VZCZCXYZ0023
PP RUEHWEB

DE RUEHMU #1434/01 1841752
ZNY SSSSS ZZH
P 031752Z JUL 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 6809
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0722
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

S E C R E T MANAGUA 001434 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPT FOR S/CRS: BRENDA HAZZARD, WHA/CEN 
 
E.O. 12958: DECL: 07/03/2026 
TAGS: KDEM MARR MOPS NU PGOV PINR PREL
SUBJECT: NICARAGUA: COMMENTS ON NIC WATCH LIST OF INTERNAL 
INSTABILITY 
 
REF: STATE 94960 
 
Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). 
 
¶1.  (S/NF) Post concurs with the bulk of the NIC Watch list's 
assessment of internal instability in Nicaragua.  However, we 
recommend that the following clarifications and recent 
political developments be considered: 
 
CALL FOR A PUBLIC REFERENDUM ON CONSTITUTIONAL REFORMS 
- - - - - - - - - - - - - - -  -- - - - - - -  - - - - - 
 
¶2.  (S/NF) Post notes that not only President Bolanos, but 
also a number of pro-democratic presidential candidates and 
their parties/alliances, have called for the referendum on 
the so-called constitutional reforms (setbacks, really), 
which once in effect on January 20, 2007, will further erode 
the Executive's powers.  Indeed, Eduardo Montealegre's 
Liberal Nicaraguan Alliance-Conservative Party caucus 
(ALN-PC) was the first to call for the referendum.  Daniel 
Ortega's FSLN opposes the referendum, while recently Liberal 
Constitutional Party (PLC) presidential candidate Jose Rizo 
has endorsed it.  It is unclear whether PLC strongman Arnoldo 
Aleman would in fact support the referendum measure, should 
it create tensions with the FSLN.  The issue of National 
Assembly approval is not that debating it would revive 
inter-party hostilities; these hostilities are already active 
and we can expect them to increase in the lead up to the 
November 5 election, referendum or not.  Rather, debate 
continues over whether the Ass 
embly's call for a referendum requires 47 votes or 56 votes; 
the latter is unobtainable without the FSLN votes. 
 
¶3.  (S/NF) If the Assembly does not call for a referendum, it 
could become a campaign issue, and voter preferences may 
reflect their views on the issue.  There is also the 
possibility that the OAS may broker an agreement with the GON 
and the National Assembly to postpone the constitutional 
changes until a much later date and perhaps broaden the 
debate to other issues in a constitutional assembly. 
 
REMITTANCES, MCA, CAFTA 
- - - - - - - - - - - - 
 
¶4.  (S/NF) Post believes that the inputs of remittances, 
Millennium Challenge Account (MCA), and Free Trade Agreement 
(CAFTA "could," not/not necessarily "will," have a 
significant stabilizing effect over the next two years.  Much 
will depend on the policies of the new government. 
 
EFFORTS TO UNITE ANTI-FSLN FORCES/POSSIBLE ORTEGA VICTORY 
- - - - - - - -  -  - - - - - - - - - - - - - - - - - - - 
 
¶5.  (S/NF) Efforts to unite Liberals behind a single 
presidential ticket have failed.  On May 31, PLC presidential 
candidate Jose Rizo jettisoned his earlier inclination to 
withdraw his candidacy and join Eduardo Montealegre if PLC 
caudillo Arnoldo Aleman and the party's leadership did not 
remove undesirable National Assembly candidates and the 
Aleman family refused to end its hegemony over the party. 
Five presidential candidates and their respective legislative 
slates are registered to run in the November 5 elections: 
Herty Lewites (MRS, FSLN dissident/anti-Ortega); Eden Pastora 
(Alternativa por El Cambio, also likely to appeal to some 
Sandinista voters); Daniel Ortega (FSLN); Jose Rizo (PLC); 
and Eduardo Montealegre (ALN).  A possibility still exists, 
however, that if Rizo fails to climb in the polls, he could 
withdraw from the race in September or October and back 
Montealegre. 
 
¶6.  (S/NF) Regarding a possible Ortega victory, at this stage 
it does appear unlikely that he could win on the first round, 
and in a second round Ortega would probably lose.  However, 
given Ortega's party's control over the Supreme Electoral 
Council and the courts and a five-candidate race, if Ortega 
stole 3% to 5% of the votes, he could obtain enough votes to 
win on the first round (according to Nicaraguan electoral 
law, a candidate requires 35% of the vote with a 5% advantage 
over the closest competitor to win the election).  An Ortega 
victory could not only result in significant capital flight 
and increased political factionalism, it could also hurt 
counternarcotics, counterterrorism, and mil-mil cooperation, 
and substantially increase concerns over Nicaragua's stock of 
1,071 MANPADS. 
 
EFFECTS OF THE ORTEGA-ALEMAN PACT ON THE ELECTORAL LANDSCAPE 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶7.  (S/NF) Although Nicaragua enjoys inclusive suffrage, 
freedom of expression and organization, and associational 
autonomy, the country remains a quasi-democracy.  Its long 
legacy of strongman-dominated ("caudillo"), authoritarian 
rule permeates its political culture, a culture where the 
rule of impunity, not rule of law, prevails.  The 
Ortega-Aleman pact, dating from 1998, has virtually subjected 
all branches of government other than the Executive to 
Ortega's and Aleman's control and seriously eroded Executive 
authority.   To stay out of jail, Aleman appears willing to 
cede his party and country to Daniel Ortega, possibly to the 
point of "allowing" Ortega to win the presidency in exchange 
for his freedom. 
 
NARCO PRESENCE AND PROBLEMS 
- - - - - - - - - - - - - - 
 
¶8.  (S/NF) While Nicaragua's growing narcotrafficking problem 
along its Atlantic Coast draws the most attention, its 
Pacific coastline has also experienced an increase in 
narcotrafficking and related problems.  Certainly inadequate 
law enforcement contributes to the problem; however, 
Nicaragua's judiciary is equally, if not more, at fault.  The 
courts routinely release narcotraffickers and money launders. 
 
VULNERABILITY TO NATURAL DISASTERS 
- - - - - - - - - - - -  - - - - - 
 
¶9.  (U) In addition to Nicaragua's vulnerability to 
earthquakes, it is also prone to devastating hurricanes and 
occasional volcanic eruption. 
 
 
TRIVELLI