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P 221312Z AUG 07
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RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC PRIORITY
RUEHMU/USMILGP MANAGUA NU PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 04 MANAGUA 001963 
 
SIPDIS 
 
SIPDIS 
 
NSC FOR V ALVARADO 
 
E.O. 12958: DECL: 08/20/2017 
TAGS: PGOV PHUM ECON KDEM NU
SUBJECT: FEAR AND LOATHING ON NICARAGUA'S ATLANTIC COAST 
 
REF: A. MANAGUA 1783 
     ¶B. MANAGUA 1944 
 
Classified By: Ambassador Paul Trivelli for reasons 1.4b,d 
 
¶1.  (C) SUMMARY:  Our contacts on Nicaragua's Atlantic Coast 
("costenos") support the Ambassador's non-combative 
engagement strategy with President Ortega's administration. 
With many households almost wholly dependent on remittances 
from family members working in the U.S., costenos are fearful 
of the impact of Ortega's anti-U.S. rhetoric on bilateral 
relations.  The coast's dismal economic situation fuels 
continued concern over drug-trafficking and personal security 
and is causing an exodus of young people from the region, 
robbing it of future economic and political leaders.  At the 
heart of coast's economic woes is the 20-year old Law 28, the 
Law of Autonomy.  Under Law 28, the coast does not enjoy 
financial autonomy, and its communal property laws and 
complex territorial arrangements discourage private 
investment.  Opposition political party unification efforts 
in the regional capitals of Bluefields and Puerto Cabezas are 
far ahead of Managua.  Further, political and civic leaders 
have thus far repelled the efforts of the Sandinista National 
Liberation Front's (FSLN) Citizen Councils to establish a 
presence on the Atlantic Coast.  Future USG efforts to 
strengthen democratic forces on the Atlantic Coast should 
include the Catholic and Moravian churches which wield 
tremendous influence up-and-down the coast and face 
increasing pressure from the Ortega administration.  END 
SUMMARY 
 
¶2.  (U) From August 9-11, the Ambassador visited the Atlantic 
Coast towns of Bluefields in the Autonomous Southern Region 
(RAAS) and Puerto Cabezas in the Autonomous North (RAAN) to 
inaugurate several projects, including two mediation centers, 
a model school in the Excellence program, a municipal family 
health project, and a refurbished Navy patrol boat refitted 
to undertake long voyages in open water as part of the USG's 
anti-narcotic assistance efforts.  In addition, the 
Ambassador spoke  with religious, community, and political 
leaders in both communities about the situation on the 
Atlantic Coast. 
 
Costenos Support Embassy Engagement Strategy 
- - - - - - - - - - - - - - - - - - - - - - - 
 
¶3.  (C) Leaders in the RAAS and RAAN unanimously support the 
Embassy's engagement strategy with the Ortega Administration. 
 Initially fearful that the U.S. would "abandon" the 
Nicaraguan people following the elections, leaders expressed 
satisfaction that U.S. involvement and programs are 
continuing.  Further, they praised the Ambassador for his 
positive public discourse, refusing to be provoked by 
Ortega's verbal attacks on the U.S.  In fact, Ortega's 
attempts to discredit the U.S., according to leaders, are 
having the opposite affect on the Atlantic Coast, bolstering 
the image of the U.S. 
 
¶4.  (C) Costenos are hyper-sensitive to U.S. policy in 
Nicaragua because of their dependence on monthly remittances. 
 According to leaders in both the RAAS and RAAN, nearly every 
household receives funds from a family member working in the 
U.S.  In many instances, they reported, remittances are the 
sole source of household income, masking, to a degree, the 
gravity of the economic situation in these regions. 
 
Security Key Concern for Costenos 
- - - - - - - - - - - - - - - - - 
 
¶5.  (SBU) Given the high rates of unemployment, drug 
trafficking and petty theft remain constant problems on the 
Atlantic Coast.  Police and civic officials acknowledge that 
recent counter-drug initiatives have reduced the flow of 
illicit substances, however, trouble remains.  Although 
relations between the police and military were characterized 
as "close" and "cooperative," general public security in both 
regional capitals is a problem, reported community leaders, 
impacting local business and tourism.  Adding to the 
difficulty in the RAAS, is the long legal backlog due to a 
severe shortage of prosecutors.  With only two prosecutors in 
the entire region, the Bluefields chief of police lamented 
that drug traffickers operate with near impunity, knowing 
they will never be convicted if caught. 
 
Law of Autonomy Holding Back Development 
- - - - - - - - - - - - - - - - - - - - - 
 
¶6.  (U) The lack of development -- and subsequent economic 
problems -- on the Atlantic Coast can be traced back to Law 
28 - the Law of Autonomy.  Passed in 1988 by then-President 
Ortega, the law was designed to "calm down" the indigenous 
communities on the Atlantic Coast without, according to the 
Bluefield mayor, being the "most appropriate" law.  Under Law 
28, indigenous communities do not enjoy fiscal and budgetary 
autonomy.  In addition, those regional businesses that do pay 
taxes, pay them directly to Managua, leaving coastal 
communities without the means to make autonomous decisions 
about public works investments. 
 
¶7.  (C) In nearly every meeting, the Ambassador underscored 
the importance of property rights and clear title to 
attracting foreign investment and driving growth.  Under Law 
28, all land is communal and potential investors face a 
dizzying array of councils and committees -- regional, 
municipal, territorial, and community -- to win approval to 
use, by lease, any land.  As a result, infrastructure 
projects have languished for years and national and 
international private investors shy away from the region, 
focusing instead on the Pacific Coast. 
 
¶8.  (SBU) Leaders were receptive to the Ambassador's idea of 
a formal 20-year anniversary study to evaluate the effects of 
Law 28 and to propose changes to facilitate investment.  RAAN 
governor Reynaldo Francis has proposed reforms to streamline 
the negotiation process with regional and local authorities. 
In his own efforts to attract international investment, 
Francis remarked that he had been in California the week 
prior meeting with Nicaraguan/American businessmen to explain 
the value proposition and process for investing in the coast. 
 
¶9.  (C) Francis appears to be the exception.  Most costenos, 
although recognizing the serious shortcomings of Law 28, have 
taken very little initiative to change the law.  Most blamed 
their National Assembly representatives, accusing them of 
forgetting about the coast once they get to Managua.  While 
political neglect is a likely contributing factor, the 
complex structure of regional councils and committees set up 
under Law 28 makes it nearly impossible to reach consensus 
for coherent reform. 
 
Oil Exploration - Ready and Willing 
- - - - - - - - - - - - - - - - - - 
 
¶10.  (C) Infinity Oil and MKJ oil exploration projects have 
both fallen prey to this complex process and the political 
infighting that accompanies it.  Regional council members and 
governors in both the RAAS and RAAN voiced strong support for 
the oil firms and were frustrated that the projects had been 
blocked by procedural problems.  However, Francis as well as 
the president of the RAAS regional council, Maria Lourdes 
Aguilar Gibbs, informed the Ambassador that the companies had 
not consulted with the regional councils as required by law 
(although the firms did follow the advice of the central 
government), thus slowing down the process.  Other leaders 
remarked, more cynically, that the oil exploration projects 
would not get off the ground until certain "party interests" 
were involved, implicating the FSLN and PLC. 
 
Civil Society / Youth Disengaged 
- - - - - - - - - - - - - - - - - 
 
¶11.  (SBU) Due to the Atlantic Coast's grim economic 
situation, religious, political, and civil society leaders 
warned of a general lethargy among youth and civil society. 
These leaders insist that this trend threatens security, 
democracy, sense of community, and future economic 
opportunities.  The former mayor of Bluefields, remarked that 
only 300 people protested the brutal killing of four police 
officers last year.  Vote buying in both regions is also 
common practice, with people reportedly selling their votes 
for as little as five dollars.  Instead of working for 
change, young people are leaving the Atlantic Coast, getting 
involved in drug-trafficking, or simply existing from 
remittances, with a resulting paucity of young emerging 
political and social leaders.  Across the board, these 
community leaders urged U.S. support for programs to 
re-engage youth and civil society. 
 
CPCs Threaten Autonomy, not Welcome 
- - - - - - - - - - - - - - - - - - 
 
¶12.  (C) Given the fragility of the economic and social 
situation in both regions, leaders are very concerned about 
the Citizen's Councils which they see as the Ortega 
government's attempt to subjugate regional authorities to 
will of the Sandinistas (reftel B).  Thus far, the CPCs have 
met strong resistance by authorities in both regions and have 
not been established in either Bluefields or Puerto Cabezas. 
However, our interlocutors warned that the costenos' poverty 
and poor education make them easy to manipulate, and that the 
CPCs may slowly penetrate the coast through programs like 
Zero Hunger (reftel A) that promise token assistance. 
Leaders fear that, once entrenched, the CPCs would be 
difficult to extract, threatening the region's autonomy by 
demanding compliance with Ortega's wishes in exchange for 
government funding and resources. 
 
Political Opposition Groups Working Together 
- - - - - - - - - - - - - - - - - - - - - - - 
 
¶13.  (SBU) Despite the lack of Liberal unity between the 
Liberal Constitutional Party (PLC) and Nicaraguan Liberal 
Alliance (ALN) at the central level in Managua, on the 
Atlantic Coast, democratic opposition groups are working 
together in preparation for the 2008 municipal elections.  In 
the RAAS, opposition political groups have been formally 
working together for the past 15 months.  In the RAAN, seven 
political groups signed a unity agreement three months ago, 
although discussions continue.  Although he has repeatedly 
declined to run for mayor of Puerto Cabezas, there is 
universal support among all non-FSLN political parties, 
religious leaders, and civil society groups for Javier 
Williams-Slate, the former vice foreign minister of foreign 
affairs under Bolanos.  In the RAAS, discussions are under 
way to identify a democratic candidate.  In this sense, 
Liberal/opposition unification in the Atlantic Coast is far 
ahead of Managua and most other departments.  However, 
leaders fully expect Ortega to mount a concerted effort to 
infiltrate and break-down liberal support using the CPCs, 
Zero Hunger, and blocking investment to the area (as in the 
case of Infinity Oil and MKJ) in order to bring the region to 
its knees. 
 
Opportunities for USG Support 
- - - - - - - - - - - - - - - 
 
¶14.  (C) The Ambassador received over a dozen assistance 
proposals during his two-day visit to the Atlantic Coast. 
While personal pleas for assistance and small requests for 
materials were mixed among the proposals, half were requests 
to fund civil society organizations or churches to support 
local outreach or to provide training and education programs 
targeting youth and marginalized groups.  Historically 
underserved by the national government, the situation for 
non-Sandinista organizations, including local governments, is 
becoming increasingly grim as Ortega tightens his grip and 
chokes-off funding.  For example, the mayor of Bluefields 
complained that he had only 11,000 Cordobas (  USD 600.00) to 
service the needs of 12 communities outside Bluefield's 
center. 
 
Comment - Churches Represent Strategic Opportunity 
- - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶15.  (C) Given the dearth of non-Sandinista NGOs on the 
Atlantic Coast, the Moravian and Catholic churches represent 
strategic opportunities for USG-supported programs.  They 
have strong inter-faith dialogue, wield enormous influence 
within most communities up-and-down the Atlantic Coast, and 
are increasingly uncomfortable with the Ortega 
administration.  During their meetings with the Ambassador, 
these representatives provided crisp analysis of the problems 
facing the costenos and presented sensible ideas and 
well-developed proposals which position the church as an 
instrument of social outreach and civic education.  Such 
ideas may help forge the solution to the coast's most 
overarching problem -- the lack of a unified vision of the 
region's future -- and encourage greater cooperation among 
the RAAS and RAAN's ethnically diverse population.  Over the 
coming weeks, we will evaluate these proposals for the 
Ambassador's democracy fund.  In addition, we will reach out 
to other organizations such the National Endowment for 
Democracy to facilitate contact.  As the battle for control 
over the Atlantic Coast's political future heats-up and more 
weight falls on the churches' shoulders to defend civil 
rights and democracy, we will work to support and strengthen 
their positions and programs. 
 
 
TRIVELLI