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 - - - - - - - - - - - - - - - - - - - - ¶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 - - - - - - - - - - - - - - - - - ¶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 - - - - - - - - - - - - ¶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 - - - - - - - - - - - - - - - - - - - - - - - ¶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 - - - - ¶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