NICARAGUA: TRANSPORTATION WORKERS STRIKE

C O N F I D E N T I A L MANAGUA 000578

SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, EEB/TRA

E.O. 12958: DECL: 05/07/2018
TAGS: ELTN ECON ELAB EFIN PGOV NU
SUBJECT: NICARAGUA: TRANSPORTATION WORKERS STRIKE


Classified By: Ambassador Paul A. Trivelli for reasons 1.4 (b,d)


1. (C) Summary: The Association of National Transport
Coordinators went on strike on May 5 seeking relief from
skyrocketing gasoline and diesel prices. While day one was
not well organized, on days two and three, more taxi,
intercity bus, and truck drivers heeded the call, and
sporadic violence has broken out in cities around the
country. The political affiliations of the transport unions
are mixed, with sector coverage spreading as economic
interests and union solidarity take hold. In the meantime,
the trigger for the strike has shifted from high prices per
se to whether the government, specifically President Ortega,
will talk to the strikers about lowering prices through
subsidies and/or removing fuel taxes at the pump. Different
union party representatives hold differing opinions on the
strike's staying power, with Sandinista representatives
merely expressing "solidarity" with the unions in the near
term, and Liberal-affiliated sector representatives saying
they will strike for as long as it takes to win relief. End
Summary.

Prices Rise Dramatically at the Pump
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2. (U) Since the beginning of the year, retail fuel prices in
Nicaragua have risen more than 25%. The first week of May,
the price at the pump for regular gasoline topped $4.70 per
gallon, with premium gasoline costing about 9 cents more and
diesel 11 cents less. The high cost of fuel cuts deep into
the margins of those who earn their living on the road. The
Nicaraguan Federation of Taxi Cooperatives, the Nicaraguan
Transport Workers Association, the Nicaraguan Federation of
Transport Collectives, and allied transport cooperatives from
the northern and southern regions called on the government to
provide far reaching subsidies, but the government has
refused to talk.

Strike
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3. (U) Transportation union leaders first wanted to call a
strike at the end of April, followed by a show of force
during May Day celebrations in Managua. Indeed, Ortega moved
his May Day event to the evening of April 30 to avoid
confrontation with transportation workers on May 1. The
Association of National Trsport Coordinators then backed away
from a possible confrontation with Ortega supporters on May
1, choosing instead to start the strike on May 5. While day
one activities appeared to lack strong broad-based
coordination, long lines of trucks parked along the shoulder
of the Pan American highway made their point. The evening
news ran clips of roving taxi drivers ripping off the roof
signs of still operating taxis. On days two and three, more
taxi, inter- and intra-city buses, and truck drivers heeded
the call, and sporadic violence broke out in cities around
the country. The Nicaraguan Transportation Chamber claims at
least 25,000 taxis, 15,000 buses, and 5,000 truck drivers are
willing participants; nevertheless, a number of taxis and
trucks have been operating.


4. (U) In the meantime, the trigger for the strike has
shifted from high fuel prices per se to whether the
government will talk to the strikers about lowering prices
through subsidies and/or removing taxes at the pump.
Transportation Minister Pablo Fernando Martinez and Finance
Minister Alberto Guevara have flatly rejected these proposals
as "impossible." However, Martinez has suggested that the
government would allow drivers to save 6 cents on the gallon
by using a "self-service" option at gasoline stations around
the country.


5. (C) Four days into the strike, worker solidarity ) not
political affiliation ) appears to be the driving force
behind the strike's spread. According to Liberal labor
leaders, their transportation affiliates began the strike,
seeking a reduction in gas prices. Miguel Ruiz, director of
the Sandinistas' largest labor confederation, confirmed that
the Sandinistas are not behind the strike and that he is
actively seeking a resolution given the action's negative
impact on the rest of the confederation's membership. As
further evidence of the bi-partisan nature of the stoppage,
on May 8, day four of the strike, Managua's largest bus
cooperative )- a Sandinista organization -) joined in,
stopping half its bus fleet. Asked directly about his
motivations, Rafael Quinto, the cooperative's president,
matter-of-factly told us that his decision "has nothing to do
with politics. We are showing solidarity with our
transportation colleagues." Quinto also insisted that, if
the strike is not resolved by Monday, he would order 100
percent of the cooperative's Managua buses to strike, a move
that will bring mass transit in Managua to a grinding halt.

COMMENT: This lack of FSLN sponsorship ) but apparent
solidarity -- is interesting, given President Ortega's
ability to use the bus transportation cooperatives to bus in
supporters for political rallies, most recently on May 6.
FSLN-controlled media is exploiting the situation to score
anti-U.S. "imperialist" points, claiming that the strike is
somehow U.S.-backed. So, while Liberal and
opposition-dominated unions started the strike by their
year-long agitation for relief, what seems to be the tipping
point drawing in the FSLN unions to this increasingly
disciplined strike is not GON orders, but fuel prices
crossing an economically unsustainable operating line and
demonstrations of solidarity. END COMMENT.

Where's Hugo When You Need Him?
--------------


6. (U) A number of economists point out that Nicaragua has
the highest priced gasoline in Central America, 25% higher
than neighboring Honduras, which participates in a Chavez
scheme that is theoretically a cut below the one struck with
Nicaragua. Opposition politicians are beginning to exploit
the fact that Nicaraguans do not see the value of Ortega's
fraternal relationship with Chavez if the benefits are not
flowing directly into their gas tanks. Pleading the flu and
a hoarse voice, Chavez bowed out of the Central American Food
Crisis Summit in Managua on May 7.

Existing Subsidies Public Transportation
--------------


7. (SBU) The national government already subsidizes the
Managua intra-city public transportation bus system. In
2007, this subsidy amounted to $5,783,386, equivalent to
$0.12 per passenger/day. In 2008, the National Assembly
approved just $4,206,099, but reportedly the government has
failed to disburse the first quarter's allocation of
$1,577,287.


8. (U) In addition, for the past five years, the City of
Managua has administered an operating subsidy for fuel and
expenses to city bus cooperatives. The system constitutes
855 buses organized into 27 cooperatives that serve 727,000
people daily, or 58% of the urban population. Almost 90% of
the buses are more than 15-years old. With the fuel subsidy,
cooperatives can buy diesel at a fixed price of $2.13 per
gallon. The Managua Municipal Transport Regulatory Institute
(IRTRAMMA) estimates that this translates to a savings of
five cents per passenger/day. The national government and
city subsidies combine to allow Managua to fix the city bus
fare at 2.50 cordobas (13 cents).

Comment
--------------


9. (C) If the strike continues to expand and holds through
the weekend without resolution, Ortega will have a serious
problem on his hands. We believe he may face the decision
either to break the strike or negotiate. Breaking the strike
) which has now taken on a national dimension ) would prove
difficult. First, Ortega lacks an effective mechanism to do
so. Police have shown some affinity with the strikers' cause
and transportation workers have demonstrated strong
bi-partisan solidarity. Breaking the strike would also place
Ortega in the unenviable position of taking draconian
measures against a group )- Managua bus cooperatives -- long
considered an important base.
TRIVELLI