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RR RUEHWEB

DE RUEHMU #0753/01 2151517
ZNR UUUUU ZZH
R 031517Z AUG 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 4393
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUMIAAA/CDR USSOUTHCOM MIAMI FL

UNCLAS MANAGUA 000753 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN, EB/IFD/OIA, L/CID 
STATE FOR WHA/EPSC 
STATE PLEASE PASS TO USTR 
DEPT FOR USAID 
 
E.O. 12958: N/A 
TAGS: ECON ETRD USTR KIDE NU
SUBJECT: NICARAGUA: HONDURAN CRISIS HURTING NICARAGUAN ECONOMY
 
SUMMARY 
-------- 

¶1. (SBU) The Honduran crisis has adversely affected 
Nicaragua's economy during the last two weeks.  Private 
industry representatives complain that closures and/or delays 
at major Nicaraguan-Honduran border crossings have resulted 
in a loss of nearly $3 million per day in exports, and have 
delayed the arrival of their imports.  Several companies are 
looking for alternate transportation routes through Costa 
Rica, or through other border crossings with Honduras to move 
their goods.  Industry blames President Daniel Ortega for 
these economic woes because he has allowed Honduran President 
Manuel Zelaya to use Nicaragua as a base to heighten tensions 
in the Honduran crisis.  The Government of Nicaragua (GON) 
has responded by taking some measures to alleviate obstacles 
to shipping goods to their markets, but the private sector 
worries that the economy will suffer more as long as Zelaya 
remains intermittently camped near the Honduran border.  End 
Summary. 
 
NICARAGUAN ECONOMY HURTING 
-------------------------- 

¶2. (U) The Honduran crisis has adversely affected Nicaragua's 
exports, imports, and tourism industry during the last two 
weeks.  Because Nicaragua lacks a deep-water port on its 
Atlantic Coast, Honduras is one of Nicaragua's primary 
shipping routes for trade with the United States and Europe. 
Industry representatives complain that President Zelaya's 
attempts to enter Honduras at the Las Manos border crossing 
have either stopped or delayed the transport of their goods 
through this critical transit point.  The Honduran crisis has 
also slowed the flow of traffic at the other primary border 
crossings through which cargo is transported, El Espino and 
Guasaule, because of curfews and tighter security checks 
imposed by Honduran customs and border officials.  Many 
trucks have waited at Las Manos, El Espino, and Guasaule for 
long periods of time to enter Honduras, including those with 
perishable goods such as beans and milk-based products.  On 
July 27, local transport companies reported that there were 
approximately 200 trucks stopped at Las Manos waiting to 
enter Honduras.  Business associations such as the Nicaraguan 
Chamber of Commerce (CACONIC) and Federation of Nicaraguan 
Business Associations (COSEP) estimate that the Honduran 
crisis has resulted in a loss of nearly $3 million per day in 
exports.  These losses include additional transportation and 
insurance costs, payment of salaries, and damaged goods, 
e.g., spoiled produce. 
 
¶3. (SBU) Nicaraguan imports have also been adversely affected 
as businesses wait for new supplies.  For example, the 
general manager of the Burger King franchise in Nicaragua 
told us that his restaurants could serve only chicken 
products between July 27-29 because he had to wait to receive 
his container of processed beef that had been shipped through 
Honduras.  He explained that Burger King's Nicaragua sales 
over a typical three day period average $22,500.  However, 
sales dropped by 70 percent during the July 27-29 period 
because his restaurants could not sell hamburgers.  He added 
that his processed beef shipment is expected to arrive on 
August 3, but he is worried that it might suffer more delays. 
 
 
¶4. (U) Mario Salinas, President of the GON's Institute of 
Tourism, (INTUR), expressed concern that the Honduran crisis 
will affect 60 percent of the tourists who visit Nicaragua 
come from Honduras and El Salvador.  He opined that the 
Honduran crisis not only adversely affects the Nicaraguan 
economy, but it also gives the entire region a bad image. 
Tourism-related businesses report that they have canceled 
organized tours to Nicaragua because of their customers' 
security concerns.  Tourism representatives said that their 
sales have dropped by 60 percent since the Honduran crisis 
started on June 28.  The months of June, July, and August 
normally attract a large number of tourists because of the 
holidays and festivities that occur in Nicaragua and the 
region during this time period. 
 
LOOKING FOR NEW TRANSIT ROUTES 
------------------------------ 

¶5. (SBU) Ernesto Porta, President of CACONIC, told us that most Nicaraguan companies that export to the United States and Europe have decided to transport their products through Costa Rica. This change has increased their inland freight costs by $300 per container. Nicaraguan companies that export to El Salvador, Guatemala, and Mexico are now transporting their goods through El Espino and Guasaule. The trucks, however, are only allowed to enter Honduras in the morning because of the curfew imposed by Honduran authorities. 
 
INDUSTRY BLAMES ORTEGA 
---------------------- 

¶6. (U) Business associations such as CACONIC and COSEP blame 
President Ortega for the private sector's recent economic 
woes.  They argue that the Honduran crisis is unfairly 
punishing the economy and President Zelaya's actions in 
Nicaragua should not be allowed to negatively impact 
Nicaraguan commercial interests.  They have urged the GON to 
take measures to protect the flow of goods and people into 
and out of Nicaragua.  According to COSEP, 46 percent of 
Nicaragua's exports transit Honduras.  Fifty-five percent of 
those exports that transit Honduras pass through Las Manos 
and El Espino.  The Nicaraguan National Chamber of Tourism 
reported that Nicaragua normally receives about 20,000 
tourists from the United States and Europe in July and 
August, but Nicaragua's involvement in the Honduran crisis 
has caused many of these potential visitors to look for other 
destinations. 
 
¶7. (U) In response to the private sector's concerns, the GON 
has allowed cargo trucks that were destined to transit Las 
Manos to pass through other border crossings.  The GON is 
also working to improve customs clearance facilities at Port 
El Rama in the South Atlantic Autonomous Region (RAAS).  The 
use of this port would help companies transport their goods 
to Port Cortes in Honduras and eventually to the U.S. and 
Europe, decreasing their transportation costs by $800. 
Industry experts assert, however, that the use of Port El 
Rama is not a viable option because the port normally handles 
only one cargo ship per week that transports up to 30 
containers.  They noted that Nicaragua's free trade zone 
alone exports 50-60 containers per week. 
 
COMMENT 
------- 

¶8. (SBU) The private sector is concerned that as long as 
Ortega allows Zelaya to use Nicaragua as a base of operations 
to heighten tensions in the Honduran crisis, the economy will 
suffer.  Industry representatives will continue to call on 
Ortega to put an end to Zelaya's actions, which are 
negatively impacting Nicaragua.  Unfortunately, those calls 
will likely fall on deaf ears.  End Comment. 
CALLAHAN