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C O N F I D E N T I A L SECTION 01 OF 06 MANAGUA 002223 
 
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E.O. 12958: DECL: 09/27/2017 
TAGS: ECON ETRD EINV NU
SUBJECT: SUBJECT: NICARAGUA: AN ECONOMIC PERSPECTIVE ON 
EIGHT MONTHS OF ORTEGA RHETORIC 
 
Classified By: Ambassador Paul Trivelli, Reason: E.O. 12958 1.4 (d) 
 
¶1. (C) Summary: Eight months into Daniel Ortega's term as 
president, his socialist rhetoric continues to worry 
potential and current investors in Nicaragua.  Beginning on 
the day of his inauguration, Ortega launched into 
anti-capitalist, anti-neoliberal, and increasingly 
anti-American rhetoric, implying that what had transpired in 
Nicaragua during the past sixteen years was all wrong.  A 
consistent economic theme has been the need for Nicaragua to 
reduce its dependency on the United States and international 
financial institutions.  Ortega believes that this theme 
provides him with the political cover he needs to forge 
closer economic relations with the likes of Venezuela, Cuba, 
Iran, Libya, and North Korea.  When it comes to private 
sector investment, Ortega seems to be of two minds.  He 
acknowledges the fundamental role that the private sector 
plays in creating jobs, generating growth, and improving 
social well-being, but in practice never really accepts that 
this is true.  One of Ortega's most palatable messages is 
that capital investment in Nicaragua needs to incorporate 
some social component.  End summary. 
 
¶2. (C) Eight months into Daniel Ortega's term as President, 
his socialist rhetoric continues to worry current and 
potential investors in Nicaragua.  Ortega rarely misses an 
opportunity to denounce "imperialism" and "savage 
capitalism," although his tone and presentation often varies 
with his audience.  A review of Ortega's public discourse 
since his inauguration on January 10, 2007, reveals a 
worldview adorned with disdain for what he terms "global 
capitalism" and its imperialist champion, the United States. 
Ortega borrows heavily from Marx to explain the success of 
capitalism, which he views as being fundamentally opposed to 
the welfare of poor people throughout the world.  Recently, 
he has been focusing more on historical inequities, drawing a 
causal relationship between the wealth of developed countries 
and the poverty of underdeveloped countries. 
 
¶3. (C) Ortega has avoided criticizing specific individuals or 
businesses in Nicaragua, with a few exceptions in the energy 
sector.  He has forcefully criticized electricity distributor 
Union Fenosa (Spain), liquid fuels importer and distributor 
Glencore (Switzerland), geothermal power producer Polaris 
(Canada), power producer Geosa (Nicaragua), and through his 
tax and customs directors general and other party stalwarts, 
refiner and liquid fuels distributor Esso (United States). 
Every company that Ortega has criticized publicly has become 
the object of state-led legal and tax challenges. 
 
Out of the Starting Gate 
------------------------ 
 
¶4. (C) Beginning on the day of his inauguration attended by 
Venezuelan and Bolivian Presidents Hugo Chavez and Evo 
Morales, Ortega and his Communications Coordinator (wife 
Rosario Murillo) launched a propaganda campaign to 
reestablish socialist values in Nicaragua.  The campaign 
contrasts greatly with his election campaign, also managed by 
Murillo, both in tone and content.  Ortega's election 
campaign was little more than the repeated play of a 
Nicaraguan version of John Lennon's "Give Peace a Chance" as 
a silent candidate waived to the masses from a slowly driven 
vehicle.  Ortega now makes great use of the bully pulpit to 
constantly assert that Nicaragua's "neoliberal" experiment in 
"global capitalism" the last sixteen years has failed. 
 
¶5. (C) The day after his inauguration, Ortega signed onto the 
Bolivarian Alternative for the Americas (ALBA), since 
heralded as the centerpiece of Nicaragua's foreign economic 
relations and the alternative to the Central American Free 
Trade Agreement (CAFTA) and a Free Trade Agreement of the 
Americas (FTAA).  Ortega has consistently trumpeted economic 
relations with ALBA countries (Venezuela, Cuba, and Bolivia) 
at the expense of his relations with Central American 
countries and as a substitute to economic relations with the 
United States.  His socialist fire only dimmed for his first 
 
MANAGUA 00002223  002 OF 006 
 
 
press conference in January, to calm nervous investors.  By 
May, his anti-capitalist, anti-neoliberal, and anti-American 
rhetoric picked up another head of steam.  This culminated in 
20-minute inflammatory speech at the United Nations on 
September 25 2007, in which Ortega railed against the United 
States as the imperial power (septel). 
 
America Is Bad 
-------------- 
 
¶6. (C) An underlying theme for Ortega's speeches has been the 
need for Nicaragua to reduce its political and economic 
dependence on the United States, developed country donors, 
and international financial institutions, which he believes 
"are controlled by the United States."  He argues that global 
capitalism has enslaved the world by helping the rich get 
richer at the expense of the poor, and exploiting natural 
resources and polluting the world's environment.  Further, he 
argues that international financial institutions are the 
tools of "yankee imperialism," that neoliberalism is a modern 
version of imperialism, and that privatization and 
neoliberalism in Nicaragua have failed to lift Nicaragua out 
of poverty. 
 
¶7. (C) A corollary to these arguments is that CAFTA should 
never have been negotiated because of inherent and 
insurmountable economic asymmetries between poor, small 
Central American countries and the United States.  Ortega 
asserts that if such a trade agreement had to be negotiated, 
then Central American countries should have negotiated it as 
a single, unified entity to strike a more balanced deal. 
Because this did not happen, CAFTA surely favors the United 
States.  Ortega further asserts that by definition small 
agricultural producers cannot compete with large U.S. 
producers who, he laments, receive state subsidies. 
Therefore, he concludes, CAFTA is inherently unfair. 
 
¶8. (C) Ortega often deploys this logic as political 
justification for forging closer economic relations with 
Venezuela, Cuba, Bolivia, Iran, Libya, and even North Korea. 
For more political cover, he will elaborate on the historical 
and lasting evil of "imperialism," "global capitalism," and 
"the empire," all euphemisms for the United States.  (Note: 
In his speech before the United Nations on September 25 2007, 
Ortega clearly tied the United States to these euphemisms). 
Ortega compares these evils to honest and well-meaning 
foreign assistance and commerce from and with ALBA countries 
and Iran. 
 
¶9. (C) Ortega's anti-American rhetoric often varies with the 
occasion.  He never used the word "empire," for example, to 
refer to the United States in his public meeting with World 
Bank Vice President Pamela Cox on February 1.  However, 
during his July 21 address to the Sao Paulo Forum, a 
conference composed of leftist and nationalist political 
parties and social movements in Latin America and the 
Caribbean, Ortega bandied the term an astounding twenty-one 
times.  Left to his own resources, Ortega will almost always 
weave in a few minutes of anti-American epithets into one of 
his patented 100-minute speeches to loyal followers.  The 
rhetoric flows especially freely during visits from 
Venezuelan President Hugo Chavez. 
 
Capitalism Is Bad; Some Investment Might Be Good 
--------------------------------------------- --- 
 
¶10. (C) Ortega seems to be of two minds when it comes to 
capital investment.  He claims to welcome capital investment 
on the one hand, but on the other decries the evils of 
"global capitalism."  He asserts that privatization has 
failed in Nicaragua, that "neoliberalism" has corrupted 
government to serve selfish interests "of those with family 
names we all know," but claims to be open to dialogue with 
business.  He accepts the need to negotiate a new Poverty 
Reduction Growth Facility with the IMF, but issues a blanket 
condemnation of all international financial institutions as 
being "the mere tools of capitalism."  He acknowledges the 
 
MANAGUA 00002223  003 OF 006 
 
 
fundamental role that capital investment plays in creating 
jobs, generating growth, and improving social wellbeing, but 
never really accepts the notion that capitalism works.  He 
equates "global capitalism" with imperialism, vilifies the 
United States as chief imperialist, and equates "original 
capital" to original sin -) since, according to his 
accounting of history, "original capital" was derived from 
slavery and colonialism. 
 
¶11. (C) Ortega repeatedly quotes Pope John Paul II to draw a 
distinction between "savage capitalism" and presumably 
"not-so-savage capitalism."  This gives Ortega the pretext to 
support some forms of capital investment, e.g., that which 
"serves the interests of the people," especially the poor. 
Clearly, Ortega feels better about an investment if there is 
some form of social contribution included.  He has repeatedly 
referred to Cone Denim's $100 million investment in a textile 
manufacturing plant near Managua as an example of the kind of 
long-term, "non-maquila" investment that he welcomes.  Cone 
Denim (United States) makes some social contributions. 
However, Cone Denim is a free trade zone investment like all 
other Nicaraguan "maquilas," and will, in fact, employ fewer 
people than most maquilas.  The difference is that Cone Denim 
will manufacture cloth rather than finished goods. 
 
The A to (almost) Z of Ortega's Rhetoric 
---------------------------------------- 
 
¶12. (SBU) Below are unofficial translations of statements 
made by Ortega during his first eight months in office.  They 
identify the range of his economic thinking, and not just the 
anti-American quality of his rhetoric. 
 
a. "Every time that I speak about this issue with the same 
representatives from the IMF, the World Bank, the European 
Union, and representatives of the North American Government, 
I say to them, 'What are the results of these policies that 
His Holiness the Pope John Paul II called savage capitalism?' 
 That is what His Holiness called it!  I ask them, and I say 
to those who continue insisting that the neoliberal model is 
the only way that our people can progress, I say to them, 'I 
am going to put it to the test here in Nicaragua!'" 
(Presidential Inauguration, January 10, 2007). 
 
b. "This treaty with the United States, CAFTA, that was 
approved a few years and months ago  ...we said that, in all 
clarity, this treaty was not thought out, not considered as 
to the condition of a country like the United States with 
great and enormous resources and economic subsidies versus 
the economies of our countries.  They had to understand this 
(inequity) to negotiate.  Finally they signed a treaty that 
brings some benefits to some sectors, but not to others.  We 
have talked with North American representatives and told them 
about the problem, that they have not taken into account 
economic asymmetry with these countries.  How can a small 
Nicaraguan producer compete with a North American producer 
who is subsidized?"  (Presidential Inauguration, January 10, 
2007). 
 
c. "There does not exist, in these times, a situation that 
signifies that economic activity in our country is paralyzed 
or is decreasing.  To the contrary, we feel that economic 
activity is being maintained ...the year is beginning.  There 
have been the normal movements for the start of a year and a 
dialogue has continued with the national businesses through 
INCAE (the Central American Institute for Business 
Administration).  Vice President Jaime Morales is in charge 
of working with them, that already is the commitment.... It 
was a grave error to have negotiated CAFTA in bilateral form; 
it put us in a weak situation." (Press Conference, January 
22, 2007) 
 
d. "This is a new government.  We have a conception, a 
philosophy that is very different from the governments that 
preceded us.  We are interested in developing, establishing, 
consolidating good relationships with (international) 
organizations, with the (World) Bank as well as with the 
 
MANAGUA 00002223  004 OF 006 
 
 
(International Monetary) Fund." (Meeting with World Bank Vice 
President Pamela Cox, February 1, 2007). 
 
e. "We are meeting many businessmen, many investors, 
capitalists who are ready, and in addition to their 
(financial) investments, to make social investments.  But 
there are others in the minority, in the case of Nicaragua, 
who bring an entirely selfish attitude, who want to 
accumulate more riches each day and to whom it does not 
matter if the people are in poverty, in misery."  Sixteen 
years of neoliberalism has passed in Nicaragua.  And what do 
we have?  We have economic growth.  Of course, we have 
economic growth, but with whom does this wealth reside? 
Where does wealth stop?" Celebration of the 29th Anniversary 
of the Sandinista Insurrection in Monimbo February 24, 2007) 
 
f. "What is the root of the problem (speaking of power 
outages throughout the country)?  It is in the deed of having 
privatized.  This was the original sin.  Who privatized?  The 
democrats, those who say they are democrats.  They privatized 
the power plants, giving concessions (to the electricity 
distributor).  Thank God they did not sell it, because all 
this involves corruption, selling (the power plants) for 
pennies -- but what they did was to rent it."  (Celebration 
of the 29th Anniversary of the Sandinista Insurrection in 
Monimbo February 24, 2007) 
 
g. "We will have a world filled with justice, where all 
families live in dignity, where hearts are filled with the 
feeling of love, and where we will have buried forever 
feelings of hatred, of selfishness, of individualism, of 
'savage capitalism' that His Holiness Pope John Paul II 
called by name ) 'savage capitalism'....  We are not 
fighting with the Yankees.  They are the ones who have been 
fighting with the world.  This is the history of the 
imperialists." (Ortega with Hugo Chavez in Leon, March 11, 
2007) 
 
h. "We are against polluting the environment, a result that 
must be viewed in the (context of) policies of consumption, 
imposed by the capitalist model and that will not stop for 
anything." (Ortega with members of his Cabinet, April 3, 2007) 
 
i. "At the height of neoliberalism, with all the support that 
is possible in terms of policies and capitalist material 
wellbeing, capitalist countries, with all the support that 
the Government of the United States had offered to previous 
governments.... How much would it mean for the United States 
to donate (a power plant) to Nicaragua?  They did not donate 
it ... It is neoliberal political nature to forget about the 
people, about the poor, and simply do things every day to 
become richer." (Inauguration of the Venezuelan Hugo Chavez 
Power Plant at Las Brisas, Managua, April 17, 2007) 
 
j. "During these sixteen years in which neoliberalism was 
imposed on Nicaragua, what was considered the most important 
was to maintain structural reforms -- the privatizations, 
privatizing education, health -- all at a cost of greater 
poverty for the Nicaraguan people."   (Meeting with a Russian 
Delegation, April 25, 2007) 
 
k. "Never as today, has the world been so divided between the 
minority that possess wealth and the immense majority 
(living) in poverty.  This has occurred at both the national 
and international level.  Here in Nicaragua, where the scheme 
of world capitalist domination is replicated by the 'land 
imperialists,' as our General Sandino called them, a few with 
wealth and the majority in poverty....  Who is the 
imperialist bourgeois?  The one who is of 'savage 
capitalism,' the imperialist who tries to break, to conquer 
our people."  (Labor Day, May 1, 2007) 
 
l. "We have to liberate ourselves from this dependency on 
external resources because of all the problems they bring, 
the conditions that they put on us." (Cabinet Meeting on the 
National Infrastructure Plan, May 3, 2007) 
 
 
MANAGUA 00002223  005 OF 006 
 
 
m. "Neoliberalism not only has meant denying education, 
health, and work to the people, denying financing to the 
farmers, but also it has meant the destruction of the 
environment, of the forests....  This is where it is clear 
that what the world is questioning is the model.  There has 
to be questioning, from all sides, of the model that savage 
capitalism has imposed on the world and which is leading to 
the destruction of the environment."  Cabinet meeting on the 
National Environment Plan, May 8, 2007) 
 
n. "The greatest acts of violence, of barbarism, have been 
committed by rich, developed countries.  Violent crimes of 
all kinds -- not for hunger, not for poverty, not for 
unemployment.  Simply put, what has provoked this kind of 
situation has been the deformity, the destruction of the 
human spirit by savage capitalism." (Appointment of Cardenal 
Obando y Bravo as Chair of the Reconciliation Commission, May 
9, 2007) 
 
o. "In our attempt to generate quick employment, we can be 
killing ourselves.  This is the great problem: as we say, 
bread for today, hunger for tomorrow.  We cannot run that 
risk...  We want investment with a sense of respect, to the 
workers and to the environment -- an investment that is 
accompanied with social sense."  (Institute of Social 
Security Presentation, May 22, 2007) 
 
p. "Our country, throughout its history, has suffered wars 
imposed by the politics of imperial North America....  This 
is what permits us to break with unipolar politics to 
establish a new equilibrium in the world, where we transform 
in a profound way the current world order, as much in the 
areas of economics and commerce between counties as in the 
area of law.  What we will really achieve is to democratize 
relations between people, between nations, by putting an end 
to the dictatorship of the global capitalism of the empire. 
And then we can ensure a world of peace, of justice, of 
liberty....  And in the dialogue that we hold with the United 
States, we have been clear to demonstrate our position 
against imperialist policies, against the dictatorship of 
global capitalism...." (Greeting Iranian President 
Ahmadinejad, June 10, 2007) 
 
q. "This is the greatest battle that escapes human history -- 
the concept that development policy has been in the hands of 
global capitalism which sets the norms, imposes its economic 
policy through blood and fire, and for which certain periods 
and eras a conquered Africa, Asia, and American continent 
submitted to colonization, responding to a development model 
that was determined in the European metropolis, simply trying 
to grow, but in these moments, the world population, 
technological development, and pollution that was generated 
in the form of epic exploitation, was brutal.  It turned into 
an economic policy that practiced systematic genocide in 
order to steal natural resources."  (Closing Remarks to the 
Natural Resources and Environment Conference of Central 
American Ministers, June 18, 2007) 
 
r. "These gentlemen that today are the owners of the world 
economy, who impose upon us schemes such as neoliberalism, 
who wish to obligate us to accept the conditions of the 
International Monetary Fund, they accumulated their wealth in 
the most abject manner, the most brutal, shameful manner that 
human history could have ever known." (Celebration of the 
71st Anniversary of the Birth of Carlos Fonseca, founder of 
the FSLN, June 23, 2007) 
 
s. "The recent meeting of the Group of Seven plus one, in 
Europe, once again provides evidence of the inflexibility of 
those who continue defending an exhausted model ) a 
developmentalist, consumerist (one) that goes against the 
most vital interests of humanity.  And the opposition, the 
voice that raises concern, from countries belonging to the 
same exhausted global capitalist scheme, (is against) global 
capitalism that has imposed its rules throughout the years, 
that has established norms, and that talks of democracy 
without practicing democracy."  (Inauguration of the Regional 
 
MANAGUA 00002223  006 OF 006 
 
 
Conference on UN Coherence, June 25, 2007) 
 
t. "I think that the moment has arrived that, above all the 
countries of global capitalism, the empire (is the one who) 
controls the (International Monetary) Fund.  Really, the poor 
(workers at) the Fund are no more than an instrument, because 
we say here that the Fund is evil.  No.  What is evil is 
world economic order imposed by the countries of global 
capitalism, of the empire, which accumulate their capital at 
the cost of enslaving Africans for more than 300 years (and) 
exterminating indigenous people in Latin America.  This is 
the origin of their capital."  (Ortega's arrival at the 
airport on a state visit to Mexico, June 27, 2007) 
 
u. "In the sixteen years that they governed quietly, the 
model they imposed was global capitalism, the imperialist 
model.  What were the results?  They said (that) the country 
achieved take-off because a few became richer.  Because of 
this, they achieved take-off.  Those that became richer took 
off, but the immense majority of the people did not have any 
take off.  What they had was privatization of health care, 
education, the democratization of hunger, of unemployment. 
This is what they had.  This is the reason why we have 
(electricity) rationing )- our inheritance from 
neoliberalism.  To put it into simple language, the 
inheritance of 'savage capitalism.'  This is our 
inheritance." (Inauguration of the Zero Hunger Initiative in 
Estelli, July 7, 2007) 
 
v. "This is what the Europeans did.  All the Europeans who 
today present themselves as saviors of the world, this is 
what they did.  The primary capital for capitalism has its 
origins in these forms of exploitation, of theft, of plunder, 
of corruption, that they established throughout the African 
and American continent, and also in Asia.  They were 
accumulating this wealth which they later converted into 
power." (Closing of the 15th Congress of the Nicaraguan 
Student Union, July 18, 2007) 
 
w. "The situation is very simple.  Those that accumulated 
this capital, this wealth, with the plunder, the 
extermination, concentration camps, more than 300 years of 
slavery of the African population, they are very united, and 
they are searching a way to keep all of us divided, in order 
to dominate us, to better oppress us.  They practice this 
policy throughout the world: to divide people, nations, (and) 
governments.  And, each time governments make an effort to 
become closer, listening to the will of the people, the 
threats come with sanctions and everything that we already 
know.  But the world lives in a new time.  True that global 
capitalism, headed by the yankee empire, has enormous 
strength....  Global capitalism threatens destruction, not of 
the small people because it has already destroyed them, but 
rather of medium and large producers...." (Celebration of the 
28th Anniversary of the Sandinista Revolution, July 19, 2007) 
TRIVELLI