VZCZCXYZ0015
RR RUEHWEB

DE RUEHMU #0576/01 0732217
ZNR UUUUU ZZH (CCY  ADX A473771/MSI6500)
R 142217Z MAR 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 5586
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHDG/AMEMBASSY SANTO DOMINGO 0510
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS MANAGUA 000576 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
C O R R E C T E D COPY (SBU ADDED) 
DEPT FOR OES: CAROLE JACKSON & LARRY SPERLING, WHA/PPC:MIKE 
PUCCETTI, DRL/IL:PAT DEL VECCHIO & GABRIELLA RIGG, LABOR 
FOR ILAB:JANE RICHARDS, USAID/LAC/RSD:BARRY 
MACDONALD,USAID/LAC/AA: MICHAEL MAGAN, USAID/LAC/RSD: JOHN 
GARRISON, SAN JOSE FOR HUB: BERNIE LINK, SAN SALVADOR FOR 
USAID: LAWRENCE RUBEY, TEGUCIGALPA FOR USAID: JILL KELLEY, 
SANTO DOMINGO FOR USAID: DUTY GREEN 
 
E.O. 12958: N/A 
TAGS: EAID ETRD SENV
SUBJECT: NICARAGUA'S CAFTA ENVIRONMENTAL & LABOR PROJECT 
PROPOSALS 
 
REF: STATE 26123 
 
1.(SBU) Per REFTEL, this telegram outlines proposals for three 
environmental and two labor projects in Nicaragua in 
accordance with DR-CAFTA and Mission Performance Plan 
priorities.  These proposals were selected based on 
consultations with the Government of Nicaragua (GON), and 
vetted by the country team.  In addition to adhering to the 
factors for funding approval detailed in the REFTEL, post 
sought projects that would provide concrete environmental 
and/or labor benefits related to broader USG priorities such 
as trade capacity building.  The proposals are placed in rank 
order of mission priority.  Complete project drafts will be 
sent via e-mail to the individuals named in the pass line, as 
well as to WHA/CEN.  The three environmental proposals are 
Institutional Strengthening in Trade and Environmental 
Issues, Market Incentives for Improved Management of Critical 
Biodiversity-rich watersheds, and Cleaner Energy and 
Production to Enhance Competitiveness.  The two labor 
proposals are Workforce Development in a Globalizing Economy 
and Improving Labor-Management Relations. 
 
 
ENVIRONMENTAL PROPOSALS 
- - - - - - - - - - - - 
 
2.(SBU) INSTITUTIONAL STRENGTHENING IN TRADE AND ENVIRONMENTAL 
ISSUES

ranks highest among the mission's environmental 
proposals.  Its purpose is to strengthen the ability of the 
GON and municipal authorities to enforce existing 
environmental legislation, including reinforcing 
institutional and legal frameworks and the capacity to 
develop, implement, administer and enforce environmental 
laws, regulations, standards and policies.  Currently, 
institutions within the GON have limited human and financial 
resources, or even full legal authority to enforce 
environmental laws.  Existing legal frameworks often lack the 
implementing regulations and procedures, hindering 
implementation.  Technical assistance is required to help the 
GON implement its obligations under the DR-CAFTA 
Environmental Chapter.  Specific elements include training 
and equipping police and prosecutors to assist environmental 
and forestry regulators, as well as establishing effective 
and transparent procedures for dealing with violations of 
environmental laws and regulations.  This project will 
complement the work to be performed by USEPA in country. 
This project addresses the GON,s top two priorities under 
the DR-CAFTA Work Plan, activities for which the GON 
currently lacks the funds to implement.  Potential partners 
are EPA and CCAD.  The estimated cost is $4 million over 
three years. 
 
¶3. (SBU) MARKET INCENTIVES FOR IMPROVED MANAGEMENT OF CRITICAL 
BIODIVERSITY-RICH WATERSHEDS

ranks second among the mission's 
environmental proposals.  Its purpose is to enhance market 
incentives for improved natural resource management and to 
build the capacity for sustainable financial support for 
watersheds of high biodiversity importance.  In addition to 
improving Protected Area and Private Nature Reserve 
Management, this proposal seeks to increase options for 
sustainable income generation.  Specific elements include 
providing technical assistance to significantly increase 
hectares under improved environmental management, sales of 
environmentally friendly goods, and sales of environmentally 
friendly services, particularly those related to sustainable 
tourism.  We also seek to promote "payment for environmental 
services" as a concept for improved management, with similar 
programs currently operating in Costa Rica and Guatemala to 
serve as models.  This activity directly addresses priorities 
established by DR-CAFTA in the ECA Work Plan, which 
highlighted the need for sustainable financing for natural 
resource management.  This project matches several of the 
GON,s CAFTA-ECA priorities.  Furthermore, the activities 
described here represent some of the most visible and valued 
USG investments in Nicaragua and promise substantial public 
diplomacy dividends.  The estimated cost is $5 million over 
two years.  This activity will leverage new private sector 
resources, both cash and in-kind, through the development of 
Global Development Alliances. 
 
¶4. (SBU) CLEANER ENERGY AND PRODUCTION TO ENHANCE COMPETITIVENESS 
 
ranks third among the mission's environmental proposals.  Its 
purpose is to develop incentives for the GON and private 
sector to make investment in cleaner energy and cleaner 
projection technologies.  It will establish flexible 
voluntary mechanisms that provide incentives for public and 
private partnerships that reduce pollution and production 
costs.  This project will assist the GON in untangling its 
economically and politically costly petroleum-based energy 
strategy and institutional arrangements to provide incentives 
for investments in cleaner production technologies and help 
local institutions provide fee-for-service cleaner production 
technical assistance.  As a result of this project, 
Nicaragua,s private sector's environmental performance and 
competitiveness will be increased because of reduced 
pollution and reduced fuel and production costs.  Currently, 
the GON,s energy policy and regulatory system creates 
enormous disincentives for investment in cleaner/renewable 
energy sources.  High start up costs for environmentally 
friendly energy production from sources such as wind, water 
and thermal energy have also discouraged investment in these 
sources despite their abundance here. Additionally, this 
project seeks to promote clean production best practices and 
develop public-private partnerships to facilitate the 
transfer and adoption of cleaner energy and production 
technologies.  The estimated cost of this program is $1 
million over two years.  This activity will leverage new 
private sector resources, both cash and in-kind, through the 
development of Global Development Alliances.  USAID,s 
implementing partners will continue to encourage and work 
with private firms to increase their utilization of clean 
production DCA.  Recent meetings between GON officials 
responsible for energy production and regulation have 
identified renewable energy as a path out of Nicaragua,s 
energy quagmire. 
 
LABOR PROPOSALS 
- - - - - - - - 
 
¶5. (SBU) WORKFORCE DEVELOPMENT IN A GLOBALIZING ECONOMY

ranks 
highest among the mission's labor proposals.  Its purpose is 
to open opportunities for Nicaraguan workers that will enable 
them to develop the skills necessary to work productively in 
a globalized economy and provide policy makers, investors, 
and representatives of organized labor timely and accurate 
information about trends and developments in the Nicaraguan 
labor market.  Activities will be conducted for labor policy 
reform, labor market surveys and workforce training.  This 
project will focus on providing specific training for workers 
interested in entering the emerging labor markets in 
Nicaragua.  This initiative will build on USAID success in 
training workers for jobs in the agricultural processing of 
export crops by targeting other emerging labor markets such 
as tourism services, call centers, new apparel lines, and 
value added agricultural processing.  English language 
training will be a key component. 
 
¶6. (SBU) As a first phase, the project will develop the GON's 
capacity to produce reliable and timely information about 
labor market trends and employment rates.  Assistance will 
provide expertise and training for the staff of the national 
statistics institutions to prepare labor market reports 
consistent with internationally recognized best practices. 
This information will inform the second phase, in which 
workshops, seminars, and courses will be executed to assist 
in re-tooling the workforce to meet the labor demands of 
emerging markets.  Rigid and outdated labor markets prevent 
workers with little or no education from taking advantage of 
new employment opportunities.  If existing working age people 
cannot find work in Nicaragua, more of them will attempt to 
migrate illegally to countries such as the U.S.  This project 
will help investors to expand the job market and help workers 
to fill these new jobs with the required skills.  Information 
generated by this project will also be of practical use to 
U.S. investors looking for opportunities in Nicaragua.  The 
estimated cost is $500,000 over three years.  Sponsored 
activities will provide the mission with opportunities to 
demonstrate USG commitment to workers' rights and employment 
opportunities associated with DR-CAFTA. 
 
¶7. (SBU) IMPROVING LABOR-MANAGEMENT RELATIONS ranks second among 
the mission's labor proposals.  Its purpose is to expand and 
extend the Central American "Cumple y Gana" project 
implemented by the Department of Labor through FUNPADEM and 
Abt Associates to include the development of negotiation and 
bargaining skills for labor unions/associations, management, 
and the Ministry of Labor in both the public and private 
sectors and demonstrate how working together will help all 
parties to take full advantage of free trade opportunities. 
The project will pursue legal reforms to the rigid labor 
system, provide labor and industrial relations training, 
disseminate information to stakeholders, strengthen labor 
inspection systems, and strengthen alternative dispute 
resolution and mediation systems. 
 
¶8. (SBU) The project also includes strengthening the labor 
inspection system by working with all of the stakeholders. 
Improving labor relations in both the public and private 
sectors will reduce economically and politically costly work 
stoppages.  These events tarnish Nicaragua's image as a good 
place to invest.  They also have the potential of derailing 
government efforts to open the economy by enhancing the 
political capital of anti-trade and anti-U.S. forces in the 
country.  On the other hand, good labor relations with more 
predictable outcomes can send a positive message to potential 
investors and increase jobs and benefits for workers.  The 
estimated cost is $500,000 over two years.  Local 
counterparts have expressed their satisfaction with the 
current project and the need to expand it.  The training and 
other activities in this project will receive positive media 
attention for US efforts to both protect workers' rights and 
help attract new jobs, higher incomes and better working 
conditions. 
TRIVELLI