NICARAGUAN GOVERNMENT SEEKS USE OF U.S. LAW TO AVOID

UNCLAS MANAGUA 000902 STATE FOR WHA/CEN, EB/IFD/OIA, AND L/CID STATE ALSO FOR WHA/EPSC STATE PASS TO USTR TREASURY FOR INL AND OWH SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EINV ECON USTR KIDE NU SUBJECT: NICARAGUAN GOVERNMENT SEEKS USE OF U.S. LAW TO AVOID COMPENSATING U.S. CITIZEN CLAIMANTS REFS: A) MANAGUA 537, B) MANAGUA 002, C) MANAGUA 542, D) 02 MANAGUA 877 SUMMARY -------------- ¶1. (SBU) During the August 27 Property Working Group meeting, Government of Nicaragua (GON)officials told us they were reviewing 26 U.S. citizen claims to determine whether they met the criteria established in Section 527 of the Foreign Relations Authorization Act of Fiscal Years 1994 and 1995. They informed us that 19 U.S. claimants could no longer pursue their claims through the administrative process and could either accept the government's settlement offer or seek resolution in court. Officials asked us to contact 24 claimants whose claims were dismissed for administrative reasons and ask them to submit documents to advance their cases. They assured us that the government would resolve the 28 claims of U.S. citizen Juan Barreto, whose property is under the control of the Nicaraguan Army. During the first working group meeting of the 2009-2010 waiver year, the GON made it clear that their strategy is to compel U.S. claimants to accept whatever compensation the government offers without negotiation and use any mechanism at its disposal to dismiss claims or pay inadequate compensation. MISINTERPRETATION OF SECTION 527 -------------- ¶2. (U) On August 27, Econoff held the monthly Property Working Group meeting with Ruth Zapata, Head of the Office of Assessment and Quantification (OCI); Jeanette Garcia, President of the National Confiscations Review Commission (CNRC); Magally Bravo, the Attorney General4s Executive Coordinator for Property Issues; Alfonso Solorzano, CNRC member; and Rebeca Zuniga, Coordinator of the Office of U.S. Citizen Claims. Zapata and Bravo told us that the GON was reviewing 26 U.S. citizen claims to determine whether they complied with paragraph (h) of Section 527 of the Foreign Relations Authorization Act of Fiscal Years 1994 and 1995. Paragraph (h) defines a United States person as a U.S. citizen, corporation, partnership, or association at least 50 percent beneficially owned by United States citizens. ¶3. (SBU) Econoff explained that at this time, the only operable paragraph of Section 527 is (g),which authorizes the U.S. Government to grant a waiver to Nicaragua based on U.S. national interests. He explained that the criteria applicable in evaluating Nicaragua's progress in resolving U.S. citizen claims during this waiver year are the benchmarks laid out in the Secretary's 2009-2010 Section 527 waiver notification letter to Foreign Minister Samuel Santos. Econoff emphasized that the USG only considers a property claim resolved when a U.S. citizen has determined that he/she has received adequate and effective compensation. GON SETTLEMENT OFFERS: TAKE IT OR LEAVE IT -------------- ¶4. (SBU) Zapata provided Econoff a list of 19 U.S. claimants who could no longer pursue their claims through the administrative process. She added that they could either accept the government's settlement offer or seek resolution in court. Econoff said the Property Office would contact claimants but he asked for additional information about the status of these claims. He urged GON officials to work with claimants to resolve outstanding claims, underscoring that the USG does not consider a claim resolved when the GON publishes case resolutions in the Official Gazette and deposits compensation in an escrow account (Ref A). GON REDUCES ADMINISTRATIVE DISMISSALS -------------- ¶5. (SBU) Bravo provided Econoff a revised list of 24 U.S. claimants whose claims the GON dismissed for administrative reasons; some lack of proof of ownership and/or confiscation of the property in question, and other claims were never filed with the CNRC. Econoff responded that the Property Office would follow up with these claimants, but he also asked GON officials to exercise patience and flexibility. He noted that some claimants were physically forced from their property without possessions, while others lost documents located at regional cadastral registry offices that had been destroyed by fire, as was the case in Matagalpa, or during the civil war, as occurred in Chinandega and Masaya (Ref B). [Note: On May 22, Attorney General Hernan Estrada sent the Ambassador a list of 52 U.S. claimants whose claims the GON had dismissed for administrative reasons. The Property Office contacted the majority of these claimants, and they provided the necessary paperwork to the CNRC. The GON subsequently reduced the number of administrative dismissals from 52 to 24 (Ref C). End Note.] STATUS OF THE BARRETO CASE -------------- ¶6. (SBU) Econoff raised the case of U.S. citizen Juan Barreto, whose 28 properties are under control of the Nicaraguan Army (Ref D). Zuniga said she awaited additional paperwork from the Barreto family to finalize the case. Zapata assured Econoff that the GON would settle the case as soon as possible. COMMENT -------------- ¶7. (SBU) During the first working group meeting of the 2009-2010 waiver year, GON officials made it clear that their strategy is to compel U.S. claimants to accept whatever compensation the government offers without negotiation. The government will also use any mechanism at its disposal, including misinterpretation of U.S. law, to dismiss claims or pay inadequate compensation. This approach complicates our efforts to cooperate with the GON and U.S. claimants to advance case resolution during this waiver year. We will encourage the GON to work with us and U.S. claimants to find reasonable solutions to advance claims. We will emphasiQ to the GON that we are also interested in reducing the number of outstanding claims, as long as cases are addressed in a fair and transparent manner. End Comment. CALLAHAN