VZCZCXRO9392
RR RUEHLMC
DE RUEHMU #0815/01 0882112
ZNR UUUUU ZZH
R 292112Z MAR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9646
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1038
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RHEHNSC/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 MANAGUA 000815 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA, WHA/CEN, WHA/EPSC, EEB, AND EEB/TPP 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR 
 
E.O. 12958: N/A 
TAGS: ECON PREL ETRD EAGR PGOV NU
SUBJECT: EEB A/S MEETS WITH MEMBERS OF ORTEGA'S CABINET 
 
¶1. (SBU) Summary: On February 27, A/S Sullivan met several 
members of Ortega's economic cabinet.  Central Bank President 
Rosales requested USG assistance in getting better terms from 
the IMF during upcoming negotiations on a Poverty Reduction 
and Growth Facility (PRGF).  MFA Vice Minister Coronel 
envisioned using A/S Sullivan's "Total Economic Engagement" 
to support GON programs to fight rural poverty and create 
"social transformation."  Trade Minister Brenes focused on 
how to make CAFTA visible and tangible for the rural small 
and medium businesses.  FM Santos expressed strong interest 
in continued U.S. public and private engagement in Nicaragua, 
and Agriculture Minister Bucardo urged that the USG expand 
its work in Nicaragua's cattle sector.  All these meetings 
demonstrated members of Ortega's economic cabinet understand 
the important role that the USG can continue to play in 
Nicaragua.  End Summary. 
 
¶2. (U) On February 27, A/S Sullivan hosted a breakfast 
meeting with Development, Industry and Trade (MIFIC) Minister 
Horacio Brenes, Central Bank (BCN) President Antenor Rosales, 
Foreign Affairs Vice Minister (VFM) Manuel Coronel, and 
Advisor to the Trade Minister Orlando Solorzano.  During a 
lunch hosted by the American Chamber of Commerce, A/S 
Sullivan chatted with FM Samuel Santos, and during a visit to 
Seminole Cattle Ranch, he met Agriculture and Forestry 
(MAGFOR) Minister Ariel Bucardo and Trade Minister Brenes. 
The meetings focused on economic cooperation and ways the USG 
can engage the GON to foster Nicaragua's economic growth. 
All Nicaraguan participants remained "on message" on the need 
to fight poverty and the overall tone was cordial and 
pragmatic in all of these meetings. 
 
Breakfast Meeting Sets a Positive Tone 
-------------------------------------- 

¶3. (SBU) The breakfast with Minister Brenes, VFM Coronel, BCN 
President Rosales, and Trade Advisor Solorzano covered a wide 
range of macro/micro-economic issues, focusing on areas where 
A/S Sullivan's concept of "Total Economic Engagement" (TEE)* 
integrating and coordinating all USG economic tools such as 
CAFTA, MCC, USAID programs, and debt relief -- could best 
help Nicaragua.  A/S Sullivan emphasized the importance of 
developing the private sector as part of poverty alleviation 
efforts.  He stated that market integration, private sector 
growth, and job creation are all linked and will produce the 
long-term results that Nicaragua desires.  MCC Deputy CEO 
Rodney Bent focused on the importance of sustainability in 
all USG efforts in the region. 
 
¶4. (SBU) BCN President Rosales emphasized how Nicaragua's 
agenda of economic growth, strengthening democracy, and 
regional stability coincided with U.S. objectives.  He 
posited that Nicaragua's need to create jobs and reduce 
poverty required some flexibility in the terms of the new 
PRGF program the GON was about to negotiate with the IMF.  He 
requested USG assistance in getting some flexibility from the 
IFIs.  Rosales also raised the structural and budgetary 
limitations that Nicaragua's foreign debt placed on the GON's 
ability to fight poverty.  He requested continued USG support 
for Nicaragua's efforts to get forgiveness on its non-Paris 
Club bilateral debt and completion of its commercial debt 
buy-back program. 
 
¶5. (SBU) VFM Coronel was particularly taken by Total Economic 
Engagement and envisioned using it to support the 
government's programs to fight rural poverty and create 
"social transformation."  He briefly mentioned plans to fight 
poverty and "empower women" by giving them "property titles, 
a cow, several pigs, and chickens."  His focus was on meeting 
the broader social needs "because you do not want more 
Nicaraguans flowing into the U.S."  When pressed for exact 
details, Coronel responded that Nicaragua has a clear vision 
which will require "understanding from the international 
community."  According to him the plan has three strategic 
areas:  energy security, food security (irrigation of 300,000 
acres on the pacific coast for agriculture), and building a 
new canal through Nicaragua.  (Note: In the 1980s, Coronel 
was in charge of "Strategic Projects."  When he left office 
in 1990, he left behind a long list of unfinished "white 
elephant" projects. End note.) 
 
¶6. (SBU) MIFIC Minister Brenes offered concrete ideas on 
economic development.  Citing his experiences as a 
businessman in Matagalpa (in Nicaragua's mountainous northern 
region), Brenes focused on the need to make CAFTA visible and 
tangible for small and medium businesses in rural areas of 
the country.  He saw an opportunity to tie private sector 
development to municipal development, through public 
consultation, so the right sectors are chosen for donor and 
government projects.  He envisioned USAID and Millennium 
Challenge Corporation (MCC) trade capacity building for small 
and medium enterprises (SME) in the rural regions done 
through existing institutions like the local chambers of 
commerce.  Since the chambers are permanent, they then become 
permanent resources on CAFTA for local producers.  Brenes was 
particularly laudatory of the MCC model, saying that there 
"needed to be more of it," perhaps with expansion to the 
northern departments. 
 
¶7. (SBU) A/S Sullivan reiterated that the U.S. had a common 
outlook on many of the issues the GON officials raised, 
including increasing Nicaraguan and outside investment, and 
creating a better business climate to spur economic growth 
and poverty reduction.  He emphasized our Total Economic 
Engagement partnership that featured an array of U.S. 
economic tools from CAFTA to MCC, OPIC and other programs. 
To maximize the benefits of USG programs, the GON needed to 
concentrate on microeconomic reform measures in business 
climate, taxes, and sanctity of contracts.  A/S Sullivan also 
suggested future cooperation on biofuels, where President 
Bush made a major commitment in his State of the Union 
address, and where both countries share common energy 
security needs.  When A/S Sullivan inquired about whether the 
people of Nicaragua were aware of the opportunities CAFTA 
presents, the ministers suggested that the poor were not 
informed and that the further from Managua one travels, the 
less people knew about CAFTA.  A/S Sullivan stressed the need 
to integrate small farmers and businesses into the global 
economy through CAFTA. 
 
MFA: "Eager to Increase Economic Engagement" 
-------------------------------------------- 

¶8. (SBU) During an American Chamber of Commerce hosted lunch, 
FM Santos expressed strong interest in continued U.S. public 
and private engagement in Nicaragua.  He praised CAFTA for 
opening the U.S. market to Nicaraguan goods and enticing 
foreign investors to the country, but added that the 
"asymmetries" in the agreement still need to be addressed. 
(Note: The CAFTA "asymmetries" the Ortega administration 
often cites never come with examples and seem to refer 
vaguely to the different sizes of national markets and U.S. 
agriculture subsidies.  End note.)  Santos cited China as an 
example of how to help SMEs.  There, according to Santos, 
large companies are required to reach out to SMEs and train 
them to become part of the service provider chain.  Santos 
agreed with A/S Sullivan that Nicaragua needs to reduce its 
bureaucracy and regulations affecting the 
registration/establishment of businesses.  Santos also 
thought that while the Venezuelan market is not a total 
solution for Nicaragua, it offers options, especially for 
energy. 
 
Key Areas for Agricultural Development 
-------------------------------------- 

¶9. (U) MAGFOR Minister Bucardo's strategic focus was on food 
production (opening markets and increasing volume), coffee 
(addressing the lack of upkeep in the coffee plantations), 
and cattle.  Bucardo stated that 90% of ranchers are SMEs, 
responsible for almost 500,000 direct and indirect jobs in 
Nicaragua.  He added that Nicaraguan beef and dairy are very 
competitive and requested USG assistance to further improve 
production.  He pointed to the USDA sanitary-phytosanitary 
programs in Nicaragua as examples of very successful 
assistance and requested they be enhanced. (Note: There are 
two aspects to the program, an APHIS component and a Food For 
Progress component which is funded through 2008.  Ironically, 
at the same time Bucardo was lauding our SPS cooperation, he 
was removing APHIS' prime interlocutor and technical 
specialist in these programs, Dr. Denis Salgado.  End Note.) 
He requested USG assistance in restarting a cooperation 
program on organic beef, improving cattle feed, and 
establishing genetic improvement and artificial insemination 
programs. 
 
¶10. (U) MIFIC Minister Brenes pointed to bottlenecks in milk 
and grain storage as possible areas for donor assistance. 
Limited chilling capacity for milk and the small number of 
usable silos results in producers having to sell their 
product quickly to the first available buyer to avoid 
spoilage.  Donor assistance in creating more storage capacity 
in these two areas would enable farmers to increase 
production and hold their product until market prices are 
more favorable. 
 
Comment 
------- 

¶11. (SBU) These meetings demonstrated an understanding among 
Ortega's economic cabinet of the important role the USG 
continues to play in Nicaragua, despite President Ortega's 
more negative rhetoric.  End Comment. 
 
¶12. (U) A/S Sullivan cleared on this cable. 
TRIVELLI