VZCZCXYZ0012
RR RUEHWEB

DE RUEHMU #1251/01 1592127
ZNR UUUUU ZZH
R 082127Z JUN 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 6547
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS MANAGUA 001251 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR WHA/CEN MKOPOLOW & NHATCHER, EB/IFD/OIA/JPROSELI 
L/CID/EDAUGHTRY 
PASS USTR 
TREASURY FOR DONOVAN/CHRISTOPULOS 
 
E.O. 12958: N/A 
TAGS: EINV KIDE ECON USTR NU
SUBJECT: 2006 EXPROPRIATION REPORT: NICARAGUA 
 
REF: A. A) STATE 60284 
 
     ¶B. B) 05 MANAGUA 1815 
 
¶1.  This cable provides proposed language for the Nicaragua 
chapter of the 2006 Report on Investment 
Disputes and Expropriation Claims.  Embassy will send 
comprehensive annex with details of confiscated property 
claims by June 10, as requested in Ref A. 
 
---------------------------- 
Property Confiscation Claims 
---------------------------- 
 
¶2.  Despite progress in recent years, the resolution of 
property cases in Nicaragua continues to be a serious 
problem.  Since the Sandinista government left office in 
1990, thousands of Nicaraguans and other nationals have 
registered claims with the Nicaraguan government 
for more than 28,000 properties--homes, farms, bank accounts 
and other assets--expropriated during the 1979-1990 
Sandinista era.  Most of those affected were Nicaraguans, but 
many were, or have since become, U.S. citizens. 
 
¶3.  The government of Nicaragua has made continuing progress 
in resolving outstanding U.S. citizen claims, including those 
of individuals who became U.S. citizens after the decade of 
confiscation.  The current Nicaraguan administration has made 
a concerted effort to resolve such claims involving 
properties held by different agencies of the government, 
notably the parastatal holding company CORNAP (Corporacion 
Nacional del Sector Publico). 
 
¶4.  Beginning in late 2004, political forces aligned against 
the Nicaraguan president attempted to weaken the executive 
branch by using their control of the National Assembly to 
enact a series of constitutional and institutional changes. 
One of the measures was Law 512, which shifted responsibility 
for property claims resolutions from the executive branch to 
a National Property Institute under the control of the 
legislature (Ref B).  Published on January 22, 2005, Law 512 
included certain provisions affecting cases in the court 
system and others on appeal for a third tier administrative 
review.  Though the Institute was never implemented, Law 512 
had a chilling effect on claims resolutions for many months. 
Under the terms of an October 2005 political agreement, 
implementation of Law 512 was put on hold until after the 
January 2007 inauguration of the new administration.  Until 
the November 2006 presidential and parliamentary elections 
are held and the composition of the new National Assembly is 
known, it will be difficult to predict the fate of the 
National Property Institute and the extent of future progress. 
 
¶5.  Section 584 (c) (i) of H.R. 4818, Consolidated 
Appropriations Act, 2005 stated that after a cut-off date 
(subsequently set at August 1, 2005), new claims registered 
at the Embassy would not be considered in the U.S. 
government's determination on whether to extend future 
waivers to Nicaragua.  However, the Property Office will 
continue to make note of new claims and assist all U.S. 
citizens with property claims.  The new claimants receive 
assistance and constitute a separate database presently 
consisting of ten American citizen claimants pressing for 
resolution of 16 property claims.  The U.S. Embassy in 
Managua has an American officer and two Nicaraguan attorneys 
on staff who assist U.S. citizens in filing and tracking 
their claims--positions unique to that post. 
 
¶6.  The 3,192 claims considered by the U.S. Embassy for the 
purpose of determining if an annual waiver is to be granted 
are those registered between January 1995 and July 31, 2005. 
They belong to a total of 1,137 individuals, of whom 269 were 
U.S. citizens at the time of confiscation.  To date the 
Nicaraguan government has resolved 2,466 Embassy-registered 
claims.  In some cases, property has been returned to 
claimants, although most receive compensation in the form of 
long-term, low-interest bonds.  The Nicaraguan government has 
issued bonds to Embassy-registered claimants with a face 
value of an estimated US$305.6 million.  The GON has also 
resolved almost 2,000 U.S. citizen claims not registered with 
the Embassy. 
 
¶7.  As of June 1, 2006, there remain 727 active 
Embassy-registered claims of 319 U.S. citizens.  Sixty-six of 
these claimants, who have 119 current claims, were U.S. 
citizens at the time of confiscation.  The United States 
government will continue to press vigorously for resolution 
of all outstanding U.S. citizen property claims. 
 
¶8.  The usefulness of a strong performance by the GON in 
resolving property cases cannot be overemphasized.  An 
internationally recognized arbitration or mediation mechanism 
could help demonstrate Nicaragua,s commitment to economic 
stability, improve its property-related closure strategy, and 
provide a clear signal that longstanding property issues are 
being addressed equitably and effectively. 
 
------------------- 
Investment Disputes 
------------------- 
 
¶9.  Claimant A is a U.S. majority holder of a multinational 
group of investors set on constructing a dry canal in 
Nicaragua.  The project proposes two deep-water container 
ports with "post-Panamex" capability, one at Monkey Point on 
the Atlantic and the other at Brito on the Pacific, connected 
by a 377-kilometer railroad.  Claimant A began the project in 
1994 and was granted first rights to a canal concession by 
the National Assembly in a 1996 televised signing.  The May 
2001 publication of Nicaraguan Law 2878 authorized an 
interagency commission led by the Ministry of Transportation 
and Infrastructure to issue a concession and associated 
permits for a feasibility study and final design. 
 
¶10.  The Interagency Commission has not made progress despite 
insistent pursuit by Claimant A and frequent intercessions by 
U.S. Embassy officers.  Claimant A raises credible 
allegations that its intellectual property and work product 
has been misappropriated and provided by Government officials 
to a parallel company, tantamount to an expropriation.  All 
of Claimant A's work has been performed in reliance upon 
agreements directly with the Government of Nicaragua. 
Claimant A has reported investing over US$12 million in 
engineering, financial, market and other studies, as well as 
its local operations to date. 
 
¶11. (SBU) Claimant A:  Canal Interoceanico de Nicaragua or 
CINN. 
 
 
 
TRIVELLI