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INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHDC
RUMIAAA/CDR USSOUTHCOM MIAMI FL

C O N F I D E N T I A L SECTION 01 OF 02 MANAGUA 000133 
 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC AND EEB 
TREASURY FOR SARA SENICH 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
 
E.O. 12958: DECL: 02/02/2019 
TAGS: ECON EFIN PGOV PREL NU
SUBJECT: NICARAGUA: PRIVATE SECTOR LEADERS CONTEMPLATE 
NATIONAL FORUM 
 
Classified By: Classified by Ambassador Robert J. Callahan for reasons 
1.4 b & d. 
 
 ¶1.  (C) Summary.  Prominent business leaders and economists 
convened for the Ambassador's first economic roundtable of 
the new year on January 28.  The primary topic centered 
squarely on the aftermath of the fraudulent November 9 
municipal elections and the way forward for the Nicaraguan 
private sector and civil society.  Business leaders were 
particularly concerned about the loss of international budget 
support and a potential decrease in overall donor assistance, 
including from the United States.  Participants decided to 
brainstorm among themselves and plan a possible forum to 
broaden the national discussion beyond the parochial 
interests of President Ortega's Sandinista National 
Liberation Front (FSLN) and the Constitutional Liberal Party 
(PLC).  Attendees also discussed the negative effects of the 
global financial crisis on Nicaragua in 2009, but differed on 
the degree of severity.  End Summary. 
 
Municipal Elections 
------------------- 
 
¶2.  (C) The Ambassador reiterated the necessity of resolving 
the flawed November 9 municipal election results to the 
satisfaction of all parties as soon as possible.  Alejandro 
Martinez Cuenca (Ortega's FSLN Minister of the Economy in the 
1980s, now a successful cigar exporter) said that while he 
was personally offended by the electoral fraud perpetrated on 
the Nicaraguan people, terminating the USG's Millennium 
Challenge Compact (MCC) with Nicaragua would be a grave 
mistake.  The MCC has motivated hundreds of Nicaraguans to 
climb out of the cycle of poverty and provides hope.  Should 
the USG terminate MCC, he argued, it would hand President 
Ortega a golden opportunity to politically exploit his rescue 
of the affected population, and further his political 
objectives in the Leon and Chinandega departments. 
Ultimately, Nicaraguans would blame the United States for 
pulling out, and identify more closely with the FSLN and its 
Bolivarian Alternative for Americas (ALBA) supporter 
Venezuela. 
 
¶3.  (C) Ricardo Teran (who represents Kodak and Hewlett 
Packard here) agreed, noting that somehow the private sector, 
Nicaraguan civil society and the political opposition must 
provide the "big picture" to the population to better 
highlight the country,s precarious economic position. 
Gabriel Solorzano (President BANEX, the nation's largest 
microfinance institution) stated that to the common man, the 
massive fraud perpetrated in the November 9 elections 
represented Nicaragua,s "9-11," and that, as a result, two 
possibilities exist:  Machiavellian stability based on the 
new "repacto" (a second pact) between the FSLN and former 
President Arnoldo Aleman, and collapse into near anarchy. 
Prominent economist and former Finance Minister Eduardo 
Montiel told the Ambassador that various Nicaraguan 
politicians favored the latter, as a necessary step to 
finally uniting the fractured opposition.  Solorzano compared 
Nicaragua's current situation to the late 1980s, when gross 
economic mismanagement combined with the collapse of the 
Soviet Union (then Nicaragua,s primary economic patron) led 
to a united opposition able to ultimately remove the 
Sandinistas from power in 1990. 
 
A National Forum? 
----------------- 
 
¶4.  (C) Julio Cardenas, General Manager of Bancentro, opined 
that Ortega will never shift his position on the municipal 
elections.  However, the private sector could promote its 
concerns via a national forum which would include 
representatives from all segments of society including the 
government.  Another attendee observed that, in reality, 
Nicaragua is ruled by what might be described as two mafia 
groups (Ortega's FSLN and Aleman's Constitutional Liberal 
Party).  A national conference could be useful, especially if 
it highlighted the broader interests of the Nicaraguan 
citizenry.  Participants debated whether or not such a forum 
should include political parties.  Martinez Cuenca added that 
a key consideration was whether the Ortega regime would react 
 
MANAGUA 00000133  002 OF 002 
 
 
to such pressure in a rational way, a primary obstacle to 
resolving the current crisis. 
 
¶5.  (C) Erwin Kruger, a former Minister of the Economy and 
Development and President of business federation COSEP, urged 
roundtable members to meet as soon as possible to iron out 
the modalities of such a forum.  Roundtable members held a 
breakfast meeting on January 30, and planned to follow up in 
early February. 
 
Impact of Global Financial Crisis 
--------------------------------- 
 
¶6.  (C) Kruger warned of an economic "tsunami" that would hit 
Nicaragua in 2009 as a result of the international financial 
crisis, a domestic political stalemate, and a lack of budget 
support from foreign donors.  When asked if he was predicting 
an outright economic collapse, Kruger demurred, only replying 
that Nicaragua,s economy would get worse before it gets 
better.  Eduardo Montiel stressed that Nicaraguans at the 
municipal level do not yet grasp the magnitude of the world 
crisis.  Business leaders should work with more moderate 
elements of the FSLN, such as Central Bank President Rosales 
and Presidential Economic Advisor Bayardo Arce, to establish 
a constructive dialogue. 
 
COMMENT 
------- 
 
¶7.  (C) The notion of a national dialogue which includes 
representatives not only from the private sector and civil 
society, but also the Catholic Church, strikes us as a 
worthwhile endeavor.  Montiel's proposed strategy for the 
private sector to work with the FSLN's more moderate Arce and 
Rosales to counter the economic consequences of the 
international financial crisis and the decision by donors to 
suspend budget support in the wake of fraudulent elections 
makes sense.  Unfortunately, the private sector has already 
reached out to the GON many times with minimal results. 
 
¶8.  (SBU) Roundtable Participants: 
 
--Eduardo Montiel, Professor of Finance, INCAE 
(the Central American Business School) 
 
--Gabriel Solorzano, President BANEX (with 60,000 clients, 
the nation's largest microfinance bank, formerly FINDESA) 
 
--Roberto Bendana, former head of the Competitiveness 
Commission and President of Cafe Don Paco, a coffee exporter. 
 
--Alejandro Martinez Cuenca, President  International 
Foundation for Global Economic Challenge.  Martinez is also 
an economist, a businessman, an FSLN member, and was Ortega's 
Minister of the Economy in 1980s. 
 
--Ricardo Teran, President Corporacion Roberto Teran 
 
--Rene Teran, General Manager, Casa Teran 
(medical and agricultural equipment) 
 
--Julio Cardenas, Executive Director, Bancentro (U.S.- 
citizen owned bank) 
 
--Joaquim de Magalhaes, General Manager Exxon Mobil 
 
--Erwin Kruger, President, DRACMA 
CALLAHAN