NICARAGUA: AMBASSADOR LEADS DISCUSSION ON DONOR

C O N F I D E N T I A L SECTION 01 OF 02 MANAGUA 000432 SIPDIS DEPT FOR WHA/CEN KRAAIMOORE DEPT FOR INR/IAA E.O. 12958: DECL: 04/23/2019 TAGS: EAID ECON PGOV NU SUBJECT: NICARAGUA: AMBASSADOR LEADS DISCUSSION ON DONOR UNITY REF: 2008 MANAGUA 1392 Classified By: Ambassador Robert J. Callahan for reasons 1.4 (b & d). ¶1. (C) SUMMARY: On April 15, Ambassador Callahan hosted ambassadors from Nicaragua's major European donor countries in a discussion about donor actions following the fraudulent outcome of the 2008 municipal elections (reftel) and the continued unwillingness of the GON to address the issue. The meeting resulted in a near-consensus (Spain excepted) among donors, including the recognition that the GON has already lost millions in budget support payments, that the donors would look to work through other entities (NGOs, municipalities),where possible, and that all feared the creeping authoritarianism of the Ortega Administration. The meeting was the culmination of a process of consultation among aid missions and embassies in Nicaragua with the participation of an international consultant, funded by the UK. END SUMMARY -------------- DONORS AGREE ON CONSEQUENCES FOR FRAUD -------------- ¶2. (C) The ambassador-level meeting, which included the Chiefs of Missions from Germany, Denmark, Finland, Spain, the Netherlands, and the European Commission, resulted in a near-consensus (Spain excepted) between donors that there should be consequences for the blatant November 2008 electoral fraud and that the GON has done nothing to date to address legitimate international concerns about the fraud. Donors also agreed that as a consequence, the GON had already lost millions for 2009 through the freezing of traditional budget support and the suspension of the Millennium Challenge Corporation (MCC) projects. Going forward all the donors would look to work through more congenial entities (NGOs, municipalities),where possible, to disseminate their assistance. There was also agreement between all participants that Nicaragua's fledgling democracy was at serious risk of being derailed and could be entering a "perfect storm" for increased nacro-trafficking and criminal gang activity as the economic situation deteriorated. The group of ambassadors also agreed to meet again in a few weeks to draft common language that would be presented to President Daniel Ortega. -------------- UK'S DFID SPONSORS DONOR WORKSHOPS -------------- ¶3. (C) The ambassadors' meeting on April 15 was the final step in a three-month exercise originally conceived and sponsored by the United Kingdom,s Department for International Development (DFID). After DFID announced that it was leaving Nicaragua to re-focus resources in Africa, its country director decided to use remaining funds to sponsor a series of donor workshops and interviews to explore the forces for change in Nicaragua and develop scenario analysis for future donor actions. The goal of the DFID workshops, among other things, was to facilitate a dialogue among donors that could lead to better coordination. DFID hired an international consulting firm to facilitate the donor workshops which began in January 2009 among technical-level aid practitioners and concluded with a multi-day scenario analysis workshop in March. DFID agreed to sponsor a final technical-level meeting among like-minded donors and an ambassadors' meeting, both hosted at the US Embassy. MANAGUA 00000432 002 OF 002 -------------- COMMENT -------------- ¶4. (C) European capitals are refocusing foreign assistance resources away from Latin America to Africa and the Mideast. For example, during the discussion it was revealed that Norway's budget support payments would end in 2009, and that both Dutch and Finnish development assistance may also leave Nicaragua within five years. While Nicaragua desperately needs donor funding to support its social programs, it has encouraged donor flight through its authoritarian actions and rhetoric. Expected or promised assistance from "new" allies Russia, Iran and Venezuela has been slow in materializing. The DFID donor workshops, if nothing else, established useful lines of communication within the diverse donor community, as well as the recognition that the donors should coordinate more closely because of shared values and objectives. CALLAHAN