VZCZCXYZ0004
OO RUEHWEB

DE RUEHMU #0261/01 0701429
ZNY CCCCC ZZH
O 111429Z MAR 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3863
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RUMIAAA/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEABND/DEA HQS WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

C O N F I D E N T I A L MANAGUA 000261 
 
SIPDIS 
 
STATE FOR WHA/CEN, INL/LP 
 
E.O. 12958: DECL: 03/04/2013 
TAGS: PGOV PREL SNAR NU
SUBJECT: NNP PROPOSES "CODE OF CONDUCT" AND "COMMON FUND" 
FOR INTERNATIONAL DONORS 
 
REF: FEBRUARY 24 TSAO-AHERN E-MAIL 
 
Classified By: Ambassador Robert Callahan, Reasons 1.4 (b) and (d) 
 
¶1. (C) Summary: During a meeting on March 4, 2009, 
representatives of the Nicaraguan National Police (NNP) and 
the Nicaraguan Ministry of Foreign Relations (MinRex) 
presented Poloff with details regarding a newly proposed 
"Code of Conduct" (Codigo de Conducta, or CdC in Spanish) to 
govern all aid received by the NNP from international donors. 
 The intent of the CdC document is to give the NNP direct 
control over the administration and execution of the foreign 
aid it receives, a concept which runs counter to many USG 
policies on the execution of foreign aid.  In addition, the 
NNP discussed - but declined to share written details of - a 
"Common Fund," to be administered by the Nicaraguan Ministry 
of Finance, that will be set up as a holding account for 
international donors to directly deposit financial aid to the 
NNP.  When Poloff pointed out the difficulty of having the 
USG sign an agreement that contradicts its laws and 
regulations, both NNP and MinRex representatives said that 
USG could continue using "existing legal mechanisms" to carry 
out programs, including those related to the Merida 
Initiative, with the NNP but hoped that the Embassy would 
remain "engaged" with the new process.  In a troubling 
side-note, NNP Chief Aminta Granera appeared to be completely 
unaware of the CdC effort, underlining the continuing erosion 
of her power and influence within the NNP organization.  End 
Summary. 
 
- - - - - - - - - 
Bugs In The Code 
- - - - - - - - - 
 
¶2. (C) On March 4, 2009, NNP official Manuel Rocha, Chief of 
the NNP Project Coordination Division, discussed with Poloff 
a new "Code of Conduct" (Codigo de Conducta, or CdC in 
Spanish) that the NNP is proposing as the main legal 
mechanism to govern all aid projects conducted between 
international donors and the NNP.  (The CdC document was sent 
to WHA/CEN and INL/LP in reference e-mail.)  The CdC is based 
broadly upon principles set forth in the Organization for 
Economic Cooperation and Development (OECD) Paris Declaration 
on Aid Effectiveness, which was endorsed by many OECD member 
states in March of 2005, including the United States.  In 
particular, the CdC seems to draw heavily upon the Paris 
Declaration tenets of "ownership" and "alignment."  According 
to the Paris Declaration, donor countries should rely as much 
as possible on country systems and procedures and avoid 
"intrusive conditionality" in order to give host governments 
greater "ownership" of the aid process.   Furthermore, donor 
countries should "align" their funding with host country 
developed strategies instead of imposing "multiple conditions 
based on other agendas." 
 
¶3. (C) The Nicaraguan CdC document takes these Paris 
Declaration tenets and interprets them aggressively, 
resulting in the inclusion of many provisions in the CdC 
document that either conflict with established USG laws and 
regulations on executing foreign aid programs or with simple 
practicality.  Furthermore, the Paris Declaration presupposes 
that, "public financial management systems in partner 
countries...adhere to broadly accepted good practices or have 
a reform program in place to achieve this."  Recent, well 
publicized scandals with the probable misappropriation of 
donated funds (including the alleged "misplacement" of 
millions of dollars from donors such as Spain and Taiwan) 
belie this assumption in the case of Nicaragua and cast doubt 
on the ability of GON institutions, if left to themselves, to 
execute foreign aid programs in a fully transparent manner. 
 
¶4. (C) The most problematic of these provisions include (with 
Post comments): 
 
"The Development Partners will ... employ the systems and 
national (GON) procedures of disbursement, execution, 
tracking, and evaluation of foreign assistance ... non-use of 
these systems must be justified and reviewed at regular 
intervals."  Post Comment:  This provision runs directly 
counter to the USG procurement provisions outlined in the 
"Buy American Act." 
 
 
"Signers of this Code of Conduct will ... avoid parallel 
structures and gradually adapt the GON Fiscal Year to match 
the GON's financial responsibilities."  Post Comment:  The 
sheer impracticality of attempting to adjust USG budget 
cycles to match the GON fiscal year should preclude any 
possibility of USG accedence to this provision. 
 
"The GON will inform...the Development Partners of plans, 
projects, programs....that are being executed in other 
entities whose purposes are related to NNP functions and 
competencies, but are public or private, and not integrated 
with the NNP structure."  Post Comment:  This provision opens 
up the troubling possibility that donated funds will be used 
to support the activities of the illegitimate, 
semi-government Councils of Citizen Power (CPC) structure 
supported by Ortega. 
 
 
- - - - - - - - - - - - - - - - - - 
No Change In The Merida LOA Process 
- - - - - - - - - - - - - - - - - - 
 
¶5. (C) When Poloff pointed out the difficulty of having the 
USG sign an agreement that contradicts its laws and 
regulations, both NNP and MinRex representatives said that 
USG could continue using "existing legal mechanisms" to carry 
out programs, specifically mentioning the new Letter of 
Agreement (LOA) being negotiated to implement Merida 
Initiative programs.  Rocha expressed disappointment that the 
USG was not likely to sign the CdC document but expressed the 
hope that the U.S. would remain "actively engaged" in the 
overall donor coordination process.  Rocha assured Poloff 
that the U.S. would remain informed of any new information 
regarding the CdC donor coordination group, including the 
roll-out of a comprehensive NNP strategy document covering 
the next five years of NNP operations. 
 
 
- - - - - - - - - - - - - - - - - - - - - - - 
Common Fund - "We Know You're Not Interested" 
- - - - - - - - - - - - - - - - - - - - - - - 
 
¶6. (C) Rocha briefly discussed the concept of creating a NNP 
Common Fund, a fund that would be administered by the 
Nicaraguan Ministry of Finance as a holding account for 
international donors to directly deposit financial aid to the 
NNP. Rocha espoused the benefits of the fund, explaining that 
it would allow the NNP to utilize donated funds with "greater 
flexibility, transparency, and accountability."  As an 
example, he continued, the Common Fund could be used on law 
enforcement initiatives "outside of the NNP," a concept that 
would be difficult to implement under most of the bilateral 
aid agreements the NNP currently works under (and one that 
would open the door to possible CPC involvement).  Two 
comprehensive reports on the expenditure of the funds would 
be released every year to show donors that the funds had been 
used transparently and in an effective manner.  When asked 
why documents related to the formation of the Common Fund had 
not been sent to the Embassy, Rocha simply replied that the 
documents had not been sent because, "we knew you would not 
be interested."  To date, only Spain has formally agreed to 
participate in the Common Fund, with an initial deposit of 
one million Euros. 
 
- - - - - - - - - - - - - - - - - - - - - - 
Comment: The Increasingly Schizophrenic NNP 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶7. (C) Comment:  The CdC contains several problematic - and 
unrealistic - proposals which are in direct conflict with 
U.S. laws and regulations.  Unfortunately, the 2005 Paris 
Statement gives the GON an effective platform as it seeks to 
wrest control of donated funding from donor countries to the 
cash-starved Ortega Administration.  In a troubling 
side-note, in the days and weeks leading up to the actual 
meeting with Rocha, the NNP presented seemingly contradictory 
stances on how USG aid to the NNP should be handled.  During 
discussions over the conclusion of the new Merida Initiative 
LOA, NNP Sub-Director Javier Maynard (who is directly 
responsible for NNP finances and actually signed the CdC 
 
meeting invitation letter) specifically requested that a 
clause be added to the LOA stating that, "the USG will be in 
charge of the administration and implementation of these 
funds." 
 
 
¶8. (C) In addition, just days before the CdC meeting NNP 
Chief Aminta Granera appeared to be completely unaware of the 
entire CdC coordination movement, asking, "What document are 
you talking about?  I'd like to see a copy."  Taking all of 
these developments into account, it is clear that a severe 
schism has developed within the NNP, with one group closely 
aligned with Ortega that is cooperating with MinRex attempts 
to funnel foreign aid into FSLN projects, and another group 
headed by Granera attempting to keep the funding within the 
NNP.  The increasingly schizophrenic disposition of the NNP 
clearly underlines the continuing erosion of Granera's power 
and influence within the NNP organization and points the way 
to an uncertain future for the institution after her 
departure. 
 
CALLAHAN