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C O N F I D E N T I A L SECTION 01 OF 03 MANAGUA 000599 
 
SIPDIS 
 
STATE FOR WHA/CEN 
 
E.O. 12958: DECL: 06/15/2019 
TAGS: PGOV PREL ECON EAID NU
SUBJECT: ORTEGA RESPONDS TO MCC CANCELLATION 
 
REF: A. MANAGUA 580 
     ¶B. MANAGUA 425 
 
Classified By: Ambassador Robert J. Callahan, for reasons 1.4(b) & (d) 
 
¶1.   (SBU) Summary: Responding to the decision of the Board 
of the Millennium Challenge Corporation (MCC) to partially 
terminate Nicaragua's compact assistance, President Daniel 
Ortega accused the USG of using aid programs to interfere in 
Nicaragua's internal affairs and promote its own political 
agenda abroad. Ortega repeatedly compared President Obama to 
President Reagan when President Reagan cut assistance to 
Nicaragua in 1982. He also claimed that the capitalist system 
of foreign aid distribution practiced by the developed world 
was flawed and should be replaced. Essentially, the USG and 
those like it will always put their own interests ahead of 
aid recipients' needs.  Ortega announced the establishment of 
a Venezuelan funded aid program (ALBA-Solidaria) to fund 
projects that the MCC had "abandoned."  The most radical 
response to the MCC decision came from the President of the 
Supreme Electoral Council, Roberto Rivas, whom demanded that 
the Ambassador be expelled from Nicaragua.  Despite Ortega's 
comments, remarks from the broader Nicaraguan society, 
including the local leaders of the Catholic Church, showed a 
sympathetic understanding of the decision. End Summary. 
 
------------------------------------------- 
Ortega Responds - More Threats of Expulsion 
------------------------------------------- 
 
¶2.   (SBU) At the sixth summit of Petrocaribe leaders on June 
13, President Daniel Ortega used the forum to speak publicly 
against the MCC decision to partially terminate Nicaragua's 
compact assistance. President Ortega labeled the decision a 
flagrant attempt on the part of the USG to try and gain 
political leverage within Nicaragua and diminish the 
sovereignty of the Government of Nicaragua (GON). Claiming 
that the USG and other developed nations have never fully 
lived up to their promises for aid, Ortega likened USG 
assistance to a "carrot and a stick." Through foreign aid, 
Ortega claimed that the USG attempted to enact political 
change within a sovereign nation. The goal of USG aid, he 
continued, was not to alleviate extreme poverty and improve 
infrastructure, but rather to reward or punish its recipient 
government. In his speech, Ortega accused the USG of 
continually providing aid to three corrupt neo-liberal 
regimes prior to his Sandinista National Liberation Front 
(FSLN) party regaining power. He said the MCC made its 
decision simply because of "the victory of the FSLN in 
November's municipal elections." Ortega said the USG was 
essentially meddling in internal politics and acted as an 
interventionist power in Nicaragua. 
 
¶3.   (SBU) President Ortega concluded his remarks at the 
forum stating that the United States was, and always would 
be, an expansionist power. It is in the USG's nature to seek 
dominance over its neighbors because of its "capitalist 
philosophy." He expressed that he had hoped things would 
change as President Obama entered the Oval Office; however, 
he had since realized that Obama was still the president of 
"an empire, and that empire has its rules." Ortega proceeded 
to refer to Obama as a modern day Reagan and dismissed the 
MCC decision as a product of the USG's capitalist system of 
aid distribution. 
 
¶4.   (SBU) On June 13 Ortega called an FSLN party rally in 
Managua.  In his speech, Ortega accused the Embassy of 
meeting with enemies of the GON, called this a "crime", and 
threatened expulsion on Embassy personnel stating his 
government was "gathering information, and when the time is 
right, we will take the necessary measures." (Note: this is 
not the first time Ortega has threatened expulsion of Embassy 
personnel.  See ref B.)  Some FSLN leaders have made explicit 
calls for the expulsion of the Ambassador and other Embassy 
personnel.  Supreme Electoral Council President Roberto Rivas 
said the Ambassador's June 11 press conference, in which he 
stated fraud was evident in the November municipal elections 
and should be corrected, was "the most absurd, degrading, 
bold, and insolent violation of minimal norms of diplomatic 
behavior."  Rivas said that in any other country such 
behavior would be rewarded with expulsion.  Human Rights 
Ombudsman Omar Cabezas said, "the government can no longer 
 
MANAGUA 00000599  002 OF 003 
 
 
maintain diplomatic relations with people so primitive, 
people in such violation of human rights, because to drop 
(the MCA) is a violation of human rights."  Some FSLN 
leaders, nonetheless, have taken another approach. Supreme 
Court Vice-president Rafael Solis noted that it is more 
important for the GON to overcome its differences with the 
USG rather than make things worse. 
 
---------------------- 
Friends Got Your Back? 
---------------------- 
 
¶5.   (SBU) Ortega has tried to assuage the Nicaraguan people 
by assuring them that Venezuelan aid will pick-up right where 
the MCC left off. In his Petrocaribe speech, Ortega said, "It 
is time for United States policy to change, once and for all; 
it is time for developed nations to follow the Venezuelan 
example, to contribute to development, to contribute to the 
fight against poverty, to win the fight against hunger, to 
win the fight against unemployment, and to contribute without 
conditions." Venezuelan President Hugo Chavez was in 
attendance at that summit and said that Venezuela would stand 
by Nicaragua. Chavez called the MCC decision a crime and 
pledged, "the least we can do for Nicaragua is to modestly 
support some of these programs, so that Nicaragua is not 
without highways and agricultural programs." 
 
¶6.   (SBU) At the June 13 FSLN party rally in Managua, 
President Ortega announced the formation of the Venezuelan 
assistance program "ALBA-Solidaria." The new program would 
consist of grants provided by the Venzuelan-led Alternativa 
Bolivariana para los Pueblos de Nuestra America (ALBA). 
(NOTE: It remains unclear if this ALBA assistance would be in 
the form of grants, loans, or some other kind of assistance.) 
 Ortega said that these funds would be put toward continuing 
projects left behind by the MCC. Ortega introduced the 
program as a way to "confront the blackmail politics of the 
empire." Chavez committed $50 million to Nicaragua through 
the ALBA-Solidaria Fund. 
 
-------------------------------- 
Media and Civil Society Reaction 
-------------------------------- 
 
¶7.   (SBU) Major Nicaraguan media continued to positively 
report on the Ambassador's press conference regarding the MCC 
decision (ref A). "El Nuevo Diario" (center-left national 
daily) mocked the GON's defense and printed a story under the 
headline, "This act was blackmail." The headline referred to 
a statement issued by Vice Foreign Minister Valdrack 
Jaentschke and drew attention to the stubbornness of the FSLN 
in refusing to discuss the November elections because the 
"FSLN government had demonstrated with 'total clarity and 
transparency' the electoral process."  "La Prensa" 
(center-right national daily) ran a story under the headline, 
"They do not believe Chavez can replace the MCC."  The 
article read, "Every one knows that it is a lie that Chavez's 
funds will benefit the people. These funds are to 
finance...and privilege Ortega's supporters and to benefit 
the businessmen related to Ortega's family." 
 
¶8.   (SBU) The media also reported the reaction of 
Nicaragua's leaders of the Catholic Church. Bishop Abelardo 
Mata of Matagalpa said the Ortega administration did not 
think about the people's interests and needs, instead it 
acted with arrogance in not reviewing the results of the last 
electoral process. Bishop Bernardo Hombach of Granada said 
that what was more disappointing than the loss of the MCC 
funds was the reason for the MCC's decision.  "There was 
fraud," Hombach stated, "the Church has said it clearly." 
Bishop Bosco Vivas of Leon lamented the MCC decision and did 
not think that aid should be conditioned. He said, however, 
that Ortega did not respond to the will of the majority and 
as such he is ultimately at fault for the people's loss. 
 
------- 
Comment 
------- 
 
¶9.   (C) As expected, in responding to the MCC decision, 
Ortega blamed the USG for its "inherent political undertones" 
in the distribution of USG foreign assistance.  At the same 
 
MANAGUA 00000599  003 OF 003 
 
 
time he announced his plan to replace the funds lost from the 
MCC with Venezuelan assistance.  His comments on President 
Obama and threats to expel the Ambassador suggest Ortega is 
willing to further distance himself from the USG and 
strengthen his relationship with Hugo Chavez, a move that 
will surely affect the Nicaraguan people for the worse in the 
long-run. 
CALLAHAN