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Viewing cable 06MANAGUA1524, FOREIGN MINISTER CALDERA TO A/S SHANNON: IT IS

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Reference ID Created Released Classification Origin
06MANAGUA1524 2006-07-11 15:30 2011-06-21 08:00 CONFIDENTIAL Embassy Managua
VZCZCXYZ0028
PP RUEHWEB

DE RUEHMU #1524/01 1921530
ZNY CCCCC ZZH
P 111530Z JUL 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC PRIORITY 6949
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0737
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
C O N F I D E N T I A L MANAGUA 001524 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA A/S SHANNON, WHA/CEN 
 
E.O. 12958: DECL: 06/30/2016 
TAGS: EAID ECON EFIN KDEM NU PGOV PINR PREL
SUBJECT: FOREIGN MINISTER CALDERA TO A/S SHANNON:  IT IS 
ALL ABOUT THE ECONOMY 
 
Classified By: Ambassador Paul A. Trivelli. Reasons 1.4 (B,D). 
 
1.  (SBU) SUMMARY: During a June 27 lunch he hosted for A/S 
Shannon, Foreign Minister Norman Caldera predicted that 
Central America would sign a free trade agreement with the 
European Union within the next three years.  Caldera touched 
on the recent free trade agreement between Nicaragua and 
Taiwan, Asian involvement in the region, and a host of varied 
economic issues.  Caldera also commented on relations among 
the Central American nations and progress on regional 
integration.  END SUMMARY. 
 
Taiwan:  The Asian Tiger in Central America 
- - - - - - - - - - - - - - - - - - - - - - 
 
2.  (SBU)  Foreign Minister Norman Caldera told A/S Shannon 
June 27 that Nicaragua had just signed a free 
trade agreement with Taiwan.  He emphasized that Nicaragua 
must maintain a balance between China and Taiwan in case of 
eventual reunification.  For the near future, he does not 
believe China will exert much influence in Nicaragua.  He 
mentioned meeting with Chinese officials in Mexico to discuss 
Chinese interest in augmenting their diplomatic presence in 
the region, but reported that there had been no follow-up. 
Caldera confirmed that Central America may try to join APEC 
as a region. 
 
3.  (C) Shannon said China does not threaten U.S. interests 
in the region, but it competes with Japan for Latin American 
resources.  He reported that during his recent trip to Japan, 
the Japanese expressed interest in establishing democracy 
programs in the region.  Shannon suggested that such programs 
would usefully differentiate Japanese regional involvement 
from that of China.  Shannon commented on the need to get 
South Korea involved in similar programs. 
 
4.  (SBU) Caldera affirmed that Taiwan and Japan are the most 
active Asian nations in Nicaragua.  Nicaragua had considered 
a free trade agreement with Thailand, but rejected the notion 
because "cheap rice" from Thailand would ruin the local rice 
market. 
 
Nicaragua the New Panama? 
- - - - - - - - - - - - - 
 
4.  (C) Caldera discussed Chinese involvement and interest in 
building a canal in Nicaragua.  He claimed the idea did not 
make economic sense since the Panama Canal is not as 
profitable as many believe and too little money would be 
earned on such a venture to cover the huge investment costs. 
(COMMENT:  A canal in Nicaragua is a key item for the FSLN, 
who see it as a way to boost tourism, ties with mainland 
China, and Nicaragua's standing in Central America.  END 
COMMENT) 
 
Regional Integration, Mexico 
- - - - - - - - - - - - - - - 
 
5.  (SBU)  Caldera said the pace of Central American 
integration is lagging because of issues with Costa Rica and 
Panama.   He hoped to see a change in Mexico's interaction 
with Central America; immigration remains a contentious 
Centam-Mexico issue.  Caldera asked Shannon about the U.S. 
relationship with Mexico given the election's uncertain 
results.  Shannon said the U.S. had a close relationship with 
Mexico that would continue no matter who was elected. 
 
Free Trade Agreement with European Union 
- - - - - - - - - - - - - - - - - - - - - 
 
6.  (SBU) Caldera speculated that Central America could 
finalize a free trade agreement with the European Union in 
the next three years.  He stressed that the agreement must be 
negotiated between the European Union and Central America as 
a whole, not between individual countries.  For that to 
happen, Central America must formalize its own customs union 
and common external tariff regime.  He added that a few 
contentious issues remain to be resolved, such as the EU's 
proposed tariff increase on Central American bananas. 
 
7.  (U) Participants: 
 
Nicaragua: 
Foreign Minister Norman Caldera 
Ariel Granera 
Frank Arana 
 
Leonardo Sommariba 
Ambassador Stadhagen 
Mauricio Herodocia 
 
U.S.: 
Assistant Secretary Tom Shannon 
Senior Advisor for Public Diplomacy Maria Tamburri 
Ambassador Paul Trivelli 
DCM Peter Brennan 
Polcouns Victoria Alvarado 
Poloff Nicole Chulick (notetaker) 
 
This cable was cleared by A/S Shannon. 
TRIVELLI