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C O N F I D E N T I A L SECTION 01 OF 03 MANAGUA 000178 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
 
E.O. 12958: DECL: 01/23/2017 
TAGS: KDEM NU PGOV PINR PREL ENRG EPET
SUBJECT: LACAYO: FSLN INTEREST GROUPS COMPETE FOR DOMINANCE 
 
REF: MANAGUA 0155 
 
Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). 
 
¶1.  (C) Summary:  Antonio Lacayo, secretary minister of the 
presidency during Violeta Chamorro's presidency and her 
son-in-law, believes that the power struggle among competing 
Sandinista National Liberation Front (FSLN) interest groups 
will "test" the new Ortega government and could be exploited 
to the opposition's advantage.  He recently warned the 
Ambassador that Ortega is intent on mounting a "parallel 
government" operating outside of public scrutiny, but 
believes the opposition holds the key to counter this trend. 
End Summary. 
 
Ortega Set on Mounting Parallel Government 
- - - - - - - - - - - - - - - - - - - - - 
 
¶2.  (C) In a January 18 meeting with Ambassador, DCM, and 
PolCouns, Antonio Lacayo warned us that President Ortega is 
determined to mount a parallel government that will operate 
outside of public scrutiny.  Lacayo, who served as Violeta 
Chamorro's secretary minister of the presidency and is her 
son-in-law, described Ortega's new cabinet as "a group of 
largely unqualified, incapable novices".  Their loyalty to 
Ortega is unequivocal, but they will exercise no significant 
influence.  Citing Education Minister de Castilla as a case 
in point, Lacayo observed that the minister's double 
discourse has the population reeling, and even pro-Sandinista 
education union ANDEN has criticized de Castilla.  Lacayo 
recounted how in the course of a week de Castilla had 
proposed eliminating school cafeterias, and then reinstated 
them.  Similarly, the minister declared educational autonomy 
"dead" and ordered parents to refuse to pay any 
administrative school fees; days later, however, de Castilla 
announced that parents will be responsible for holding fund 
raising events to contribute to their children's schools. 
 
¶3.  (C) As for Health Minister Maritza Cuant, Lacayo 
highlighted the fact that she was quick to correct the FSLN's 
pre-election opposition to abortion of any kind and is now 
openly opposing the penalization of abortion.  As for 
National Energy Institute (INE) director David Castillo, "he 
is totally crazy," declared Lacayo, while new Energy Minister 
Emilio Rapacciolli is one of the capable few in the new 
cabinet.  (Comment:  The FSLN has traditionally openly 
supported therapeutic abortion; its change of heart in the 
lead up to the November 2006 national election was clearly a 
political ploy to gain more votes and ingratiate the party 
with the Catholic Church.  (Note: The January 22 editions of 
Nicaragua's dailies La Prensa and El Nuevo Diario both 
featured Managua Archbishop Leopoldo Brenes' comments that 
the FSLN should remember its campaign position against 
abortion.) 
 
¶4.  (C) According to Lacayo, another reason for Ortega's 
delay in standing up his cabinet and the lack of transparency 
surrounding the process is his inability to deliver on his 
campaign promise to appoint women to 50% of the government 
positions.  Lacayo reported that GON "Zero Hunger" director 
Orlando Nunez had apprised him of the dilemma -- many capable 
women work for NGOs and are unwilling to sacrifice their 
generous salaries to take a much lower paying government job, 
especially if Ortega delivers on his promise to halve the 
salaries of senior government officials. 
 
So, Who is in Charge? 
- - - - - - - - - - 
 
¶5.  (C) Depicting President Ortega as a "disorganized sort 
with absolutely no sense of time," Lacayo believes that 
Ortega will not be engaged in the daily goings on of his 
government.  He ventured that the increasingly evident 
rivalries and divisions among Sandinista leaders close to 
Ortega will further complicate the Ortega government.  Lacayo 
listed four main currents: Ortega's wife Rosario; his new 
senior economic advisor Bayardo Arce; Managua Mayor Dionisio 
"Nicho" Marenco; and, the ever-present Lenin Cerna, still a 
power to reckon with, even though he is not to Rosario's 
liking.  Lacayo opined that in the scheme of things, 
Rosario's influence is on rise, recounting that while a year 
ago Tomas Borge had ordered Rosario to "shut up," today he 
would not dare to confront her. 
 
 
MANAGUA 00000178  002 OF 003 
 
 
¶6.  (C) Comment: The other shadow power figures in Ortega's 
government will be Miguel D'Escoto, Alvaro Baltodano, Manuel 
Coronel Krautz and Mohammed Lashtar.  Marenco's presidential 
ambitions could eventually trump his loyalty to Ortega. 
While National Assembly Deputy Edwin Castro and Foreign 
Minister Samuel Santos (and probably Nicaraguan 
Ambassador-designate to the United States Arturo Cruz) lie 
within Rosario's camp (considered the more "moderate" and 
"intellectual" wing), National Assembly President Rene Nunez 
appears closer to Bayardo Arce.  Lacayo predicted that the 
power struggles among these camps will test the new Ortega 
government and suggested that these tensions could be 
exploited to the opposition's advantage.  End Comment. 
 
¶7.  (C) The Ambassador raised concerns regarding Ortega's 
choice of former Libyan/naturalized Nicaraguan Muhamad 
Muhktar Lashtar as his personal secretary, noting that 
Lashtar was a commercial attache at the Libyan embassy in 
Managua in the 1980s and reportedly associated with Libyan 
intelligence.  Lacayo, who shared the Ambassador's concern, 
remarked that Pepe Mathus, a former Contra (associated with 
the Nicaraguan Liberal Alliance, ALN) who has been involved 
in some business dealings with Lashtar, told Lacayo recently 
that the Libyan Embassy had informed him that Lashtar no 
longer maintains any relation with the embassy.  PolCouns 
shared that Lashtar is reportedly Moammar al-Ghadafi's 
nephew. 
 
Disgruntled Convergencia 
- - - -  - - - - - - - - 
 
¶8.  (C) Lacayo related how Edwin Castro had sent a letter to 
President Ortega recommending he appoint Convergencia leader 
Santiago Rivas as Defense Minister, but Cerna knocked the 
idea down and lobbied for wife Marisol Castillo to take the 
job.  Only vigorous foreign and domestic objections derailed 
Castillo's appointment, opined Lacayo.  Similarly, Luis 
Guzman, another Convergencia member, was not taken into 
account, said Lacayo, who added that at one point he was also 
affiliated with Convergencia. 
 
Transformation in the Fast Lane 
- - - - - - - - - - - - - - - - 
 
¶9.  (C) The Ambassador observed that President Ortega appears 
intent on a transformation of state along the lines of the 
Chavez model and is quickly trying to pass legislation that 
would reduce the role of traditional governmental 
institutions.  The Ambassador added that Ortega's aggressive 
efforts to consolidate power and his association with the 
Venezuelan, Bolivian, and Iranian presidents is causing him 
to quickly waste the political capital he had gained during 
the campaign and following his election. 
 
Stepping Back on Law 290 
- - - - - - - - - - - - - 
 
¶10.  (C) Lacayo, who agreed with the Ambassador's assessment, 
attributed Ortega's recent decision to retreat a few steps on 
some of his party's most egregious proposed changes to Law 
290 (including revisions that would have accorded Ortega 
direct control over the police and the military) to his 
realization that he can only go so far, so fast before the 
opposition will dig in its heels.  However, Ortega is certain 
to try to "score other goals," warned Lacayo. 
 
Ortega's Double Discourse -- A Matter of Money 
- - - - - - - - - - - - - - - - - - - - - - - 
 
¶11.  (C) The Ambassador solicited Lacayo's views on whether 
Ortega is serious in his "double discourse" that he seeks 
positive relations with the United States while allowing the 
Venezuelan and Iranian presidents to lambaste the United 
States as they signed a number of cooperation agreements. 
Lacayo's response was immediate: "It's all about the money" 
-- Ortega wants to remain within the graces of the IMF, and 
with the U.S., EU, Japan, and other donors.  Thus, Ortega's 
rhetoric during his inaugural ceremonies was relatively 
benign.  However, because Ortega needs more funds than these 
traditional sources can provide to deliver on all of his 
campaign promises, he must court Chavez.  Ortega knows that 
President Chavez saved Cuba, explained Lacayo, adding that 
"Chavez is not a revolutionary, he's a gorilla."  Fidel 
Castro does not even respect Chavez and Daniel possibly might 
 
MANAGUA 00000178  003 OF 003 
 
 
not even consider Chavez a "true ideological" colleague, but 
they both need him, he concluded. 
 
¶12.  (C)  The Ambassador commented that some of Chavez' 
offers are to problems that the Nicaraguans do not have, for 
example, the construction of a refinery that will process 
much more crude than Nicaragua's domestic consumption 
requires.  Lacayo replied that the refinery and pipeline are 
directed at meeting China's growing energy needs. 
 
Taking Advantage of the New Political Chapter 
- - - - - - - - - - - - - - -  - - - - - - - - 
 
¶13.  (C) Lacayo mused that Ortega's return to power and his 
fast-track efforts to transform Nicaragua's political model 
has panicked the opposition and opened a new political 
"chapter" that offers the divided liberals and other 
opposition parties a chance to rally around a common purpose. 
 He listed lawmakers Wilfredo Navarro, Francisco Aguirre 
Sacasa and Jose Pallais as some of the PLC deputies who might 
be willing to participate in such an effort with their ALN 
and Sandinista Renovation Movement (MRS) counterparts.  Both 
Navarro and Aguirre Sacasa hold strong ambitions to run for 
president, so their loyalty to Aleman could be compromised, 
he explained.  Referring to DCM/POL's recent meeting with PLC 
caucus chief Maximino Rodriguez, he agreed that Rodriguez 
would be another good candidate. 
 
A Bit of Pact History 
- - - - - - - - - - - 
 
¶14.  (C) Commenting that Aguirre Sacasa claims he is 
"different" from his father Francisco Aguirre Baca, Lacayo 
related how Aguirre Baca, who resides in the United States, 
and Humberto Ortega were the initial intermediaries who set 
up the "pact" between Arnoldo Aleman and Daniel Ortega. 
Later on, current VP Jaime Morales and Managua Mayor Nicho 
Marenco replaced Aguirre Baca and Humberto Ortega as the pact 
intermediaries, he explained. 
 
Comment 
- - - - 
 
¶15.  (C) Lacayo's insights track closely with many of our 
other contacts, although he seems out of touch regarding PLC 
deputy Wilfredo Navarro; thus far, Navarro has shunned ALN 
efforts to seek common ground against Ortega.  The fissures 
within Ortega's inner circle can be exploited to the 
opposition's and our advantage, particularly if the 
opposition starts rallying around a common goal to prevent 
Ortega from transforming Nicaragua's political model and 
remaining indefinitely in power.  The  media can also help by 
informing the public that Chavez' use of Nicaragua as his 
bully pulpit against the United States demonstrates his 
aggressive, neo-imperialistic intentions for the region. 
TRIVELLI