CORRECTED COPY -- LIBERALS UNITE FOR NOVEMBER

C O N F I D E N T I A L SECTION 01 OF 03 MANAGUA 000333

SIPDIS

SIPDIS

STATE FOR WHA/CEN AND DRL
STATE PASS USAID FOR LAC - BONICELLI/CARDENAS
NSC FOR FISK/ALVARADO

E.O. 12958: DECL: 03/18/2018
TAGS: PGOV PHUM KDEM NU
SUBJECT: CORRECTED COPY -- LIBERALS UNITE FOR NOVEMBER
MUNICIPAL ELECTIONS

REF: MANAGUA 209

Classified By: Ambassador Paul Trivelli, Reasons 1.4 (b) and (d)

SUMMARY
--------------


1. (C) On March 4, Nicaragua's two largest Liberal movements,
Vamos con Eduardo (VCE, formerly the Nicaraguan Liberal
Alliance, ALN) headed by Eduardo Montealegre and the
Constitutional Liberal Party (PLC) led by ex-President
Arnoldo Aleman officially formed an alliance to run jointly
in the November municipal elections. On March 14, through a
haphazard and sometimes controversial process, the VCE-PLC
alliance registered joint mayor and vice-mayor candidates
(apparently) in all 153 municipalities, including the Managua
ticket of Montealegre-Quinonez. Montealegre told us his
"party" (now technically just a "movement") was forced to
choose between the lesser of two evils: joining the PLC to
fight the growing authoritarianism of the Ortega/FSLN
government or fighting the combined forces of the Pacto (the
powersharing agreement between Aleman and Ortega) and face
certain electoral defeat. Promises of private sector
financial support for the new alliance also played
significantly into the decision to unite. The unity
agreement, if fully implemented, could offer voters a true
referendum on the Ortega administration and thereby lead to
Liberal victories in a significant number of municipalities.
However, tough obstacles lie ahead, especially for
Montealegre, and it remains to be seen how the FSLN, and
Aleman, will respond. End Summary.

VAMOS CON EDUARDO AND PLC - A UNITED LIBERAL EFFORT
-------------- --------------


2. (C) According to our political party contacts, following
the abrupt decision by the CSE to advance the electoral
calendar and change the leadership of the ALN (reftel),
Montealegre considered withdrawing from the race for mayor of
Managua. Without the ALN's legal status, Montealegre simply
had no party banner with a firm legal footing under which to
run. However, following a February 26 decision by the PLC's
executive committee to endorse Montealegre's vice-mayoral
candidate, PLC National Assembly Deputy Enrique Quinonez, and
to open the door to a formal alliance, Montealegre formally
announced his candidacy for mayor of Managua and his
intention to pursue an alliance with the PLC, but under the
party banner of the Independent Liberal Party (PLI).
Montealegre subsequently told us that the announcement
concerning PLI was actually part of a negotiating tactic to
force Aleman and the PLC to offer better terms for the
proposed alliance and acknowledged that he knew from the
start of the talks that the alliance would most likely to run
under the PLC banner.


3. (C) Indeed, on March 4, the VCE, PLI and the PLC announced
an alliance -- "a grand coalition of democratic forces" --
and registered the same day with Supreme Electoral Council
(CSE). All three parties agreed to use the PLC's party
registration for the elections -- a step designed to reduce
the likelihood of CSE interference and manipulation. In
addition, the alliance registered two joint legal
representatives -- PLC Deputy Wilfredo Navarro for the PLC
and Mauricio Montealegre for VCE/PLI, as well as an evenly
split team to manage the campaign.


4. (C) On March 14, in a contentious process lasting until
midnight, the Liberals registered candidates for mayor and
vice mayor in (apparently) all 153 municipalities. According
to an internal agreement, the party that gained the most
votes in the 2006 elections in a given district would name
the mayor candidate and the other party would choose the
vice-mayor candidacy. In practice, this arrangement appears
to have not always been honored. For example, in Bonanza,
the PLC prevented the VCE and the Nicaraguan Resistance Party
(PRN) from registering candidates, and instead inscribed its
own candidates first. There are reports of similar
manipulation of registration in a few other municipalities.
Furthermore, a last minute fight over the registration of the
PLC candidate for Nindiri, anti-Aleman and pro-Quinonez ally
Lucas Reyes, nearly scuttled the entire deal as Quinonez
threatened to withdraw from the race and Montealegre refused

MANAGUA 00000333 002 OF 003


to register without Quinonez. Minutes prior to the closing
of registration, Aleman reportedly withdrew his objections to
Reyes and the Montealegre-Quinonez ticket was duly inscribed
with the CSE.

IS THE STRUGGLE AGAINST ORTEGA OR THE PACTO?
--------------


5. (C) In a series of meetings with Montealegre and other
leaders of VCE over the past two weeks, Montealegre
acknowledged to us the challenges facing his movement, noting
that he was confronted with two less-than-optimal choices
following his loss of the ALN presidency and the advanced
date for alliance and candidate registration set by the CSE.
On one hand, he could have formed an anti-Pacto alliance with
the left-wing Sandinista Renovation Movement (MRS) and the
smaller parties (PLI, Conservative Party (PC),PRN and
others) but that grouping would have been saddled with
serious problems which may have well ensured its defeat,
namely, the lack of a legally viable party vehicle under
which to run (i.e., one strong enough to withstand the CSE's
pernicious legalisms),a dearth of funding, and the continued
division of the Liberal forces. He doubted these combined
forces could put together a winning electoral coalition,
particularly given the private sector's long-standing threat
to withhold all funds from any alliance not representing
Liberal unity.


6. (C) Alternatively, to run jointly with the PLC could serve
to unite the Liberal forces and tap a greater percentage of
the electorate, but also risked surrendering control over his
movement (and his political credibility) to Arnoldo Aleman.
"The question is -- is the main struggle against Ortega or
the Pacto?" he postulated. In Montealegre's view, Ortega's
growing authoritarianism, lack of respect for the rule of
law, and mismanagement of the economy and foreign policy, now
present the greatest threat to the future of Nicaragua and,
given the political circumstances, forced him to seek an
agreement with the PLC against Ortega. Montealegre maintains
no illusions that Aleman will respect the terms of the
agreement, but believes that the joint legal representation
and campaign team, plus the growing influence of anti-Aleman
leaders within the PLC, will give him enough space to operate
and advance his candidates in key municipalities.


7. (C) Montealegre was clearly influenced in his decision by
the private sector's continuing reluctance to provide
financial support to the democratic forces in the absence of
Liberal unity. In particular, Nicaraguan businessman Carlos
Pellas (Nicaragua's wealthiest person and head of the Pellas
Group) told Montealegre (as well as us) that the leaders of
the business class would not provide financing to him or
other democratic groups unless the Liberals united. It
remains to be seen whether the inverse of the private
sector's argument - that they will give money now that the
Liberals are united - holds true. Montealegre has placed a
number of private sector leaders on his campaign team to
expand the outreach to the business community and is looking
to raise at least USD 2 million for the Managua race alone.


OTHER PARTIES VOICE DOUBTS
--------------


8. (C) Edmundo Jarquin, leader of the MRS, has privately
expressed regret that Montealegre had joined with Aleman,
thereby undercutting his anti-Pacto credentials. Jarquin
fears that Montealegre's decision has breathed new life into
Aleman at a moment when his influence was clearly on the
wane. He believes the unity agreement will not help the
Liberals attract more votes, noting that in 2000 the Liberals
were united -- and still lost heavily to the FSLN. Moreover,
the association with Aleman will dampen the enthusiasm of
independents, and increase the rate of abstention, further
eroding the Liberals' chances for victory. Jarquin had hoped
that he and Montealegre could have formed an anti-Pacto,
left-right coalition that would have been able to win the
larger municipalities and establish a solid political base
for the future. Instead, the MRS will not participate in any
formal alliance and indeed has registered Assembly Deputy
Enrique Saenz to run for mayor of Managua.


MANAGUA 00000333 003 OF 003



9. (C) The VCE-PLC alliance has also exacerbated tensions
within the smaller Conservative Party (PC) and the Nicaraguan
Resistance Party (PRN). Leaders of both parties formally
declined to participate in the alliance and have registered
their own candidates (septel) in many municipalities. To
further add to potential confusion voters will face, some
prominent PC members opted as individuals to register as
candidates within the unity alliance while others are running
under the PC party banner. In Granada and surrounding
municipalities, this division threatens to further split the
democratic forces and perhaps hand the FSLN victories they
otherwise would not have earned.

COMMENT
--------------


10. (C) The agreement of the two main Liberal movements
(joined in some cases by candidates from other parties)
represents a step forward by the pro-democratic movement to
challenge Ortega in the upcoming elections. With the two
parties running jointly, they do have the potential to
mobilize a majority of the electorate and capture a large
number of municipalities. The alliance also presents an
opportunity to develop new political leadership within the
democratic forces at the local level that will be more
responsive to their constituents. However, the combined
effects of ill feelings within both parties over the
haphazard candidate selection and registration process, and
the electoral isolation of smaller parties like the
Conservatives threaten to blunt some of the positive
momentum. Furthermore, it is not clear how much damage
Montealegre may have done to his anti-Pacto and democratic
credentials by joining forces with Aleman's PLC, regardless
of how many institutional checks have been put in place by
the terms of the agreement. Finally, we can expect the CSE
to throw up many more obstacles to Montealegre and his
candidates in the coming weeks, including rejection of some
hopefuls as well as limitations on domestic election
observers and training for party poll watchers. Whether the
alliance, and the broader democratic movement, can overcome
these internal and external challenges remains a serious
concern.


11. (C) We also note that several prominent FSLN members have
told us privately that they did not expect the Liberals to
unite ("...shocked, shocked!!") and that they are "losing
sleep" over the thought of confronting "the very powerful"
Montealegre-Quinonez ticket in Managua. Such uniform
protestations are only making us more suspicious that the
Sandinistas have the Liberals right where they want them --
separated from several small parties on both the right and
left, still bound to an ever-scheming Arnoldo Aleman, and at
the mercy of a CSE which has shown itself adept and shameless
at tilting the electoral playing field sharply towards the
Sandinistas.
TRIVELLI