the GON offered the Iranians
support as necessary for the processing of any permits required for
foreign investment in Nicaragua.

Water and Sanitation
--------------

10. (U) The Iranians will help to dig another 10-20 water wells in
southwest Managua; will assist in improving and reconstructing
Nicaragua's existing water distribution network; and will complete a
long-term feasibility study of a Lake Cocibolca project to identify
the most viable ways to utilize the water from the lake for the
southern region of the country.

Fisheries
--------------

11. (U) Both governments agreed to a feasibility study for the
construction of two ports with fish processing plants.
Additionally, the Nicaraguan delegation presented a proposal for the
development of training programs for the fishing sector and for the
construction of fishing storage centers, boats, and equipment.

Small- and Medium-Sized Businesses
--------------

12. (U) The Iranian delegation proposed the sale of plastic
injection machinery at preferential prices to Nicaragua with the aim

MANAGUA 00001987 003 OF 004


of stimulating the development of small- and medium-sized companies
in the country. The Nicaraguans were receptive to this offer and
said that they hope to implement it in the near-term.

Foreign Relations
--------------

13. (U) In order to strengthen ties between Iran and Nicaragua, both
governments agreed to name ambassador-level diplomatic
representation. They also agreed to waive visa requirements for
diplomats and government officials. The Iranian delegation offered
ten scholarships for the training of Nicaraguan diplomats.

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

14. (SBU) As with all of the assistance promises from Nicaragua's
new "friends," the proof is in the pudding. While there are some
concrete projects in the works, there is little specificity on
funding or scale of the possible projects. The assistance which
would have the most significant effect on Nicaragua's development,
i.e. ports, hydroelectric power, and industrial facilities, is
limited to feasibility studies and vague promises. Several local
commentators point out that real proof of Iran's commitment to
Nicaragua is in its reluctance to forgive $152 million in bilateral
debt. During President Ahmadinejad's visit in January, the
Sandinista Government highlighted debt forgiveness as one of their
goals. Ahmadinejad said that it would be up to the Iranian
Parliament, but promised to "look into it." The issue has not been
publicly raised by either side since.


15. (U) Iranian Delegation Members:
-- Hamid Chitchian, Deputy Minister of Energy

-- Mohsen Bakhtiar, Director General of Economic Studies and Export
Promotion, Ministry of Energy

-- Ahmad Sabhani, Director of the Americas, Foreign Ministry

Energy and Mining:
-- Masoud Hojjat, General Manager of the Electricity Network of Iran


-- Ahmand Shkoori Rad, General Manager, Ghods Niroo, electricity

-- Mohammed Reza Hezarehee, geology and mining expert

-- Reza Gholami, Deputy Manager of the Karun Dam, FARAB

-- Reza Ebad Zahed, General Manager, Sunir Corporation, water and
electricity sector

Agriculture:
-- Mostafa Faghih Imani, General Manager, Foundation for the
Development of Grains and Meats

-- Mohammed Reza Rikhtegar Berenji, expert, Foundation for the
Development of Meats and Grains

-- Morteza Meshkini, General Manager of a tractor factory

-- Abdolhosean Mohammed Zadeh, General Manager of Sut Masin, dairy
plant

-- Abdoreza Yousefvand Mansouri, General Manager, Tehran Development
Company (TAD)


Health:
-- Dr. Jamal Akhavan Moghaddam, Director of Health for the Red
Crescent Society of Iran

Ports:
-- Parviz Ramazan Pour, General Manager of ICAN, ports and water
pumps

Urban and Rural housing:
-- Manouchehr Nowroozi, President of the Board of Directors of
Tabliye, construction

Water and Sanitation:
-- Mohammed Kiafar, General Manager of Mahab Ghods, water projects


MANAGUA 00001987 004 OF 004


-- Freydoon Solh Doost, General Manager of Bornak, piping for water
projects

-- Kamyar Baytmakoo, Marketing Manager, Mahab Ghods, water, wells
and irrigation

Small- and Medium-sized Businesses:
-- Gilda Satahey, representing a company that does plastic injection
machines

-- Mehdi Hahian, Director of Exports, Iranhodro Diesel

-- Abbas Memaria, Production Manager, Iran Tobacco

TRIVELLI