VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0914/01 1011516
ZNR UUUUU ZZH
R 111516Z APR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9766
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1055
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS MANAGUA 000914 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CEN, WHA/EPSC, EB/ESC 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PINR PTER EAID EFIN EINV ETRD EPET
ENRG, EIND, VE, IR, NU 
SUBJECT: NICARAGUAN MEMORANDUM OF UNDERSTANDING WITH IRAN 
 
REF: A. MANAGUA 0725 
     ¶B. MANAGUA 0639 
 
¶1. (SBU) Summary.  Three days after signing a series of 
cooperation agreements with Venezuela, Nicaragua played host 
to Islamic Republic of Iran President Mahmoud Ahmadinejad on 
January 14.  In a southern barrio of Managua, Ortega 
informally presented Ahmadinejad to the public in a two-hour 
event broadcast live to the rest of the country.  Later at 
Olaf Palme Convention Center, Ahmadinejad and Ortega signed a 
Memorandum of Understanding, promising to reopen embassies in 
their respective capitals, offering mutual support in 
international fora, outlining potential areas for potential 
cooperation, and creating a Joint Commission to supervise 
bilateral cooperation.  While the visit appears to have been 
orchestrated to give Ahmadinejad greater international 
credibility and regional visibility, the ultimate result may 
have been simply to pull Nicaragua closer to Iran's low 
international standing.  End Summary. 
 
¶2. (SBU) Three days after signing a series of Bolivarian 
Alternative agreements with Venezuela on January 11, 2007 
(Ref A), Nicaragua played host to Islamic Republic of Iran 
President Mahmoud Ahmadinejad.  A week before, the rumor 
circulated that Ahmadinejad would attend Daniel Ortega's 
January 10th presidential inauguration, but Ahmadinejad did 
not arrive until late in the evening of January 13.  On the 
morning of January 14, Ortega informally presented 
Ahmadinejad to the public in the "Barrio Cuba Libre," a 
Sandinista stronghold district in Managua, in a two-hour 
event broadcast live to the rest of the country.  In lengthy 
remarks, Ortega praised Ahmadinejad as a great revolutionary 
leader.  The fact that Nicaragua and Iran had initiated their 
revolutions in 1979, said Ortega, created some bond of 
kinship.  Ortega spent the rest of the time describing social 
and economic inequities facing Nicaragua, including poverty 
and hunger, and praising Venezuelan President Chavez for his 
support of Nicaragua and his vision.  Speaking to the public 
via consecutive translation, Ahmadinejad made a point of 
saying that both countries shared "common interests, common 
enemies, and common goals." 
 
¶3. (SBU) Later at Olaf Palme Convention Center, Ahmadinejad 
and Ortega signed a Memorandum of Understanding (MOU).  The 
MOU states that the two countries will reopen embassies in 
their respective capitals, extend mutual support in 
international fora, explore areas for potential cooperation 
(See Paragraphs 8 and 12), and create a Joint Commission to 
supervise future bilateral cooperation.  Nicaragua also 
promised to introduce Iran, for possible participation, to 
projects financed by international institutions and bilateral 
sources.  Close to the bottom of the list is the possibility 
of entering into some sort of bilateral free trade or 
preferential tariff agreement.  While the press billed the 
visit as the moment when Iran would forgive its $152 million 
debt with Nicaragua, the MOU only states that Iran will study 
the possibility in the near term. 
 
¶4. (SBU) We understand that the National Assembly will soon 
consider the MOU, but its approval is uncertain.  A number of 
National Assembly politicians representing the opposition 
Liberal Nicaraguan Alliance (ALN) party intend to vote 
against it.  They particularly object to Article 15, which 
states that the parties agree to consult regarding mutual 
support in international fora on principle topics relating to 
the global agenda, fearing that Nicaragua will side with Iran 
and alienate the United States.  Some Liberal Constitutional 
Party (PLC) lawmakers have told us they also oppose the 
agreement, but we suspect they can be pressured to vote for 
it if so ordered by PLC leader Arnoldo Aleman, whose 
political pact with and reliance on President Ortega for his 
medical parole/house arrest is likely to come into play. 
Possibly, the PLC and FSLN (Sandinistas) will skirt the issue 
by arguing that the agreement does not require a vote in the 
National Assembly because it is only a memorandum, not a 
treaty. 
 
Comment 
------- 
¶5. (SBU) Ahmadinejad's visit appears to have been 
orchestrated to give Iran greater international credibility 
and regional visibility, but it may simply have pulled 
Nicaragua closer to Iran's low international standing.  Among 
major foreign investors, events surrounding the inauguration 
-) especially Ahmadinejad's visit -- clearly rubbed the 
wrong way.  One by one, CEOs filed into Nicaragua to reassess 
the political environment for their investments here, and one 
by one, the new government managed to assuage their fears. 
That said, with the great exception of increased interest 
from Venezuelan state-run enterprises, we have not seen much 
new foreign investment interest since the inaugural events 
with Presidents Hugo Chavez, Evo Morales (along with Cuban 
Vice President Jose Ramon Machado), and the subsequent visit 
by Mahmoud Ahmadinejad.  Quite the reverse, we have seen 
existing investors, both domestic and foreign, begin to 
examine ways to reduce their exposure to increasing 
Nicaraguan political risk.  End Comment. 
 
The MOU 
------- 
¶6. (U) The remainder of this cable reports on the particulars 
of a signed copy of the MOU obtained by the Embassy. 
 
Preambular Language 
------------------- 
¶7. (SBU) Preambular language states that the purpose of 
Ahmadinejad's visit was to congratulate Ortega on his 
democratic election.  In addition, the two countries declare 
their desire to strengthen traditional ties of friendship and 
recognize common interests, such as the need to coordinate 
forces to achieve common goals.  The two countries assert the 
importance of effective, reciprocal cooperation, based on 
solidarity and mutual respect. 
 
Articles 1-2: Friendship and Cooperation 
---------------------------------------- 
¶8. (SBU) Nicaragua and Iran agree to "perfect" the mechanism 
for cooperation, exchange, and understanding on matters of 
common interest.  Parties pledge to develop, strengthen, and 
promote bilateral cooperation.  To strengthen ties of 
friendship, cooperation, and improve social well-being, Iran 
and Nicaragua promise to exchange experiences in the areas of 
economics, energy, trade, finance, infrastructure, and 
technical matters. 
 
Article 3: Complementing Agreements 
----------------------------------- 
¶9. (SBU) If suitable, the areas of cooperation mentioned in 
this MOU shall be the subject of complementing agreements, 
which should specify objectives, timelines for execution, and 
feasibility studies by experts from both parties. 
 
Articles 4-5: New Projects and Facilitating Cooperation 
--------------------------------------------- ---------- 
¶10. (SBU) The execution of this MOU will be reviewed annually 
by the Presidents of a Joint Commission created for this 
purpose.  They should specify desired projects, their form of 
financing, their timeline for execution, and the obligations 
of each of the parties.  When state financing is employed, 
concessionary terms should apply in accord with the laws and 
obligations of both countries.  To facilitate cooperation, 
the parties shall grant privileges and necessary facilities 
in accord with internal legislation of each country. 
 
Article 6: Joint Commission 
--------------------------- 
¶11. (SBU) The parties agree to establish a Joint Commission, 
headed by the ministers from each party, to follow up on this 
MOU and other points of common interest.  The Joint 
Commission will meet every year, alternatively in Iran and 
Nicaragua, or wherever the parties so agree. 
 
Article 7: Areas for Cooperation 
-------------------------------- 
¶12. (SBU) Iran expresses interest in supporting and assisting 
Nicaragua in the areas mentioned in Article 2, as well as 
expresses readiness to study and for its part execute all 
related projects that are economically justified, subject to 
agreement by the parties.  Common areas of cooperation 
include the following: 
 
   a. Hydroelectric dams and irrigation systems; 
   b. Study on port development on the part of Iran to 
      the advantage of both parties; 
   c. Cooperation in fishing through the supply of boats, 
      technology, and industry; 
   d. Development of the energy sector and energy 
      production networks and overall generators of 
      electricity and electrical centers; 
   e. Housing construction, especially low income; 
   f. Assembly and export of industrial and agricultural 
      machinery, as well as buses, autos, motorcycles, 
      bicycles, and all kinds of motors for irrigation 
      and marine, with a view to reaching the regional 
      market; 
   g. Development of the cement sector through the 
      construction of cement plants; 
   h. Development and industrialization of agricultural 
      production; 
   i. Study of potable water systems and treatment of 
      waste water for industrial use; 
   j. Study of the application of energy needs, including 
      petroleum and its derivatives, natural gas, 
      electricity, etc.; 
   k. Media for technical education; 
   l. A free trade agreement and a preferential tariff 
      agreement; 
   m. Investment projects among private sectors of each 
      state; and 
   n. Information exchange between parties. 
 
Articles 9-10: Feasibility Studies 
---------------------------------- 
¶13. (SBU) To facilitate cooperation with Iran, Nicaragua 
promises to submit for consideration and study information 
necessary to justify various projects with respect to 
feasibility studies in areas so mentioned, so that possible 
execution may be based upon international norms.  For its 
part, Iran agrees to consider and study presented projects, 
with priority, and to assist Nicaragua with experts, whom may 
be sourced from the private sector. 
 
Article 11: Trilateral Cooperation with Venezuela 
--------------------------------------------- ---- 
¶14. (SBU) The parties agree to create and define the form, 
with the cooperation of the friendly, fraternal government of 
the Bolivarian Republic of Venezuela, of a joint fund that 
will contribute to the execution of projects of interest to 
the three parties, through a trilateral consortium to 
facilitate the execution of projects.  In addition, Nicaragua 
shall request access to the joint fund created by the 
President of the Islamic Republic of Iran Mahmoud Ahmadinejad 
and President Hugo Chavez of the Bolivarian Republic of 
Venezuela to support Latin America and Africa, once that fund 
has been ratified and confirmed. 
 
Article 12: Debt Forgiveness 
---------------------------- 
¶15. (SBU) Considering its critical economic situation and 
existing crisis, the Nicaragua has requested that Iran 
forgive bilateral debt totaling $152 million dollars.  Taking 
into account the various interests of state in this matter, 
such as Parliament, Iran has expressed its willingness to 
study this request in shortest timeframe possible. 
 
Article 13: Incorporating Iran in Existing Projects 
--------------------------------------------- ------ 
¶16. (SBU) Nicaragua agrees to introduce Iran, for its 
consideration and possible participation, to projects whose 
financing has been provided by international organizations 
and other countries. 
 
Article 14: Project Development 
------------------------------- 
¶17. (SBU) Upon prior consultation, Iran will send to 
Nicaragua an expert technical delegation to study ways -- be 
they public, private, or mixed ownership -- to execute 
various projects of common interest, especially those 
concerning technical, engineering, and financial services. 
The creation of this delegation and the date of this trip 
will be defined beforehand through agreement by the parties. 
 
Article 15: Mutual Support in International Fora 
--------------------------------------------- --- 
¶18. (SBU) The parties agree to consult regarding mutual 
support in international fora on principle topics relating to 
the global agenda. 
 
Article 16: Reopening Embassies 
------------------------------- 
¶19. (SBU) The parties agree to reopen their embassies in 
their respective capitals. 
 
Articles 17-19: Education and Training 
------------------------------------- 
¶20. (SBU) Iran agrees to facilitate the installation of 
technical and professional education centers in Nicaragua to 
improve opportunities for work in Nicaragua.  Iran agrees to 
host ten young diplomats from Nicaragua, without charge, to 
contribute to their training.  Iran expresses its interest in 
cooperating with Nicaragua on improving its system of middle 
and higher education. 
 
Article 20: Trade 
----------------- 
¶21. (SBU) The parties promise to exchange information lists 
of traded products so that they may take maximum advantage of 
their capacity for bilateral trade, with the view of also 
reaching potential regional markets.  (Also see Paragraph 12, 
Item L.) 
 
Article 21: Construction of a Refinery with Venezuela 
--------------------------------------------- -------- 
¶22. (SBU) With prior consultation with the fraternal 
Government of the Bolivarian Republic of Venezuela, the 
parties agreed to Iranian cooperation in the construction of 
a refinery in Nicaragua, as recently agreed upon by Nicaragua 
and Venezuela (Ref B). 
 
Article 22: Dispute Settlement 
------------------------------ 
¶23. (SBU) Doubts that may arise concerning the interpretation 
and execution of this agreement shall be resolved through 
diplomatic means. 
 
Articles 23-25: Entry into Force, Renewal, 
                and Termination 
------------------------------------------ 
¶24. (SBU) This MOU will enter into force upon signature. 
Either party may withdraw from this MOU after providing 
six-months' prior notification.  Withdrawal shall not affect 
the development of programs and projects that may be in 
execution on the date of withdrawal.  This MOU will be in 
effect for two years and automatically renewed for equal 
periods, unless one of the parties provides prior 
notification in writing of its intention not to renew three 
months before the agreement lapses. 
 
Signatures 
---------- 
¶25. (SBU) Signed in Managua, Nicaragua on the 14th day of 
January in 2007, the 24th of the month Dey of the year 1385 
(Hegira Solar), in two copies, one in Spanish and the other 
in Persian, each equally authentic. 
TRIVELLI