VZCZCXYZ0024
RR RUEHWEB

DE RUEHMU #0721/01 0901427
ZNR UUUUU ZZH
R 311427Z MAR 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 5790
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 000721 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CEN 
 
E.O. 12958: N/A 
TAGS: ECON EINV ELAB PGOV SOCI NU
SUBJECT: CHONTALES, NICARAGUA: WHERE CATTLE AND LIBERALS 
ROAM (FIRST OF TWO) 
 
¶1. (U) Summary: The Department of Chontales is renowned for 
its cattle and Liberal Constitutional Party (PLC) members. 
Forty percent of all cows in this cattle nation are raised in 
this small region, wedged between Lake Nicaragua to the West 
and the Autonomous Southern Atlantic Region (RAAS) to the 
East.  With high beef prices, easy travel to Managua and 
beyond on a good highway, and lots of attention from the last 
two presidential administrations, Chontales is relatively 
more prosperous than the rest of the country.  ECONOFF held 
meetings recently in Chontales with civic and political 
leaders, as well as cattle ranchers and business owners. 
Virtually every political leader was also a cattle rancher 
and every rancher/business person was a Liberal or 
Conservative.  There are very few Sandinistas in this region. 
 This cable will primarily focus on the economy of Chontales, 
while a separate message will specifically address the 
political situation.  The general economic themes of the 
meetings were contentment with the current economy of 
Chontales, cautious optimism for the opportunities presented 
by DR-CAFTA, concern about high energy prices, and fear that 
a Sandinista Party (FSLN) victory in November could wreak 
havoc upon the national economy.  See Paragraph Seven for a 
list of meeting participants.  End Summary. 
 
¶2. (U) All interlocutors agreed that the economy of Chontales 
is booming, primarily thanks to historically high beef 
prices,  which have more than doubled since 2000.  According 
to the Ministry of Agriculture (MAGFOR), a kilogram of beef 
paid an average of US $.83 in 1994, $.90 in 2000 and $1.86 in 
¶2005.  These figures are all the more impressive considering 
that the exchange rate between the Nicaraguan Cordoba (C$) 
and the dollar nearly tripled from 6.72 C$/US$ in 1994 to 
12.68 in 2000 to 16.73 in 2005.  Dairy prices, however, have 
not kept pace.  The price of a liter of milk has fluctuated 
on a narrow band from US $.277 in 2000 to $.303 in 2002 and 
back to $.277 in 2005.  Fortunately for the region, a great 
deal of the dairy output is used for value added products 
such as the famous Chontaleno cheese and ice cream for the 
successful Nicaraguan ice cream company, Eskimo.  Evidence of 
the booming economy in Chontales - both in comparison to the 
rest of Nicaragua and in real terms - was evident during 
ECONOFF's visit.  The cities were clean and had well 
maintained infrastructure and were full of bustling, modern 
shops.  People in the cities were well fed and neatly 
dressed.  Construction of homes and businesses was a common 
sight.  Comment: Areas of extreme poverty remain in rural 
Chontales.  On another recent trip to the region, ECONOFF 
observed families living in near feudal conditions on the 
ranches of large property holders.  End Comment. 
 
¶3. (SBU) The fact that Chontales is a PLC stronghold has 
translated into many public works projects over the last 
decade, especially during the Aleman period.  The most 
expensive project, and one which has paid important financial 
dividends, is the highway from El Rama to Managua.  This once 
long and painful journey now takes just a few hours, and the 
highway provides direct access to the Atlantic Ocean via the 
river port at El Rama.  The road had been mostly unpaved and 
its many bridges had been the frequent target of Contra 
attacks during the 1980's.   Reconstruction of the highway, 
undertaken during Aleman's presidency, is a prime example of 
how the ex-president mastered the art of practicing retail 
politics while lining his own pockets, allegedly via the 
granting of bloated contracts to several of the president's 
cronies.  Participants in one meeting also noted the 
different approaches between Aleman and Bolanos in how public 
works projects have been handled.  They said that under 
Aleman, supplicants lined up at the presidency to get 
approval so that Aleman could get personal credit for every 
project.  Under Bolanos, however, money has been devolved to 
the municipalities, allowing them to identify their own 
priorities and keep the political credit at the local level. 
Comment: This is not due solely to Bolanos' reform 
mindedness, but also to the National Assembly stripping power 
from the presidency to benefit the Aleman-PLC/Ortega-FSLN 
pact.  Since most municipalities nationally are currently led 
by Sandinista mayors, this economic development policy has 
resulted in political benefits for the FSLN.  End Comment. 
 
¶4. (U) The consensus in the meetings was that DR-CAFTA offers 
a great opportunity for Nicaragua as a whole, and Chontales 
in particular.  Business, civic, and political leaders are 
eager to increase exports to the United States, as well as to 
Central America, and are convinced that they will be able to 
do so.  Nevertheless, participants stated that agricultural 
practices in Chontales are not sufficiently modern to ensure 
the quality necessary for competition at the international 
level.  They requested as much U.S. assistance as possible in 
order to build capacity.  When ECONOFF mentioned several 
 
current programs administered by USAID, USDA, and MCA, 
Chonteleno interlocutors were pleased, but poorly informed 
about these opportunities.  In a presentation last year to 
the international donor community, the Chontales Development 
Council (CDC) identified several projects such as a milk 
production plant, assistance with commercialization, and a 
soil rejuvenation program to assist rural subsistence 
farmers. 
 
¶5. (U) Although Chontales is strikingly beautiful, with a 
backdrop of mountains and clear rivers to the east and the 
shores of Lake Nicaragua to the west, its tourism potential 
has yet to be tapped.  There are few quality hotels and 
limited tourist destinations seeking to attract international 
visitors.  The CDC recognizes this deficiency and is seeking 
to develop Chontales as a center for adventure tourism. 
Other CDC priorities include improving the quality of primary 
education; providing secondary education for the 70% of rural 
children for whom it is currently unavailable; continuing 
infrastructure improvements, especially in the delivery of 
potable water; upgrading of deteriorating healthcare 
facilities; and, supporting programs that assist neglected 
and abused children. 
 
¶6. (SBU) Despite the general spirit of optimism, there is 
palpable concern about rising energy prices.  Participants 
stated that in addition to limiting their own economic 
potential, the situation threatens political stability in the 
country.  Along the same lines, these strong Liberals and 
Conservatives (whether they were reform-minded supporters of 
PLC breakaway-candidate Eduardo Montealegre or staunch 
traditionalists) are truly frightened by the prospects of an 
FSLN victory in November.  They worry that such an event 
would devastate the national economy and that Chontales would 
suffer economic reprisals from the new government. 
 
¶7. (SBU) Meeting Participants - 'Vamos Con Eduardo' Meeting: 
Elman Urbina, Municipal President of Juigalpa and PLC 
activist; Luis Garcia, businessman and PLC activist; Agusto 
Ayala, businessman and PLC activist; Lombardo Madriz, 
journalist, city councilman, and chief of the PLC in 
Juigalpa; and Juan Carlos Bravo, cattle rancher and PLC 
activist.  Supreme Electoral Court Meeting: Marcio Gutierrez, 
President of the CSE for Chontales and strong supporter of 
Aleman and the PLC/FSLN pact.  Chontales Association of 
Cattlemen Meeting: Nardo Sierra, President and PLC member; 
Manuel Fernandez, Treasurer and Conservative Party (PC) 
member; Martin Hernandez, PLC member; and Maria Fidelina 
Castro, PLC member.  Santo Tomas Cattlemens' Cooperative 
Meeting: Orlando Bravo, general manager and PC member; 
Hilario Vargas, former mayor of Santo Tomas and Vamos Con 
Eduardo member; Vincente Sirias, PLC member; Jose Saborio, 
PLC member. 
TRIVELLI