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C O N F I D E N T I A L SECTION 01 OF 04 MANAGUA 000357 
 
SIPDIS 
 
SIPDIS 
 
WHA A/S THOMAS A SHANNON, WHA/CEN 
 
E.O. 12958: DECL: 02/07/2017 
TAGS: PGOV EFIN KDEM MARR NU PARM PINR PREL PTER
ECON 
SUBJECT: ORTEGA ACTIONS TEST TRIPWIRES 
 
REF: A. MANAGUA 329 
 
     ¶B. MANAGUA 323 
     ¶C. MANAGUA 268 
     ¶D. MANAGUA 242 
     ¶E. MANAGUA 241 
     ¶F. MANAGUA 225 
     ¶G. MANAGUA 182 
     ¶H. MANAGUA 179 
     ¶I. MANAGUA 177 
     ¶J. MANAGUA 157 
     ¶K. MANAGUA 155 
     ¶L. MANAGUA 140 
     ¶M. MANAGUA 106 
     ¶N. 2006 MANAGUA 2611 
 
Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). 
 
¶1.  (C) SUMMARY/INTRODUCTION:  With less than one month in 
office, President Daniel Ortega and Sandinista National 
Liberation Front (FSLN) lawmakers have already touched off a 
number of our tripwires and placed opposition parties and 
civil society, international financial institutions (IFIs), 
and much of Nicaragua's democratic-leaning diplomatic 
community on the alert (Reftels).  While Ortega's actions 
probably are partially attributable to disorganization and 
inexperience, he also appears bent on gaining total control 
over Nicaragua's powers of state and the national budget.  We 
expect the Nicaraguan government (GON) will continue to test 
at every opportunity to determine just how far it can go 
without being blocked by the opposition in the National 
Assembly or by foreign leverage.  Despite these warning 
signs, however, opposition parties and civil society have yet 
to raise the alarm, while much of the private sector does not 
yet appear willing to challenge Ortega so long as he does not 
infringe upon their business interests. 
 
¶2.  (C) Our primary bilateral objectives are to protect U.S. 
citizens and their interests; keep Nicaragua on a just, 
democratic, market economy path; ensure the GON's foreign 
policies do not endanger our interests; and, obtain Ortega 
government cooperation in combating arms, narcotics, and 
people trafficking/smuggling.  To this end, we are exploring 
ways to help our Nicaraguan friends, and where appropriate, 
encourage Nicaragua's neighbors and other international 
actors to help keep Nicaragua on course.  Over the next weeks 
and months, we will continue to engage the new government, 
use our leverage when appropriate, and encourage opposition 
sectors to find common ground and purpose -- an essential 
front to contain Ortega's inclinations towards 
authoritarianism.  We are forwarding a more detailed matrix 
to the desk.  END SUMMARY/INTRODUCTION. 
 
PROTECTING U.S. CITIZENS AND INTERESTS 
- - - -  - - - - - - - - -  - - - - - - 
 
¶3.  (C) Our paramount objective is protecting U.S. citizens 
and their property and investment interests in country, as 
well as the mission's locally engaged staff (LES).  Tripwires 
include the systematic legal or administrative harassment of 
our diplomatic mission employees including LES, and/or other 
U.S. citizens; an unjustified or inexplicable slow-down in 
resolution of outstanding property cases, increased 
resistance to resolving them, or new property seizures; and, 
harassment/unjustified legal proceedings against, or taxation 
of, U.S. firms, or seizures of company assets. 
 
¶4.  (C) Thus far, we have not seen indications that the GON 
is engaged in systematic harassment.  Indeed, the Ortega 
government appears to understand that it cannot cross these 
red lines.  According to Nicaraguan Ambassador-designate to 
the United States, Arturo Cruz, President Ortega is closely 
following a highly visible legal case involving U.S. citizen 
Eric Volz (Ref. A) and is intent on ensuring Volz' rights are 
protected. 
 
ENSURING GON MAINTAINS SOUND ECONOMIC POLICIES, FREEDOMS 
- - - - - - - - - - - - - -  - - - - - - - - - - - - - - - 
 
¶5.  (C) Our economic objectives vis-a-vis Nicaragua include 
the following: GON maintains sound macro-economic policies; 
GON maintains free floating currency with no restrictions on 
the repatriation of profit for foreign companies; the 
national budget reflects sound management of resources and 
 
MANAGUA 00000357  002 OF 004 
 
 
increases transparency in the administration of spending 
programs; Nicaragua renews the IMF agreement; Nicaragua 
remains in CAFTA and derives significant benefits; GON 
maintains a significant role for the private sector in the 
energy and telecom sectors; GON fosters transparency and 
justice through commercial law and investment. 
 
¶6.  (C) The GON's announcement late January that it will 
"consolidate" ministerial advertising budgets and manage them 
through First Lady Rosario Murillo's Communications and 
Citizenship Council violates Law 612 (which stipulates that 
councils will have no part of the national budget and no 
authority over the ministries) and appears to be Murillo's 
ploy to control government messages, reward malleable media 
outlets, and punish those who do not submit to 
self-censorship.  Airport and customs contacts tell us that 
Ortega has instructed these entities to deposit their 
revenues directly into a presidential "discretionary" fund, 
thereby violating Law 550 on Budget Administration.  (Note: 
According to the IMF, they are being asked to significantly 
increase the percentage of their revenues going to GON 
coffers -- the presidential fund is a reality.)  Ortega's 
public criticism of the IMF raised some eyebrows, although 
Central Bank President Antenor Rosales and Vice President 
Jaime Morales have publicly clarified that 
 Nicaragua will seek an IMF agreement (Ref. B). 
 
¶7.  (C) While Ortega makes frequent reference to the need to 
"adjust" CAFTA's "asymmetries," he has also requested 
Ambassador-designate Arturo Cruz to provide him with evidence 
that CAFTA works (Note: Embassy forwarded materials to Cruz 
on February 5).  However, the GON's talk of reviewing private 
production in the energy and telephone sectors has caused 
Victoria/Tona Brewery to abandon plans to consider entering 
the energy sector.  Also of concern are indications of FSLN 
pressure on businesses to "toe the line" and contribute to 
the party or lose legal status.  Sources claim that following 
the November election, Sandinista Chinandega and Leon mayors 
met with major business leaders in those areas and implied 
that business licenses might be "re-examined" if they did not 
make donations to the Sandinista party. 
 
ENSURE GON FOREIGN POLICY DOES NOT ENDANGER OUR INTERESTS 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶8.  (C) We reported previously our expectations that 
President Ortega will maintain close ties with leftist allies 
like Muammar Khadaffi, Fidel Castro, Hugo Chavez (Ref. N). 
He will be especially vulnerable to Chavez and Khadaffi's 
influence, as they both helped bankroll his campaign and 
Chavez has promised the new government millions of dollars 
through a number of development agreements.  We will engage 
the GON on any policies or actions that could endanger our 
critical foreign policy concerns and interests, specifically 
regarding Cuba, Venezuela, Central America, Iraq, Iran, 
Libya, Israel-Palestine, North Korea, Taiwan, and China. 
(Note: Nicaragua owes Libya $286 million in debt.  Libya is 
the largest non-Paris Club creditor.  Negotiations to forgive 
the debt have been unproductive so far.  Iran holds $152 
million of Nicaragua's debt, the fifth largest creditor. 
While Iran has promised to look into forgiveness, no concrete 
action has been taken thus far.) 
 
¶9.  (C) In this vein, Ortega's appointment of 
Libyan-Nicaraguan Mohammad Lashtar as his personal secretary, 
who will enjoy ambassadorial status and handle international 
affairs, is disconcerting (Refs. D, K).  Further, Iranian 
President Ahmadinejad's visit to Nicaragua on the heels of 
Ortega's January 10 inauguration, and Iran's and North 
Korea's plans to open embassies in Managua rattled the 
tripwires (Refs. F, M).  An immigration official has warned 
us that Cubans have started working in Nicaragua's 
immigration offices.  We have also heard that some 10,000 
Cuban teachers and health workers are scheduled to assist the 
new Ortega government with its efforts to improve these vital 
social sectors.  Likely, some of these workers will attempt 
to indoctrinate their publics against the United States and 
democracy.  Additionally, we have received reports that 
Venezuelan soldiers are in the North Atlantic Coast 
Autonomous Zone (RAAN) in preparation for re-building the 
Puerto Cabezas-Rio Blanco road (Ref. C).  We will carefully 
monitor these developments, assess their impact on our 
interests and assistance programs, and engage GON officials 
 
MANAGUA 00000357  003 OF 004 
 
 
on these issues as appropriate. 
 
ENSURE DEMOCRACTIC CONTINUITY, DEFEND BASIC FREEDOMS 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶10.  (C) While we believe the Ortega government is likely to 
exercise more caution in setting off economic tripwires and 
will step back if it meets resistance from the IFIs and 
domestic and foreign investors, Ortega has already touched a 
number of tripwires concerning Nicaragua's democratic 
continuity and its protection of basic freedoms.  Our 
democracy and human rights objectives include the following: 
GON maintains checks and balances in government powers; GON 
protects basic freedoms/space, including freedom of 
expression and assembly; education remains apolitical; 
independent media functions unencumbered; domestic and 
foreign cultural diversity respected; GON reforms civil 
registry, voter roster (padron), and national ID issuance; 
CSE professionalizes its functions to benefit equally all 
Nicaraguans regardless of political affiliation; all eligible 
citizens are allowed to vote. 
 
¶11.  (C) Only days following his inauguration, Ortega 
hastened to ram through revisions to Laws 290 and 228 
(covering the Executive's administrative authority and the 
National Police, respectively), which would serve to 
consolidate his power and establish new national councils 
that would oversee ministries (Ref. E).   Even before 
proposing the revisions, the presidency issued a decree 
granting these authorities.  Although the final outcome -- 
Law 612 -- was less draconian than the original draft, the 
new law consolidates somewhat the President's power. 
Further, during the last week in January, the Ministry of 
Finance announced that Murillo's Council will assume 
oversight of all ministerial advertising budgets, in clear 
violation of Laws 612 and 550.  A few media outlets have 
noted a decline in GON paid advertisements to 
non-pro-FSLN/GON media and many fear censorship and a decline 
in government advertising. 
 
¶12.  (C) While the Ortega government appears determined to 
consolidate power, it also avoids transparency -- as 
evidenced by the National Assembly's continuing reluctance to 
pass a freedom of information bill, which would provide the 
public information on government activities.  On the other 
hand, the Assembly has dragged its feet on revising the 
section of the Assembly's Ways and Means Law allowing 
legislative committees to summon domestic and foreign 
residents for questioning on any topic and for any reason 
(failure to comply could lead to a jail sentence).  We have 
also read that Sandinista-affiliated unions, like Fetrasalud, 
are being instructed to refrain from striking and collective 
bargaining, and were given a copy of a letter to this effect. 
 
¶13.  (C) The Minister of Education's announced plans to 
"reform" curriculums and change textbooks and teaching 
materials are also disturbing, as they suggest that the new 
government may politicize Nicaragua's education system, akin 
to the 1980s Sandinista era.  The indication that Cubans will 
send teachers for Ortega's literacy and education campaigns 
lends credence to these concerns.  The Ortega government's 
decision to adopt a new official government seal that is 
reminiscent of the Sandinista campaign mottos and colors as 
well as their tendency to hold official state meetings at 
Ortega's party headquarters/residence are evidence of the 
GON's attempts to blur the divisions between party and state. 
 
RULE OF LAW 
- - - - - - 
 
¶14.  (C) Our priorities in the rule of law field include the 
following:  Judges are appointed based on merit, not 
political affiliation; court sentences are non-partisan, not 
swayed by bribery; civil servants' rights and continuity on 
the job are protected; Liberal Constitutional Party (PLC) 
henchman/felon Arnoldo Aleman is not released or pardoned; 
and, court and other appointments are made according to 
merit, not their pact association. 
 
¶15. (C) According to Ministry of Government contacts, 
employees have been summoned, required to explain their 
programs, and then summarily instructed to submit their 
resignation letters.  In other cases, employees are given 
 
MANAGUA 00000357  004 OF 004 
 
 
additional work requirements and ordered to work long hours. 
In the National Assembly, a number of advisors' contracts are 
not being renewed.  (Comment: In response to our suggestion, 
the Assembly Labor Committee will review these cases.) 
 
SECURITY AND DEFENSE COOPERATION 
- - - - - - - - - - - - - - - - 
 
¶16.  (C) Our security and defense interests follow: 
Immigration, Police, Military, National Assembly, Judiciary 
cooperate with U.S. counterparts and enforce relevant 
Nicaraguan laws/regulations; GON relations with third 
countries hostile to our interests do not endanger our 
security; counter-narcotics/money laundering unit formed and 
operating; court rulings on trafficking cases are 
non-partisan and not influenced by bribery; GON destroys 
remaining MANPADS stocks (1,051); Assembly passes 
Counter-terrorism Law; security forces remain independent; 
GON does not establish parallel security forces; military 
maintains its leadership and appointments are made according 
to seniority and merit, not political affiliation; the 
military does not suppress peaceful demonstrations and police 
maintain their proper role; and, the GON does not resort to 
martial law. 
 
¶17.  (C) Since the onset of Ortega's presidency, we have 
received less cooperation from airport authorities, who 
appear to be responding to instructions from the Presidency. 
Reports of Cubans working in Immigration are also reasons for 
concern, as is President Ortega's February 2 announcement 
that he will not support MANPADS destruction because Honduras 
has received eight U.S. planes.  (Comment: Embassy issued a 
communique on 4 February clarifying that the small, two-seat 
spotter planes are to help combat narco-trafficking and 
disaster assistance, and funded through Honduras' FMF 
allocation.) 
 
COMMENT 
- - - - 
 
¶18.  (C) We expect the Ortega government will continue to 
test at every opportunity just how far it can go without 
being blocked by the opposition in the National Assembly or 
by foreign leverage.  Despite the warning signs, however, 
opposition parties and civil society have yet to raise the 
alarm, while much of the private sector does not appear 
willing to challenge Ortega so long as he does not infringe 
upon their business interests.  While we can draw on legal 
instruments and our assistance programs to attempt to check 
Ortega's excesses, Nicaraguan political, civil, and private 
sector opposition leaders must take ownership, set the 
course, and speak out.  We are examining ways to assist our 
friends in this effort.  We must also engage where 
appropriate, Nicaragua's neighbors and other international 
actors to encourage them to help keep Nicaragua on a 
democratic, market economy path.  Over the next weeks and 
months, we will continue to engage the new government, 
judiciously use our leverage, and encourage opposition 
sectors to find common ground and purpose -- an essential 
front to contain Ortega's inclinations towards 
authoritarianism.  We are forwarding a more detailed matrix 
to the desk. 
TRIVELLI