VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0578/01 1292356
ZNY CCCCC ZZH
R 082356Z MAY 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 2581
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

C O N F I D E N T I A L MANAGUA 000578 
 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, EEB/TRA 
 
E.O. 12958: DECL: 05/07/2018 
TAGS: ELTN ECON ELAB EFIN PGOV NU
SUBJECT: NICARAGUA: TRANSPORTATION WORKERS STRIKE 
 
 
Classified By: Ambassador Paul A. Trivelli for reasons 1.4 (b,d) 
 
¶1. (C) Summary:  The Association of National Transport 
Coordinators went on strike on May 5 seeking relief from 
skyrocketing gasoline and diesel prices.  While day one was 
not well organized, on days two and three, more taxi, 
intercity bus, and truck drivers heeded the call, and 
sporadic violence has broken out in cities around the 
country.  The political affiliations of the transport unions 
are mixed, with sector coverage spreading as economic 
interests and union solidarity take hold.  In the meantime, 
the trigger for the strike has shifted from high prices per 
se to whether the government, specifically President Ortega, 
will talk to the strikers about lowering prices through 
subsidies and/or removing fuel taxes at the pump.  Different 
union party representatives hold differing opinions on the 
strike's staying power, with Sandinista representatives 
merely expressing "solidarity" with the unions in the near 
term, and Liberal-affiliated sector representatives saying 
they will strike for as long as it takes to win relief.  End 
Summary. 
 
Prices Rise Dramatically at the Pump 
------------------------------------ 
 
¶2. (U) Since the beginning of the year, retail fuel prices in 
Nicaragua have risen more than 25%.  The first week of May, 
the price at the pump for regular gasoline topped $4.70 per 
gallon, with premium gasoline costing about 9 cents more and 
diesel 11 cents less.  The high cost of fuel cuts deep into 
the margins of those who earn their living on the road.  The 
Nicaraguan Federation of Taxi Cooperatives, the Nicaraguan 
Transport Workers Association, the Nicaraguan Federation of 
Transport Collectives, and allied transport cooperatives from 
the northern and southern regions called on the government to 
provide far reaching subsidies, but the government has 
refused to talk. 
 
Strike 
------ 
 
¶3. (U) Transportation union leaders first wanted to call a 
strike at the end of April, followed by a show of force 
during May Day celebrations in Managua.  Indeed, Ortega moved 
his May Day event to the evening of April 30 to avoid 
confrontation with transportation workers on May 1.  The 
Association of National Trsport Coordinators then backed away 
from a possible confrontation with Ortega supporters on May 
1, choosing instead to start the strike on May 5.  While day 
one activities appeared to lack strong broad-based 
coordination, long lines of trucks parked along the shoulder 
of the Pan American highway made their point.  The evening 
news ran clips of roving taxi drivers ripping off the roof 
signs of still operating taxis.  On days two and three, more 
taxi, inter- and intra-city buses, and truck drivers heeded 
the call, and sporadic violence broke out in cities around 
the country.  The Nicaraguan Transportation Chamber claims at 
least 25,000 taxis, 15,000 buses, and 5,000 truck drivers are 
willing participants; nevertheless, a number of taxis and 
trucks have been operating. 
 
¶4. (U) In the meantime, the trigger for the strike has 
shifted from high fuel prices per se to whether the 
government will talk to the strikers about lowering prices 
through subsidies and/or removing taxes at the pump. 
Transportation Minister Pablo Fernando Martinez and Finance 
Minister Alberto Guevara have flatly rejected these proposals 
as "impossible."  However, Martinez has suggested that the 
government would allow drivers to save 6 cents on the gallon 
by using a "self-service" option at gasoline stations around 
the country. 
 
¶5. (C) Four days into the strike, worker solidarity ) not 
political affiliation ) appears to be the driving force 
behind the strike's spread.  According to Liberal labor 
leaders, their transportation affiliates began the strike, 
seeking a reduction in gas prices.  Miguel Ruiz, director of 
the Sandinistas' largest labor confederation, confirmed that 
the Sandinistas are not behind the strike and that he is 
actively seeking a resolution given the action's negative 
impact on the rest of the confederation's membership.  As 
further evidence of the bi-partisan nature of the stoppage, 
on May 8, day four of the strike, Managua's largest bus 
cooperative )- a Sandinista organization -) joined in, 
stopping half its bus fleet.  Asked directly about his 
motivations, Rafael Quinto, the cooperative's president, 
matter-of-factly told us that his decision "has nothing to do 
with politics.  We are showing solidarity with our 
transportation colleagues."  Quinto also insisted that, if 
the strike is not resolved by Monday, he would order 100 
percent of the cooperative's Managua buses to strike, a move 
that will bring mass transit in Managua to a grinding halt. 
 
COMMENT:  This lack of FSLN sponsorship ) but apparent 
solidarity -- is interesting, given President Ortega's 
ability to use the bus transportation cooperatives to bus in 
supporters for political rallies, most recently on May 6. 
FSLN-controlled media is exploiting the situation to score 
anti-U.S. "imperialist" points, claiming that the strike is 
somehow U.S.-backed.  So, while Liberal and 
opposition-dominated unions started the strike by their 
year-long agitation for relief, what seems to be the tipping 
point drawing in the FSLN unions to this increasingly 
disciplined strike is not GON orders, but fuel prices 
crossing an economically unsustainable operating line and 
demonstrations of solidarity.  END COMMENT. 
 
Where's Hugo When You Need Him? 
------------------------------- 
 
¶6. (U) A number of economists point out that Nicaragua has 
the highest priced gasoline in Central America, 25% higher 
than neighboring Honduras, which participates in a Chavez 
scheme that is theoretically a cut below the one struck with 
Nicaragua.  Opposition politicians are beginning to exploit 
the fact that Nicaraguans do not see the value of Ortega's 
fraternal relationship with Chavez if the benefits are not 
flowing directly into their gas tanks.  Pleading the flu and 
a hoarse voice, Chavez bowed out of the Central American Food 
Crisis Summit in Managua on May 7. 
 
Existing Subsidies Public Transportation 
---------------------------------------- 
 
¶7. (SBU) The national government already subsidizes the 
Managua intra-city public transportation bus system.  In 
2007, this subsidy amounted to $5,783,386, equivalent to 
$0.12 per passenger/day.  In 2008, the National Assembly 
approved just $4,206,099, but reportedly the government has 
failed to disburse the first quarter's allocation of 
$1,577,287. 
 
¶8. (U) In addition, for the past five years, the City of 
Managua has administered an operating subsidy for fuel and 
expenses to city bus cooperatives.  The system constitutes 
855 buses organized into 27 cooperatives that serve 727,000 
people daily, or 58% of the urban population.  Almost 90% of 
the buses are more than 15-years old.  With the fuel subsidy, 
cooperatives can buy diesel at a fixed price of $2.13 per 
gallon.  The Managua Municipal Transport Regulatory Institute 
(IRTRAMMA) estimates that this translates to a savings of 
five cents per passenger/day.  The national government and 
city subsidies combine to allow Managua to fix the city bus 
fare at 2.50 cordobas (13 cents). 
 
Comment 
------- 
 
¶9. (C) If the strike continues to expand and holds through 
the weekend without resolution, Ortega will have a serious 
problem on his hands.  We believe he may face the decision 
either to break the strike or negotiate.  Breaking the strike 
) which has now taken on a national dimension ) would prove 
difficult.  First, Ortega lacks an effective mechanism to do 
so.  Police have shown some affinity with the strikers' cause 
and transportation workers have demonstrated strong 
bi-partisan solidarity. Breaking the strike would also place 
Ortega in the unenviable position of taking draconian 
measures against a group )- Managua bus cooperatives -- long 
considered an important base. 
TRIVELLI