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DE RUEHMU #1340/01 1442336
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P 242336Z MAY 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 0310
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEAIIA/CIA WASHDC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 MANAGUA 001340 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CEN 
 
E.O. 12958: DECL: 05/22/2017 
TAGS: PGOV PINR PREL KDEM NU
SUBJECT: MONTEALEGRE UNDER INTENSE PRESSURE TO MAKE DEAL 
WITH ALEMAN 
 
 
Classified By: Ambassador Paul A. Trivelli for reasons 1.4 (b and d) 
 
¶1. (C) Summary: Opposition leader Eduardo Montealegre of the 
Nicaraguan Liberal Alliance (ALN) is under intense pressure 
to make a deal with convicted ex-President and Liberal 
Constitutional Party Leader (PLC) Arnoldo Aleman to unite the 
Liberal forces.  During a recent session with Washington 
visitors, he discounted forming an electoral alliance with 
the Sandinista Renovation Movement (MRS) without the PLC, 
concerned that PLC leaders would paint him as a Sandinista 
sympathizer.  Montealegre claimed that he would resign before 
negotiating with Aleman, an option he is seriously 
considering if the ALN is unable to obtain financial support. 
 Ambassador and DCM subsequently had breakfast with 
Montealegre on May 24 to discuss these and other issues. 
After a one-day mini-retreat with some of his closest 
confidants in San Juan del Sur, Montealegre appeared much 
more relaxed and resolute.  End Summary. 
 
¶2. (C) Poloff and INR analysts met with ALN leader Eduardo 
Montealegre on May 22 to discuss the current political 
situation.  He commented that the ALN is starved of funds and 
he is bombarded "from all sides" to strike a deal with PLC 
caudillo Arnoldo Aleman to save the country from President 
Ortega's increasingly authoritarian tendencies.  Montealegre 
appeared tired and depressed, commenting that he had 
sacrificed time with his family and business only to be left 
"alone" to oppose the caudillos -- at considerable personal 
risk.  He claimed that he is seriously considering leaving 
politics. 
 
Pressure From All Sides 
- - - - - - - - - - - - 
 
¶3. (C) Montealegre explained that most "democratic" 
Nicaraguans are scared by President Ortega's 1980's-style 
rhetoric and alliances with outcast regimes in North Korea 
and Iran.  Many have unfortunately come to the conclusion 
that Aleman is a "reality" who must be dealt with as the 
lesser of two evils.  The ALN is starved of funds because the 
private sector -- both in Nicaragua and abroad -- refuse to 
support the ALN unless the party forms an alliance with the 
PLC, even if it that entails making a deal with Aleman.  He 
is experiencing similar pressure from within the ALN, grass 
roots Liberal supporters, and even civil society.  When 
queried by poloff, Montealegre commented that even some 
members of Movimiento por Nicaragua (MpN) are now advocating 
negotiations with Aleman.  (Note: MpN was founded on 
opposition to caudillismo and the Aleman-Ortega political 
pact.  End Note.) 
 
¶4. (C) Montealegre assured us that he would resign rather 
than ally with Aleman, but seemed pessimistic about 
alternative strategies.  He acknowledged that the MRS is open 
to forming an electoral alliance for the 2008 municipal 
elections, but "only because they want (former MRS 
presidential candidate) Edmundo Jarquin to be mayor of 
Managua."  An ALN alliance with the MRS without the PLC would 
"never work" because the PLC would accuse the ALN of "selling 
out to Sandinista radicals" and re-capture Liberal support, 
he claimed.  Montealegre rejected all possibility of allying 
with anti-Aleman segments of the PLC, calling his recent 
appearances with former PLC presidential candidate Jose Rizo 
a "media show" that has produced few tangible results. 
 
Municipals Last Chance to Stop Ortega 
- - - - - - - - - - - - - - - - - - - 
 
¶5. (C) Montealegre implied that the only way to prevent 
Ortega from a Chavez-like domination of Nicaragua is to 
convincingly defeat the FSLN in the municipal elections.  The 
President is slowly taking Nicaragua down the path of "New 
Socialism" by bribing and blackmailing the private sector 
into submission, he said.  Specifically, Montealegre 
mentioned Ortega's plan to impose a two-percent municipal tax 
on gas stations that would wipe out their profit margins and 
force out competition in favor of the state-supervised 
Petronic.  In addition, Montealegre claimed that the FSLN has 
already earned $30 million from sales of discounted oil from 
Venezuela -- money they are using on infrastructure projects 
to "buy votes" in rural areas.  (Comment: Montealegre's 
claims are plausible, although the donor community has not 
received any information on expenditure of oil revenues.  End 
Comment.) 
 
MANAGUA 00001340  002 OF 003 
 
 
 
Montealegre: Unaware and Rudderless 
- - - - - - - - - - - - - - - - - - 
 
¶6. (C) Although aware of the threat to Nicaraguan democracy 
posed by Ortega, Montealegre, the leader of the opposition, 
was unaware of significant events within his own party and 
also failed to pursue a significant offer of assistance from 
a sister organization.  When poloff asked about recent press 
reports that ALN leaders in the municipality of Niquinohomo 
had recently decided to re-join the PLC, Montealegre did not 
seem to know anything about the defection.  He responded, 
"Niquinohomo is a minor municipality, so I'm not concerned 
about it."  Montealegre met later the same day with an IRI 
delegation to discuss ongoing activities.  The delegation 
learned that no one in the ALN had ever contacted the Mexican 
PAN (Partido de Accion Nacional) party to accept an offer of 
technical assistance and material support that had been 
offered at an earlier IRI-sponsored meeting in El Salvador. 
(Comment: Later the same day, PolCouns raised the PAN offer 
with ALN caucus chief Maria Eugenia Sequeira.  She recognized 
that the ALN must follow up with the PAN and promised to do 
so soonest.  End Comment.) 
 
Viable Opposition at a Crossroads? 
- - - - - - - - - - - - - - - - - - 
 
¶7. (C) Montealegre has often complained about a lack of 
sufficient support from the USG, private sector, and civil 
society.  This time, however, he truly appeared tired, 
frustrated, and ready to give up the struggle for a 
democratic Nicaragua.  Montealegre was clear that the ALN 
desperately needs money to survive, not more advice or 
technical assistance.  He rejected negotiations with Aleman, 
but could offer no alternatives.  The only solution 
Montealegre half-seriously proposed: spirit Aleman out of 
Nicaragua on a Blackhawk.  His apparent apathy to internal 
party developments and our suggestions was disheartening. 
 
But What a Difference Two Days Make 
- - - - - - - - - - - - - - - - - - 
 
¶8. (C) During a May 24 breakfast with Ambassador and DCM, 
Montealegre appeared much more relaxed and resolute after 
meeting with his closest advisors in San Juan del Sur.  He 
indicated that he and his team are discussing the possibility 
of Montealegre entering the mayoral race for Managua in the 
municipal elections; his circle believing that supporting 
Jarquin for the Managua slot would alienate a significant 
segment of the Liberals.  When asked whether running for 
mayor might weaken his future presidential possibilities and 
the ALN as a national opposition force generally, Montealegre 
replied that he did not think so.  He noted that the city of 
Managua is "the second largest government in the country," 
that it has traditionally served as a stepping-stone to 
presidential candidacies, that it can be used for further 
political projection, and that it would be considered a 
serious blow to Ortega if he and the ALN could snatch it away 
from the FSLN. 
 
¶9. (C) Montealegre then discussed the strategy that he and 
his team were developing to work with the PLC (and MRS) 
towards the municipal elections nationwide.  He said they 
plan to use a breakdown of the 2006 national elections as a 
baseline to determine which party has the greatest strength 
in each municipality, and start identifying leading 
candidates on that basis, understanding that in certain areas 
there may be a natural leader from the community who is not 
from the party with the most votes.  (Note: Nicaraguan 
electoral law might limit this alliance strategy to some 30 
towns.  End Note.)  He acknowledged that the hardest part of 
the effort will be to reach the political agreement with the 
PLC without having Aleman (and by extension Ortega) trash the 
arrangement.  Chances for success, he felt, would be best if 
the parties not seek full ALN-PC unification, but simply a 
working arrangement between the two parties. The Ambassador 
concurred, and suggested that they start by identifying and 
approaching key players and candidates who would stand to 
gain from such a deal and bring them into the fold early. 
Montealegre agreed, also committing to follow up with the 
offers of strategic assistance from the PAN, as suggested by 
the Ambassador. 
 
Comment: The High Cost of Folding 
 
MANAGUA 00001340  003 OF 003 
 
 
- - - - - - - - - - - - - - - - - 
 
¶10. (C) If Montealegre abandons the ALN, the alliance will 
almost certainly splinter into its constituent parts, with 
the National Assembly caucus following suit.  The PLC would 
win the most by absorbing Liberals frightened of Ortega and 
desperately seeking refuge -- however illusory and ephemeral. 
 The MRS and Conservative Party would also gain adherents 
from anti-pact independent voters, but probably not enough to 
pose any serious electoral challenge to the FSLN or PLC. 
Ortega would continue to control the PLC through his 
co-pactmate Aleman.  The FSLN would likely win the lion's 
share of the municipalities and convince the PLC that it must 
support constitutional reforms that would permit consecutive 
presidential re-election. 
TRIVELLI