ORTEGA RESPONDS TO MCC CANCELLATION

C O N F I D E N T I A L SECTION 01 OF 03 MANAGUA 000599

SIPDIS

STATE FOR WHA/CEN

E.O. 12958: DECL: 06/15/2019
TAGS: PGOV PREL ECON EAID NU
SUBJECT: ORTEGA RESPONDS TO MCC CANCELLATION

REF: A. MANAGUA 580

B. MANAGUA 425

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


1. (SBU) Summary: Responding to the decision of the Board
of the Millennium Challenge Corporation (MCC) to partially
terminate Nicaragua's compact assistance, President Daniel
Ortega accused the USG of using aid programs to interfere in
Nicaragua's internal affairs and promote its own political
agenda abroad. Ortega repeatedly compared President Obama to
President Reagan when President Reagan cut assistance to
Nicaragua in 1982. He also claimed that the capitalist system
of foreign aid distribution practiced by the developed world
was flawed and should be replaced. Essentially, the USG and
those like it will always put their own interests ahead of
aid recipients' needs. Ortega announced the establishment of
a Venezuelan funded aid program (ALBA-Solidaria) to fund
projects that the MCC had "abandoned." The most radical
response to the MCC decision came from the President of the
Supreme Electoral Council, Roberto Rivas, whom demanded that
the Ambassador be expelled from Nicaragua. Despite Ortega's
comments, remarks from the broader Nicaraguan society,
including the local leaders of the Catholic Church, showed a
sympathetic understanding of the decision. End Summary.

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Ortega Responds - More Threats of Expulsion
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2. (SBU) At the sixth summit of Petrocaribe leaders on June
13, President Daniel Ortega used the forum to speak publicly
against the MCC decision to partially terminate Nicaragua's
compact assistance. President Ortega labeled the decision a
flagrant attempt on the part of the USG to try and gain
political leverage within Nicaragua and diminish the
sovereignty of the Government of Nicaragua (GON). Claiming
that the USG and other developed nations have never fully
lived up to their promises for aid, Ortega likened USG
assistance to a "carrot and a stick." Through foreign aid,
Ortega claimed that the USG attempted to enact political
change within a sovereign nation. The goal of USG aid, he
continued, was not to alleviate extreme poverty and improve
infrastructure, but rather to reward or punish its recipient
government. In his speech, Ortega accused the USG of
continually providing aid to three corrupt neo-liberal
regimes prior to his Sandinista National Liberation Front
(FSLN) party regaining power. He said the MCC made its
decision simply because of "the victory of the FSLN in
November's municipal elections." Ortega said the USG was
essentially meddling in internal politics and acted as an
interventionist power in Nicaragua.


3. (SBU) President Ortega concluded his remarks at the
forum stating that the United States was, and always would
be, an expansionist power. It is in the USG's nature to seek
dominance over its neighbors because of its "capitalist
philosophy." He expressed that he had hoped things would
change as President Obama entered the Oval Office; however,
he had since realized that Obama was still the president of
"an empire, and that empire has its rules." Ortega proceeded
to refer to Obama as a modern day Reagan and dismissed the
MCC decision as a product of the USG's capitalist system of
aid distribution.


4. (SBU) On June 13 Ortega called an FSLN party rally in
Managua. In his speech, Ortega accused the Embassy of
meeting with enemies of the GON, called this a "crime", and
threatened expulsion on Embassy personnel stating his
government was "gathering information, and when the time is
right, we will take the necessary measures." (Note: this is
not the first time Ortega has threatened expulsion of Embassy
personnel. See ref B.) Some FSLN leaders have made explicit
calls for the expulsion of the Ambassador and other Embassy
personnel. Supreme Electoral Council President Roberto Rivas
said the Ambassador's June 11 press conference, in which he
stated fraud was evident in the November municipal elections
and should be corrected, was "the most absurd, degrading,
bold, and insolent violation of minimal norms of diplomatic
behavior." Rivas said that in any other country such
behavior would be rewarded with expulsion. Human Rights
Ombudsman Omar Cabezas said, "the government can no longer

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maintain diplomatic relations with people so primitive,
people in such violation of human rights, because to drop
(the MCA) is a violation of human rights." Some FSLN
leaders, nonetheless, have taken another approach. Supreme
Court Vice-president Rafael Solis noted that it is more
important for the GON to overcome its differences with the
USG rather than make things worse.

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Friends Got Your Back?
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5. (SBU) Ortega has tried to assuage the Nicaraguan people
by assuring them that Venezuelan aid will pick-up right where
the MCC left off. In his Petrocaribe speech, Ortega said, "It
is time for United States policy to change, once and for all;
it is time for developed nations to follow the Venezuelan
example, to contribute to development, to contribute to the
fight against poverty, to win the fight against hunger, to
win the fight against unemployment, and to contribute without
conditions." Venezuelan President Hugo Chavez was in
attendance at that summit and said that Venezuela would stand
by Nicaragua. Chavez called the MCC decision a crime and
pledged, "the least we can do for Nicaragua is to modestly
support some of these programs, so that Nicaragua is not
without highways and agricultural programs."


6. (SBU) At the June 13 FSLN party rally in Managua,
President Ortega announced the formation of the Venezuelan
assistance program "ALBA-Solidaria." The new program would
consist of grants provided by the Venzuelan-led Alternativa
Bolivariana para los Pueblos de Nuestra America (ALBA).
(NOTE: It remains unclear if this ALBA assistance would be in
the form of grants, loans, or some other kind of assistance.)
Ortega said that these funds would be put toward continuing
projects left behind by the MCC. Ortega introduced the
program as a way to "confront the blackmail politics of the
empire." Chavez committed $50 million to Nicaragua through
the ALBA-Solidaria Fund.

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Media and Civil Society Reaction
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7. (SBU) Major Nicaraguan media continued to positively
report on the Ambassador's press conference regarding the MCC
decision (ref A). "El Nuevo Diario" (center-left national
daily) mocked the GON's defense and printed a story under the
headline, "This act was blackmail." The headline referred to
a statement issued by Vice Foreign Minister Valdrack
Jaentschke and drew attention to the stubbornness of the FSLN
in refusing to discuss the November elections because the
"FSLN government had demonstrated with 'total clarity and
transparency' the electoral process." "La Prensa"
(center-right national daily) ran a story under the headline,
"They do not believe Chavez can replace the MCC." The
article read, "Every one knows that it is a lie that Chavez's
funds will benefit the people. These funds are to
finance...and privilege Ortega's supporters and to benefit
the businessmen related to Ortega's family."


8. (SBU) The media also reported the reaction of
Nicaragua's leaders of the Catholic Church. Bishop Abelardo
Mata of Matagalpa said the Ortega administration did not
think about the people's interests and needs, instead it
acted with arrogance in not reviewing the results of the last
electoral process. Bishop Bernardo Hombach of Granada said
that what was more disappointing than the loss of the MCC
funds was the reason for the MCC's decision. "There was
fraud," Hombach stated, "the Church has said it clearly."
Bishop Bosco Vivas of Leon lamented the MCC decision and did
not think that aid should be conditioned. He said, however,
that Ortega did not respond to the will of the majority and
as such he is ultimately at fault for the people's loss.

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Comment
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9. (C) As expected, in responding to the MCC decision,
Ortega blamed the USG for its "inherent political undertones"
in the distribution of USG foreign assistance. At the same

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time he announced his plan to replace the funds lost from the
MCC with Venezuelan assistance. His comments on President
Obama and threats to expel the Ambassador suggest Ortega is
willing to further distance himself from the USG and
strengthen his relationship with Hugo Chavez, a move that
will surely affect the Nicaraguan people for the worse in the
long-run.
CALLAHAN