VZCZCXYZ0001
RR RUEHWEB

DE RUEHMU #0643/01 0682323
ZNR UUUUU ZZH
R 092323Z MAR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9415
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1006
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS MANAGUA 000643 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, EEB/TPP/ABT 
 
E.O. 12958: N/A 
TAGS: EAGR EAID NU VE
SUBJECT: NICARAGUA - VENEZUELA MOU FOR THE SALE OF 
FERTILIZER 
 
¶1. (SBU) Summary.  As part of a series of Bolivarian 
Alternative agreements between Nicaraguan and Venezuela 
signed on January 11, 2007, the President of the Cooperative 
Enterprise for Agricultural Services (NICARAOCOOP) and the 
President of the Petrochemical Corporation of Venezuela 
(PEQUIVEN) signed a Memorandum of Understanding for the 
Provision and Distribution of Fertilizer (urea).  Both 
parties agreed to negotiate a contract with 60 days for the 
provision of 40,000 MT of fertilizer from PEQUIVEN. 
NICARAOCOOP committed to prioritize the distribution this 
fertilizer under the program "Fertilizers for Life" to 
agricultural cooperatives and small farmers in Nicaragua or 
Central America.  Both parties agreed to collaborate in the 
organization of cooperatives and the training of personnel. 
End Summary. 
 
¶2. (SBU) This Memorandum of Understanding (MOU) between La 
Empresa Cooperativa de Servicios Agropecuarios NICARAO, R.L., 
(NICARAOCOOP) and La Empresa Petroquimica de Venezuela 
(PEQUIVEN) for the sale of urea as fertilizer, along with 
twelve other agreements, was negotiated by the Ortega 
government before it came to power on January 10, 2007. 
PEQUIVEN President Saul Ameliach and NICARAOCOOP President 
Moises Lopez signed the MOU on January 11, 2007.  The 
substance of this MOU and other agreements with Venezuela was 
kept from the public for weeks, although the Embassy managed 
to obtain an unsigned copy.  This cable reports on the 
substance of this MOU. 
 
Preambular Language 
------------------- 
¶3. (SBU) Preambular language calls attention to existing ties 
of solidarity and brotherhood between Venezuela and Nicaragua 
peoples, the need that agricultural producers have for fairly 
priced fertilizers to guarantee food security, and the mutual 
will that the Nicaraguan and Venezuelan peoples possess to 
create linkages of friendship and cooperation.  The 
protagonist role played by Pequiven, as a state enterprise 
for social production, in the production and supply of 
fertilizers and hydrocarbon derivatives for Venezuela and the 
South American continent is recognized.  Noted is the 
Nicaraocoop's experience has in agricultural production and 
processing through cooperative ventures, and in development 
with Pequiven of first phase of the program "Fertilizers for 
Life." 
 
Article 1: Objective 
-------------------- 
¶4. (U) Article 1 outlines the objective of the MOU as 
strengthening a cooperative movement in Nicaragua and Central 
America and the establishment of a strategic alliance between 
socioeconomic actors of both countries through fair trade in 
fertilizers under the program "Fertilizers for Life." 
 
Article 2: Fair Trade in Fertilzer 
---------------------------------- 
¶5. (SBU) Article 2 states that both parties commit to 
negotiate a contract for the supply of fertilizers within 60 
days of the signing of this MOU.  Parties agree to undertake 
best efforts to meet within thirty days after having signed 
this MOU to discuss applicable conditions for the supply of 
fertilizers.  The contract may include specific conditions 
for the sale and purchase, such as the guarantee of payment. 
The governing boards of both parties must agree upon 
conditions set forth in the contract. 
 
¶6. (SBU) PEQUIVEN promises to supply approximately 40,000 MT 
annually of fertilizer, specifically urea at a preferential 
price.  Shipments will be programmed in agreement with the 
needs of NICARAOCOOP and the availability of supply from 
PEQUIVEN, estimated at four shipments of 10,000 MT of 
fertilizer per year.  Both parties will agree upon the form 
and conditions of payment.  NICARAOCOOP will finance the 
payment of the first three shipments up to a maximum term of 
6 months after receipt, and the fourth shipment up to 12 
months.  NICARAOCOOP is expected to obtain financing from 
Venezuelan or Nicaraguan institutions acceptable to PEQUIVEN 
and that guarantee payment upon delivery. 
 
¶7. (SBU) NICARAOCOOP commits to distributing the urea to 
Nicaraguan agricultural producers at a fair retail price, 
recognizing that the final applied price will include the 
costs of purchase, storage, packing, distribution, transport, 
and administration.  NICARAOCOOP will prioritize distribution 
to agricultural cooperatives and small farmers in Nicaragua. 
After prior written authorization from Pequiven on a case by 
 
 
 
case basis, NICARAOCOOP may market the fertilizer at a fair 
price to other Central American countries, prioritizing 
distribution to agriculture cooperatives and small farmers, 
after having received for each case.  PEQUIVEN must agree to 
any modification in NICARAOCOOP's marketing policies. 
NICARAOCOOP is expected to present an annual report detailing 
the results of the program, indicating beneficiaries, plots, 
and areas of distribution. 
 
Article 3: Education and Training 
--------------------------------- 
¶8. (SBU) The parties agree to carry out cooperative 
activities with special attention to the following areas: 
 
-- NICARAOCOOP commits to support PEQUIVEN in the 
organization and training of cooperatives, and the transfer 
of technology in areas requested by PEQUIVEN. 
 
-- PEQUIVEN commits to support NICARAOCOOP with an advisory, 
technical assistance, and training on efficient operations 
for the supply, mixing, packing, quality control, transport, 
and marketing of fertilizers in Nicaragua and Central America. 
 
Article 4: Promotion and Dissemination 
-------------------------------------- 
¶9. (SBU) The parties agreed to carry out the following 
cooperative activities: 
 
-- PEQUIVEN and NICARAOCOOP commit to disseminating the 
results of the program "Fertilizers for Life" in their 
respective spheres, and to mention the alliance in the 
promotion of activities. 
 
-- PEQUIVEN and NICARAOCOOP commit to exchange promotional 
materials produced by one another, with the objective of 
maximizing their impact. 
 
-- NICARAOCOOP is committed to develop promotion activities 
of this and other programs established in the framework for 
the Bolivarian Alternative in Central America. 
 
Article 5: Implementation and Follow-up 
--------------------------------------- 
¶10. (SBU) Parties will form a team for follow-up that will: 
 
-- create technical roundtables formed by representatives of 
both parties for cooperative education and training, 
advisories, and follow-up evaluation. 
 
-- produce reports on the advances exchanges under the MOU. 
 
-- make proposals according to the objectives of this MOU to 
the signatories. 
 
Article 6: Applicable Law, Dispute Resolution 
--------------------------------------------- 
¶11. (SBU) The MOU will be interpreted in conformity with the 
laws of Venezuela.  Any differences in the interpretation or 
application of the MOU will be resolved by mutual agreement. 
 
Article 7: Entry into Force, Duration, and Termination 
--------------------------------------------- --------- 
¶12. (SBU) The MOU enters into force upon the date of 
signature and will remain in force for one year.  The MOU is 
automatically renewed, unless one of the parties requests in 
writing at least 2 months before expiration of the initial 
agreement or respective extension to terminate it. 
Termination of the MOU will not affect cooperative activities 
initiated during the agreement unless the parties so agree. 
 
Article 8: Other Provisions 
--------------------------- 
¶13. (SBU) This MOU documents discussions and understandings, 
but in no way creates rights or obligations for the parties 
involved.  Nothing in this MOU shall be interpreted as the 
withdrawal of rights or sovereignty over Nicaraguan or 
Venezuelan territories or natural resources under their 
respective legal systems and applicable international law. 
Neither party shall cede, in all or in part, this MOU without 
prior written approval of the other party.  The parties shall 
not amend, modify, or otherwise alter this MOU without the 
prior written consent of the other. 
TRIVELLI