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DE RUEHSN #0322/01 0972007
ZNY CCCCC ZZH
P 072007Z APR 09
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC PRIORITY 0947
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEKJCS/SECDEF WASHDC

C O N F I D E N T I A L SAN SALVADOR 000322 
 
SIPDIS 
 
E.O. 12958: DECL: 04/07/2029 
TAGS: PREL PGOV ECON ETRD OVIP SHANNON ES
SUBJECT: A/S SHANNON DISCUSSES TRANSITION WITH FUNES AND 
AVILA 
 
Classified By: CHARGE D'AFFAIRES ROBERT I. BLAU, REASONS 1.4(B,D) 
 
 
Summary 
------- 
 
¶1. (C) WHA Assistant Secretary Thomas Shannon held separate 
meetings March 18 with President Saca, Foreign Minister 
Marisol Argueta, President-elect Mauricio Funes and ARENA 
Presidential candidate Rodrigo Avila.  He also attended 
several press conferences and a reception with private 
business sector representatives.  This second cable on the 
visit focuses on his meetings with President-elect Mauricio 
Funes, ARENA Presidential-candidate Rodrigo Avila and the 
private business sector.  The first cable reported on A/S 
Shannon's meeting with President Saca and the Foreign 
Minister. 
 
¶2. (C) Both major parties have approached the transition in a 
mature fashion, stating they wanted to work with one another. 
 Funes was pleased with Saca's offer to cooperate in the 
transition and invitation to attend the Summit of the America 
(SOA).  Funes was also eager to work with the USG and said he 
would attend the March 30 meeting with Vice President Biden. 
He was especially pleased about his phone call from President 
Obama.  Funes' most immediate priorities are addressing the 
unemployment problems exacerbated by the current economic 
crisis and resolving crime and security issues.  Avila said 
ARENA would be a vigilant, but constructive opposition party. 
 End Summary. 
 
Meeting Attendees 
----------------- 
 
¶3. (U) Legislative Deputy Hugo Martinez (also rumored to be 
in the running as Funes' Foreign Minister or possibly 
Ambassador to Washington) and Mauricio Funes' wife Vanda 
Pignato attended Assistant Secretary Shannon's meeting with 
President-elect Funes.  Rodrigo Avila's campaign manager 
Cesar Funes (no relation to Mauricio) attended the meeting 
with Rodrigo Avila.  Charge Robert Blau and the Political and 
Economic Counselors attended all of the meetings with 
Assistant Secretary Shannon.  A/DCM joined the meeting with 
Avila. 
 
Funes Reiterates Desire to Work with USG 
---------------------------------------- 
 
¶4. (C) The phone call from President Obama to President-elect 
Mauricio Funes made a huge and positive impression.  It was 
the first thing that Funes mentioned to A/S Shannon.  (Note: 
Funes also mentioned it extensively to the press before and 
after his meeting with A/S Shannon.  End note.)  He was 
particularly pleased that the President asked for his views. 
A/S Shannon and Funes discussed their shared interest in 
maintaining close relations between the USG and the Funes 
administration.  Funes said that he would be delighted to 
attend the March 30 meeting in Costa Rica with Vice President 
Biden, and he also looked forward to attending the SOA with 
President Saca.  (Weekend media reported on the Secretary's 
call to Funes, during the latter's trip to Brazil.) 
 
¶5. (C) In the meeting with A/S Shannon, Funes complimented 
Saca on how he and ARENA handled their presidential-election 
defeat.  He was particularly pleased with Saca's willingness 
to open the government's books and work with them on the 
transition, as well as Saca's invitations to attend the SICA 
(Central American Integration Secretariat) meeting and the 
SOA.  He was also surprised by the change in the attitude of 
the press.  During the campaign, he said the press had been 
more antagonistic, but since he became President-elect they 
had treated him with much more deference and respect, which 
was a welcome surprise. 
 
¶6. (C) Funes said he inherited a polarized country and that 
he needed to reach broader understandings and agreements in 
order to move the country forward.  A/S Shannon replied that 
the peaceful and transparent elections demonstrated a 
confidence and maturity in the country's democratic process 
and institutions.  The Funes campaign, he noted, had taken a 
more positive tone than his opponents' and the vote for him 
was a vote against polarization.  In response, Funes noted 
that the division within the legislature (the FMLN has 35 of 
84 seats) means that the parties will have to work together. 
Acknowledging that there will be "discrepancies" between the 
parties "as there are in the United States," the recent 
approval by both parties of Inter-American Development Bank 
loans showed that the FMLN and ARENA could work together.  To 
 
underline the point he noted Saca's public statement that if 
the Funes administration proposes a law that is in the best 
interests of the country ARENA should support it. 
 
¶7. (C) The first priority of the Funes administration will be 
addressing the impact of the economic crisis.  Funes said 
that remittances and exports had dropped, which could create 
balance of payments problems.  He hastened to add that he was 
not saying anything about dollarization. (Comment.  In the 
past, some FMLN representatives, as well as others including 
the ARENA Vice Presidential candidate, had criticized 
dollarization.  Throughout the campaign, Funes has said that 
he has no intention of getting rid of dollarization.  End 
comment.) Funes wants to have a "national dialogue" on the 
situation and reach agreements on how to recover the "25,000 
jobs" the country has already lost and create new jobs.  He 
hopes that projects under the Millennium Challenge 
Corporation compact could be accelerated and noted that his 
administration might take advantage of the Standby Agreement 
with the International Monetary Fund or other financing to 
stimulate the economy. 
 
¶8. (C) Funes' other major priority was crime and public 
security.  He said public security was not much of a campaign 
issue, because ARENA's candidate was the former chief of 
police and given the serious crime problems in the country it 
was not in ARENA's interest to focus on the issue.   However, 
he said it was a serious problem that affected the quality of 
everyone's life in the country.  While more police would 
help, Funes said they have to be adequately trained in 
investigative techniques, because without those capabilities 
you cannot get criminal convictions.  For those reasons he 
supported the U.S.-funded International Law Enforcement 
Academy (ILEA) in El Salvador and the Cooperative Security 
Location's (CLS) anti-narco-trafficking activities. 
 
¶9. (C) A/S Shannon said he had just spoken with President 
Saca about extending the agreement for the CSL for an 
additional five years.  He also said that we would like to 
review with Funes the Merida Initiative.  Funes acknowledged 
both, stating we share a "common enemy" in that regard.   The 
Charge added that we have several groups within the Embassy 
that work on security and economic development issues that 
stand ready to begin work with the Funes administration. 
Funes appeared surprise$iL%?]NF|Ew 
= even before 
he took office, but said he was very encouraged by the offer. 
 His wife Vanda Pignato, who also attended the meeting, 
wanted to talk with USAID about women's and family issues. 
Everyone agreed to follow up on those discussions.  A/S 
Shannon stressed that he came in good faith to continue the 
excellent relations we had with El Salvador, not only on a 
government basis, but based on the large numbers of 
Salvadorans in the United States and our strong cultural and 
demographic ties. 
 
¶10. (C) In terms of international relations, Funes emphasized 
that he has not visited Hugo Chavez, but has visited his 
neighbors.  The following day, he was leaving for a week in 
Brazil where he would meet with President Lula again and he 
would not be stopping in Venezuela.  He joked that ARENA 
campaign propaganda pictures of him with Hugo Chavez were 
from a photo taken of him and Chavez when he had interviewed 
Chavez on a television program years earlier.  A/S Shannon 
said he was asked similar questions by the press at the 
Foreign Ministry regarding what the USG thought of them FMLN 
having closer relations with Venezuela and Cuba.  Assistant 
Secretary Shannon said he told the press that the USG's 
relations with the government of El Salvador would not be 
conditioned upon El Salvador's sovereign decisions about its 
foreign relations.  He added that the USG and El Salvador had 
many common interests. 
 
Avila Taking Defeat Gracefully 
------------------------------ 
 
¶11. (C) A/S Shannon complimented Avila on his campaign and 
the maturity he demonstrated in accepting defeat.  Avila said 
he meant it when he said that ARENA should work with the 
Funes government, but that they would be a "vigilant and 
constructive" opposition party and not be obstructionists. 
Avila was concerned about the state of the economy and about 
narco-trafficking in the region.  On the former, he said the 
country needed to create more employment as alternatives to 
migration and gangs.  He said his prior police experience 
made him well-qualified to talk about the problems of 
narco-trafficking in the region.  He was very worried, noting 
that the "Mexican drug lords already control Guatemala" and 
that if the problem was not urgently addressed they will get 
 
even stronger.  A/S Shannon said those concerns were part of 
the rationale behind the Merida Initiative.  Avila said he 
would continue fighting these battles and that ARENA would 
continue to be the closest ally for the United States. 
 
Business Sector in Shock but Willing to Engage 
--------------------------------------------- - 
 
¶12. (C) In a reception of twenty plus business leaders and 
economists from the both major parties and independents, 
those from the losing side said they were still processing 
ARENA's loss at the polls.  Former Minister of Economy Miguel 
Lacayo said that some business owners had been holding off on 
layoffs to help ARENA win the election.  Now that ARENA lost, 
he thought companies would start layoffs soon.  The Fruit of 
the Loom representative told Charge that they would lay off 
3,000 employees that week.  Most of the group was from the 
right and they all acknowledged the need to work with the new 
Funes administration.  Miguel Menendez, part of the "Friends 
of Mauricio" group, arrived late, stating he had watched the 
news reports of A/S Shannon's visit and how grateful he was 
for the strong support the USG has shown for Funes, both in 
the phone call from President Obama and in A/S Shannon's 
visit just three days after the election.  "Friend of 
Mauricio" Carlos Caceres echoed these remarks, adding that it 
did not go unobserved that Charge was the first to 
congratulate Funes on election night. 
 
U.S. Engagement Greatly Appreciated 
----------------------------------- 
 
¶13. (U) In his press conferences with President Saca, Foreign 
Minister Argueta and at the Embassy, A/S Shannon emphasized 
the long and extensive relationship between the United States 
and El Salvador.  He also congratulated the Salvadorans for 
the peaceful and mature expression of the democratic process 
in the recent elections.  Those comments made front-page and 
television news headlines, as did A/S Shannon's meeting with 
Funes and the President's telephone call to Funes. 
Salvadorans also said they appreciated the positive and 
visible expression of high-level USG support for the country, 
especially so soon after the election which shifted power to 
the opposition party. 
 
¶14. (U) Assistant Secretary Shannon has cleared this cable. 
BLAU