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TO RUEHC/SECSTATE WASHDC PRIORITY 6918
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0729
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

C O N F I D E N T I A L MANAGUA 001505 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA A/S SHANNON AND WHA/CEN 
 
E.O. 12958: DECL: 07/10/2016 
TAGS: PGOV PREL PINR KDEM NU
SUBJECT: ASSISTANT SECRETARY SHANNON,S MEETING WITH MFA 
CALDERA 
 
 
Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). 
 
¶1.  (C) Summary:  On June 26, A/S Shannon discussed with 
Foreign Minister Norman Caldera election concerns and the 
OAS' role, the Hugo Chavez factor, and how best to "stop the 
clock" on constitutional changes due to go into effect in 
January 2007.  Caldera believed the OAS and other observers 
should monitor FSLN presidential candidate Daniel Ortega 
closely to ensure he did not rig the electoral outcome in 
November.  The Nicaraguan Government (GON) was also seeking 
OAS intervention to block the Ortega-Aleman inspired 
constitutional changes, possibly convincing all parties to 
agree to postpone their implementation with the understanding 
that a constitutional assembly would eventually address these 
and other issues.  Caldera agreed with A/S Shannon that the 
Chavez oil deal is a political ploy to favor Ortega's 
candidacy.  Still, he believed the GON can exploit Ortega's 
need for GON cooperation on the initiative to gain FSLN 
support for other objectives, while the GON stalls on 
facilitating the oil deal.  End Summary. 
 
¶2.  (C) In the absence of President Bolanos (who was in the 
United States helping his son Javier move to Duke University 
Medical Center for cancer treatment), A/S Shannon met on June 
26 with Foreign Minister Norman Caldera, the Nicaraguan 
Ambassador to the United States, and two of Bolanos's senior 
advisers.  Leading Caldera's list of issues were the November 
elections and the importance of a robust OAS presence during 
the electoral process.  Caldera sought A/S Shannon's views on 
how best to stop the clock on the constitutional changes due 
to go into effect in January 2007.  He also raised Venezuelan 
President Hugo Chavez's overt support for Sandinista (FSLN) 
candidate Daniel Ortega and the possibility of taking 
advantage of Chavez's oil offer. 
 
OAS CAN HELP PREVENT A RIGGED ELECTORAL OUTCOME 
- - - - - - - - - - - - - - - - - - - - - - - - 
 
¶3.  (C) Nicaragua's November 5 election led Foreign Minister 
Caldera's list of concerns.  Senior political adviser Frank 
Arana noted that an OAS technical and political presence was 
required to offset the efforts of Daniel Ortega and Arnoldo 
Aleman's pact to use fraud to enable Ortega to win the 
election and Aleman to secure enough National Assembly seats 
to protect his interests.  While Arana opined that 
technically speaking the OAS had been adequately effective, 
he noted that a political mission would be crucial to 
checking the FSLN and PLC.  He suggested that representatives 
from the prestigious Madrid Club, including former presidents 
Lagos, Paniagua, Hurtado, and Sanguetti, are the types of 
heavy-lifters who could convince Ortega and Aleman that 
committing electoral fraud would cost them legitimacy. 
Shannon and Trivelli supported the Madrid Club initiative. 
Trivelli noted that a group of mid-level notables - former 
foreign ministers - had already visited Managua and would 
return as needed.  Trivelli added that the Supreme Electoral 
Council (CSE) pledged to grant the OAS access to its 
software, which should reduce opportunities for fraud. 
 
¶4.  (C) Foreign Minister Caldera said Ortega knew he would 
lose unless he rigged the electoral outcome.  He said the OAS 
and other observers should monitor Ortega every step of the 
way.  He explained that over 200,000 individuals on the voter 
roster were deceased, even though the CSE, controlled by the 
FSLN and PLC, could draw on Health Ministry death 
certificates to remove the deceased voters.  Further, 300,000 
national/voter ID cards (cedulas) had not been delivered to 
their owners.  An encouraging development was that party poll 
watchers representing Eduardo Montealegre's ALN alliance were 
omni-present during the recent vote verification process. 
Still, additional challenges remain.  The three-member voter 
tables were controlled by the FSLN and PLC (Note:  The first 
two members are FSLN and PLC.  A disproportionate number of 
third members belong to the tiny Alternative for Change (AC) 
party, which is largely sympathetic to the FSLN.)  Moreover, 
the CSE had added the Council of Latin American Electoral 
Experts (CEELA) to the observer mix to further confuse. 
Caldera warned that because the CEELA was paid in part by the 
CSE, it would be less likely to challenge the CSE's policies 
or practices.  CSE President Roberto Rivas had also 
challenged the UN offer to send a particular Panamanian 
observer (presumably Aristides Royo) because of the 
observer's reported "pro-Gringo" orientation. 
 
BUYING TIME ON CONSTITUTIONAL CHANGES 
- - - - - - - - - - - - - - - - - - - 
 
 
¶5.  (C) Assuming a clean, fair, and transparent election 
outcome, the new Nicaraguan government would face a crisis 
within days of its inauguration, warned Arana.  Although 
polls showed that 75% of Nicaraguans rejected the 
constitutional changes set to go into effect on January 20, 
the FSLN was bent on implementing these constitutional 
reforms.  The FSLN would oppose a referendum on the reforms - 
unless it was broadened to include a vote on CAFTA, Hugo 
Chavez's petroleum deal, and the Chavez alternative to CAFTA 
- ALBA, explained Arana.  If Montealegre won the election, 
Ortega will be certain to impose the constitutional changes 
and Montealegre, like Bolanos, would become another president 
unable to govern.  (NOTE: After the OAS brokered a 
governability agreement between Bolanos and Ortega last fall, 
the National Assembly passed a framework law (Ley Marco) that 
postponed the implementation of the constitutional changes 
until January 20, 2007.  Soon thereafter, the ALN and 
President Bolanos called for a referendum on the changes.  In 
recent months, PLC candidate Jose Rizo has come out in favor 
of the referendum in an effort to distance himself from the 
Ortega-Aleman pact.  END NOTE.) 
 
¶6.  (C)  Arana mentioned the possibility of another OAS 
intervention on the constitutional issue.  This could include 
an effort to convince all parties to agree to postpone their 
implementation until 2008 or later, with the understanding 
that a constitutional assembly would eventually address these 
and other issues.  He added that Dante Caputo has expressed 
interest in pursuing these possibilities when he returns to 
Managua on July 12.  Trivelli concurred that delaying 
implementation of the constitutional changes and holding a 
constitutional assembly would be positive steps. 
 
DANCING WITH CHAVEZ 
- - - - - - - - - - 
 
¶7.  (C) Shannon raised the issue of Venezuelan President Hugo 
Chavez's influence, specifically his proposed oil deal with 
the Sandinistas.  Bolanos's Chief of Staff, Nayo Somarriba, 
remarked that the issue was not the offer, but how to play it 
to the GON's, and not Ortega's, advantage.  (NOTE: The offer 
entails paying for 60% of the oil up front and the remaining 
40% at a 2%-interest rate over a period of several years. 
The GON opposed the Chavez initiative because, as it 
currently stands, the agreement was clearly linked to the 
FSLN.) 
 
¶8.  (C) Somarriba explained that given the FSLN's inability 
to store and distribute the Venezuelan oil without GON and 
national oil company Petronic action, Ortega was demanding 
GON support for the initiative in exchange for the passage of 
the Tax Reform Bill and other economic reform legislation as 
well as assurances that crippling demonstrations and work 
stoppages sponsored by the FSLN would abate.  Caldera said 
that in a recent OAS meeting in the Dominican Republic, the 
Venezuelans offered to work on the oil deal with the Bolanos 
government and to sweeten the deal with $27 million in debt 
forgiveness.  Caldera recounted how he was noncommittal but 
open to the offer.  He opined that the GON could use the 
situation to its advantage if it tacitly agrees to consider 
the offer in exchange for FSLN cooperation for the remainder 
of Bolanos' term.  In fact, the GON would stall on any real 
progress on the oil project.  Shannon remarked that the GON 
must do what it must, but noted that the Venezuelan oil deal 
would not reduce the cost of gasoline at the pump.  Caldera 
concurred with Shannon's assessment, remarking that the 
Chavez deal is a political ploy to bolster the FSLN. 
 
¶9.  (U) Participants: 
 
Nicaragua: 
Foreign Minister Norman Caldera 
Ambassador Stadhagen 
Frank Arana 
Nayo Somarriba 
MFA senior adviser Ariel Granera 
 
U.S.: 
A/S Thomas Shannon 
Ambassador Paul Trivelli 
Senior Advisor Maria Tamburri 
DCM Peter Brennan 
Polcouns Victoria Alvarado (notetaker) 
 
¶10. (U) Assistant Secretary Tom Shannon cleared on this 
 
cable. 
TRIVELLI