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Viewing cable 06MANAGUA2180, ALN PLANNING FOR A ROUGH ROAD AHEAD

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Reference ID Created Released Classification Origin
06MANAGUA2180 2006-10-03 17:43 2011-06-01 08:00 CONFIDENTIAL Embassy Managua
Appears in these articles:
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758456.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758467.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758468.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758464.aspx
http://www.confidencial.com.ni/articulo/4103/la-embusa-y-el-gabinete-de-ortega
http://www.confidencial.com.ni/articulo/4104/d-rsquo-escoto-en-onu-ldquo-un-desafio-de-ortega-a-ee-uu-rdquo
http://www.confidencial.com.ni/articulo/4102/estrada-y-la-ldquo-doble-cara-rdquo-ante-ee-uu
http://www.confidencial.com.ni/articulo/3966/la-ldquo-injerencia-rdquo-de-ee-uu-en-el-2006
http://www.nacion.com/2011-05-23/Mundo/Relacionados/Mundo2758764.aspx
http://www.nacion.com/2011-05-23/Mundo/NotaPrincipal/Mundo2758753.aspx
http://www.confidencial.com.ni/articulo/4041/millones-de-dolares-sin-control-y-a-discrecion
http://www.confidencial.com.ni/articulo/4040/la-ldquo-injerencia-rdquo-de-venezuela-en-2006
http://www.confidencial.com.ni/articulo/4047/rodrigo-barreto-enviado-de-ldquo-vacaciones-rdquo
http://www.nacion.com/2011-05-16/Mundo/NotasSecundarias/Mundo2757239.aspx
http://www.nacion.com/2011-05-16/Mundo/NotaPrincipal/Mundo2746658.aspx
http://www.nacion.com/2011-05-16/Mundo/Relacionados/Mundo2757244.aspx
http://www.nacion.com/2011-05-16/Mundo/Relacionados/Mundo2746673.aspx
http://www.confidencial.com.ni/articulo/3991/dra-yadira-centeno-desmiente-cable-diplomatico-eeuu
http://www.confidencial.com.ni/articulo/3968/pellas-pronostico-a-eeuu-victoria-de-ortega-en-2006
http://www.confidencial.com.ni/articulo/3967/barreto-era-ldquo-fuente-confiable-rdquo-para-eeuu
VZCZCXYZ0018
PP RUEHWEB

DE RUEHMU #2180/01 2761743
ZNY CCCCC ZZH
P 031743Z OCT 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 7761
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
C O N F I D E N T I A L MANAGUA 002180 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/02/2026 
TAGS: KDEM NU PGOV PINR
SUBJECT: ALN PLANNING FOR A ROUGH ROAD AHEAD 
 
REF: A. A. MANAGUA 002160 
 
     B. B. MANAGUA 002158 
 
1.  (C) SUMMARY: Drawing on Emboffs' recent meetings with 
various members of the Nicaraguan Liberal Alliance (ALN), 
this cable provides a comprehensive view of where the party 
stands five weeks before election day.  Although most local 
polls continue to show Eduardo Montealegre as the 
second-strongest candidate after Daniel Ortega, his ALN 
faces real obstacles to expanding its base.  Internal 
communication and organization problems undermine the 
party's efficiency and unless additional resources pour in, 
the ALN may not be able to make significant inroads against 
the Liberal Constitutional Party (PLC) in the all-important 
rural sector.  Given these challenges, the deciding factor 
in the election may not be how strong/popular the ALN is, 
but how vehement the anti-Ortega sentiments run.  Contacts 
in the ALN, Sandinista Renovation Movement (MRS), the 
private sector, and from various NGOs maintain that a 
significant portion of voters will vote not for their 
preferred candidate, but for whichever candidate seems 
best placed to defeat Ortega on election day.  END SUMMARY. 
 
2.  (C) Over the last two weeks Emboffs have met with 
several members of the Nicaraguan Liberal Alliance (ALN) to 
guage where the party stands now, what it plans to do in 
the remaining five weeks of the campaign, and how it will 
respond to the challenges posed by opponents in the Liberal 
Constitutional Party (PLC) and Sandinista National 
Liberation Front (FSLN).  Among those we met with were 
Eduardo Montealegre's uncle and ALN legal adviser Mauricio 
Montealegre, Azucena Castillo (a former Cabinet minister 
who is running as the first substitute deputy on the ALN's 
National Assembly ticket), ALN campaign chief of staff 
Edmundo Leal, and campaign consultant Mario Elgarresta (Ref 
A).  This cable also draws on Eduardo Montealegre's recent 
meeting with Congressman Burton (Ref B) and the Ambassador, 
and on Emboffs' conversations with an array of contacts in 
the private sector and from various NGOs. 
 
A TIGHT RACE ACCORDING TO THE POLLS 
- - - - - - - - - - - - - - - - - - 
 
3.  (C) According to an M&R poll released on 29 September, 
Daniel Ortega (30.9%) and Montealegre (26.4%) are the two 
leading candidates, followed by Jose Rizo (16.3%), Edmundo 
Jarquin (15.9%) and Eden Pastora (0.9%).  The percentage of 
people who will not vote or are still undecided stands at 
9.6%.  The poll was conducted between September 15 and 21, 
with a sample size of 4,204, and a margin of error of 
1.5%.  According to the poll, 66% of voters declared 
themselves "anti-Ortega." (Comment:  In this poll, 
Montealegre is gaining on Ortega, and the most likely 
outcome is that these two candidates will compete in a 
second round.  In a second round, Montealegre would win 
with 44.2% of the vote - 9 points over Ortega's 35%.  The 
surprise in this poll is that Jarquin's numbers appear to 
be slipping and Rizo is now in third place.  End Comment.) 
 
4.  (C) In a recent meeting with Poloff, Edmundo Leal was 
optimistic that Montealegre will win the November 5 
elections, claiming that the ALN receives more and more 
support with each poll bolstering Montealegre as the only 
serious challenger to Ortega.  He claimed that, unlike any 
other party, the ALN has registered enough party poll 
watchers (fiscales) to provide 100% coverage of the voting 
tables (JRVs) on election day - putting to rest the PLC 
assertion that only that party has the "machinery to defend 
the democratic vote."  That said, the ALN faces some tough 
obstacles that could undermine the party's efforts to 
expand its base or even erode some of its support. 
 
ORGANIZATION REMAINS A CHALLENGE 
- - - - - - - - - - - - - - - - - - 
 
5.  (C) Emboffs have heard from several sources that the 
ALN still suffers from problems of internal organization 
and communication problems, although ALN campaign 
consultant Maria Elgarresta believes that ALN has recently 
tightened up its organization.  Public statements by 
various party members occasionally appear uncoordinated or 
contradictory, and members of the alliance have told us 
that they often do not receive clear communication from 
party headquarters.  In a meeting on 29 September with Pol 
TDYer, Azucena Castillo described the ALN's central 
campaign coordination efforts as weak and reported that 
people often go about their activities without first 
talking with colleagues or checking to see whether the work 
has already been done, or really needs to be done at all. 
6.  (C) Castillo said that much of the problem lies with 
the party's poor management structure.  Castillo accused 
some Assembly candidates of not working hard enough to back 
the campaign and finds that party structure in some places 
around the country to be lacking.  She said that while the 
ALN has campaign chiefs in both Matagalpa and Managua, the 
ALN needs someone in each department to take on a more 
hands-on role in coordinating the party's local efforts -- 
something akin to a chief executive officer.  She blamed 
campaign manager Adolfo Arguello for much of the management 
difficulties.  A former bank manager, he does not have a 
strong political background and comes across as 
uncharismatic and demanding, she claimed. 
 
7.  (C) To reinforce her point about the ALN's internal 
problems, Castillo cited a 25 September meeting of senior 
party members.  Called in part to improve internal 
communication, Castillo said the group broke down several 
times in arguments over strategy.  The chief "propaganda" 
officer spoke up saying that regional campaign offices feel 
"abandoned" because they lack resources and materials. 
Castillo reported that Arguello essentially told these 
people to 'deal with it' because "we are out of money." 
This standoffish attitude came across as disrespectful, 
according to Castillo, and many attendees began to 
grumble.  The meeting was saved in large part thanks to 
Mario Rapacciolli's intervention.  He took the floor, 
delivering an animated speech that went a long way toward 
lifting morale. 
 
8.  (C) Castillo cited the ALN's strategy in the Atlantic 
Coast region as an example of how poor planning and 
resource constraints have undermined the effectiveness of 
the campaign.  She claimed that right after the Atlantic 
Coast elections in March, the ALN closed its campaign 
offices in the area, ostensibly because it lacked funds to 
remain.  Castillo said the move showed a lack of 
forethought that has proven detrimental to the campaign. 
She noted that the ALN lost much of the inroads the party 
had made in this area and has had to work almost from 
scratch.  (COMMENT:  The fact that Castillo has been 
frustrated because she does not comprise Montealegre's 
inner circle when she believes she should be included may 
have colored her views on the ALN campaign.  Early in the 
campaign, she was talked about as a potential running mate 
for Montealegre, but was passed over.  END COMMENT.) 
 
9.  (C) Nevertheless, Castillo ended on a somewhat 
optimistic note, saying that  the ALN still has time to 
turn things around and get its house in order.  She 
mentioned that the return to the campaign of Mario 
Elgarresta could have a positive effect.  An astute 
campaign adviser with longstanding ties to Nicaragua, 
Elgarresta served the campaigns of Arnoldo Aleman and 
Enrique Bolanos.  Castillo said that Elgarresta - a Cuban 
living in Miami - has the trust of Montealegre, with whom 
he worked on the Bolanos campaign, and could have a 
positive impact on Arguello's management of the campaign. 
 
 
WEAK PUBLIC STANCE 
- - - - - - - - - - 
 
10.  (C) Eduardo Montealegre's efforts to attack his 
opponents have been erratic at best and counterproductive 
at worst, according to Castillo.  While early in the 
campaign Montealegre vowed to focus his energies against 
Ortega, he has recently allowed himself to be dragged into 
lashing out at the PLC, which he continues to publicly 
maintain as an entity that has no chance of winning. 
Meanwhile Montealegre only takes an occasional swing at 
Ortega and is doing an inadequate job of defending himself 
against the attacks of his opponents.  Castillo asserted 
that Montealegre's failure to take a strong public stance 
on the CENIS issue and his lack of attacks against Ortega 
have earned him a weak public image - "he always appears on 
the defensive."  Moreover, Montealegre's attacks against 
the Liberals have often been misguided and clumsy.  Instead 
of taking direct aim at Aleman, Montealegre on the campaign 
trail has several times broadened his critique to include 
Liberals in general - a tactic that alienates many voters 
who would consider voting for Montealegre, but who consider 
themselves as Liberals.  Castillo argued that Montealegre 
shares the same Liberal ideology of many voters, including 
herself, so his anti-Liberal message comes across as 
confusing and schizophrenic.  Castillo said that she has 
told Montealegre, "Liberalism is your flag and you need to 
carry your flag." 
 
11.  (C) Despite facing a number of legal hurdles with the 
Supreme Electoral Council (CSE), the ALN has taken a 
relatively quiet approach to dealing with the body rather 
than attempting to call public attention to what are 
blatantly politicized decisions.  Mauricio Montealegre told 
Pol TDYers on 27 September that the ALN will seek to work 
with the CSE to "iron out" disagreements.  In those cases 
where the CSE has ruled against the ALN, Montealegre said 
they would exhaust all the means of appeals.  He argued 
that the alliance needed to avoid prematurely antagonizing 
the CSE so that the ALN will be freer to take a more 
critical approach at crucial later stages in the election 
process.  Part of this hesitance also stems from the desire 
to avoid scaring voters away from the polls.  Montealegre 
explained that one of the reasons for taking a toned-down 
approach toward the CSE on the issue of potential vote 
fraud is to prevent voters from getting the idea that fraud 
will be inevitable, which might prompt some not to vote. 
 
12.  (C) COMMENT: The desire to work within the confines of 
the system for now makes sense.  However, calling out the 
CSE with allegations of favoritism and the possibility of a 
manipulated vote is unlikely to alienate many voters.  For 
one thing, this dialogue has now become a constant part of 
the political din in Nicaragua.  Also, strong statements 
linking  CSE mismanagement to the interests of the PLC-FSLN 
pact probably help to stoke anti-establishment (and thus 
pro-ALN or pro-MRS) sentiments.  END COMMENT. 
 
13.  (C) Castillo also criticized Eduardo Montealegre's 
toned-down persona and aloof image, which she says hurt the 
party's outreach efforts.  Castillo told Pol TDYer that 
Montealegre is something of an introvert and that he has a 
very "mathematic and exact" personality that makes him seem 
uncomfortable around people.  She said, for example, that 
when on the campaign trail he does not engage in the 
traditional prolonged embrace, often pulling away from such 
encounters to move on to the next person.  According to 
Castillo, this is not intentional, but a reflection of an 
inability to understand why it is so important to spend 
more time with individuals.  His stance is akin to 'ok, I 
have greeted this person, time to move on.'  He thus comes 
across as uptight and aloof. 
 
 
MONEY REMAINS AN ISSUE 
- - - - - - - - - - - - 
 
14.  (C) Most of our ALN contacts have complained about a 
lack of campaign finances .  While Post recognizes that 
these comments are made in part to solicit USG support, it 
is obvious that the party is truly hurting for resources. 
Montealegre told Congressman Burton and the Ambassador 
during their meeting on 23 September that the ALN has only 
spent about one-third of what was spent on the Bolanos 
candidacy at the same point in its 2001 campaign.  While 
admitting to having received support from private sector 
sources in Guatemala and El Salvador, Montealegre and his 
campaign advisers noted that most Nicaraguan donors are 
only giving in small amounts.  Post has heard the same 
thing from our private sector contacts.  One member of the 
Nicaraguan-American Chamber of Commerce (AMCHAM) told Pol 
TDYer on 25 September that many wealthy Nicaraguans have 
been hesitant to donate to Montealegre's campaign out of 
fear of prompting reprisals from the Sandinistas. 
(Comment:  The candidates are required to declare all thei 
r donations and their sources.  Businesses fear that the 
FSLN could use their muscle in the courts to 'punish' those 
who give significant amounts to Sandinista opponents.  End 
Comment.) 
 
15.  (C) The lack of funding also appears to have forced 
the ALN to rely increasingly on borrowed money.  Edmundo 
Leal told Poloff recently that the ALN is operating in the 
red, having failed to receive the promised level of support 
from the Nicaraguan private sector.  The ALN is probably 
hoping to repay its debts from monies earned from a strong 
showing in the elections.  The government sets aside a fund 
equal to 1% of the ordinary budget to distribute to those 
political parties who gain more than 4% of the vote - to be 
disbursed after the elections.  These parties then split 
this pot in amounts proportional to the number of votes 
they receive.  The AMCHAM member said that this has 
prompted the parties to approach banks for loans based on 
how many votes they think they will be able to receive. 
However, Montealegre and his advisers hinted during their 
meeting with Congressman Burton that they were now having 
trouble persuading banks to lend them more money.  In the 
meantime the ALN will continue to appeal to international 
sources as well as domestic ones.  Castillo said that 
Rapacciolli and Montealegre were headed to El Salvador over 
the weekend of 30 September in order to drum up additional 
contributions. 
 
16.  COMMENT:  Despite its financial challenges, the ALN 
appears to have been able to spend more than any other 
party other than the Sandinistas.  According to an Etica 
and Transparencia study published in the press (El Nuevo 
Diario) on 30 September, the ALN spent 3,153,571 cordobas 
on its campaign between 1 July and 15 August, compared with 
2,622,635 spent by the PLC during the same period.  The 
FSLN was listed as having spent 7,858,120.  END COMMENT. 
 
 
ALN CONCERNED ABOUT ELECTORAL FRAUD 
- - - - - - - - - - - - - - - - - - 
 
17.  (C) Mauricio Montealegre told POL TDYers and POL FSN 
that the ALN is aware that Sandinista influence in the CSE 
and judicial sectors put that party in a strong place to 
commit fraud.  He listed four ways the Sandinistas could 
steal up to 5% of the election and avoid a second round: 
 
--Annul a handful of votes from each JRV:  Montealegre said 
that if the FSLN can use its clout at the JRV to annul 3 
votes in  each JRV around the country, this could void as 
much as 30,000 votes overall, potentially throwing out up 
to 1% of the total vote. 
 
--Raton Loco:  The FSLN-controlled electoral authorities 
can change the registered address of some voters, forcing 
them to have to vote in other polling centers at the last 
minute.  This strategy has unfolded in previous elections, 
and could prompt between 1-2% of the electorate to abstain 
(i.e. people will give up and decide not to vote rather 
than go through the hassle of having to travel to another 
polling place).  This result would favor Ortega as a high 
voter turnout improves the chances of the anti-Ortega vote. 
 
--Voiding entire JRVs:  FSLN clout over the three-member 
JRVs would give them an upper hand to challenge the results 
in particular polling centers - where they are losing. 
Through the challenge process, the entire results from each 
JRV (up to 400 votes) can be negated. 
 
--Virtual fraud:  Montealegre warned that FSLN influence 
over the CSE gives them control over the means by which the 
vote tallies will be transmitted (mostly by fax) to local 
vote tally centers.  He offered few specifics, but Embassy 
officers will follow up on this. 
 
 
THE OAS VIEW ON THE GROUND 
- - - - - - - - - - - - - - 
 
18.  (C) POL TDYers met on 29 September with OAS official 
Patricio Gajardo to discuss the latest numbers of JRVs and 
the size of the voter list.  According to Gajardo, the CSE 
has said there will be 11,274 JRVs and that the total voter 
list numbers 3.6 million.  Gajardo, however, says this is 
likely inflated and expects that the number of voters will 
be between 2.6-2.8 million.  Assuming a voter base of 2.7 
million, each 1% of the vote is 27,000 votes, or 
approximately 68 JRVs (assuming that each of the JRVs 
contains the maximum of 400 votes). 
 
 
FENDING OFF ATTEMPTS BY OPPONENTS TO LURE, SCARE PARTY 
MEMBERS 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
19.  (C) Over the course of the last few weeks the ALN has 
suffered several high-profile defections from within its 
ranks.  It is clear that the FSLN and PLC are attempting to 
seed chaos within the ALN in an attempt to undermine the 
public's confidence in the alliance as a viable political 
entity.  Most notable of these has been the decision in 
mid-September by former Contra and Nicaraguan Resistance 
Party (PRN) leader Salvador Talavera - who is the third 
candidate on the ALN's slate of national-level Assembly 
deputies - to publicly announce his support for the FSLN. 
Despite an ongoing appeals process, the CSE has so far 
prevented the ALN from replacing Talavera.  The damage this 
could cause to the ALN's Assembly slate is significant as 
Talavera will almost certainly win a spot in the Assembly 
given his senior spot on the slate.  While he would 
continue to be counted among the ALN bank of supporters, he 
would probably  vote with  the FSLN. 
 
20.  (C) Mauricio Montealegre told POL TDYers that the 
slate system of electing Assembly deputies opens doors for 
opponents to attempt to encourage defections.  He argued 
that low-ranking ALN supporters are unlikely to get a seat 
in the legislature, and are prone to the temptations or 
threats made by the PLC or FSLN.  A party as new as the 
ALN, which lacks strong resources, may find it hard to 
maintain the loyalty of these people who would be tempted 
by the opportunity to gain a stronger position with a more 
established party.  (COMMENT:  Each party has a list of 
twenty names to fill the twenty national-level seats in the 
Assembly but that as no party has a chance of winning all 
the seats, which are divvied up based on the proportion of 
the vote, most of the nominees from a party slate will not 
gain a position.  Moreover, the number of likely 
disappointed persons is actually 40 because with each 
deputy candidate comes a spot for an alternate or 
substitute candidate ("suplente").  END COMMENT.) 
 
21.  (C) Anecdotal evidence also suggests that the PLC and 
FSLN have offered money and other incentives to entice 
these 'weak links' away from the party.  The ALN's 
Department heads in Leon and Chontales publicly decried on 
27 September that the PLC and FSLN are trying to lure, 
bribe, or blackmail ALN members to join forces with the PLC 
and FSLN.  Both regional leaders said they had been offered 
money from these parties to switch sides.  Several PLC 
figures disenchanted with party leadership and advocating 
either liberal unification under Montealegre or outright 
support for his candidacy have told Emboffs that they have 
received personal threats.  ALN Assembly deputy candidate 
Ariel Montoya told Poloff on 28 September that leaders of 
the internal PLC movement to support Montealegre's 
candidacy (GANARAM) have received personal threats. 
 
22.  (C)The ALN has been able to weather Talavera's 
departure, and that of several other "suplente" candidates 
- at least for now.  Edmundo Leal and Azucena Castillo have 
told Poloffs that Talavera's defection was a 'wake-up call' 
for the ALN, and that other PRN members have since rallied 
around Montealegre.  (Comment:  Castillo has also said that 
Talavera's defection took many by surprise, but that party 
management had ignored warnings from four or five sources 
within the ALN against choosing him as a candidate in the 
first place due to his personal baggage.  End Comment.) 
 
 
LEGAL SHOALS AHEAD 
- - - - - - - - - - 
 
23.  (C) The ALN is expecting the FSLN to exploit its 
leverage in the CSE, National Assembly, and the courts to 
lash out at the ALN to handicap, and possibly derail, 
Montealegre's campaign.  Castillo said that the likelihood 
that the FSLN and PLC will try to undercut Montealegre's 
campaign (or a Montealegre administration) through legal 
cases is the ALN's "achilles heal." She said that 
Montealegre received a message from Comptroller Arguello 
Poessy in which Poessy told Montealegre that he regarded 
the candidate as a friend, but that he could not permit him 
to continue to divide the Liberals.  She said that the 
PLC-FSLN attacks on Montealegre tend to coincide with the 
release of polls depicting Montealegre as the strongest 
center-right candidate. 
 
24.  (C) To counter these efforts Mauricio Montealegre told 
Poloffs that the ALN is attempting to work closely with the 
CSE wherever possible.  He said that they have contacted 
former CSE employees to seek help on how best to work with 
the institution.  The ALN is also mounting an intense 
effort to place as many party observers at the polls on 
election day as possible.  The specific legal cases facing 
Montealegre - and some hypothetical ones - are listed 
below: 
 
--Removing Talavera from the party slate:  Numerous ALN 
contacts have told Poloffs that the CSE's refusal to allow 
the ALN to replace Talavera is yet another example of how 
politicized that body is.  Mauricio Montealegre said that 
because Nicaragua's system of electing representatives to 
the Assembly via slate (vice voting for individual members) 
should give the party the right to replace these members at 
will.  Montealegre says that jurisprudence points to 
several legal precedents in which both the PLC and FSLN 
have been able to switch out members as late as ten days 
before the elections.  Mauricio said that the party would 
continue to appeal the case to the CSE knowing that "we do 
not have the slightest hope [of winning]."  (COMMENT: With 
the suicide of one of the PLC's substitute Assembly deputy 
candidates, the PLC has requested that the CSE allow the 
PLC to replace him.  If the CSE approves the request, the 
ALN will have a bit of leverage to argue its appeal to 
E 
replace Talavera. However, the CSE is likely 
 to counter that the cases are very different.  END 
COMMENT.) 
 
--The CENIS case:  However convoluted the CENIS bank-buyout 
scandal might be, the FSLN and PLC will almost certainly 
continue to hold this case over Montealegre's head.  To 
summarize the issue, Montealegre has been accused of 
personally profiting as part of a deal in 2000-2001 where 
the government issued "Negotiable Indemnization 
Certificates" (CENIS) to facilitate the takeover of failed 
banks by other Nicaraguan banking institutions - including 
one in which Montealegre may have had a personal stake as 
he was General Director and minority shareholder. 
Montealegre counters the accusation with the assertion that 
he was not Finance Minister when these decisions were made 
and was never in a position of authority to influence the 
decision, the exception being when the CENI rates and time 
periods were renegotiated in 2003 during his tenure as 
Finance Minister.  The lead agency in the renegotiations 
was the Central Bank, where Montealegre was ex oficio 
chairman.  They negotiated lower interest rates for the 
CENIs to the benefit of the Nicaraguan public.  (COMMENT: 
We suspect Montealegre's opponents will re-engage this 
issue closer to the election when it can do more political 
damage.  END COMMENT.) 
 
--Accusations over printing fake ballots:   When asked 
about the sample ballot issue currently before the CSE, 
Leal explained that the ballots are blacked out except for 
the ALN "casilla" and could never be mistaken for the real 
thing.  The whole "scandal" has been trumped up by the FSLN 
and CSE, he claimed. 
 
--Campaign finance allegations:  A quick look at the law 
also reveals potential Achilles' heels for some of the 
campaigns.  Article 177 of the Electoral Code states that 
candidates found guilty of violating finance-related rules 
laid out in Chapter 4 (articles 99-106) or any of the other 
electoral violations cited in Title 14 (articles 173-178) 
are required to renounce their candidacies and are 
prohibited from exercising public functions for a period of 
between one and three years.  Should they be charged with 
having committed these offenses during their campaigns 
after they have already taken office, then they must step 
down.  This provides an obvious opening for the pactistas 
to use their influence to hamstring opponents. 
 
 
CHANCE OF LIBERAL ALLIANCE UNLIKELY 
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25.  (C) Eduardo Montealegre told Congressman Burton and 
the Ambassador during their meeting in late September that 
he was still open to offering Rizo a chance to join his 
campaign, and has considered giving him the inducement of a 
desirable ambassadorial position in Chile or Spain. 
Nevertheless, as time gets short, Montealegre's firm 
refusal to join a party controlled by Aleman, and Rizo's 
inability or unwillingness to challenge his party leader, 
make an alliance increasingly unlikely.  Castillo said that 
the idea is losing traction within the ranks of both the 
PLC and the ALN. 
 
 
ABILITY TO SUSTAIN STRONG NUMBERS KEY TO THE ELECTION 
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26.  (C) Multiple contacts from both the ALN, MRS, and the 
private sector have told Emboffs that the key to the 
election will be the anti-Ortega vote.  Many people may 
consider voting for whichever candidate appears most 
capable of defeating Ortega.  According to the M&R poll 
released on 29 September of the 66% of respondents who 
described themselves as against Ortega, 74.7% said they 
would consider voting for a candidate other than the one 
they preferred in order to avoid an Ortega win.  Thus, much 
of the population may pay a high degree of attention to the 
polls produced near election day, regardless of how 
credible they might be. 
 
27.  (C) COMMENT:  Despite its challenges, the ALN still 
has a good shot of finishing the campaign at a strong 
pace.  Elgarresta, Leal, and Casillo all commented that the 
campaign has identified its weaknesses and insist that they 
are taking steps to address their shortcomings and 
reinforce their strengths.  Assuming the party stays strong 
in the polls, the ALN can probably count on their numbers 
receiving an additional boost from voters from other 
parties who might see the ALN as the best chance of 
E 
defeating Ortega.  END COMMENT. 
TRIVELLI