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DE RUEHMU #0303/01 0400013
ZNY CCCCC ZZH
P 090013Z FEB 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 5164
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

C O N F I D E N T I A L MANAGUA 000303 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN, USDOC FOR 4332/ITA/MAC/OLAC 
 
E.O. 12958: DECL: 02/08/2016 
TAGS: KDEM NU PGOV PINR PREL KCOR ETRD ECON EFIN
SUBJECT: ASSEMBLY PRESIDENT GOMEZ ADVANCES CONSTRUCTIVE 
WORKING RELATIONS WITH EMBASSY 
 
Classified By: DCM Peter M. Brennan. Reasons 1.4 (B,D). 
 
¶1.  (SBU) SUMMARY: In the spirit of his commitment to 
maintain a close working relationship with Embassy on 
legislation, National Assembly President Eduardo Gomez (Ref.) 
recently met with emboffs to discuss legislative priorities 
and how best to expedite them.  The Embassy's priorities -- 
MANPADS destruction; passage of economic legislation required 
for CAFTA implementation; and, the draft criminal code -- 
coincide in large part with Gomez' interests.  Gomez expects 
discussion and a vote on MANPADS destruction within the next 
three weeks.  He has offered to do whatever in his power to 
expedite passage of legislation required for CAFTA-DR 
implementation and to place the criminal code on the 
Assembly's front burner.  END SUMMARY. 
 
¶2.  (SBU) In the spirit of his commitment to maintain a close 
working relationship with Embassy on legislation, National 
Assembly President Eduardo Gomez (Ref.) met on February 6 
with Econ Counselor , RLA, and Pol Counselor to discuss 
legislative priorities and how best to expedite them. 
Assembly Foreign Affairs chair Miguel Lopez joined the 
meeting along with Assembly legal adviser Reynaldo Molina. 
Embassy priorities -- MANPADS destruction, passage of 
economic legislation required for CAFTA implementation, and 
the draft criminal code -- coincided in large part with 
Gomez' interests. 
 
Advancing MANPADS Destruction 
- - - - - - - - - - - - - - - 
 
¶3.  (SBU) Gomez advised that MANPADS destruction and a 
revision to the Defense law returning to the Executive the 
authority to destroy MANPADS and similar weapons is on the 
top of the Assembly's agenda and will be discussed and likely 
voted on during the first two weeks the Assembly is in 
plenary (starting February 13).  To our proposal that the 
Assembly vote to destroy all 1,051 MANPADS rather than only 
the lot of 651 missiles, Gomez replied that he was unaware of 
this proposal but would consider it.  Pol Counselor noted 
that President Bolanos' senior advisors appear to support the 
initiative and that Embassy has also raised it with MOD 
Ramirez and the Chief of the Military Halleslevens, the 
latter who wishes to travel to Washington in April and who is 
aware that MANPADS destruction will make his trip much more 
productive. 
 
Assembly President - Criminal Code A Key Agenda Item 
- - - - - - - - - - -  - - - - -  - - - - - - - - - - 
 
¶4.  (SBU) On the subject of criminal justice reform, emboffs 
discussed with Gomez, Lopez, and Molina pending and proposed 
legislation, concerning the:  1) enactment of the proposed 
criminal code; 2) amendment of the current controversial 
money laundering law; 3)  enactment of legislation to provide 
for the proper administration of seized property, both real 
and personal property; 4) awarding more authority and 
autonomy to the Procurador General (or PGR, the Attorney 
General Novoa's office); 5) creation of a Financial 
Intelligence Unit (FIU); 6) affording legal protection to the 
Superintendent of Banks; 7) replacement of Fiscal General 
Centeno Gomez upon the expiration of his term in July 2006; 
and, 8) the need to reform the judiciary. 
 
¶5.  (SBU) Gomez shared that the Assembly will discuss the 
draft criminal code every Thursday and he welcomed Embassy 
input.  In response to our concern that trafficking in 
persons (TIP) legislation included in the reform bill is 
unlikely to pass before the deadline for Embassy submission 
of the annual TIP report, Lopez suggested that, in the 
meantime, the current criminal code could be amended to 
include the reform language. Post will follow up on this 
offer. 
 
¶6.  (SBU) Lopez acknowledged the intense political 
repercussions (the Aleman effect) of money laundering 
legislation reform.  He favors an expansive money laundering 
law that does not enumerate the possible predicate offenses 
to cover a host of illegal activities as a basis for 
prosecution.  Lopez was more lukewarm on the law for the 
administration of seized property, but he recognized the need 
to remove the judiciary from that business. 
 
¶7.  (SBU)   Lopez supported amending the code of criminal 
procedure to return much-needed autonomy to the PGR so that 
they can act independently in the investigation and 
prosecution of criminal offenses. (Note: The PGR is the real 
paladin in the fight against corruption in Nicaragua. After 
the code of Dec. 2002, the PGR serves only in the capacity of 
a solicitor general and its jurisdiction is limited to those 
cases where the state is a victim and the Ministerio Publico 
has either refused to act or specifically requested the PGR's 
assistance in a particular matter.  This is cumbersome at 
best, impossible at worst and manifests itself as political 
obstructionism by legal fiat as evidence in the Huaca II case 
(the second Aleman case).)  Lopez also noted that the 
Assembly must tackle the naming of the Fiscal General when 
Centeno Gomez' term expires this summer.  He expects the post 
to be vacant while political consensus for an acceptable 
replacement is built and predicts it will be utilized as a 
maneuver to run out 
 the clock on the Huaca II's Oct 2006 statute of limitations. 
 
 
¶8.  (SBU) Gomez and Lopez agreed over the need to create an 
independent and non-politicized financial intelligence unit 
(FIU) with its own budget, to support the police and law 
enforcement in handling their increasing number of financial 
investigation.  Emboffs discussed the current Ponzi scheme 
case of Agave Azul as an example of an investigation that 
would be furthered by the creation of this specialized unit. 
We mentioned that currently there are several proposals to 
create a FIU before the several Assembly committees.  Lopez 
Baldizon referred to the apportionment of legislation among 
various committees as "legislative organized crime" since it 
guaranteed a certain death and burial of that piece of 
legislation.  The legislator also embraced our suggestion of 
affording legal protection for the Superintendent of Banks 
for his acts or omissions during the course of the 
performance of his official duties.  He promised to 
reintroduce a law to this effect in the near future. 
 
¶9.  (SBU)   Lopez Baldizon endorsed holding a constitutional 
convention to amend the constitution to, among other things, 
restructure the judicial system.  He promised that if he is 
in a political position following this year's national 
election, he will work on convening such a convention. 
 
GON Legislative Strategy for CAFTA-DR Reforms 
- - - - - - - - - - - - - - - - - - - - - - - - 
 
¶10.  (SBU) Gomez and Lopez consider the passage of 
legislation required for CAFTA-DR implementation a top 
priority.  Econ Counselor informed them of the time 
constraints involved if Nicaragua is to join El Salvador for 
a March 1 Entry in Force, urging them to work with the 
Executive to pass the needed legislative package (changes in 
IPR legislation and strengthened anti-corruption penalties) 
under emergency procedures by February 16.  As of the 
meeting, however, the Executive had yet to send the draft 
legislation officially to the Assembly, or discuss procedures 
with the President, though Gomez said he understood the GON 
was consulting with the political parties.  Indeed, two weeks 
previously, the Executive had told Lopez that the CAFTA 
legislation, like the Executive's proposed reforms to the tax 
code, was not yet ready to be sent to the Assembly.  Econ 
counselor explained that because the legislation was intended 
to implement commitments made during the course of the 
negotiations, it was important that all parties agree that 
the proposed legislation did indeed fulfill those commitments 
before it was submitted to the Assembly; however, this 
agreement was now achieved and if Nicaragua did not want El 
Salvador to be the only country to enter CAFTA in the first 
group, it would be necessary to act quickly. 
 
¶11.  (SBU) During the February 7 closing of a two-day forum 
on CAFTA-DR implementation sponsored by INCAE and the 
Ministry of Trade(MIFIC),  Trade Minister Alejandro Arguello 
expressed continuing optimism about passage of the CAFTA-DR 
legislative reforms before February 16, despite the fact that 
only two legislative days - February 14 and 15 - remain 
before the deadline.  It became clear during the discussion 
that Arguello had been entirely sidelined from the 
legislative strategy concerning the CAFTA-DR reforms, such 
that he had spent most of the two preceding days at the CAFTA 
forum, to which 10 deputies had confirmed their 
participation, but only Sandinista Bayardo Arce appeared 
briefly to argue the merits of a proposed development bank. 
 
Arguello admitted that Secretary of the Presidency Leonardo 
Somarriba and Presidential Advisor Frank Arana were managing 
a legislative strategy headed by Minister of Finance Mario 
Arana and aimed at achieving political consensus through the 
National Dialogue process. He admitted that he had not been 
consulted.  Arguello also asked for Embassy intercession to 
encourage National Assembly party leaders to meet with him, 
as they had yet to return his calls requesting meetings.  In 
a separate conversation with Econoff, Nicaraguan Chamber of 
Commerce President Jase Adan Aguire threw up his hands in 
exasperation when queried about the wisdom of running the 
CAFTA reforms through the National Dialugue. 
 
¶12.  (SBU) Econoff called Luis Alejandro Matus, Chief of 
Staff to Mario Arana, on the evening of February 7, to 
determine if a head-counting exercise of pro-CAFTA forces was 
running parallel to a more inclusive process of political 
consensus through the National Dialogue. Matus offered that 
Arana had met with four liberal deputies earlier in the day, 
including Economic Commission Chairman Wilfredo Navarro to 
secure commitments on the timing of the CAFTA vote.  He added 
that the CAFTA emergency measure would be included in a 
larger package of economic legislation, including tax code 
amendments law and other IMF/World Bank priorities.  Matus 
reinforced Minister Arguello's message about the primacy of 
the National Dialogue, acknowledging this dialogue will be 
"messy", especially with transportation and medical strikes 
to resolve.  When pressed, Matus confessed that it will be a 
"miracle" if the CAFTA reforms pass before the February 16 
deadline. 
 
Other Economic Priorities 
- - - - - - - - - - - - - 
 
¶13.  (SBU) Tax code amendments:  Econ counselor pointed out 
four articles in the newly-enacted tax code that, if not 
revised, would drastically limit the tax authority's ability 
to continue its past record of increasing tax collections and 
thus leave the budget woefully under-funded.  Lopez appeared 
very familiar with the issue.  Coastal law:  Lopez said that 
there was little likelihood that this controversial law - 
brainchild of "missionary" San Juan del Sur deputy Geraldo 
Miranda, the hero/villain of the Assembly's January election 
drama - or the similarly problematic water law would be 
passed this year, as their FSLN proponents did not want to 
antagonize the private sector before the elections.  Civil 
Aviation Law:  Lopez said that this law, which is a sine qua 
non for any FAA upgrade of Nicaragua to Category 1, was 
already on the agenda for the Assembly's session (comment: 
true, but the law has been stuck halfway through its second 
reading for over a year, with no noticeable progress). 
 
¶14.  (C) Comment: Chances are surely dimming for passage of 
the required CAFTA-DR reforms before the deadline.  It 
appears that the reforms will get bogged down in a series of 
too-clever-by-a-half political and parliamentary maneuvers. 
Nicaragua's National Dialogue, a high-level group of 
political leaders from the major parties which includes 
Sandinista leader Daniel Ortega and the GON, has served 
alternately as a means of setting national policy - generally 
by resolving disputes - or of increasing political rancor and 
prolonging debate.  It has never been a tidy affair.  There 
are clear advantages to fronting the effort with Minister of 
Finance Mario Arana, who led MIFIC during the CAFTA 
negotiations and has Sandinista roots.   He enjoys broader 
political credibility than his cabinet counterparts and 
command of CAFTA-DR issues.  Arana can also counter any 
rumblings about the package containing new or unexpected 
issues by referring to his personal knowledge of the 
negotiations as head of MIFIC.  However, i 
ncluding the reforms in a high-wire discussion about ongoing 
strikes seems counterintuitive to a quick and quiet 
legislative resolution. 
 
¶15.  (SBU) Comment, continued:  The notion of including the 
relatively simple CAFTA legislative fixes in a Christmas tree 
legislative package of more contentious reforms also seems 
wrongheaded.  Sadly, the weekend evolution of the CAFTA 
strategy from a head-counting exercise of pro-CAFTA forces to 
a more inclusive, but complicated, process of political 
consensus is likely to backfire.  Bottom line: the smart but 
discouraging bet is against Nicaragua entering the CAFTA-DR 
agreement into force by March 1.  End Comment. 
TRIVELLI