VZCZCXRO9792
PP RUEHLMC
DE RUEHMU #0432/01 1171253
ZNY CCCCC ZZH
P 271253Z APR 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 4074
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHRL/AMEMBASSY BERLIN PRIORITY 0179
RUEHCP/AMEMBASSY COPENHAGEN PRIORITY 0042
RUEHHE/AMEMBASSY HELSINKI PRIORITY 0065
RUEHLO/AMEMBASSY LONDON PRIORITY 0119
RUEHMD/AMEMBASSY MADRID PRIORITY 0503
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0267
RUEHPG/AMEMBASSY PRAGUE PRIORITY 0011
RUEHUL/AMEMBASSY SEOUL PRIORITY 0061
RUEHTC/AMEMBASSY THE HAGUE PRIORITY 0179
RUEHKO/AMEMBASSY TOKYO PRIORITY 0231
RUEHBS/USEU BRUSSELS PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC PRIORITY
RHBVJPX/COMPHIBRON SIX  PRIORITY
RUMIAAA/CDR USSOUTHCOM MIAMI FL//J2/J3/J5// PRIORITY
RHBPCOM/USNS COMFORT  PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MANAGUA 000432 
 
SIPDIS 
 
DEPT FOR WHA/CEN KRAAIMOORE 
DEPT FOR INR/IAA 
 
E.O. 12958: DECL: 04/23/2019 
TAGS: EAID ECON PGOV NU
SUBJECT: NICARAGUA: AMBASSADOR LEADS DISCUSSION ON DONOR 
UNITY 
 
REF: 2008 MANAGUA 1392 
 
Classified By: Ambassador Robert J. Callahan for reasons 1.4 (b & d). 
 
¶1. (C) SUMMARY: On April 15, Ambassador Callahan hosted 
ambassadors from Nicaragua's major European donor countries 
in a discussion about donor actions following the fraudulent 
outcome of the 2008 municipal elections (reftel) and the 
continued unwillingness of the GON to address the issue. The 
meeting resulted in a near-consensus (Spain excepted) among 
donors, including the recognition that the GON has already 
lost millions in budget support payments, that the donors 
would look to work through other entities (NGOs, 
municipalities), where possible, and that all feared the 
creeping authoritarianism of the Ortega Administration.  The 
meeting was the culmination of a process of consultation 
among aid missions and embassies in Nicaragua with the 
participation of an international consultant, funded by the 
UK.  END SUMMARY 
 
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DONORS AGREE ON CONSEQUENCES FOR FRAUD 
-------------------------------------- 
 
¶2. (C) The ambassador-level meeting, which included the 
Chiefs of Missions from Germany, Denmark, Finland, Spain, the 
Netherlands, and the European Commission, resulted in a 
near-consensus (Spain excepted) between donors that there 
should be consequences for the blatant November 2008 
electoral fraud and that the GON has done nothing to date to 
address legitimate international concerns about the fraud. 
Donors also agreed that as a consequence, the GON had already 
lost millions for 2009 through the freezing of traditional 
budget support and the suspension of the Millennium Challenge 
Corporation (MCC) projects.  Going forward all the donors 
would look to work through more congenial entities (NGOs, 
municipalities), where possible, to disseminate their 
assistance.  There was also agreement between all 
participants that Nicaragua's fledgling democracy was at 
serious risk of being derailed and could be entering a 
"perfect storm" for increased nacro-trafficking and criminal 
gang activity as the economic situation deteriorated. The 
group of ambassadors also agreed to meet again in a few weeks 
to draft common language that would be presented to President 
Daniel Ortega. 
 
---------------------------------- 
UK'S DFID SPONSORS DONOR WORKSHOPS 
---------------------------------- 
 
¶3. (C) The ambassadors' meeting on April 15 was the final 
step in a three-month exercise originally conceived and 
sponsored by the United Kingdom,s Department for 
International Development (DFID). After DFID announced that 
it was leaving Nicaragua to re-focus resources in Africa, its 
country director decided to use remaining funds to sponsor a 
series of donor workshops and interviews to explore the 
forces for change in Nicaragua and develop scenario analysis 
for future donor actions.  The goal of the DFID workshops, 
among other things, was to facilitate a dialogue among donors 
that could lead to better coordination.  DFID hired an 
international consulting firm to facilitate the donor 
workshops which began in January 2009 among technical-level 
aid practitioners and concluded with a multi-day scenario 
analysis workshop in March.  DFID agreed to sponsor a final 
technical-level meeting among like-minded donors and an 
ambassadors' meeting, both hosted at the US Embassy. 
 
MANAGUA 00000432  002 OF 002 
 
 
 
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COMMENT 
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¶4. (C) European capitals are refocusing foreign assistance 
resources away from Latin America to Africa and the Mideast. 
For example, during the discussion it was revealed that 
Norway's budget support payments would end in 2009, and that 
both Dutch and Finnish development assistance may also leave 
Nicaragua within five years.  While Nicaragua desperately 
needs donor funding to support its social programs, it has 
encouraged donor flight through its authoritarian actions and 
rhetoric.  Expected or promised assistance from "new" allies 
Russia, Iran and Venezuela has been slow in materializing. 
The DFID donor workshops, if nothing else, established useful 
lines of communication within the diverse donor community, as 
well as the recognition that the donors should coordinate 
more closely because of shared values and objectives. 
 
CALLAHAN