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RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

C O N F I D E N T I A L MANAGUA 002158 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
 
E.O. 12958: DECL: 09/25/2026 
TAGS: KDEM NU PGOV PINR
SUBJECT: MONTEALEGRE TELLS CODEL HE'S NICARAGUA'S BEST 
CHANCE FOR DEMOCRACY 
 
 
¶1.  (C) Summary:  Congressman Burton, the Ambassador, and 
DCM met with Eduardo Montealegre, Adolfo Arguello, and 
Mario Rapacciolli on 23 September to discuss the progress 
of Montealegre's presidential campaign, the strength of his 
Nicaraguan Liberal Alliance (ALN) party, and the corrosive 
effects of the political pact between Arnoldo Aleman and 
Daniel Ortega.  Montealegre started by asserting that local 
polls consistently demonstrate the race is between he and 
Ortega.  He discounted the viability of Liberal Constitutional 
Party (PLC) candidate Jose Rizo, claiming that it was clear 
Rizo is nothing more than Aleman's puppet.  Montealegre and 
his advisers cited as their biggest challenge the attempts 
by the Sandinista National Liberation Front (FSLN)-PLC 
pact (pacto) to undermine his campaign by launching 
politicized 
corruption allegations against him.  He fears that the 
Sandinistas 
will exploit  their control of the courts to initiate a trial 
on politicized corruption allegations in an effort to nullify 
his campaign. 
The ALN members suggested Burton could help their cause by 
reminding voters of 
the disastrous economic consequences an Ortega administration 
implies.  End Summary. 
 
 
Montealegre:  I'm the Only One Who Can Beat Ortega 
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¶2.  (C) Eduardo Montealegre and advisers Adolfo Arguello 
and Mario Rapacciolli told Congressman Burton, Ambassador, 
and DCM over breakfast on 23 September that their 
Nicaraguan Liberal Alliance (ALN) party is the country's 
best hope for defeating Daniel Ortega and his Sandinista 
National Liberation Front (FSLN) in the 5 November 
Presidential election.  Citing an internal ALN poll, 
Montealegre argued that 72% of Nicaraguans do not want Ortega 
to win in November, and that most of these people have yet 
to decide who they will vote for.  Nevertheless, 
Montealegre said he typically places about 22 to 25% in the 
polls, followed by Sandinista Renovation Movement (MRS) 
candidate Edmundo Jarquin with about 19%, and that Liberal 
Constitutional Party (PLC) Jose Rizo typically trails with 
numbers in the low teens.  Montealegre said that local 
polling trends indicate that he is the only one who can be 
assured victory against Ortega in the second round; polls 
also suggest Rizo would lose such a contest, that Jarquin 
could 
not decisively beat Ortega, but that he (Montealegre) 
would best Ortega by about 12 points. 
 
¶3.  (C) Montealegre and his advisers were upbeat on the 
strength of their campaign, although they acknowledged 
difficulties in fundraising.  They were 
positive over the ALN's ability to mobilize supporters 
throughout the country.  Montealegre cited the ALN's 
ability to field a large numbers of candidates to staff the 
local polling places (JRVs) in the municipality of 
Chinandega where each party was able to name three 
candidates to man each of the 80 JRVs.  The ALN came 
forward with a full roster of 240 nominees, while noting 
that the PLC only came up with 80.  The ALN members 
informed the Codel that the PLC has been "resting on their 
laurels" and that the organizational capacity of the PLC is 
not as strong as many assume.  Indeed, Montealegre and his 
colleagues claimed  that their party has won over PLC 
supporters in many areas.  Asked whether the ALN was making 
use of the internet in its campaign, the ALN members said 
that while they have websites, they have not made this a 
focal point of the campaign as only about 5% of the 
population enjoys access to the web.   However,  the party 
has used cell-phone marketing (i.e. calls to random 
numbers to tout the ALN's campaign platform). 
 
¶4.  (C) The ALN members avoided citing specific funding 
levels, but 
said they need more resources for the campaign.  Initially 
denying having received funds from Taiwan, they then hinted 
that they had received some limited contributions from the 
Taiwanese.  They also alluded to having received support from 
the private 
sectors in Guatemala and El Salvador, as 
businesspeople there "understand the negative implications" 
of the return of Sandinista rule on the isthmus.  That said, 
the ALN members noted that while they have received some 
funding 
from the Nicaraguan business sector, the largest financiers 
 
are hedging their bets by also backing other candidates. 
Rapacciolli 
described the mentality amongst these donors is one of 'I am 
going 
to pay the most to those I know can hurt me (if I do not 
support them).' 
Montealegre estimated that his campaign has spent only one 
third of 
what Bolanos spent at the same point in his 2001 campaign. 
 
Montealegre: The CSE Is Stacked Against Us 
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¶5.  (C) Montealegre predicted that Ortega's influence in the 
Supreme Electoral Council (CSE) would help him 
steal some of the vote, or hamstring his opponents.  He 
noted that the Sandinistas and the CSE are cooperating on 
"little things that go unnoticed" and that the real danger 
will be if PLC and FSLN JRV members -- who will compose two 
out of three seats in most JRVs -- cooperate to strengthen 
their positions while weakening those of their opponents. 
The ALN members expressed their frustration with a recent 
CSE decision to make it easier for votes to be challenged, 
and claimed that JRV members could purposefully commit errors 
in their paperwork in order to throw out entire ballot 
boxes.  Montealegre and his colleagues pointed out that 
this is exactly what happened in Granada in the 2004 
municipal elections.  Montealegre commented that the 
previous day he had been working in Chichigalpa to 
select ALN members for positions on the local JRVs, and 
that while his party had named candidates for each of the 
108 JRVs, they were only given 14 seats.  In contrast, the 
MRS presented only 60 names and received 60 spots; Eden 
Pastora's Alternative for Change party received all ten of 
the slots they applied for. 
 
¶6.  (C) Nevertheless, Montealegre said 
the ALN has been trying to address the problem of CSE 
partisanship.  He noted that his party has been reaching 
out to local PLC JRV representatives to form positive 
relationships so that things go smoothly on election day. 
Montealegre said that his party was also working closely 
with the Carter Center and other NGOs to point out 
weaknesses in the process.  (Comment:  Article 16 of the 
Electoral Code clearly states that the top two JRV positions 
will be doled out to the two dominant parties of the last 
elections - in this case the PLC and FSLN.  The same 
article says that the PLC and FSLN-controlled CSE has 
the ability to divvy the third JRV slots as it sees fit 
among the remaining political parties participating in 
the election -- the Alternative for Change (AC), ALN, 
or the MRS.  End Comment.) 
 
Montealegre:  The Pacto Is Gunning For Me 
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¶7.  (C) Montealegre alleged that Arnoldo Aleman is 
doing everything in his power to help Ortega win the 
election.  He said such an alliance could be the only 
possible 
explanation for Aleman's decision to remove Montealegre -- 
the most popular center-right candidate -- from the PLC and 
choose instead the relatively weak Rizo.  Rizo, said 
Montealegre, "takes enough votes for us not to be assured 
of at least a second round."  Montealegre also blamed the 
Ortega-Aleman pact (known locally as the "pacto") for 
launching politicized allegations of wrongdoing.  He reported 
that in early 2006 Aleman and Ortega agreed to re-examine 
Montealegre's role in a banking scandal in 2000 when he was 
serving as Finance Minister. 
 
¶8.  (C) Montealegre explained that the 
same motives were behind recent allegations launched by the 
CSE and the FSLN that the ALN was working with President 
Elias Antonio Saca of El Salvador to print false ballots. 
Montealegre said that the economic unit of the National 
Police are now investigating the case.  Montealegre told 
his audience that the FSLN is prepared to exert their 
influence in the judiciary to bring Montealegre to trial 
should the election go to a second round.  Montealegre said 
that a trial would legally invalidate his candidacy and 
require that he step down -- and that, as runner-up, Ortega 
would win the presidency.  (Comment:  The Electoral Code does 
not address the implications of what would happen to a 
candidate 
involved in a legal trial.  However, Article 47 Chapter 2 of 
the 
 
Constitution states that a candidate who is found guilty of a 
crime will have his political rights suspended, and thus would 
no longer be able to run for office.  It is unclear whether 
the 
ALN would be able to replace Montealegre in this eventuality. 
Moreover, FSLN and PLC control over the judicial and electoral 
institutions give them the ability to manipulate the 
law in their favor, and thus to force Montealegre from 
the race even before a verdict is issued in any trial. End 
Comment.) 
 
¶9.  (C) Burton mentioned that he had heard Aleman was in 
poor health and asked whether that would impact his 
involvement in the campaign.  The ALN members had no news 
on Aleman's health, but insisted that regardless he will 
remain 
a key factor throughout the election season. 
 
The Rizo Factor 
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¶10.  (C) Montealegre characterized Rizo as a weak puppet of 
Aleman -- someone guided more by his own ambitions than 
ideology or values.  To back this up, Montealegre cited the 
fact 
that Rizo has turned against both Bolanos and Aleman in the 
past. 
Montealegre argued  that while Rizo claims  he is independent 
of Aleman, it is clear he is not.  Montealegre recalled a 
meeting between he and Rizo in early May during which he 
offered to become Rizo's running mate in exchange for the 
right to name half of the Assembly candidates and a commitment 
to marginalize Aleman.  Rizo replied that Aleman would have to 
approve any deal; Aleman's subsequent answer was that Rizo 
had no authority to negotiate with  Montealegre. (Comment: 
The 
Ambassador confirmed that he had heard a similar readout of 
this meeting from former President Calderon Sol of El Salvador 
who had been involved in attempts to bring Rizo and 
Montealegre 
together.  End Comment.) 
 
¶11.  (C) Despite their wariness of Rizo, the ALN members 
indicated that they continue to try to pressure Rizo into 
stepping down.  Burton asked whether Rizo's departure would 
have a positive impact on the campaign.  Montealegre 
responded that the move would probably have some value 
because it would cause turmoil within the PLC, 
although he pointed out that the party would name a 
successor rather than admit defeat.  Montealegre speculated 
that Rizo might be amenable to an offer of a cushy 
Ambassadorial position in Chile or Spain.  (Comment:  We 
assess that Rizo's departure is unlikely as he is beholden 
to Aleman.  That said, in the event that he would consider 
such a move, he would almost certainly demand far more 
compensation than an ambassadorial position which, in 
effect, would amount to little more than a political exile 
-- something the ambitious Rizo would probably find 
unappealing.  End Comment.). 
 
¶12.  (C) Rapacciolli said that a defection by Jorge Antonio 
Alvarado, Rizo's running mate, would be another way to 
derail the PLC campaign.  He speculated that Alvarado would 
be susceptible to the argument that by continuing to run 
against Montealegre he could be blamed for allowing Ortega 
to win, and thus can be induced to quit.  His defection, in 
turn, would increase the pressure on Rizo to do the same. 
(Comment:  Rapacciolli has personal ties to Alvarado -- 
they both got their start with the Conservative Party -- 
and thus sees him in a somewhat positive light.  We assess 
that Alvarado is even more politically opportunistic than 
Rizo, and that should Rizo resign, Alvarado would almost 
certainly step forward to helm the ticket.  In any event, 
Alvarado would be a dangerous partner for Montealegre given 
his history of changing alliances to suit his own personal 
interests.  End Comment.). 
 
ALN Issue Uncharacteristically Strong Criticism of the MRS 
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¶13.  (C) Montealegre and his advisers took the opportunity 
to criticize the leftist origins of the MRS and its weak 
organizational capacity.  The ALN members told their audience 
that the MRS is weak, and lacks a strong nation-wide 
organization, 
including at the JRVs.  Elaborating, the ALN members said 
that the MRS does not have enough supporters to field 
 
observers at all of the 
voting centers on election day.  Led by Rapacciolli -- 
whose tone was more aggressive than Montealegre's or 
Arguello's -- the ALN took a very critical posture against 
the MRS.  Rapacciolli said that Herty Lewites's candidacy 
had been part of a scheme by Humberto Ortega to reunite the 
Sandinista family.  While not going as far, Montealegre 
opined that if Jarquin makes it to a second round with 
Ortega, there will be little difference regardless of the 
outcome as both are Sandinistas.  Asked by Burton for his 
opinion, the Ambassador said clearly that he does 
not view Jarquin's campaign as a plot to unite the left, 
pointing out that Jarquin does hold a leftist-bent, but 
is committed to standing up against the entrenched and 
corrupt domination of the left by Daniel Ortega. 
 
¶14.  (C) Montealegre, Arguello, and Rapacciolli countered 
that 
Jarquin was a diehard Sandinista, citing his service during 
the Sandinista government of the 1980s as an Ambassador to 
Mexico and Spain, and as an FSLN deputy in the Assembly 
from 1990 to 1992.  They said the only reason he moved to 
Washington in 1992 was because his wife's son needed 
medical care.  (Comment:  The ALN's strident criticism of 
the MRS was clearly an attempt to dissuade the audience 
from seeing the MRS as an independent alternative.  In 
previous meetings, the ALN has expressed frustration with 
the Embassy's policy of speaking of both the ALN and the 
MRS as positive alternatives to the PLC and FSLN.  The ALN 
quite rightly view the MRS as a serious competitor as the 
MRS is competing with them for the moderate and undecided 
vote.  End Comment.) 
 
ALN to Codel:  Remind Nicaraguans of the Negative 
Consequences of An Ortega Win 
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¶15.  (C) Rapacciolli told the Codel that local polls 
consistently show Nicaraguans are very pro-American, and 
suggested that a strong reminder from the United States on 
the negative points of an Ortega presidency could do some 
good.  Specifically, he pointed out that with over one 
million Nicaraguans living in the United States, it would 
be "effective to announce that a Sandinista government could 
endanger the flow of remittances."  He reported that Ortega 
could choose 
to take a page out of Venezuelan President Hugo Chavez's 
playbook by 
trying to impose legislation that would crack down on foreign 
currency. 
That said, Rapacciolli warned against taking on an aggressive 
critique 
condemning the corruption of Nicaragua's institutions; doing 
so 
antagonizes national sensitivities and plays to Ortega's 
anti-interventionist rhetoric.  By way of example, he cited 
the recent 
case of Eva Zetterberg, Sweden's Ambassador to Nicaragua 
against whom 
the CSE recently filed an official complaint.  (Comment: 
Zetterberg 
in mid-September publicly decried the partisan bias of the 
CSE, prompting 
that institution to file a complaint with Sweden's foreign 
ministry and 
slam Zetterberg in the press. End Comment.). 
 
¶16.  (C) Instead, the ALN leaders recommended citing the 
economic 
consequences of an Ortega government, including a decline in 
foreign 
investment and economic assistance.  They also said that a 
clear message 
reminding people of the poor economic track record of the 
Sandinistas.  In 
response to a question from Congressman Burton over what the 
economic 
impact of an FSLN administration might look like, Montealegre 
cited 
the following figures: 
 
--Inflation in the 1980s reached 33,000%; GDP during the 
same timeframe was reduced by half. 
--The average monthly salary fell from $159 to $13. 
--Coffee exports in 1978 totaled 1.5 million tons; shipments 
were down to 600,000 in 1988.  2006 was the first year 
 
exports 
reached pre-Sandinista levels. 
--450,000 head of cattle were slaughtered in 1978, compared 
to 200,000 in 1990.  Only now has the economy been 
restored to pre-FSLN levels. 
--The international community has spent $15 billion to bring 
Nicaragua's economy back to pre-1980 conditions. 
 
Burton:  "You Are An Honorable Man." 
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¶17.  (C) Congressman Burton concluded the meeting by 
thanking Montealegre and his colleagues for their frank 
discussion, and by complimenting Montealegre, saying "you 
are an honorable man."  Burton said that he shared their 
fears about an Ortega victory, indicating that the return 
to power of the Sandinistas "would be a disaster." 
 
Comment: Atmospherics A Microcosm of Larger Internal ALN 
Communication Difficulties 
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¶18.  (C) Montealegre has often been criticized for not 
sufficiently coordinating the disparate members of his 
alliance, which has at times resulted in chaotic campaign 
planning sessions and other communication problems. 
Montealegre's visual frustration with having to reign in 
one of his colleagues -- Rapaccioli -- during this meeting 
drove this point home.  Although the meeting was cordial 
and relaxed, the dynamic between Montealegre, Arguello, and 
Rapacciolli demonstrated the challenge Montealegre faces in 
ensuring that his campaign of disparate backers speaks with 
one voice.  Rapaccioli is a former president of  the 
Conservative 
Party, a Montealegre relative, and a key Alliance member. 
His outspoken comments, dramatic flair, and a penchant for 
interrupting Montealegre, however, appeared to increasingly 
try Montealegre's patience. 
 
¶19.  (C) While he never directly 
contradicted the candidate, Rapacciolli frequently 
attempted to hammer home certain points he felt Montealegre 
had not fully addressed.  Rapacciolli's  excitable 
nature --  he occasionally resorted to squirming in his chair 
and waving his arm in the air trying to interject 
something -- and several exaggerated points prompted 
Montealegre 
to lower  his tone  at times.  During one point in the 
breakfast 
Rapacciolli stopped talking, waited until a waiter had left 
the 
room, and then dramatically announced that the wait staff were 
Aleman or Ortega spies, which elicited a sigh from the visibly 
perturbed Montealegre.  The candidate, however, handled the 
situation 
with humor, and at one point said wryly that "Mario is the 
one who makes the points."  Arguello, by contrast, was 
low-key, kept his comments to the point, and never 
interrupted Montealegre. 
End Comment. 
TRIVELLI