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C O N F I D E N T I A L SECTION 01 OF 05 MANAGUA 001622 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CEN 
 
E.O. 12958: DECL: 06/18/2017 
TAGS: PGOV PREL PINR ECON NU
SUBJECT: ORTEGA ADMINISTRATION AT SIX MONTHS 
 
REF: A. MANAGUA 1566 
     ¶B. MANAGUA 1562 
     ¶C. MANAGUA 1537 
     ¶D. MANAGUA 1318 
     ¶E. MANAGUA 1311 
     ¶F. MANAGUA 1273 
     ¶G. MANAGUA 1067 
     ¶H. MANAGUA 1495 
 
Classified By: Ambassador P. Trivelli for reasons 1.4 (b and d) 
 
¶1. (C) Summary:  During his first six months in office, 
President Daniel Ortega has expanded executive powers and 
used them to destroy or give away pieces of Nicaragua's 
cultural patrimony; to threaten opposition media and freedom 
of expression; to fire large numbers of government officials 
and replace them with party loyalists; and to centralize the 
powers of the ministries under the Presidency. He has also 
reoriented Nicaragua's foreign policy by reestablishing ties 
with ideological bedfellows from the 1980's and other leaders 
of anti-American bent. Although "national sovereignty" is a 
favorite leitmotif of Ortega's, he continues deferring to his 
Venezuelan counterpart. The lack of transparency and open 
disregard for legal limitations point to an administration 
that relies increasingly on promising popular democratic 
reforms while taking significant steps towards 
authoritarianism and a blending of party and state.  Recent 
polls indicate that the Nicaraguan people are not happy with 
Ortega's management of the country.  End Summary. 
 
Ortega Strengthens and Forms Alliances with Fellow Ideologues 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶2. (C) Eager to reap the benefits of oil-rich Venezuela's 
largesse, over the past six months, Ortega has followed 
Venezuelan President Hugo Chavez' lead on almost every issue 
of importance (ref F). When Chavez refused to renew the 
contract of RCTV (ref E), Ortega voiced support for Chavez's 
decision and strongly criticized counter-protests by 
Venezuelan students. First Lady Rosario Murillo, head of the 
increasingly influential Council of Citizenship and 
Communications, correspondingly began the process to convert 
Nicaragua's state-owned Channel 6 to a source of 
Venezuela-friendly media by partnering with Telesur. Ortega 
has also followed in Chavez's footsteps outside of the 
Americas, visiting many of Chavez's allies in Africa and the 
Middle East. On July 19 the President will reportedly 
announce the "Five Pillars" of the FSLN strategy, which are 
modeled directly on Chavez's "Five Motors" of 21st Century 
socialism. (Septel) 
 
¶3. (C) During a recent 15-day marathon tour, Ortega visited 
Venezuela, Cuba, Iran, Libya, Algeria, and Senegal on a 
private jet provided for the occasion by Libyan dictator 
Moammar Gadhafi. (Note: A visit to Italy to meet with a group 
of investors was canceled at the last minute, while Senegal 
was added to the agenda. A senior MFA official, in a meeting 
coinciding with Ortega's visit to Senegal, joked that "not 
even we know where he might go next," and admitted that the 
MFA -at the office director level at least- had received 
virtually no updates or reports from the President's party 
during his trip. Contacts reported that Alvaro Robelo, 
Ortega,s choice for ambassador to the Vatican, bungled the 
Italy visit and forced its cancellation -- a further 
humiliation for Robelo, a banker implicated in various 
financial scandals, who earlier failed to gain agrement as 
ambassador to the Vatican. End Note) 
 
¶4. (C) Since returning to Nicaragua on June 18, Ortega has 
been sharply criticized by National Assembly deputies for not 
publicly discussing the results of his 15-day trip. Thus far, 
Ortega has only commented publicly on a possible energy deal 
with Iran.  Deputies from the Liberal Constitutional Party 
(PLC) and Sandinista Renovationist Movement (MRS) decry the 
President's silence and insist that the public has a right to 
know what issues were discussed and what agreements or 
accords were signed.  In addition, legislators are 
questioning why Ortega did not visit Rome after having 
announced meetings with Italy's president and Italian 
business leaders prior to his departure from Nicaragua. 
Foreign Minister Samuel Santos weakly (and falsely, according 
to the Italian Ambassador in Managua) justified the decision 
by stating that Rome was simply a "stopover for the pilots to 
 
MANAGUA 00001622  002 OF 005 
 
 
rest" and was never part of the official agenda. 
 
¶5. (C) In the month leading up to his recent trip, Ortega was 
also visited by the Vice Chancellor of the Russian National 
Assembly Serguei Kislyak. During the visit, Ortega expressed 
his desire to revitalize relations, stating that, "when we 
speak of cooperation with Russia, we are speaking of taking 
into account the relation that we had with the Soviet Union, 
when Russia was one of our supporters." 
 
Allies in Asia 
- - - - - - - - 
 
¶6. (C) Not content to hobnob only with dictators in Latin 
America and the Middle East, Ortega decided to reinforce ties 
to North Korea and Laos.  In regard to Korea's nuclear arms, 
Ortega has declared "that it isn't fair," that some countries 
continue to be armed, "then want to prohibit others from 
arming themselves in self-defense" (ref D) In meetings with 
Laotian officials,  he recalled that, "In the 1980s we had 
exceptional relations with Laos and with all the peoples of 
Indochina." 
 
¶7. (C)  The possibility of adding yet another ally, mainland 
China, is still on the table. In early June, Costa Rica's 
announcement of the cessation of its 60-year formal 
diplomatic relationship with Taiwan in favor of mainland 
China created uncertainty in Nicaragua.  For the moment, the 
official line is that all ties are firm; however, the Free 
Trade Agreement between Nicaragua and Taiwan remains stalled 
in its final stage because the Ortega government claims not 
to have the $5,000 necessary for publication, which would put 
it into legal effect. Dollar diplomacy may ensure Taiwan's 
continued presence in the medium term as the Taiwanese have 
pledged to send multiple energy plants, scheduled to go 
online in January 2008, to assist Nicaragua in addressing its 
chronic electrical power crisis.  Thousands of Nicaraguans 
are also employed in Taiwanese-owned maquilas in Nicaragua's 
Free Trade Zones. 
 
Mixed Messages 
- - - - - - - - 
 
¶8. (C) While Ortega visited allies abroad, publicly 
criticizing "American imperialism", his Vice President, Jaime 
Morales Carazo, was at the Americas Competitiveness Forum in 
Atlanta assuring the business elite that Nicaragua was an 
ideal setting for investment. (Note: For a two-day period, 
while the President and Vice President were out of the 
country, there was no acting Head of State named, a further 
indication of the improvisation and secretive nature of the 
Ortega regime.) On June 19, President Ortega met with members 
of the private sector for the second time since his 
inauguration.  The private sector repeated its concerns 
regarding the sanctity of private property, the lack of 
support for foreign and local private investment, the need to 
fight corruption, and the lack of a coherent economic 
plan/direction from the government.  The meeting launched a 
series of public-private working groups to develop strategies 
addressing the energy, infrastructure, and tourism sectors 
and the sustainable management of the environment 
 
¶9. (C) These efforts have not received as much publicity and 
Presidential support as Ortega,s proposed "citizen 
councils."  According to Ortega and Murillo, any plans which 
the citizen councils develop will become GON policy and must 
be advocated by Ministers before the National Assembly. In 
contrast, the work of these public-private groups has not 
been given any such political weight, and will most likely be 
contradicted by the more populist economic pronouncements 
likely to come out of the Sandinista-dominated citizen 
councils. (Comment: Since his election, Ortega has stated 
several times that he welcomes foreign investors because they 
are the engines which will create the jobs to help raise the 
country out of poverty. In reality, however, the FSLN 
government has displayed a cavalier attitude toward 
contracts, particularly in the energy sector. On three 
different occasions the GON claimed that contracts with 
private sector energy companies were "injurious" to Nicaragua 
and would be canceled. This hardline forced the companies to 
the negotiating table.  End Comment.) 
 
Citizens' Councils 
 
MANAGUA 00001622  003 OF 005 
 
 
- - - - - - - - - - 
 
¶10. (C) The newly established "Citizen Empowerment Councils" 
("Counsejos de Poder Cuidadano") have been a source of much 
opposition concern in recent weeks. These Councils, which are 
a direct evolution of the "Sandinista Defense Committees" of 
the 1980's, while officially not party-affiliated, are widely 
considered to favor hard-line Sandinistas and exclude all 
others with questionable ideological affiliations. Their 
stated goal is to increase citizen participation within the 
system by encouraging active debate within small, local fora. 
Charges of FSLN bias are rejected by members of that party, 
who say that positions are often filled with FSLN 
representatives because they are unpaid; therefore, there 
have been very few volunteers for the job. The same logic 
applies to the location of the council offices, many of which 
are run out of FSLN campaign houses, apparently for lack of 
another, more neutral space.  More moderate Sandinistas have 
declined to participate in (or been excluded from) the 
councils, which they regard as usurping existing civil 
society groups nurtured over the years by the Sandinistas 
themselves (ref B).  Whatever the origin of the divide, the 
result is that the councils are composed primarily of Ortega 
loyalists. 
 
First Lady, First Citizen 
- - - - - - - - - - - - - 
 
¶11. (C)  With her allegedly illegal appointment (according to 
Nicaragua's nepotism laws) to Executive Secretary of the 
Council of Citizenship and Communications, First Lady Rosario 
Murillo has become an integral part of the Presidential 
powerhouse. Murillo has centralized under her control all 
official communication from the government, often writing 
press announcements for specific ministries, then ordering 
the ministry to issue them unedited.  She personally approves 
all travel abroad for government officials, a policy which 
has generated considerable confusion and often caused 
Nicaragua to be absent at regional meetings related to the 
Sistema para la Integracion Centroamericana (SICA) and CAFTA, 
as well as several USG-funded workshops that are part of 
long-running programs.  She controls the entire government 
budget for publicity, and has co-opted the professional 
journalist association in Nicaragua, even reviewing the 
weekly schedules for the VP, all Ministers and Vice-Ministers 
to decide which events should be publicized and who will 
cover them (ref A). Any ministers who dare to speak publicly 
without her explicit permission are quickly removed.  In 
addition, the First Lady reportedly siphons $11 million 
monthly from state airport revenues, Free Trade Zones, and 
Immigrations and Customs charges. This money is supposed to 
fund FSLN-sponsored aid projects, but as of yet none have 
been announced.  (Comment: One project possibly funded by 
this illicit capital is the series of billboards reading 
"Arise the Poor of the World!" alongside a prominent photo of 
Ortega, which have recently popped up around Managua. The 
billboards bear the government's logo, but the government 
claims that the funds to erect them were not drawn from 
national coffers. End Comment.) 
 
¶12. (C) Despite the apparent illegitimacy of her position, 
Murillo personally signed an agreement with Telesur, 
Chavez,s propaganda channel, to develop the Nicaraguan 
Channel 6, which had remained dormant since 2002. The station 
will require approximately $30 million to be reopened, 
according to Education Minister De Castilla. The stated goal 
of the partnership is to increase the "democratization" of 
the media. 
 
Poor Financial Planning 
- - - - - - - - - - - - - 
 
¶13. (C) The Ortega administration is also running into 
difficulties in signing an accord with the IMF. The major 
sticking points are the IMF,s insistence on accounting for 
Venezuela's assistance in the budget and on Nicaragua,s lack 
of clarity on how it plans to achieve its economic and social 
goals. 
 
¶14.  (C) Furthermore, it is becoming clear that due to 
paralysis and ineptitude at all levels, the current budget 
has been poorly managed. At the close of the first trimester 
only 12% of the capital spending allocated in the budget had 
 
MANAGUA 00001622  004 OF 005 
 
 
been spent. Delays are attributed in part to confusion caused 
by the investigations of corruption within some of the major 
infrastructure ministries during the previous administration, 
and by the wholesale firing of thousands of technical workers 
in the ministries by the current administration. As a result, 
the projects that capital expenditures are tied to have not 
gotten off the ground. 
 
Undermining Independent Institutions 
- - - - - - - - - - - - - - - - - - - 
 
¶15. (C) As the opposition remains paralyzed, Ortega has used 
his power to attempt to consolidate security forces under 
executive control. Most recently, Ortega appointed Ruth Tapia 
Roa, a friend of the First Lady's with little background in 
defense or security, as "Secretary General with the rank of 
Minister" to head the Ministry of Defense, but he has so far 
preferred to run Ministry policy directly from the 
Presidency.  According to an internal memo, Tapia's primary 
goals are to purge the Ministry of the few remaining 
technical functionaries left from the previous administration 
and monitor the "ideological purity" of the armed forces. 
(ref C). 
 
¶16. (C) The army has assumed the primary security 
responsibilities of the President's residence, a task which 
in the past has belonged to the National Police, an 
organization which Ortega feels is too "somocist" in origin. 
However, armed forces chief General Moises Omar Halleslevens 
has repeatedly stated that the army will remain apolitical 
and continue to support the constitution. 
 
Security Breaches 
- - - - - -  - - - 
 
¶17.  (C) The Nicaraguan National Police continue to cooperate 
with the U.S. on counternarcotics efforts and resist efforts 
to be "co-opted" by Ortega.  The police continue to work with 
the Embassy, particularly through programs such as the vetted 
unit, the mobile inspection unit and the vehicle inspection 
station at Penas Blancas.  Chief of Police Aminta Granera 
told POL officers during a recent meeting that her 
relationship with Ortega is a "balancing act" and that she 
continues to push for police autonomy.  She claims that 
Ortega does not interfere with police operations.  However, 
she further elaborated that she is often required to attend 
events with Ortega where his rhetoric is "anti-gringo" and 
that this makes her "uncomfortable." 
 
¶18.  (C) Even though airport security has been completely 
compromised and is regularly bypassed by the FSLN, the 
President has issued orders to give the appearance of 
security, heavily searching and double-checking documents on 
U.S. personnel who are likely to report that security 
measures are "in force."  One example that highlights the 
weakness in the system is the continued use of false "letters 
to board" provided by illegal immigrants arriving from "C 
class" countries that are regularly accepted by Nicaraguan 
immigration officials. Additionally, the Director and 
Assistant Director of Immigration no longer routinely share 
information with the Embassy regarding possible TIP cases. 
There are indications that these officials have also accepted 
payments from local Muslim organized crime figure Ismat 
Khatib for facilitating documents and visas and for 
permitting Iranian, Libyan and other Middle Eastern nationals 
to pass through the airport without documentation or 
registration. 
 
A Battle of Symbols 
- - - - - - - - - - 
 
¶19. (C)  In what has become ground zero for a back-and-forth 
battle of symbols between administrations, the musical 
fountain that had been installed by former president Arnoldo 
Aleman on the old "Plaza de la Revolucion" (actually just an 
old parking lot) was removed by order of the First Lady. 
According to Aleman,s detractors, the fountain was intended 
to block FSLN protests in front of the Presidential Palace. 
In the face of public outcry, the Ortega Administration 
announced plans to relocate the fountain, but then scrapped 
them.  Besides being a deplorable use of public funds, the 
fountain's removal was allegedly illegal, as no one bothered 
to obtain a permit from the Mayor's office as is required by 
 
MANAGUA 00001622  005 OF 005 
 
 
law, prompting criticism by the Sandinista Mayor of Managua, 
Dionoso Marenco. (Comment: This episode is reminiscent of 
Ortega's previous faux pas with Nicaragua's cultural 
patrimony, the gift of two original manuscripts by Ruben 
Dario, Nicaragua's most well-known and beloved poet, to Hugo 
Chavez. End Comment.) 
 
The Honeymoon Is Over 
- - - - - - - - - - - - - 
 
¶20. (C) The shenanigans of the Ortega-Murillo family have not 
been well received by Nicaraguans, including certain segments 
of the Sandinista party.  A CID/Gallup poll published on June 
20 indicated that Ortega,s popularity has dropped 
exponentially since his inauguration, from a 51% approval 
rating to -10%. A majority feels that Ortega has not governed 
democratically or in the best interests of the people. 
Nevertheless, most respondents were still optimistic about 
the country's future (a more thorough analysis will follow 
septel). 
 
Opposition Still Divided 
- - - - - - - - - - - - - 
 
¶21. (C)  With a corrupt judiciary and an electoral authority 
increasingly packed with FSLN hacks, the National Assembly is 
increasingly pointed to as the last stronghold for democracy 
in Nicaragua. Although Ortega's erratic and authoritarian 
behavior has frightened the opposition, there are still 
several factors that continue to impede a united front 
against the FSLN. In the PLC, the continued influence of 
former President and party caudillo Arnoldo Aleman isolates 
the party from other segments of the opposition. The 
Sandinista Renovation Movement (MRS) has the difficult 
position of wanting to oppose Ortega without risking the loss 
of core supporters by appearing to submit too much to the 
Liberals. There is, however, a general agreement among all 
parties on certain issues; for example, condemnation of First 
Lady Rosario Murillo's role within the government; Ortega's 
poor fiscal policy; his slavish following and allegiance to 
Chavez; and the removal of the fountain in front of the 
presidential palace. The organization of unions and other 
labor groups in their struggle to raise the minimum wage 
could also be a point of unity for the Liberals (ref H). 
 
Authoritarianism with a Facade of Democracy 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶22. (C) Ortega,s primary goal remains the destruction of the 
ALN and the election of the majority of mayors in the 
November 2008 Municipal elections. So focused has this effort 
been that the only expenditure outside of these objectives 
has been propaganda costs to cover their remarks and maintain 
political support amongst the populace. For example, the 
administration has been dropping hints about a new plan to be 
announced July 19, but a leaked document revealed that the 
"Five Pillars of the FSLN strategy", (SEPTEL) contains no 
significant changes, merely an alternative presentation of 
the same objectives and rhetoric that the FSLN has utilized 
consistently throughout the last 6 months. 
 
¶23. (C) A group of four political analysts speaking with 
embassy representatives on June 13, 2007 commented on what 
Ortega's actions over the last six months might indicate for 
the future. One described the likely arrangement as 
"authoritarianism with a facade of democracy". They 
pinpointed the source of FSLN power to three party 
characteristics: organization, devotion, and experience in 
harnessing the system to its advantage.  These are all 
characteristics that the opposition parties regrettably lack. 
TRIVELLI