WHA/CEN DIRECTOR FEELEY VISITS NICARAGUA

1. (C) SUMMARY: During his March 4-5 visit to Nicaragua,
Office Director for Central American Affairs John Feeley
delivered a consistent message that the USG desires a
constructive and positive relationship with the Ortega
administration and that the U.S. will stay engaged for the
benefit of the Nicaraguan people. Feeley also led the
technical delegation that will study Nicaragua's medical
infrastructure with a view to formulating a USG offer to
provide medical equipment in exchange for obsolete Nicaraguan
anti-air missles (MANPADs). Former Nicaraguan Liberal
Alliance president and Managuan mayoral candidate Eduardo
Montealegre acknowledged the risks of his alliance with the
Constitutional Liberal Party (PLC), but insisted that
"getting rid of the Pacto means getting rid of Ortega."
USAID's democracy partners warned that a divided and weakened
civil society is incapable of mounting organized opposition
to Ortega's increasingly autocratic administration. Managua
mayor Nicho Marenco characterized the Liberal mayoral ticket
for Managua as "strong" and admitted that the FSLN's mayoral
candidate "has no chance." Former Sandinista National
Liberation Front (FSLN) vice president Sergio Ramirez
supported the USG's general engagement policy in Nicaragua,
while making the point that international cooperation should
be separated from political relations. In an extended
interview with a leading daily, Feeley recapped both his
MANPADs mission and offered a general overview of
U.S.-Nicaraguan relations as productive and satisfactory,
despite some differences with the FSLN government,
particularly on property claim resolutions. END SUMMARY.

MANPADs, Regional Issues, and Colombia with Ortega
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2. (C) Feeley and the Ambassador, along with two
representatives from the Armed Forces Medical Intelligence
Center (AFMIC) visiting Nicaragua to conduct a comprehensive
analysis of Nicaragua's public health system, met with
President Ortega on the evening of March 4. Although the
meeting was delayed until after 10pm, the encounter quickly
became an informal and wide ranging conversation, despite the
presence of several Nicaraguan ministers, military officials,
and a large press contingent. Feeley stressed to Ortega that
the MANPADs belong to another era and the USG and Ortega,s
government have a rare opportunity to put much of that past
behind them by reaching an agreement to turnover these
missiles. Feeley linked the destruction of these missiles to
the administration,s Merida Initiative, underscoring that
the transnational threats the isthmus and the United States
confront cannot be effectively neutralized with MANPADs, but
rather with increased interoperability among regional police
forces, better intelligence and information sharing, and
improved investigative and prosecutorial capabilities. The
AFMIC team leader provided an overview of the team,s mission
and described initial impressions from the first day of field
work.



3. (C) Ortega segued from health care to migration and free
trade, repeating his belief that CAFTA should be renegotiated
due to the inherent asymmetries between the U.S. and regional
economies and in order to "avoid driving more migration to
the U.S." due to the closing of businesses. Feeley countered
that initial statistics from the region indicate that CAFTA
has actually generated new jobs among small and medium
businesses. He highlighted the development linkages of CAFTA
and export-driven growth with the MCC project in Nicaragua.
Ortega concurred that the MCC has been a success and
expressed his appreciation for MCC CEO Danilovich,s interest
in the project, as well as his hope for more assistance of
this nature. He provided a detailed analysis of the state of
Nicaraguan agriculture and the possibility that it could
become Central America,s milk, dairy and beef provider.



4. (C) Finally, Ortega touched on Nicaragua's dispute with
Colombia over the 82nd parallel and the International Court
of Justice's (ICJ) recent decision. He also decried Colombia
recent incursion into Ecuadorian territory and the strike on
the FARC encampment which killed FARC spokesperson Raul
Reyes. Feeley responded that Colombia had a right to self
defense from terrorist groups using the sovereign territory
of neighboring states as a refuge. He also stated that, in
his personal opinion, neither Reyes nor the FARC genuinely
sought a negotiated peace or incorporation into Colombian
civil society. The FARC seeks a power sharing arrangement
and will continue to terrorize the Colombian people as long
as its drug-fueled profits allow. Ortega disagreed and
stated his belief that the FARC seeks a more just Colombian
society, but that Uribe is a bellicose and arrogant leader,
as evidenced by the GOC,s provocations against Nicaragua in
the Caribbean. Feeley repeated the recent injunction of the
Deputy Secretary to both FM Santos and Colombian FM Araujo
that both sides desist from provocative actions and let the
maritime boundary dispute be resolved by the ICJ. Ortega
responded Nicaragua would not seek confrontation, but he was
unsure Colombia would exercise such self-restraint. (NOTE:
The following day the GON broke relations with Colombia over
the Ecuador attack, only to restore them several days later
following a Rio Summit meeting in Santo Domingo. END NOTE)

Lesser of Two Evils
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5. (C) Speaking of his decision to align his supporters with
the PLC and run on the PLC ticket in November's municipal
elections, Eduardo Montealegre readily acknowledged that this
new alliance carries inherent risks. Stating that the
alliance "gives oxygen to (former President and convicted
felon) Arnoldo Aleman," Montealegre insisted that "getting
rid of the Pacto means getting rid of Ortega" and that
winning the majority of the municipalities in November's
election is essential to forestall Ortega's efforts to stay
in power after 2011. Despite his commitment to the alliance
with the PLC, Montealegre wryly admitted that the Supreme
Electoral Council (CSE) could rule the alliance illegal
because "the law doesn't work and the CSE does what it
wants." Montealegre also spoke in favor of an amnesty law to
provide some measure of protection against blackmail for
those politicians seeking real change. Without such a law,
he reasoned, Ortega and Aleman will continue to manipulate
the levers of state against any and all who threaten their
power.

Civil Society - The Deafening Silence
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6. (C) USAID's democracy partners -- International
Republican Institute (IRI), National Democratic Institute
(NDI), and the International Foundation for Electoral Systems
(IFES) -- decried civil society's slow self-destruction. Due
to power struggles and lack of cooperation, civil society
groups have failed to mount a unified campaign against
Ortega's steady concentration of power in the executive
branch. The three partners highlighted that civil society
has been virtually silent on key issues such as firings
within the CSE (ref A), the attempt to suspend elections in
the North Atlantic Autonomous Region (RAAN) (ref B), and the
CSE's stripping control of the ALN from Montealegre (ref C)
among other issues. In addition, instead of supporting and
strengthening political opposition parties, remarked the
partners, civil society organizations are acting as
quasi-political parties, fighting among themselves both for
U.S. attention and organizational preeminence. This behavior
has frequently put them at odds with opposition parties and
confused the population.

Former Sandinista Vice President Criticizes Ortega
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7. (C) According to Sergio Ramirez, Vice President during
Ortega's first administration, one of the more disturbing
elements of Ortega,s first year as president was his ability
to manipulate the IMF into allowing the GON to receive
funding and Venezuela oil from President Chavez without any
accounting for this income. He also criticized Ortega,s
"double discourse" -- his penchant for fiery anti-American
rhetoric that is not matched by commensurately anti-U.S. or
anti-market actions -- as a tactic to divert attention from
his main goal of perpetuating himself in power. Ramirez said
if the FSLN were to succeed and Ortega to remain in power,
Nicaragua would no longer be a "viable" country. When asked
his opinion of U.S. policy toward Nicaragua, Ramirez agreed
the U.S. was right to not respond publicly to Ortega,s
egregious rhetoric and to remain engaged in helping alleviate
Nicaragua,s crushing poverty. Ramirez believed that
international cooperation needed to be separated from
political relations. In his view, one country helping
another, despite political disagreements, was "the right
thing to do." He also recognized that the Nicaraguan people
were sophisticated enough to recognize these dichotomy, but
would prefer that the U.S. and Nicaragua maintain good
relations despite their President,s often confusing public
attitude with regard to the United States.

Marenco - "FSLN Has no Chance to Win in Managua"
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8. (C) In a lunch meeting with Feeley, Dionisio "Nicho"
Marenco, the FSLN mayor of Managua, directly stated that his
former vice mayor -- former championship boxer and the FSLN's
mayoral candidate for Managua in November, Alexis Arguello --
"doesn't have a chance to win (in November's election). No
way." According to Marenco, the FSLN bases don't like
Arguello -- who continues to struggle with drug and alcohol
addictions -- but he remains completely loyal to Ortega and
First Lady Rosario Murillo. Marenco characterized the
Liberal coalition ticket of Eduardo Montealegre and PLC
deputy Enrique Quinonez as "strong" and admitted that he is
"comfortable" with the coalition. In reference to the state
of the economy, Marenco commented that the Ortega
administration faces some very tough challenges in light of
the glaring contrast between promised jobs and improved
services and the reality of sharp prices increases for water,
electricity, fuel, and food.

Central Bank - Nicaragua Remains on Track
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9. (SBU) According to Antenor Rosales, President of
Nicaragua's Central Bank, the IMF visit went well, with
Nicaragua meeting most of its targets. Rosales pointed out
that both sides agreed on the importance of accounting for
Venezuelan assistance, particularly the money from the oil
import scheme. In Rosales, view, as long as the funds were
used in productive sectors such as agriculture and
infrastructure, the possible inflationary effects should be
tolerable. (NOTE: Rosales indicated that income from the oil
scheme totaled USD 128 million in 2007. END NOTE) Looking at
2008 and beyond, for the FSLN to fulfill its campaign
promises, Rosales believes the GON needs to solve the
electricity shortage problem, improve the investment climate
to attract investors (and generate the promised jobs and
economic growth), and keep macroeconomic stability to keep
the blessing and approval of the IMF and donors.

Agreeing to Disagree
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10. (C) Aside from agreeing to check the status of a draft
Standard of Forces Agreement (SOFA) stalled in the Ministry
for two months, Foreign Minister Samuel Santos was either
evasive or prickly on a range of topics including pending
American citizen property disputes, Nicaragua's liberal
interpretation of their rights based on the Hague's recent
decision on the 82nd parallel, the potential suspension of
elections in the RAAN, and the "independence" of the CSE.
Santos referred to Montealegre and the Liberals as "political
infants" whose inability to resolve their internal problems
was not the fault of the FSLN. He emphasized that the CSE's
decision to move up the electoral calendar did not favor the
FSLN. Santos admitted that the Liberal coalition, if it
stands, "will be difficult" in the Managua mayoral race.



11. (U) In a comprehensive interview with the daily
newspaper "El Nuevo Diario," Feeley emphasized our positive
engagement in Nicaragua as exemplified by our MCC program and
Hurricane Felix reconstruction efforts. He noted the USG's
satisfaction with Ortega's willingness to negotiate a
settlement on the MANPADs issue. He remarked that while the
USG has not yet reached the point where precise numbers can
be discussed, both sides have shown a strong willingness to
work towards a solution that benefits the Nicaraguan people.
Feeley also made it clear that, despite the generally
positive direction of the USG-GON relationship, the USG
expects the GON to take the measures necessary to resolve the
over 600 outstanding property cases in accordance with
Congressional mandates. Mentioning the Merida Initiative,
Feeley then described the USG's commitment to work with
Mexico and the Central American governments to fight
narco-trafficking and terrorism, further extending the USG's
overall committment to Nicaragua.
TRIVELLI