VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0355/01 0372352
ZNR UUUUU ZZH
R 062352Z FEB 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9003
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS MANAGUA 000355 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PLEASE PASS TO USTR/AMALITO 
DEPT FOR WHA/CEN, WHA/EPSC, EB/TPA 
 
E.O. 12958: N/A 
TAGS: ETRD EINV EAGR WTO MCC PINR NU
SUBJECT: NICARAGUA: AMBASSADOR CALLS ON NEW MINISTER OF 
TRADE AND INDUSTRY 
 
¶1. (SBU) Summary.  In a cordial introductory meeting with new 
Minister for Development, Trade, and Industry Horacio Manuel 
Brenes Icabalceta, the Ambassador touched on CAFTA and U.S. 
trade capacity building programs, the Millennium Challenge 
Account, and WTO trade issues.  Also discussed were recent 
statements made by President Ortega and the toll that 
corruption took on the poor.  Brenes observed that the 
impression that some have of Ortega's views is somewhat 
distorted.  The government's public discourse, he explained, 
does not always agree with its actions -- Nicaragua was not 
preparing to return to the 1980s.  "Everybody knows," he 
stated, "that if we do not maintain (macroeconomic 
stability), nothing will happen."  Nicaragua "had already 
tried socialism," he explained, "and it did not work."  On 
the subject of corruption, Brenes became animated, stating 
that corruption was why he had left Arnoldo Aleman's PLC. 
Brenes feels that Nicaragua needed to educate itself away 
from a culture of corruption.  End Summary. 
 
¶2. (SBU) The Ambassador called on new Minister for 
Development, Trade, and Industry Horacio Manuel Brenes 
Icabalceta on January 29.  In a cordial introductory meeting 
lasting less than one hour, the Ambassador touched on CAFTA 
and U.S. trade capacity building programs, the Millennium 
Challenge Account, and WTO trade issues.  Also discussed were 
recent statements made by President Ortega and the toll that 
corruption took on the poor.  From a policy perspective, 
Brenes did not go into depth on any of these subjects.  No 
other Ministry of Development, Trade, and Industry (MIFIC) 
official attended. 
 
CAFTA 
----- 
 
¶3. (U) The Ambassador explained that much what the U.S. 
Mission does in Nicaragua revolves around helping Nicaraguans 
take advantage of opportunities that the U.S.-Central 
American Free Trade Agreement (CAFTA) has to offer.  The 
Ambassador pointed out that this activity reflects the fact 
that CAFTA is the basis of our bilateral economic 
relationship.  The Ambassador described some of the trade 
capacity building efforts in which the Mission was engaged. 
Through ProCAFTA, for example, USAID is working with MIFIC to 
encourage bilateral trade and investment, promote a 
public-private dialogue on development priorities, and help 
Nicaraguans meet international norms and standards to 
facilitate trade.  The U.S. Department of Agriculture is 
working with Nicaraguan officials to help farmers and 
ranchers meet U.S. food and health standards, so that they 
may sell their products to the United States.  The Millennium 
Challenge Corporation is working with MIFIC to unlock the 
regional potential of the departments of Leon and Chinandega, 
including constructing roads and developing regional 
processing and marketing channels to U.S. and other 
international markets.  The U.S. Trade and Development Agency 
is funding $750,000 worth of feasibility studies on expanding 
cargo services at the Port of Corinto and Managua 
International Airport.  Each of these programs reflects our 
desire to help Nicaragua take advantage of the opportunities 
that CAFTA has to offer. 
 
Millennium Challenge Account 
---------------------------- 
 
¶4. (U) The Ambassador told Brenes that he is optimistic about 
opportunities that CAFTA, the Millennium Challenge Account, 
and rising investment flows presented to Nicaragua.  Trade 
and investment is creating real jobs and raising Nicaraguan 
productivity.  The Ambassador added that he would soon be 
visiting Leon to see a Mexican-Japanese plant assembling 
electrical wire harnesses for Ford Motor Company.  The plant 
represented the type of investment that can take place within 
the context of globalization -- the kind that the Millennium 
Challenge Corporation (MCC) wants to attract and that might 
someday find its way to Matagalpa, the minister's home 
department.  Matagalpa borders MCC's region; and Brenes 
seemed to be well aware of what was going on in the 
neighboring departments of Leon and Chinandega. 
 
Ortega's Economic Policy 
------------------------ 
 
¶5. (SBU) The Ambassador asked Brenes about some of the points 
that President Daniel Ortega made during his meeting with the 
diplomatic corps on January 26.  Ortega seemed to be 
questioning the value of private participation in the 
telecommunications and power sectors, lamenting the prospect 
of negotiating a program with the IMF, and regretting that 
the country would have to pay $100 million this year on bonds 
issued to indemnify property confiscations of the 1980s. 
Ortega also spoke on the failures of "neo-liberalism," as if 
no progress had been made during the past fifteen years. 
 
¶6. (SBU) Brenes replied that the impression that some have of 
Ortega's views is somewhat distorted.  The country has taken 
"some severe blows" over the years, sometimes devastated by 
earthquakes and hurricanes, and at other times by war and 
politics.  Brenes highlighted the corruption of former 
president Arnoldo Aleman.  He claimed that 80% of the 
population had not been adequately represented in decisions 
taken in Managua.  However, Nicaragua "had already tried 
socialism," he said, "and it did not work."  The government's 
public discourse, he explained, does not always agree with 
action; Nicaragua was not preparing to return to the 1980s. 
"Everybody knows," he declared, "that if we do not maintain 
(macroeconomic stability), nothing will happen."  In fact, he 
stressed, "If there were something more I could do to 
preserve macroeconomic stability, I would."  Brenes continued 
to say that he believes in free enterprise and wanted to see 
it work for Nicaragua.  For this reason, he planned to work 
closely with the small and medium enterprise institute, which 
reported to his ministry.  He pointed out that small and 
enterprise covers 70% of the "masses." 
 
Corruption 
---------- 
 
¶7. (SBU) Brenes, who was soft spoken throughout most of the 
meeting, became animated on the subject of corruption.  He 
said that corruption was why he had left the PLC.  "Aleman 
acts like he is the owner the party," he said.  Brenes then 
recounted that, at one point during the last election 
campaign, Brenes approached Aleman to tell him that he was 
"killing the party."  After that, Aleman tried to approach 
Brenes through an intermediary, the first and last of whom 
Brenes summarily rebuffed.  Brenes recalled a lecture he once 
had at INCAE.  The professor walked into the classroom asking 
the class, "What is the problem with Latin America?"  At the 
end of the discussion, the professor paused to say, "The 
problem with Latin America is corruption," and with that, he 
walked out of class.  Brenes reasoned that Nicaragua does not 
just need to produce more, but also needs education (i.e., to 
change the culture of corruption).  The Ambassador suggested 
that perhaps the American Chamber of Commerce should invite 
the Minister to lunch to discuss these issues.  The chamber 
is quite engaged on the subject of ethics, transparency, and 
corporate responsibility. 
 
WTO Trade Disputes 
------------------ 
 
¶8. (SBU) The Ambassador mentioned Ecuador's November 2006 
request for WTO consultations on the European Union's new 
import regime for bananas.  The United States has joined as a 
third party, but wondered if Nicaragua had missed the window 
to join.  Brenes responded that he has only recently become 
aware of the case, but seemed to know that in the past 
Nicaragua had supported Ecuador.  He recognized the potential 
for Nicaragua to increase its banana/plantain production to 
historical levels. 
 
¶9. (SBU) Brenes knew a bit more about peanuts.  Nicaragua's 
interest in peanut exports has caused it to join Canada's 
request for WTO consultations on U.S. agricultural subsidies. 
 Specifically, Nicaraguan peanut producers, who are producing 
increasing quantities of the product, are quite worried that 
sales of U.S. subsidized peanuts are adversely affecting 
Nicaraguan peanut sales to Mexico.  The Ambassador noted that 
Nicaragua did not come close to filling its U.S. tariff rate 
quota under CAFTA, but that exports of peanut oil and other 
value added products have been rising.  The Ambassador 
suggested that perhaps Nicaragua should look for ways to add 
more value to the product before exporting it.  Brenes agreed 
that this idea had some merit.  Note: On January 30, Brenes 
penned a letter to the Ambassador stating that Nicaragua had 
petitioned to join Canada's request for consultations as a 
consequence of U.S. peanut subsidies. 
 
Biography: Horacio Manuel Brenes Icabalceta 
------------------------------------------- 
 
¶10. (SBU) Horacio Brenes is a 57-year-old businessman from 
Matagalpa who became increasingly active in business 
associations and politics in Matagalpa during the past ten 
years.  In 1995, Brenes helped found the Pro-Matagalpa Trade 
Fair Committee, which by 1998 had transformed into the 
Foundation for the Development of Enterprise in Matagalpa 
(FUDEMAT). 
 
¶11. (SBU) Brenes entered politics in 1996, when he ran for 
mayor of Matagalpa.  In his first campaign, he ran on an 
independent ticket called Matagalpa 2000.  He was defeated by 
the PLC candidate.  In his second campaign, he ran on the PLC 
ticket for mayor of Matagalpa in 2000.  He was defeated by 
FSLN candidate Sadrach Zeledon.  Nevertheless, Brenes earned 
a seat on the City Council and began working with Zeledon. 
In a unity pact, the two pledged to "work for the good of 
Matagalpa."  In his third campaign, Brenes again ran for 
mayor of Matagalpa on the PLC ticket.  This time he lost to 
FSLN candidate Nelson Artola.  Remaining a member of the City 
Council, Brenes continued to work with Artola as he had 
Zeledon until Brenes left to become Minister of Development, 
Industry, and Trade. 
 
¶12. (SBU) It appears that Brenes first identified himself as 
a supporter of FSLN presidential candidate Daniel Ortega in 
August 2006.  Brenes was one of a group of liberals who 
joined the FSLN's campaign for unity in a series of town 
meetings held in Matagalpa and Boaco in support of candidate 
Ortega.  Ortega's wife and campaign manager, Rosario Murillo, 
organized these campaigns and it is this relationship which 
may have led to his appointment as minister. 
 
¶13. (SBU) Brenes attended the Central American Institute for 
Business Administration (INCAE), a well-known business school 
Latin America with campuses in Managua and San Jose, Costa 
Rica.  Brenes told us that he also studied at Louisiana State 
University for three years in the late 1960s.  Brenes is 
married to Tamara Hawkins, whose grandfather came from 
Boston.  He has four children, two boys and two girls.  Two 
of his children attend university in Florida. 
 
¶14. (U) Post is still awaiting Brenes' official biography. 
TRIVELLI