NICARAGUA: TRANSPORTATION STRIKE CONTINUES

C O N F I D E N T I A L MANAGUA 000611

SIPDIS

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

E.O. 12958: DECL: 05/13/2018
TAGS: ELTN ECON ELAB EFIN PGOV NU
SUBJECT: NICARAGUA: TRANSPORTATION STRIKE CONTINUES

REF: A. MANAGUA 578

B. MANAGUA 520

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


1. (C) Summary. Nicaragua's national transportation strike
involving taxis, inter-urban buses, and freight haulers is
now in its ninth day. On May 12, for the second day in a
row, transportation leaders and government representatives -
led by Transportation Minister Fernando Martinez - failed to
reach an agreement, with both sides remaining far apart.
Produce prices are up, with fresh vegetables costing twice as
much as last week, but markets have generally been able to
restock. Despite sporadic cases of violence and police
detentions, city traffic patterns and urban behavior belie
hysterical headlines about the strike. Union leaders, who
may not be able to sustain the strike for a prolonged period,
believe it is "now or never" for the workers to gain
concessions from the government. End Summary.

Scale and Seriousness of Strike Unclear
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2. (U) Nicaragua's national transportation strike involving
taxis, inter-urban buses, and freight haulers is now in its
ninth day. There is no consensus as to whether the scope of
the strike is growing or subsiding. Some media reports
indicate that the strike is losing steam outside of Managua.
However, others show the strikers becoming more radical, for
instance, by burning two trucks at a rural Managua Department
intersection. Instant television and press Internet coverage
report multiple injuries the result of the truck burnings and
the heart attack fatality of one detained taxi driver
protester in the city of Leon.

Talks Break Down For a Second Day
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3. (SBU) On May 12, for the second day in a row,
transportation leaders and government representatives - lead
by Transportation Minister Fernando Martinez - failed to
reach an agreement. Transportation leaders began
negotiations by meeting with Lenin Cerna, the Sandinista
National Liberation Front's (FSLN) Political Secretary, and
other FSLN representatives to discuss and gain support for
their counter-proposal to freeze gas prices at $2.11 per
gallon, nearly half of the government's offer.
Transportation leaders had expected this "pre-meeting" to
soften the government's position during negotiations.
However, the government continued to stand by its proposal to
lower retail gas prices for taxis and inter-urban buses by
$0.50 cents to a current $4.20/gallon. The proposal does not
cover freight carriers. Upon hearing the government's
position, transportation negotiators abruptly left the
meeting and have indicated that they will only negotiate with
President Ortega directly.

Politics Come into Play
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4. (C) According to the government's offer, 20 cents of the
50-cent price cut would come from the national budget.
(Comment. It is not clear where the remaining 30 cents would
come from, though Andres Lara, the Nicaraguan Transport
Chamber President, reports that the Government of Nicaragua
(GON) would find the funds from the Albanisa Venezuelan
petroleum subsidy. End Comment.) However, Liberal
opposition National Assembly deputy and Managua mayoral
candidate Eduardo Montealegre declared that he will not
support an additional budgetary obligation. Instead, he
called on the government to subsidize the 20-cent price cut
using off-budget funds accumulated from sales of Venezuelan
oil, estimated to be between US$200-400 million a year. In
addition, Montealegre hinted that he would tie any opposition
backing for additional budgetary support to further
negotiations over election delays in the North Atlantic
Autonomous Region (RAAN) (Ref B) (Comment. Shifting
attention away from striker demands that Ortega use Venezuela
ALBA funds to lower gasoline prices and toward the opposition
in the National Assembly would seem to play into Ortega's
hand. End Comment.)

Scarcity, Prices, and the View from the Street
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5. (U) News reports decry a scarcity of produce on the
shelves and rising prices. EconOff's visit to the largest
market in Managua on May 13 confirmed this had been
situation. That day, however, a major delivery arrived
filling market stalls with fresh produce, basic grains and
non-perishable items. Prices are up, with fresh vegetables
costing twice as much as last week. Most prices have risen
between 24% and 400%. Only onions and rice remained stable,
with basic grains and beans reflecting only modest price
changes. Chicken, distributed by the independent Tip-Top
enterprise, whose truckers are not striking, reflected no
change in prices. Fresh meat prices have risen due to
delivery issues. The price of butane, the cooking fuel used
by most Nicaraguans, has risen 4% the last week. We have
reports, however, of perishable produce crated for export
unable to be transported, whose limited shelf life make an
eventual wholesome delivery, to the U.S. or Europe, uncertain.


6. (U) Stores belonging to major supermarket chains - Pali,
La Union, and La Colonia - were well-stocked, with prices in
concert with those observed at the municipal market. Shelf
managers indicated sporadic, though sufficient, delivery
schedules. The regional produce manager for WalMart Central
America, the owner of the Pali and La Union chains, has
expressed his concern over continued supply of dairy, fruit,
and vegetable products, as well as the inability to move meat
delivery exports.


7. (C) Reports of thousands of containers stacking up at the
national port of Corinto were denied by the National Port
Authority (EPN). Bernardo Salazar Meza, EPN's legal advisor,
said that the importation of goods has been proceeding on
schedule. Container inventory at the port is manageable,
though he would not specify a number. He told us that the
arrival of export containers was down, but was not worrisome.
This official report was contradicted by shipping company
contacts, who said that the port is indeed full to capacity,
with both import and export shipments unable to move.


8. (U) Finally, Managua traffic reflects nearly normal hustle
and bustle. The threatened strike on May 12 by the remaining
buses from Managua's largest bus cooperative did not happen,
and there seems to be an increasing number of taxis and buses
in circulation. Most Embassy locally employed staff are
making it to work, albeit with some delays.

Comment
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9. (C) While market inventories ebb and flow, markets have
been able to restock, though at higher retail prices.
Despite sporadic cases of violence and police detentions,
city traffic patterns and urban behavior belie hysterical
headlines about the strike. With many of Nicaragua's bus,
truck, and taxi drivers financially unable to sustain the
strike indefinitely, union leaders believe it is "now or
never" for the workers to gain concessions from the
government. According to one Sandinista union leader, who
characterized Ortega as "taking extreme positions," if the
strikers cannot resolve the situation by May 14, "Ortega will
wait them out and give them nothing." Asked about the
political implications of such a move, he responded that
"after three or four months the issue will be forgotten,"
implying that it would not affect the outcome of the
municipal elections. Ortega's planned departure for the
Euro-Latin Summit in Lima suggests that waiting the strike
out may indeed by the GON's strategy.
TRIVELLI