ORTEGA LAUNCHES CHARM OFFENSIVE TO WOO BACK AID

C O N F I D E N T I A L SECTION 01 OF 02 MANAGUA 000241

SIPDIS

E.O. 12958: DECL: 03/04/2019
TAGS: PREL PGOV NU
SUBJECT: ORTEGA LAUNCHES CHARM OFFENSIVE TO WOO BACK AID

Classified By: Ambassador Robert J. Callahan, reasons 1.4 (b, d)


1. (C) Summary. Faced with a worsening economic situation,
steep cuts in foreign assistance, and an ongoing domestic
political crisis resulting from fraudulent municipal
elections in November 2008, President Ortega has a launched a
belated and superficial charm offensive with foreign donors
to woo back aid and attract new cooperation and investment.
In its outreach to donors, especially from the EU, the GoN
has emphasized the negative impact cuts would have on the
rural poor and sought to minimize concerns over
anti-democratic trends and credible accounts of elections
fraud. Additionally, Ortega has called for a "national
dialogue" to restore donor confidence, while avoiding
committing to concrete minimum conditions or participation by
opposition groups in any such dialogue. End Summary.

CHANGING THE RHETORIC AND OPENING DOORS
--------------


2. (C) In the immediate aftermath of the November 2008
municipal elections and cuts or freezes in aid announced by
donors in response to credible reports of massive electoral
fraud, the Ortega administration appeared defiant and
welcomed the departure of the "imperialists." In late
November, Ortega told his fellow participants in the ALBA
Summit in Caracas, Venezuela that the departure of the
Millennium Challenge Corporation's (MCC) program would make
Nicaragua "more free." Vice Foreign Minister Manuel Coronel
Kautz later said that the freezing of MCC and other
international aid was an "act of desperation" and suggested
that Nicaragua would be better off without such aid "because
this type of cooperation does not develop the country."


3. (C) Three months later, facing a worsening economic
situation compounded by a significant budget shortfall,
President Ortega and senior GON officials have launched an
effort to woo back foreign aid and enhance relations with
foreign donors. Over the last month, senior GON officials,
including the Finance Minister, Education Minister, Foreign
Minister and President Ortega himself have made personal and
direct efforts to enhance or highlight cooperation with the
U.S. as well as with other key foreign donors. In public,
Ortega and other senior FSLN/GoN leaders have scaled back,
though not eliminated their standard anti-U.S. and European
rhetoric.


4. (C) Moreover, Ortega and the FSLN leadership have expanded
their personal outreach to the Embassy and the Europeans. On
January 29, Ambassador hosted Ortega and his wife, Rosario
Murillo, for their first ever dinner at the U.S. Ambassador's
residence. Over the course of the three hour event, Ortega
and Murillo were engaging and personable, but cautiously
avoided discussion of substantive issues. In a February 10
meeting with the Ambassador, Foreign Minister Santos
committed to quickly resolve several long-standing bilateral
disputes involving exemption from taxes for the Embassy and
personnel. After months of being told that the Finance
Ministry opposed granting the Embassy exemption from taxes on
gasoline purchases, Finance Minister Guevera told the
Ambassador that he was "under orders" to resolve the problem
and committed to exempting the Embassy from future taxes as
well as removing the demand that back taxes be paid on prior
fuel purchases. Other FSLN National Assembly Deputies and
regional party officials have also opened their doors to
Emboffs after declining or canceling requests for meetings in
previous months. Other diplomatic missions have reported to
us a similar sudden change in GoN behavior. One Ambassador
told us that "cooperation has never been better" and that he
could not explain the change in attitude and cooperativeness
suddenly coming from the GoN.

NATIONAL DIALOGUE - BUT ON FSLN TERMS
--------------


5. (C) Beyond changing the rhetoric and opening their doors
to Western diplomats, the FSLN has re-circulated an idea
proposed last year to convene a "national dialogue" to move
Nicaragua beyond its current crises. On February 27,
National Assembly President and Ortega-confidant Rene Nunez
publicly announced the proposal for a "national dialogue in
which would participate all the social, political and
economic sectors of the country." The goal of the dialogue,
according to Nunez, would be to design programs that would
counteract the "negative effects of the decadence of the
capitalist and neo-liberal system." Only a national

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dialogue, he asserted, would be able to address the problems
facing the country and keep the nation on course to address
the real problems of poverty and other social needs of
Nicaraguans. On March 3, Ortega met with Cardinal Miguel
Obando y Bravo (who chairs the pro-Ortega National
Reconciliation Commission) and proposed that Obando chair the
national dialogue. (Note: Obando, who was once the leading
critic of Ortega, has allied himself with Ortega, publicly
defending his handling of the November municipal elections
and rejecting criticism of Ortega's slide towards
authoritarianism. Obando's popularity has fallen as a result
and his role in any dialogue would be widely rejected by
opposition political parties and NGOs. End Note.)


6. (C) In a sign that the call for a dialogue is likely part
of the "Pacto" power-sharing agreement between Ortega and
former President Arnoldo Aleman, Constitutional Liberal Party
(PLC) leader Wilfredo Navarro issued a public challenge to
Ortega to convene the dialogue and committing the PLC's
participation, but only if it included a discussion of the
formation of a new Supreme Electoral Council (CSE) and
broader constitutional and political reforms, including
permitting presidential re-election. Civil society leaders
with whom we have spoken have rejected the call for a
dialogue on the FSLN's and PLC's terms, fearing that they
would be excluded from the table and any outcome of the
dialogue, which is more than likely pre-determined. Violeta
Granera, Executive Director of the civil society group
Movimiento por Nicaragua, believed the call for a dialogue
was a "trap" that would be used to endorse constitutional
changes, cosmetic reforms of the electoral system, and lead
to a further concentration of Ortega's power at the expense
of civil society. Granera reported that a group of NGOs
working to promote electoral reform would shortly issue a new
platform of recommended changes to electoral law (that do not
involve constitutional reform) that she hoped could serve as
the basis for a real dialogue and a minimum standard by which
to evaluate the GoN's commitment to reform.

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


7. (C) It is clear that Ortega is beginning to feel the bite
of the global financial crisis and reduced international aid,
particularly European-donated direct budget support, and is
looking for a way forward to attract re-investment. At the
same time, it is also clear that Ortega is confident that his
administration can ride out the economic storm and woo back
aid if they go through the motions of committing to improved
relations and reform. He appears willing to give lip-service
to reform, but only to the extent that it serves his
long-term agenda of securing his hold on power through
constitutional reform and presidential re-election. We have
seen no indication that Ortega or others in the FSLN have
reached out to key segments of Nicaraguan society, including
pro-democracy NGOs, the business community, or the Catholic
Church, or that such organizations would be prepared to
engage in a dialogue on the terms proposed by Ortega.



CALLAHAN