THE SANDINISTA GOVERNMENT 60 DAYS OUT - AND OUR

C O N F I D E N T I A L SECTION 01 OF 05 MANAGUA 000583

SIPDIS

SIPDIS

DEPT FOR WHA A/S THOMAS A. SHANNON, WHA/CEN

E.O. 12958: DECL: 03/05/2027
TAGS: PGOV KDEM NU PHUM PINR PREL KCOR
SUBJECT: THE SANDINISTA GOVERNMENT 60 DAYS OUT - AND OUR
RESPONSE

REF: MANAGUA 0357 AND PREVIOUS

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


1. (C) Summary: The FSLN administration is fast reverting to
its improvisation, secrecy, and centralization of the 1980's,
forging an operating style more appropriate for a
revolutionary junta than a modern, democratic state.
President Ortega appears determined to consolidate his power,
circumventing legislative restrictions and disregarding the
constitution to achieve his objective. Left unchecked,
Ortega will likely lead Nicaragua along the path of
Venezuela. We need to take decisive action and well-funded
measures to bolster the elements of Nicaraguan society that
can best stop him before he lulls the majority of the
Nicaraguan people into complacency, or threatens them into
silence. Without our support, our democratic-minded friends
may well falter. To keep our place at the table and help
Nicaraguans keep their country on a democratic path, we
recommend making an additional investment of about $65
million over the next four years. End Summary.

Off to a Bad Start
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2. (C) With only two months in power, the FSLN
administration of Daniel Ortega is fast reverting to its
improvisation, secrecy, and centralization of the 1980's --
forging an operating style more appropriate for a
revolutionary junta than a modern, democratic state.
Starting with the January 10 inauguration ceremony, itself
marred by disorganization, shoddy planning, and tardiness,
the Ortega government's style has been strictly characterized
by heavy symbolism, glaring inconsistencies, and a double
discourse that over the long run will be untenable.
Presidential meetings are taking on a Fidel-like aura, often
late-night affairs in a room dominated by a huge mural
depicting a psychedelic, all-seeing eye gazing from an
out-sized human palm. Ministers generally confirm
appointments only at the last possible minute and are often
knocked off their agendas by calls from the "Comandante."


3. (C) Our sources tell us that all government decisions are
being made by a very small cabal at the top of the pyramid --
Ortega himself, his wife, and at times economic guru Bayardo
Arce (although there have been some signs that his influence
may be fading),former state security chief Lenin Cerna, and
national security adviser Paul Oquist. First Lady Rosario
Murillo personally controls the PR budget for all branches of
the executive and signs off on all foreign travel. The new
government loathes transparency; the President railed against
the press for printing summaries of agreements reached with
Venezuela and Iran and the government's communications
strategy. Sandinista lawmakers have sponsored a change in
the criminal code to make illegal the publicizing of private
communications. Simple internal administrative memoranda are
marked confidential, and woe to the Ministry that leaks or
loses any such missives. The inner circle consists largely
of clandestine operators -- paranoid cave dwellers who are
afraid of the light and openness. Transparency is their
worst enemy.

The Cabinet - The Fourth String Takes the Field
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4. (C) We have systematically met with all the new ministers
and many independent agency heads. Our overtures have
generally been met by some reserve, but always with typical
Nicaraguan courtesy and form. Our impression is that the new
crew has been completely taken aback by the depth and
diversity of our assistance relationships with the GON at all
levels. It is also clear that most of the ministers have
little background in their respective portfolios, and were
likely chosen for their loyalty and malleability. For
example, the Minister of Environment is a cranial reflexology
practitioner and a sociologist, and the new Minister of
Finance previously served as a junior researcher in the
Central Bank before ascending to his current position. Those
who do have some technical expertise, such as the new
Minister of Transport and Infrastructure, seem to enjoy
little influence or connections to the inner circle.

Eating away at Democracy and the Market Economy
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5. (C) Even more troubling is the new government's largely
successful attempts at chipping away at the country's
democratic institutions and market economy. While in public
and private, Ortega claims to embrace democracy and private
enterprise, his "double discourse" speaks volumes about his
real intentions -- "Popular" or "direct democracy" really
means creating new councils whose membership he controls;
"investment" really means economic control of all profitable
ventures by his allies.


6. (C) Before assuming office, Ortega engineered a new
National Assembly Ways and Means Law that forces Nicaraguan
or foreign citizens residing in the country to appear for
hearings or possibly face prison. Independent media and
opposition contacts fear this provision could be used to
intimidate and induce self-censorship. In many respects, the
independent media have borne the brunt of the Ortega
administration's attacks thus far, including reducing
government publicity to opposition-associated media, blocking
their access to government information and events, and
threatening to eliminate import exonerations for newsprint
and other materials and equipment.


7. (C) In the same vein, Ortega rammed through revisions to
the Executive Authority Law (Law 290) only days after his
inauguration, allowing him to establish his prized national
councils. Although the final revisions did not authorize the
new councils to oversee the ministries or receive a share of
the national budget, as Ortega had sought, the President has
circumvented these limitations by establishing additional
presidential secretariats to channel the funding to the
councils. A defiant Ortega brazenly announced in a speech
commemorating the Sandinista insurrection against the Somoza
regime his plans to ignore the National Assembly. Possibly
emboldened by his high poll ratings, Ortega declared to the
audience that the "president is the people" and told the
faithful that his ministers will take their instructions from
the councils and "defend the people."

Power is the Prime Directive
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8. (C) Ortega also seems to be systematically co-opting, and
if this tact fails, castigating, those few sectors of society
which could conceivably oppose him. He has cursed the press
for not paying its fair share of taxes and lambasted them for
maligning his wife, insisting she will occupy any position in
the government she desires. He has wagged his finger at the
National Assembly saying that it must take heed and obey the
will of the People's Councils. When PLC lawmakers question
him, Ortega hints he will incarcerate former
President/convicted embezzler Arnoldo Aleman. He has
threatened to "control" NGO's. Even his once gentle touch
with the private sector is on the wane: following his latest
infusion of Chavez moxy, Ortega threatened to cancel the
concession of a geothermal energy firm linked to COSEP
President Kruger and several foreign investment groups,
including some from the United States. He has weakened
ministerial (i.e., civilian) control over the police and the
army. In short, he is running through the Chavez playbook at
break-neck speed.


9. (C) Left-leaning daily El Nuevo Diario's March 5
think-piece on the direction of the Ortega government
suggests that the Ortega government has three major policy
options: impose its direct democracy construct even though
the majority of Nicaraguans reject it; convoke a consultative
assembly with the support of the PLC; or, continue operating
on the fringes of the law. We expect that President Ortega
will draw on all three of these arrows in his quiver as it
suits him. To the good, unlike Chavez, however, Ortega does
not enjoy the support of the majority of his people, and the
opposition has resisted (at times, rather wanly) the GON's
efforts to "blitzkrieg" its direct democracy concept.
Notwithstanding this opposition, Ortega will likely continue
to test his legal limits and skirt the law through
presidential decrees. He also may call for a consultative
assembly, the apparent new weapon of choice of the region's
authoritarian, neo-populists. But remember -- Ortega's prime
directive is to consolidate power and extend FSLN control
over the GON for the foreseeable future. He will only try to
fill his campaign promises of social investment, full
employment, and reconciliation to the extent that new
programs contribute to goal number one.

Looking for Love in All the Wrong Places
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10. (C) Ortega's deep ties to Venezuela and Cuba are
painfully obvious. Chavez dominated his inaugural circus.
After Ortega paid a semi-secret visit to Caracas on February
23, he returned feistier than ever. Venezuelan technicians
are already semi-embedded in several ministries. Ortega
heaps nothing but praise on Venezuelan and Cuban assistance,
most recently hosting the Cuban Minister of Culture, but
belittles or downplays our programs. He has denounced our
counternarcotics support as "mere crumbs" and makes scant
mention of our New Horizons program, currently constructing
clinics and schools for poor Nicaraguans. Talk of
"thousands" of Cuban and Venezuelan teachers and doctors
abound. We hear that the FSLN is touting a Cuban-sponsored
literacy campaign and a Venezuelan-funded light bulb exchange
program to "spread the word" in rural, predominantly
"Liberal" bastions of the country that we have abandoned
Nicaragua and only Ortega and his allies can alleviate hunger
and poverty. There is no doubt where Ortega's heart lies,
but even though Chavez will never deliver on all his lofty
promises, by the time the Nicaraguan people understand that,
their country's democracy and economy may be lying in tatters.

Our Policy - Avoiding Minefields and Helping our Friends
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11. (C) During our early calls on the government, we have
carefully laid out for the new ministers our willingness to
continue with our assistance programs and circled in red for
them those issues, which if not approached correctly, could
seriously damage bilateral relations. They have been amply
forewarned, for example, of the need for progress on such
subjects as confiscated property resolutions and trafficking
in persons (TIP) programs. Whether they choose to
deliberately step on those mines is another question, but
some of the early signs are not encouraging. We are no
longer receiving counternarcotics information in advance of
seizures, and information sharing from airport authorities
has taken a downturn. Some government employees associated
with us have been dismissed or sidelined. Growing
anti-American sentiment has surfaced in a tourist spot
frequented by U.S. retirees and tourists. Ortega's recent
speech before the National Police included a Chavez-like
suggestion that even U.S. presidents have been involved in
narcotrafficking and that the U.S. and its decaying society
are responsible for many of the ills of the region.


12. (C) The most telling evidence of Ortega's true
intentions vis-a-vis the United States is his leaked
administration's communications plan. Reportedly drafted by
Ortega's wife in her role of communications and citizenship
council coordinator, the strategy recognizes that the
Nicaraguan government's relationship with the United States
is sensitive, not only for economic considerations, but also
because Nicaraguans associate their own stability and
security with the United States. Thus, the Ortega
administration must convey a permanent image of desiring a
policy of openness and close ties with the United States and
should avoid falling into a cold war reflexively
anti-American position. At the same time, the document calls
for using the media to oppose the Bush government, while
welcoming U.S. investors.


13. (C) Unless he is checked, we expect Ortega will lead
Nicaragua along the path of Venezuela, governing by decree
and co-opting or squelching any opposition to his plan, as
has his self-described "twin" Hugo Chavez. If Ortega is
systematically singling out his perceived enemies for early
intimidation, we have to be equally strategic and quietly
single out our friends for support now and through the 2011.
Our potential allies include the democratic political
parties, the National Assembly (the only non-FSLN-controlled
political game in town),academic institutions, the free
press, a limited number of NGO's (the FSLN controls the
lion's share),some non-Sandinista unions, and the
ever-opportunistic and institutionally territorial police and
army.


14. (C) We must take measures to bolster those elements that
can best stop him before he lulls the majority of the
Nicaraguan people into complacency or threatens them into
silence. Without our support, our democratic-minded friends
are likely to falter. We need additional funds over the next
four years to keep our place at the table and help
Nicaraguans keep their country on a democratic path --
approximately $65 million above our recent past base levels
over the next four years -- through the next Presidential
elections to make this work. We ask Washington to consider
finding the means to support the following initiatives:

--Increase AID democracy monies, roughly an additional $4
million per year, to back political party strengthening, the
media and democratically minded NGO's.

--$250,000 per year to create a Legislative Exchange and
Training Program for democratic forces and committees in the
National Assembly.

--Allocations of an additional $2 million per year of AID
funds in small infrastructure projects at the municipal level
-- rebuilding schools, improving water systems, restocking
clinics, providing zinc roofing for housing, et al -- the
kind of work that Nicaraguans prize.

--Consider changing MCC legislation to allow nations like
Nicaragua to sign concurrent compacts, with an eye towards
replicating what we are doing in Leon and Chinandega in the
politically sensitive northern departments.

--$250,000 per year for a PD-managed "rapid response"
Democracy Fund to deliver small, flexible grants on short
notice to groups engaging in critical efforts that defend
Nicaragua's democracy, advance our interests, and counter
those who rail against us.

--$500,000 to establish and run five new American Corners
Centers with integrated internet "cafes" in strategic areas
of the country.

--$500,000 per year for a Public Awareness Fund to provide
air time and column space so the scope of our and our allies'
activities and positions on issues will be made known to the
public, and to enhance the technical capabilities of friendly
radio stations, especially in rural areas.

--$500,000 per year for a comprehensive PR campaign to
"brand" our contributions to the Nicaraguan people. Efforts
will include promoting our "CAFTA Alliance", establishing an
"Alliance America" campaign for U.S.-affiliated NGOs,
establishing a Nicaragua-American Friendship Association, and
producing and disseminating promotional material for all MCA
projects (flags, banners, etc.).

--$2.5 million/year for INL programs to assist and engage
further with the Nicaraguan Army and Police in their efforts
to effectively enforce laws and combat terrorism; corruption;
narcotics; transnational crime and trafficking in arms,
people, and dangerous/illegal materials and substances; and,
the emergence of gangs. Support would include our RLA
program.

--The appointment of an in-country DHS agent, to keep an eye
on suspicious migrant and customs activity.

--$1 million in FMF for light spotter aircraft and $9 million
in FMF to help the Army recondition its helo fleet with Czech
help over the next two years.

--Approximately $2 million per year of Southcom Humanitarian
Team support to construct schools and clinics, and provide
Medretes in impoverished areas of the country and possibly
Seabees to pave 50 kilometers of road from Bluefields to
Nuevo Leon in Nuevo Guinea to improve the quality of life and
help counternarcotics and other law efforts in a vulnerable
region of the country.

--$2 million to assist our struggling binational center to
construct new facilities and improve relations between the
American and Nicaraguan peoples.

--$2 million in scholarship monies for English language and
career training at Ave Maria College and other institutions
over the next four years.

--$1 million to enhance INCAE's infrastructure and increase
free market-based economic research.
TRIVELLI