NICARAGUA: PRIVATE SECTOR SUBDUED ON ELECTIONS

C O N F I D E N T I A L SECTION 01 OF 02 MANAGUA 001409 SIPDIS E.O. 12958: DECL: 11/20/2028 TAGS: ECON EINV PGOV PREL NU SUBJECT: NICARAGUA: PRIVATE SECTOR SUBDUED ON ELECTIONS CRISIS REF: MANAGUA 1392 Classified By: Ambassador Robert J. Callahan, reasons 1.4 b and d. Summary -------------- ¶1. (C) When authorities announced preliminary municipal election results on November 10, business leaders initially called for a recount in Managua and other municipalities where parties in opposition to the FSLN alleged electoral fraud. Since then, the private sector has avoided a public role in the ongoing political crisis. The president of one prominent business association said it would be difficult to take a political stand now, but he is looking forward to maintaining private sector unity in anticipation of 2011 national elections. Meanwhile, he said maintaining channels of communication with the government to protect members' economic interests is his objective. One businessman explained that business leaders fear government retaliation if they publicly support the opposition. By taking themselves out of the game, however, the private sector may be inadvertently ensuring that, by 2011, it will be too late to have any impact on elections. End summary. Private Sector Calls for Review -------------- ¶2. (C) When the Supreme Electoral Council (CSE) announced preliminary municipal election results on November 10, business leaders initially supported the political opposition -- the "Vamos con Eduardo" - Constitutional Liberal Party (PLC) alliance, Sandinista Reform Movement (MRS),and Conservative Party (PC) -- in its call for a recount in Managua and other municipalities where it alleged fraud (reftel). In the days following the elections, the American Chamber of Commerce (AmCham),the Federation of Nicaraguan and Business Associations (COSEP),and several individual chambers that are COSEP members issued formal declarations warning that political instability caused by the elections crisis would have a severe economic impact, and they called for an open, transparent review of the election results. Since, the private sector has avoided a public role in the ongoing political crisis. COSEP: Difficult to Take a Political Stand -------------- ¶3. (C) On November 18, Jose Adan Aguerri, President of the Federation of Nicaraguan Business Associations (COSEP),told the Ambassador that it would be difficult for the private sector to take a firm stand in support of any political party in the ongoing elections crisis. Aguerri said that he has worked to achieve unity within COSEP to deal with the Ortega administration on business issues; taking a stand on political issues would be even more difficult. ¶4. (C) Aguerri said it is his primary goal during the crisis to ensure that the private sector "weathers the storm" without significant losses in terms of sales or employment. "COSEP must protect its members' interests," Aguerri emphasized, "by maintaining an open channel of communication with the government." COSEP is already looking toward national elections in 2011. Keeping the private sector united and strong will allow COSEP to play a constructive role when it comes to electing a new president and legislators, said Aguerri. AmCham: Legal Process Must Run Its Course -------------- ¶5. (C) American Chamber of Commerce of Nicaragua (AmCham) President Cesar Zamora told Econoff on November 14 that AmCham continues to press for a full recount of the November 9 municipal election results. He said that to be credible, the recount must be subject to international observation. When pushed on whether AmCham would step up its public support for Montealegre, Zamora replied dryly that Montealegre and other members of the opposition must make use of the legal process available to contest the results. He said AmCham did not want to interfere or get ahead of the legal process, which should be allowed to run its course. AmCham would wait to see how the process unfolds, he added. Government Convinces Private Sector to Back Down -------------- --- ¶6. (C) Jorge Solis, Corporate Relations Manager for the Nicaragua Brewing Company (Guatemalan and Costa Rican owned), told Econoff on November 14 that President Ortega,s Economic MANAGUA 00001409 002 OF 002 Advisor Bayardo Arce called him twice on November 10 to discourage him from supporting a general strike that business leaders had discussed for November 11. Solis reported that Arce made similar calls to COSEP President Aguerri and other business leaders to discourage support for Montealegre. ¶7. (C) Solis told us that a number of high-level FSLN officials had participated in efforts discourage private sector support for Montealegre. Rather than seek common ground, as Arce does when he argues that political instability will only hurt business, Attorney General Hernan Estrada bullies and intimidates. First Lady Rosario Murillo was concerned that a strike on November 11 would have quickly solidified domestic and international opinion against FSLN electoral fraud. Solis told us that Murillo became directly involved in efforts to kill a strike and called Aguerri on November 10 to lobby against it. Fearing government retaliation, Aguerri felt he had no choice but to acquiesce to her request. Comment -------------- ¶8. (C) COSEP continues to be cautious in its relations with the Ortega administration. Its members have been subject to tax audits, regulatory harrassment, accusations of criminal wrongdoing, and assorted threats from government officials. With assets at risk and responsibility for thousands of employees and their families, it is not surprising for members of the private sector to think twice about taking on an increasingly autocratic government. By taking themselves out of the game, however, the private sector may be inadvertently ensuring that, by 2011, it will be too late to have any impact on elections. CALLAHAN