VZCZCXYZ0000
PP RUEHWEB

DE RUEHMU #0222/01 0302232
ZNR UUUUU ZZH
P 302232Z JAN 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 5072
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS MANAGUA 000222 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
 
E.O. 12958: N/A 
TAGS: SOCI ELAB ECON EFIN KIRF SMIG NU
SUBJECT: NICARAGUAN REGIONAL REPORTING--SOCIAL AND ECONOMIC 
ISSUES: CARAZO 
 
REF: MANAGUA 221 
 
¶1. (SBU) During a January 26 election reporting trip to the 
department of Carazo, just south and east of Managua 
(reftel), emboffs discussed a range of economic, social, and 
religious issues with local leaders.  Businessmen Aquiles 
Jaenz, Edgard Bermudez, and Ramon Conrado, the President, 
Secretary, and Treasurer, respectively, of the Carazo Chamber 
of Commerce, provided an overview of departmental economy. 
They stated that even when Carazo's economic development 
peaked in the 1970s, it still had a serious unemployment 
problem.  The local economy has never recovered from the 
ravages of 1980s Sandinista mismanagement, and now 
unemployment is much worse.  Although there are no exact 
figures, the Chamber estimates at least 30 percent 
unemployment in Carazo, as well as widespread 
underemployment.  This average conceals wide variations, as 
the mayor of the small municipality of La Conquista told 
emboffs that at least 75 to 80 percent of the people in his 
town are jobless. 
 
ECONOMY BASED ON SUBSISTENCE AGRICULTURE, GOVERNMENT JOBS, 
AND A HANDFUL OF FACTORIES 
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¶2. (SBU) According to the Chamber, subsistence agriculture is 
the primary economic activity in the region, and, of the 
small quantity of agricultural goods that are produced for 
sale, few go beyond the department.  Little of the former 
coffee industry remains in Carazo, and returns on ranching 
have declined markedly.  Other local leaders complained of 
the "unreliable" prices paid for those agricultural products 
that are exported, including sugar and rum, and called for 
the creation of a national development bank that would help 
producers to expand production and produce better quality 
goods for international markets.  For now, the only industry 
is provided by a single plastics factory and a few 
recently-arrived free trade zone (FTZ) textile factories; the 
latter have slightly improved the unemployment numbers.  What 
remains of the economy is service oriented, in the form of 
jobs in government, health, and schools, all of which depend 
on the GON budget.  Aside from the arrival of the FTZ 
factories, the only real growth in recent years has been in 
the informal sector. 
 
LOCAL CHAMBER OF COMMERCE WELCOMES CAFTA, BUT COMPLAINS OF 
POOR GON COORDINATION AND PLANNING 
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¶3. (SBU) The Chamber leaders complained that local and 
national developmental strategies are rarely coordinated, and 
stated that local business feels neglected by both the GON 
and the national business council, which they said ignores 
departmental concerns and really only represents Managua. 
While Managua enjoys national and international business 
interests, virtually all business in Carazo is local.  The 
Carazo Chamber welcomed the passage of CAFTA, but feared that 
without a coherent development strategy, Carazo would draw 
little benefit from it.  Most businesses in the department 
are small and family owned, and there are widespread fears 
that free trade could lead to the arrival of larger companies 
that would put the local enterprises out of business. 
 
¶4. (SBU)  The Chamber leaders suggested that the GON should 
help to promote development strategies to enable individual 
towns or departments to develop a sort of "cottage industry" 
whereby a whole town or region would produce specialized 
items for collective export as a way of taking greater 
advantage of CAFTA.  Carazo needed more than just textile 
factories, they opined.  Along with many other local leaders, 
the Chamber noted that the depressed economic situation in 
Carazo has led to large scale emigration, primarily to Costa 
Rica, given the proximity of the border, but also to the 
United States and elsewhere.  Much of the population that 
remains now gets by on remittances sent home from family 
members abroad. 
 
CATHOLIC CHURCH CONCERNED ON ECONOMIC PROBLEMS, MIGRATION, 
EVANGELICAL COMPETITION 
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¶5. (SBU) While in Carazo, emboffs also met Father Rafael 
Bermudez, the top Catholic Church official for the 
department.  Bermudez stated that his parishioners are 
primarily interested in assistance with their many (mostly 
economic) problems, and that they feel little help from 
Managua is forthcoming.  He believed that the number of 
people leaving the department to seek opportunities elsewhere 
is increasing.  Bermudez regretted that some of those seeking 
solutions are turning to the evangelical churches, which he 
described as providing them little more than "therapy."  He 
was reluctant to admit that the number of evangelicals is 
growing, and insisted that the Catholic Church is "holding 
its own" in Carazo. 
TRIVELLI