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### Viewing cable 06MANAGUA576, NICARAGUA'S CAFTA ENVIRONMENTAL & LABOR PROJECT

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06MANAGUA576 | 2006-03-14 22:17 | 2011-06-21 08:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Managua

`

    VZCZCXYZ0015
    RR RUEHWEB

    DE RUEHMU #0576/01 0732217
    ZNR UUUUU ZZH (CCY  ADX A473771/MSI6500)
    R 142217Z MAR 06
    FM AMEMBASSY MANAGUA
    TO RUEHC/SECSTATE WASHDC 5586
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
    RUEHDG/AMEMBASSY SANTO DOMINGO 0510
    RUEHC/DEPT OF LABOR WASHINGTON DC

` `

    UNCLAS MANAGUA 000576

    SIPDIS

    SENSITIVE
    SIPDIS

    C O R R E C T E D COPY (SBU ADDED)
    DEPT FOR OES: CAROLE JACKSON & LARRY SPERLING, WHA/PPC:MIKE
    PUCCETTI, DRL/IL:PAT DEL VECCHIO & GABRIELLA RIGG, LABOR
    FOR ILAB:JANE RICHARDS, USAID/LAC/RSD:BARRY
    MACDONALD,USAID/LAC/AA: MICHAEL MAGAN, USAID/LAC/RSD: JOHN
    GARRISON, SAN JOSE FOR HUB: BERNIE LINK, SAN SALVADOR FOR
    USAID: LAWRENCE RUBEY, TEGUCIGALPA FOR USAID: JILL KELLEY,
    SANTO DOMINGO FOR USAID: DUTY GREEN

    E.O. 12958: N/A
    TAGS: EAID ETRD SENV
    SUBJECT: NICARAGUA'S CAFTA ENVIRONMENTAL & LABOR PROJECT
    PROPOSALS

    REF: STATE 26123

    1.(SBU) Per REFTEL, this telegram outlines proposals for three
    environmental and two labor projects in Nicaragua in
    accordance with DR-CAFTA and Mission Performance Plan
    priorities.  These proposals were selected based on
    consultations with the Government of Nicaragua (GON), and
    vetted by the country team.  In addition to adhering to the
    factors for funding approval detailed in the REFTEL, post
    sought projects that would provide concrete environmental
    and/or labor benefits related to broader USG priorities such
    as trade capacity building.  The proposals are placed in rank
    order of mission priority.  Complete project drafts will be
    sent via e-mail to the individuals named in the pass line, as
    well as to WHA/CEN.  The three environmental proposals are
    Institutional Strengthening in Trade and Environmental
    Issues, Market Incentives for Improved Management of Critical
    Biodiversity-rich watersheds, and Cleaner Energy and
    Production to Enhance Competitiveness.  The two labor
    proposals are Workforce Development in a Globalizing Economy
    and Improving Labor-Management Relations.

    ENVIRONMENTAL PROPOSALS
    - - - - - - - - - - - -

    2.(SBU) INSTITUTIONAL STRENGTHENING IN TRADE AND ENVIRONMENTAL
    ISSUES

    ranks highest among the mission's environmental
    proposals.  Its purpose is to strengthen the ability of the
    GON and municipal authorities to enforce existing
    environmental legislation, including reinforcing
    institutional and legal frameworks and the capacity to
    develop, implement, administer and enforce environmental
    laws, regulations, standards and policies.  Currently,
    institutions within the GON have limited human and financial
    resources, or even full legal authority to enforce
    environmental laws.  Existing legal frameworks often lack the
    implementing regulations and procedures, hindering
    implementation.  Technical assistance is required to help the
    GON implement its obligations under the DR-CAFTA
    Environmental Chapter.  Specific elements include training
    and equipping police and prosecutors to assist environmental
    and forestry regulators, as well as establishing effective
    and transparent procedures for dealing with violations of
    environmental laws and regulations.  This project will
    complement the work to be performed by USEPA in country.
    This project addresses the GON,s top two priorities under
    the DR-CAFTA Work Plan, activities for which the GON
    currently lacks the funds to implement.  Potential partners
    are EPA and CCAD.  The estimated cost is $4 million over
    three years.

    ¶3. (SBU) MARKET INCENTIVES FOR IMPROVED MANAGEMENT OF CRITICAL
    BIODIVERSITY-RICH WATERSHEDS

    ranks second among the mission's
    environmental proposals.  Its purpose is to enhance market
    incentives for improved natural resource management and to
    build the capacity for sustainable financial support for
    watersheds of high biodiversity importance.  In addition to
    improving Protected Area and Private Nature Reserve
    Management, this proposal seeks to increase options for
    sustainable income generation.  Specific elements include
    providing technical assistance to significantly increase
    hectares under improved environmental management, sales of
    environmentally friendly goods, and sales of environmentally
    friendly services, particularly those related to sustainable
    tourism.  We also seek to promote "payment for environmental
    services" as a concept for improved management, with similar
    programs currently operating in Costa Rica and Guatemala to
    serve as models.  This activity directly addresses priorities
    established by DR-CAFTA in the ECA Work Plan, which
    highlighted the need for sustainable financing for natural
    resource management.  This project matches several of the
    GON,s CAFTA-ECA priorities.  Furthermore, the activities
    described here represent some of the most visible and valued
    USG investments in Nicaragua and promise substantial public
    diplomacy dividends.  The estimated cost is $5 million over
    two years.  This activity will leverage new private sector
    resources, both cash and in-kind, through the development of
    Global Development Alliances.

    ¶4. (SBU) CLEANER ENERGY AND PRODUCTION TO ENHANCE COMPETITIVENESS

    ranks third among the mission's environmental proposals.  Its
    purpose is to develop incentives for the GON and private
    sector to make investment in cleaner energy and cleaner
    projection technologies.  It will establish flexible
    voluntary mechanisms that provide incentives for public and
    private partnerships that reduce pollution and production
    costs.  This project will assist the GON in untangling its
    economically and politically costly petroleum-based energy
    strategy and institutional arrangements to provide incentives
    for investments in cleaner production technologies and help
    local institutions provide fee-for-service cleaner production
    technical assistance.  As a result of this project,
    Nicaragua,s private sector's environmental performance and
    competitiveness will be increased because of reduced
    pollution and reduced fuel and production costs.  Currently,
    the GON,s energy policy and regulatory system creates
    enormous disincentives for investment in cleaner/renewable
    energy sources.  High start up costs for environmentally
    friendly energy production from sources such as wind, water
    and thermal energy have also discouraged investment in these
    sources despite their abundance here. Additionally, this
    project seeks to promote clean production best practices and
    develop public-private partnerships to facilitate the
    transfer and adoption of cleaner energy and production
    technologies.  The estimated cost of this program is $1
    million over two years.  This activity will leverage new
    private sector resources, both cash and in-kind, through the
    development of Global Development Alliances.  USAID,s
    implementing partners will continue to encourage and work
    with private firms to increase their utilization of clean
    production DCA.  Recent meetings between GON officials
    responsible for energy production and regulation have
    identified renewable energy as a path out of Nicaragua,s
    energy quagmire.

    LABOR PROPOSALS
    - - - - - - - -

    ¶5. (SBU) WORKFORCE DEVELOPMENT IN A GLOBALIZING ECONOMY

    ranks
    highest among the mission's labor proposals.  Its purpose is
    to open opportunities for Nicaraguan workers that will enable
    them to develop the skills necessary to work productively in
    a globalized economy and provide policy makers, investors,
    and representatives of organized labor timely and accurate
    information about trends and developments in the Nicaraguan
    labor market.  Activities will be conducted for labor policy
    reform, labor market surveys and workforce training.  This
    project will focus on providing specific training for workers
    interested in entering the emerging labor markets in
    Nicaragua.  This initiative will build on USAID success in
    training workers for jobs in the agricultural processing of
    export crops by targeting other emerging labor markets such
    as tourism services, call centers, new apparel lines, and
    value added agricultural processing.  English language
    training will be a key component.

    ¶6. (SBU) As a first phase, the project will develop the GON's
    capacity to produce reliable and timely information about
    labor market trends and employment rates.  Assistance will
    provide expertise and training for the staff of the national
    statistics institutions to prepare labor market reports
    consistent with internationally recognized best practices.
    This information will inform the second phase, in which
    workshops, seminars, and courses will be executed to assist
    in re-tooling the workforce to meet the labor demands of
    emerging markets.  Rigid and outdated labor markets prevent
    workers with little or no education from taking advantage of
    new employment opportunities.  If existing working age people
    cannot find work in Nicaragua, more of them will attempt to
    migrate illegally to countries such as the U.S.  This project
    will help investors to expand the job market and help workers
    to fill these new jobs with the required skills.  Information
    generated by this project will also be of practical use to
    U.S. investors looking for opportunities in Nicaragua.  The
    estimated cost is $500,000 over three years.  Sponsored
    activities will provide the mission with opportunities to
    demonstrate USG commitment to workers' rights and employment
    opportunities associated with DR-CAFTA.

    ¶7. (SBU) IMPROVING LABOR-MANAGEMENT RELATIONS ranks second among
    the mission's labor proposals.  Its purpose is to expand and
    extend the Central American "Cumple y Gana" project
    implemented by the Department of Labor through FUNPADEM and
    Abt Associates to include the development of negotiation and
    bargaining skills for labor unions/associations, management,
    and the Ministry of Labor in both the public and private
    sectors and demonstrate how working together will help all
    parties to take full advantage of free trade opportunities.
    The project will pursue legal reforms to the rigid labor
    system, provide labor and industrial relations training,
    disseminate information to stakeholders, strengthen labor
    inspection systems, and strengthen alternative dispute
    resolution and mediation systems.

    ¶8. (SBU) The project also includes strengthening the labor
    inspection system by working with all of the stakeholders.
    Improving labor relations in both the public and private
    sectors will reduce economically and politically costly work
    stoppages.  These events tarnish Nicaragua's image as a good
    place to invest.  They also have the potential of derailing
    government efforts to open the economy by enhancing the
    political capital of anti-trade and anti-U.S. forces in the
    country.  On the other hand, good labor relations with more
    predictable outcomes can send a positive message to potential
    investors and increase jobs and benefits for workers.  The
    estimated cost is $500,000 over two years.  Local
    counterparts have expressed their satisfaction with the
    current project and the need to expand it.  The training and
    other activities in this project will receive positive media
    attention for US efforts to both protect workers' rights and
    help attract new jobs, higher incomes and better working
    conditions.
    TRIVELLI

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