NICARAGUAN MEMORANDUM OF UNDERSTANDING WITH IRAN

UNCLAS MANAGUA 000914 SIPDIS SENSITIVE SIPDIS DEPT FOR WHA/CEN, WHA/EPSC, EB/ESC E.O. 12958: N/A TAGS: PREL PGOV PINR PTER EAID EFIN EINV ETRD EPET ENRG, EIND, VE, IR, NU SUBJECT: NICARAGUAN MEMORANDUM OF UNDERSTANDING WITH IRAN REF: A. MANAGUA 0725 ¶B. MANAGUA 0639 ¶1. (SBU) Summary. Three days after signing a series of cooperation agreements with Venezuela, Nicaragua played host to Islamic Republic of Iran President Mahmoud Ahmadinejad on January 14. In a southern barrio of Managua, Ortega informally presented Ahmadinejad to the public in a two-hour event broadcast live to the rest of the country. Later at Olaf Palme Convention Center, Ahmadinejad and Ortega signed a Memorandum of Understanding, promising to reopen embassies in their respective capitals, offering mutual support in international fora, outlining potential areas for potential cooperation, and creating a Joint Commission to supervise bilateral cooperation. While the visit appears to have been orchestrated to give Ahmadinejad greater international credibility and regional visibility, the ultimate result may have been simply to pull Nicaragua closer to Iran's low international standing. End Summary. ¶2. (SBU) Three days after signing a series of Bolivarian Alternative agreements with Venezuela on January 11, 2007 (Ref A),Nicaragua played host to Islamic Republic of Iran President Mahmoud Ahmadinejad. A week before, the rumor circulated that Ahmadinejad would attend Daniel Ortega's January 10th presidential inauguration, but Ahmadinejad did not arrive until late in the evening of January 13. On the morning of January 14, Ortega informally presented Ahmadinejad to the public in the "Barrio Cuba Libre," a Sandinista stronghold district in Managua, in a two-hour event broadcast live to the rest of the country. In lengthy remarks, Ortega praised Ahmadinejad as a great revolutionary leader. The fact that Nicaragua and Iran had initiated their revolutions in 1979, said Ortega, created some bond of kinship. Ortega spent the rest of the time describing social and economic inequities facing Nicaragua, including poverty and hunger, and praising Venezuelan President Chavez for his support of Nicaragua and his vision. Speaking to the public via consecutive translation, Ahmadinejad made a point of saying that both countries shared "common interests, common enemies, and common goals." ¶3. (SBU) Later at Olaf Palme Convention Center, Ahmadinejad and Ortega signed a Memorandum of Understanding (MOU). The MOU states that the two countries will reopen embassies in their respective capitals, extend mutual support in international fora, explore areas for potential cooperation (See Paragraphs 8 and 12),and create a Joint Commission to supervise future bilateral cooperation. Nicaragua also promised to introduce Iran, for possible participation, to projects financed by international institutions and bilateral sources. Close to the bottom of the list is the possibility of entering into some sort of bilateral free trade or preferential tariff agreement. While the press billed the visit as the moment when Iran would forgive its $152 million debt with Nicaragua, the MOU only states that Iran will study the possibility in the near term. ¶4. (SBU) We understand that the National Assembly will soon consider the MOU, but its approval is uncertain. A number of National Assembly politicians representing the opposition Liberal Nicaraguan Alliance (ALN) party intend to vote against it. They particularly object to Article 15, which states that the parties agree to consult regarding mutual support in international fora on principle topics relating to the global agenda, fearing that Nicaragua will side with Iran and alienate the United States. Some Liberal Constitutional Party (PLC) lawmakers have told us they also oppose the agreement, but we suspect they can be pressured to vote for it if so ordered by PLC leader Arnoldo Aleman, whose political pact with and reliance on President Ortega for his medical parole/house arrest is likely to come into play. Possibly, the PLC and FSLN (Sandinistas) will skirt the issue by arguing that the agreement does not require a vote in the National Assembly because it is only a memorandum, not a treaty. Comment -------------- ¶5. (SBU) Ahmadinejad's visit appears to have been orchestrated to give Iran greater international credibility and regional visibility, but it may simply have pulled Nicaragua closer to Iran's low international standing. Among major foreign investors, events surrounding the inauguration -) especially Ahmadinejad's visit -- clearly rubbed the wrong way. One by one, CEOs filed into Nicaragua to reassess the political environment for their investments here, and one by one, the new government managed to assuage their fears. That said, with the great exception of increased interest from Venezuelan state-run enterprises, we have not seen much new foreign investment interest since the inaugural events with Presidents Hugo Chavez, Evo Morales (along with Cuban Vice President Jose Ramon Machado),and the subsequent visit by Mahmoud Ahmadinejad. Quite the reverse, we have seen existing investors, both domestic and foreign, begin to examine ways to reduce their exposure to increasing Nicaraguan political risk. End Comment. The MOU -------------- ¶6. (U) The remainder of this cable reports on the particulars of a signed copy of the MOU obtained by the Embassy. Preambular Language -------------- ¶7. (SBU) Preambular language states that the purpose of Ahmadinejad's visit was to congratulate Ortega on his democratic election. In addition, the two countries declare their desire to strengthen traditional ties of friendship and recognize common interests, such as the need to coordinate forces to achieve common goals. The two countries assert the importance of effective, reciprocal cooperation, based on solidarity and mutual respect. Articles 1-2: Friendship and Cooperation -------------- ¶8. (SBU) Nicaragua and Iran agree to "perfect" the mechanism for cooperation, exchange, and understanding on matters of common interest. Parties pledge to develop, strengthen, and promote bilateral cooperation. To strengthen ties of friendship, cooperation, and improve social well-being, Iran and Nicaragua promise to exchange experiences in the areas of economics, energy, trade, finance, infrastructure, and technical matters. Article 3: Complementing Agreements -------------- ¶9. (SBU) If suitable, the areas of cooperation mentioned in this MOU shall be the subject of complementing agreements, which should specify objectives, timelines for execution, and feasibility studies by experts from both parties. Articles 4-5: New Projects and Facilitating Cooperation -------------- -------------- ¶10. (SBU) The execution of this MOU will be reviewed annually by the Presidents of a Joint Commission created for this purpose. They should specify desired projects, their form of financing, their timeline for execution, and the obligations of each of the parties. When state financing is employed, concessionary terms should apply in accord with the laws and obligations of both countries. To facilitate cooperation, the parties shall grant privileges and necessary facilities in accord with internal legislation of each country. Article 6: Joint Commission -------------- ¶11. (SBU) The parties agree to establish a Joint Commission, headed by the ministers from each party, to follow up on this MOU and other points of common interest. The Joint Commission will meet every year, alternatively in Iran and Nicaragua, or wherever the parties so agree. Article 7: Areas for Cooperation -------------- ¶12. (SBU) Iran expresses interest in supporting and assisting Nicaragua in the areas mentioned in Article 2, as well as expresses readiness to study and for its part execute all related projects that are economically justified, subject to agreement by the parties. Common areas of cooperation include the following: a. Hydroelectric dams and irrigation systems; b. Study on port development on the part of Iran to the advantage of both parties; c. Cooperation in fishing through the supply of boats, technology, and industry; d. Development of the energy sector and energy production networks and overall generators of electricity and electrical centers; e. Housing construction, especially low income; f. Assembly and export of industrial and agricultural machinery, as well as buses, autos, motorcycles, bicycles, and all kinds of motors for irrigation and marine, with a view to reaching the regional market; g. Development of the cement sector through the construction of cement plants; h. Development and industrialization of agricultural production; i. Study of potable water systems and treatment of waste water for industrial use; j. Study of the application of energy needs, including petroleum and its derivatives, natural gas, electricity, etc.; k. Media for technical education; l. A free trade agreement and a preferential tariff agreement; m. Investment projects among private sectors of each state; and n. Information exchange between parties. Articles 9-10: Feasibility Studies -------------- ¶13. (SBU) To facilitate cooperation with Iran, Nicaragua promises to submit for consideration and study information necessary to justify various projects with respect to feasibility studies in areas so mentioned, so that possible execution may be based upon international norms. For its part, Iran agrees to consider and study presented projects, with priority, and to assist Nicaragua with experts, whom may be sourced from the private sector. Article 11: Trilateral Cooperation with Venezuela -------------- -------------- ¶14. (SBU) The parties agree to create and define the form, with the cooperation of the friendly, fraternal government of the Bolivarian Republic of Venezuela, of a joint fund that will contribute to the execution of projects of interest to the three parties, through a trilateral consortium to facilitate the execution of projects. In addition, Nicaragua shall request access to the joint fund created by the President of the Islamic Republic of Iran Mahmoud Ahmadinejad and President Hugo Chavez of the Bolivarian Republic of Venezuela to support Latin America and Africa, once that fund has been ratified and confirmed. Article 12: Debt Forgiveness -------------- ¶15. (SBU) Considering its critical economic situation and existing crisis, the Nicaragua has requested that Iran forgive bilateral debt totaling $152 million dollars. Taking into account the various interests of state in this matter, such as Parliament, Iran has expressed its willingness to study this request in shortest timeframe possible. Article 13: Incorporating Iran in Existing Projects -------------- -------------- ¶16. (SBU) Nicaragua agrees to introduce Iran, for its consideration and possible participation, to projects whose financing has been provided by international organizations and other countries. Article 14: Project Development -------------- ¶17. (SBU) Upon prior consultation, Iran will send to Nicaragua an expert technical delegation to study ways -- be they public, private, or mixed ownership -- to execute various projects of common interest, especially those concerning technical, engineering, and financial services. The creation of this delegation and the date of this trip will be defined beforehand through agreement by the parties. Article 15: Mutual Support in International Fora -------------- --- ¶18. (SBU) The parties agree to consult regarding mutual support in international fora on principle topics relating to the global agenda. Article 16: Reopening Embassies -------------- ¶19. (SBU) The parties agree to reopen their embassies in their respective capitals. Articles 17-19: Education and Training -------------- ¶20. (SBU) Iran agrees to facilitate the installation of technical and professional education centers in Nicaragua to improve opportunities for work in Nicaragua. Iran agrees to host ten young diplomats from Nicaragua, without charge, to contribute to their training. Iran expresses its interest in cooperating with Nicaragua on improving its system of middle and higher education. Article 20: Trade -------------- ¶21. (SBU) The parties promise to exchange information lists of traded products so that they may take maximum advantage of their capacity for bilateral trade, with the view of also reaching potential regional markets. (Also see Paragraph 12, Item L.) Article 21: Construction of a Refinery with Venezuela -------------- -------------- ¶22. (SBU) With prior consultation with the fraternal Government of the Bolivarian Republic of Venezuela, the parties agreed to Iranian cooperation in the construction of a refinery in Nicaragua, as recently agreed upon by Nicaragua and Venezuela (Ref B). Article 22: Dispute Settlement -------------- ¶23. (SBU) Doubts that may arise concerning the interpretation and execution of this agreement shall be resolved through diplomatic means. Articles 23-25: Entry into Force, Renewal, and Termination -------------- ¶24. (SBU) This MOU will enter into force upon signature. Either party may withdraw from this MOU after providing six-months' prior notification. Withdrawal shall not affect the development of programs and projects that may be in execution on the date of withdrawal. This MOU will be in effect for two years and automatically renewed for equal periods, unless one of the parties provides prior notification in writing of its intention not to renew three months before the agreement lapses. Signatures -------------- ¶25. (SBU) Signed in Managua, Nicaragua on the 14th day of January in 2007, the 24th of the month Dey of the year 1385 (Hegira Solar),in two copies, one in Spanish and the other in Persian, each equally authentic. TRIVELLI