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### Viewing cable 07MANAGUA2223, SUBJECT: NICARAGUA: AN ECONOMIC PERSPECTIVE ON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07MANAGUA2223 | 2007-09-28 23:33 | 2011-06-01 08:00 | CONFIDENTIAL | Embassy Managua

Appears in these articles:
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758456.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758467.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758468.aspx
http://www.nacion.com/2011-05-30/Mundo/NotasSecundarias/Mundo2758464.aspx
http://www.confidencial.com.ni/articulo/4103/la-embusa-y-el-gabinete-de-ortega
http://www.confidencial.com.ni/articulo/4104/d-rsquo-escoto-en-onu-ldquo-un-desafio-de-ortega-a-ee-uu-rdquo
http://www.confidencial.com.ni/articulo/4102/estrada-y-la-ldquo-doble-cara-rdquo-ante-ee-uu
http://www.confidencial.com.ni/articulo/3966/la-ldquo-injerencia-rdquo-de-ee-uu-en-el-2006
http://www.nacion.com/2011-05-23/Mundo/Relacionados/Mundo2758764.aspx
http://www.nacion.com/2011-05-23/Mundo/NotaPrincipal/Mundo2758753.aspx
http://www.confidencial.com.ni/articulo/4041/millones-de-dolares-sin-control-y-a-discrecion
http://www.confidencial.com.ni/articulo/4040/la-ldquo-injerencia-rdquo-de-venezuela-en-2006
http://www.confidencial.com.ni/articulo/4047/rodrigo-barreto-enviado-de-ldquo-vacaciones-rdquo
http://www.nacion.com/2011-05-16/Mundo/NotasSecundarias/Mundo2757239.aspx
http://www.nacion.com/2011-05-16/Mundo/NotaPrincipal/Mundo2746658.aspx
http://www.nacion.com/2011-05-16/Mundo/Relacionados/Mundo2757244.aspx
http://www.nacion.com/2011-05-16/Mundo/Relacionados/Mundo2746673.aspx
http://www.confidencial.com.ni/articulo/3991/dra-yadira-centeno-desmiente-cable-diplomatico-eeuu
http://www.confidencial.com.ni/articulo/3968/pellas-pronostico-a-eeuu-victoria-de-ortega-en-2006
http://www.confidencial.com.ni/articulo/3967/barreto-era-ldquo-fuente-confiable-rdquo-para-eeuu

`

    VZCZCXRO1602
    RR RUEHLMC
    DE RUEHMU #2223/01 2712333
    ZNY CCCCC ZZH
    R 282333Z SEP 07
    FM AMEMBASSY MANAGUA
    TO RUEHC/SECSTATE WASHDC 1378
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
    RUEHSW/AMEMBASSY BERN 0044
    RUEHMD/AMEMBASSY MADRID 0469
    RUEHOT/AMEMBASSY OTTAWA 0235
    RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
    RHEBAAA/DEPT OF ENERGY WASHINGTON DC
    RUEATRS/DEPT OF TREASURY WASHINGTON DC
    RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
    RHEHNSC/NSC WASHINGTON DC

` `

    C O N F I D E N T I A L SECTION 01 OF 06 MANAGUA 002223

    SIPDIS

    SIPDIS

    STATE PLEASE PASS TO USTR
    STATE FOR WHA/CEN, WHA/EPSC, EEB/TPP, EEB/IFD
    TREASURY FOR SARA GRAY
    USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN
    3134/ITA/USFCS/OIO/WH/MKESHISHIAN/BARTHUR

    E.O. 12958: DECL: 09/27/2017
    TAGS: ECON ETRD EINV NU
    SUBJECT: SUBJECT: NICARAGUA: AN ECONOMIC PERSPECTIVE ON
    EIGHT MONTHS OF ORTEGA RHETORIC

    Classified By: Ambassador Paul Trivelli, Reason: E.O. 12958 1.4 (d)

    ¶1. (C) Summary: Eight months into Daniel Ortega's term as
    president, his socialist rhetoric continues to worry
    potential and current investors in Nicaragua.  Beginning on
    the day of his inauguration, Ortega launched into
    anti-capitalist, anti-neoliberal, and increasingly
    anti-American rhetoric, implying that what had transpired in
    Nicaragua during the past sixteen years was all wrong.  A
    consistent economic theme has been the need for Nicaragua to
    reduce its dependency on the United States and international
    financial institutions.  Ortega believes that this theme
    provides him with the political cover he needs to forge
    closer economic relations with the likes of Venezuela, Cuba,
    Iran, Libya, and North Korea.  When it comes to private
    sector investment, Ortega seems to be of two minds.  He
    acknowledges the fundamental role that the private sector
    plays in creating jobs, generating growth, and improving
    social well-being, but in practice never really accepts that
    this is true.  One of Ortega's most palatable messages is
    that capital investment in Nicaragua needs to incorporate
    some social component.  End summary.

    ¶2. (C) Eight months into Daniel Ortega's term as President,
    his socialist rhetoric continues to worry current and
    potential investors in Nicaragua.  Ortega rarely misses an
    opportunity to denounce "imperialism" and "savage
    capitalism," although his tone and presentation often varies
    with his audience.  A review of Ortega's public discourse
    since his inauguration on January 10, 2007, reveals a
    worldview adorned with disdain for what he terms "global
    capitalism" and its imperialist champion, the United States.
    Ortega borrows heavily from Marx to explain the success of
    capitalism, which he views as being fundamentally opposed to
    the welfare of poor people throughout the world.  Recently,
    he has been focusing more on historical inequities, drawing a
    causal relationship between the wealth of developed countries
    and the poverty of underdeveloped countries.

    ¶3. (C) Ortega has avoided criticizing specific individuals or
    businesses in Nicaragua, with a few exceptions in the energy
    sector.  He has forcefully criticized electricity distributor
    Union Fenosa (Spain), liquid fuels importer and distributor
    Glencore (Switzerland), geothermal power producer Polaris
    (Canada), power producer Geosa (Nicaragua), and through his
    tax and customs directors general and other party stalwarts,
    refiner and liquid fuels distributor Esso (United States).
    Every company that Ortega has criticized publicly has become
    the object of state-led legal and tax challenges.

    Out of the Starting Gate
    ------------------------

    ¶4. (C) Beginning on the day of his inauguration attended by
    Venezuelan and Bolivian Presidents Hugo Chavez and Evo
    Morales, Ortega and his Communications Coordinator (wife
    Rosario Murillo) launched a propaganda campaign to
    reestablish socialist values in Nicaragua.  The campaign
    contrasts greatly with his election campaign, also managed by
    Murillo, both in tone and content.  Ortega's election
    campaign was little more than the repeated play of a
    Nicaraguan version of John Lennon's "Give Peace a Chance" as
    a silent candidate waived to the masses from a slowly driven
    vehicle.  Ortega now makes great use of the bully pulpit to
    constantly assert that Nicaragua's "neoliberal" experiment in
    "global capitalism" the last sixteen years has failed.

    ¶5. (C) The day after his inauguration, Ortega signed onto the
    Bolivarian Alternative for the Americas (ALBA), since
    heralded as the centerpiece of Nicaragua's foreign economic
    relations and the alternative to the Central American Free
    Trade Agreement (CAFTA) and a Free Trade Agreement of the
    Americas (FTAA).  Ortega has consistently trumpeted economic
    relations with ALBA countries (Venezuela, Cuba, and Bolivia)
    at the expense of his relations with Central American
    countries and as a substitute to economic relations with the
    United States.  His socialist fire only dimmed for his first

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    press conference in January, to calm nervous investors.  By
    May, his anti-capitalist, anti-neoliberal, and anti-American
    rhetoric picked up another head of steam.  This culminated in
    20-minute inflammatory speech at the United Nations on
    September 25 2007, in which Ortega railed against the United
    States as the imperial power (septel).

    America Is Bad
    --------------

    ¶6. (C) An underlying theme for Ortega's speeches has been the
    need for Nicaragua to reduce its political and economic
    dependence on the United States, developed country donors,
    and international financial institutions, which he believes
    "are controlled by the United States."  He argues that global
    capitalism has enslaved the world by helping the rich get
    richer at the expense of the poor, and exploiting natural
    resources and polluting the world's environment.  Further, he
    argues that international financial institutions are the
    tools of "yankee imperialism," that neoliberalism is a modern
    version of imperialism, and that privatization and
    neoliberalism in Nicaragua have failed to lift Nicaragua out
    of poverty.

    ¶7. (C) A corollary to these arguments is that CAFTA should
    never have been negotiated because of inherent and
    insurmountable economic asymmetries between poor, small
    Central American countries and the United States.  Ortega
    asserts that if such a trade agreement had to be negotiated,
    then Central American countries should have negotiated it as
    a single, unified entity to strike a more balanced deal.
    Because this did not happen, CAFTA surely favors the United
    States.  Ortega further asserts that by definition small
    agricultural producers cannot compete with large U.S.
    producers who, he laments, receive state subsidies.
    Therefore, he concludes, CAFTA is inherently unfair.

    ¶8. (C) Ortega often deploys this logic as political
    justification for forging closer economic relations with
    Venezuela, Cuba, Bolivia, Iran, Libya, and even North Korea.
    For more political cover, he will elaborate on the historical
    and lasting evil of "imperialism," "global capitalism," and
    "the empire," all euphemisms for the United States.  (Note:
    In his speech before the United Nations on September 25 2007,
    Ortega clearly tied the United States to these euphemisms).
    Ortega compares these evils to honest and well-meaning
    foreign assistance and commerce from and with ALBA countries
    and Iran.

    ¶9. (C) Ortega's anti-American rhetoric often varies with the
    occasion.  He never used the word "empire," for example, to
    refer to the United States in his public meeting with World
    Bank Vice President Pamela Cox on February 1.  However,
    during his July 21 address to the Sao Paulo Forum, a
    conference composed of leftist and nationalist political
    parties and social movements in Latin America and the
    Caribbean, Ortega bandied the term an astounding twenty-one
    times.  Left to his own resources, Ortega will almost always
    weave in a few minutes of anti-American epithets into one of
    his patented 100-minute speeches to loyal followers.  The
    rhetoric flows especially freely during visits from
    Venezuelan President Hugo Chavez.

    Capitalism Is Bad; Some Investment Might Be Good
    --------------------------------------------- ---

    ¶10. (C) Ortega seems to be of two minds when it comes to
    capital investment.  He claims to welcome capital investment
    on the one hand, but on the other decries the evils of
    "global capitalism."  He asserts that privatization has
    failed in Nicaragua, that "neoliberalism" has corrupted
    government to serve selfish interests "of those with family
    names we all know," but claims to be open to dialogue with
    business.  He accepts the need to negotiate a new Poverty
    Reduction Growth Facility with the IMF, but issues a blanket
    condemnation of all international financial institutions as
    being "the mere tools of capitalism."  He acknowledges the

    MANAGUA 00002223  003 OF 006

    fundamental role that capital investment plays in creating
    jobs, generating growth, and improving social wellbeing, but
    never really accepts the notion that capitalism works.  He
    equates "global capitalism" with imperialism, vilifies the
    United States as chief imperialist, and equates "original
    capital" to original sin -) since, according to his
    accounting of history, "original capital" was derived from
    slavery and colonialism.

    ¶11. (C) Ortega repeatedly quotes Pope John Paul II to draw a
    distinction between "savage capitalism" and presumably
    "not-so-savage capitalism."  This gives Ortega the pretext to
    support some forms of capital investment, e.g., that which
    "serves the interests of the people," especially the poor.
    Clearly, Ortega feels better about an investment if there is
    some form of social contribution included.  He has repeatedly
    referred to Cone Denim's $100 million investment in a textile
    manufacturing plant near Managua as an example of the kind of
    long-term, "non-maquila" investment that he welcomes.  Cone
    Denim (United States) makes some social contributions.
    However, Cone Denim is a free trade zone investment like all
    other Nicaraguan "maquilas," and will, in fact, employ fewer
    people than most maquilas.  The difference is that Cone Denim
    will manufacture cloth rather than finished goods.

    The A to (almost) Z of Ortega's Rhetoric
    ----------------------------------------

    ¶12. (SBU) Below are unofficial translations of statements
    made by Ortega during his first eight months in office.  They
    identify the range of his economic thinking, and not just the
    anti-American quality of his rhetoric.

    a. "Every time that I speak about this issue with the same
    representatives from the IMF, the World Bank, the European
    Union, and representatives of the North American Government,
    I say to them, 'What are the results of these policies that
    His Holiness the Pope John Paul II called savage capitalism?'
     That is what His Holiness called it!  I ask them, and I say
    to those who continue insisting that the neoliberal model is
    the only way that our people can progress, I say to them, 'I
    am going to put it to the test here in Nicaragua!'"
    (Presidential Inauguration, January 10, 2007).

    b. "This treaty with the United States, CAFTA, that was
    approved a few years and months ago  ...we said that, in all
    clarity, this treaty was not thought out, not considered as
    to the condition of a country like the United States with
    great and enormous resources and economic subsidies versus
    the economies of our countries.  They had to understand this
    (inequity) to negotiate.  Finally they signed a treaty that
    brings some benefits to some sectors, but not to others.  We
    have talked with North American representatives and told them
    about the problem, that they have not taken into account
    economic asymmetry with these countries.  How can a small
    Nicaraguan producer compete with a North American producer
    who is subsidized?"  (Presidential Inauguration, January 10,
    2007).

    c. "There does not exist, in these times, a situation that
    signifies that economic activity in our country is paralyzed
    or is decreasing.  To the contrary, we feel that economic
    activity is being maintained ...the year is beginning.  There
    have been the normal movements for the start of a year and a
    dialogue has continued with the national businesses through
    INCAE (the Central American Institute for Business
    Administration).  Vice President Jaime Morales is in charge
    of working with them, that already is the commitment.... It
    was a grave error to have negotiated CAFTA in bilateral form;
    it put us in a weak situation." (Press Conference, January
    22, 2007)

    d. "This is a new government.  We have a conception, a
    philosophy that is very different from the governments that
    preceded us.  We are interested in developing, establishing,
    consolidating good relationships with (international)
    organizations, with the (World) Bank as well as with the

    MANAGUA 00002223  004 OF 006

    (International Monetary) Fund." (Meeting with World Bank Vice
    President Pamela Cox, February 1, 2007).

    e. "We are meeting many businessmen, many investors,
    capitalists who are ready, and in addition to their
    (financial) investments, to make social investments.  But
    there are others in the minority, in the case of Nicaragua,
    who bring an entirely selfish attitude, who want to
    accumulate more riches each day and to whom it does not
    matter if the people are in poverty, in misery."  Sixteen
    years of neoliberalism has passed in Nicaragua.  And what do
    we have?  We have economic growth.  Of course, we have
    economic growth, but with whom does this wealth reside?
    Where does wealth stop?" Celebration of the 29th Anniversary
    of the Sandinista Insurrection in Monimbo February 24, 2007)

    f. "What is the root of the problem (speaking of power
    outages throughout the country)?  It is in the deed of having
    privatized.  This was the original sin.  Who privatized?  The
    democrats, those who say they are democrats.  They privatized
    the power plants, giving concessions (to the electricity
    distributor).  Thank God they did not sell it, because all
    this involves corruption, selling (the power plants) for
    pennies -- but what they did was to rent it."  (Celebration
    of the 29th Anniversary of the Sandinista Insurrection in
    Monimbo February 24, 2007)

    g. "We will have a world filled with justice, where all
    families live in dignity, where hearts are filled with the
    feeling of love, and where we will have buried forever
    feelings of hatred, of selfishness, of individualism, of
    'savage capitalism' that His Holiness Pope John Paul II
    called by name ) 'savage capitalism'....  We are not
    fighting with the Yankees.  They are the ones who have been
    fighting with the world.  This is the history of the
    imperialists." (Ortega with Hugo Chavez in Leon, March 11,
    2007)

    h. "We are against polluting the environment, a result that
    must be viewed in the (context of) policies of consumption,
    imposed by the capitalist model and that will not stop for
    anything." (Ortega with members of his Cabinet, April 3, 2007)

    i. "At the height of neoliberalism, with all the support that
    is possible in terms of policies and capitalist material
    wellbeing, capitalist countries, with all the support that
    the Government of the United States had offered to previous
    governments.... How much would it mean for the United States
    to donate (a power plant) to Nicaragua?  They did not donate
    it ... It is neoliberal political nature to forget about the
    people, about the poor, and simply do things every day to
    become richer." (Inauguration of the Venezuelan Hugo Chavez
    Power Plant at Las Brisas, Managua, April 17, 2007)

    j. "During these sixteen years in which neoliberalism was
    imposed on Nicaragua, what was considered the most important
    was to maintain structural reforms -- the privatizations,
    privatizing education, health -- all at a cost of greater
    poverty for the Nicaraguan people."   (Meeting with a Russian
    Delegation, April 25, 2007)

    k. "Never as today, has the world been so divided between the
    minority that possess wealth and the immense majority
    (living) in poverty.  This has occurred at both the national
    and international level.  Here in Nicaragua, where the scheme
    of world capitalist domination is replicated by the 'land
    imperialists,' as our General Sandino called them, a few with
    wealth and the majority in poverty....  Who is the
    imperialist bourgeois?  The one who is of 'savage
    capitalism,' the imperialist who tries to break, to conquer
    our people."  (Labor Day, May 1, 2007)

    l. "We have to liberate ourselves from this dependency on
    external resources because of all the problems they bring,
    the conditions that they put on us." (Cabinet Meeting on the
    National Infrastructure Plan, May 3, 2007)

    MANAGUA 00002223  005 OF 006

    m. "Neoliberalism not only has meant denying education,
    health, and work to the people, denying financing to the
    farmers, but also it has meant the destruction of the
    environment, of the forests....  This is where it is clear
    that what the world is questioning is the model.  There has
    to be questioning, from all sides, of the model that savage
    capitalism has imposed on the world and which is leading to
    the destruction of the environment."  Cabinet meeting on the
    National Environment Plan, May 8, 2007)

    n. "The greatest acts of violence, of barbarism, have been
    committed by rich, developed countries.  Violent crimes of
    all kinds -- not for hunger, not for poverty, not for
    unemployment.  Simply put, what has provoked this kind of
    situation has been the deformity, the destruction of the
    human spirit by savage capitalism." (Appointment of Cardenal
    Obando y Bravo as Chair of the Reconciliation Commission, May
    9, 2007)

    o. "In our attempt to generate quick employment, we can be
    killing ourselves.  This is the great problem: as we say,
    bread for today, hunger for tomorrow.  We cannot run that
    risk...  We want investment with a sense of respect, to the
    workers and to the environment -- an investment that is
    accompanied with social sense."  (Institute of Social
    Security Presentation, May 22, 2007)

    p. "Our country, throughout its history, has suffered wars
    imposed by the politics of imperial North America....  This
    is what permits us to break with unipolar politics to
    establish a new equilibrium in the world, where we transform
    in a profound way the current world order, as much in the
    areas of economics and commerce between counties as in the
    area of law.  What we will really achieve is to democratize
    relations between people, between nations, by putting an end
    to the dictatorship of the global capitalism of the empire.
    And then we can ensure a world of peace, of justice, of
    liberty....  And in the dialogue that we hold with the United
    States, we have been clear to demonstrate our position
    against imperialist policies, against the dictatorship of
    global capitalism...." (Greeting Iranian President
    Ahmadinejad, June 10, 2007)

    q. "This is the greatest battle that escapes human history --
    the concept that development policy has been in the hands of
    global capitalism which sets the norms, imposes its economic
    policy through blood and fire, and for which certain periods
    and eras a conquered Africa, Asia, and American continent
    submitted to colonization, responding to a development model
    that was determined in the European metropolis, simply trying
    to grow, but in these moments, the world population,
    technological development, and pollution that was generated
    in the form of epic exploitation, was brutal.  It turned into
    an economic policy that practiced systematic genocide in
    order to steal natural resources."  (Closing Remarks to the
    Natural Resources and Environment Conference of Central
    American Ministers, June 18, 2007)

    r. "These gentlemen that today are the owners of the world
    economy, who impose upon us schemes such as neoliberalism,
    who wish to obligate us to accept the conditions of the
    International Monetary Fund, they accumulated their wealth in
    the most abject manner, the most brutal, shameful manner that
    human history could have ever known." (Celebration of the
    71st Anniversary of the Birth of Carlos Fonseca, founder of
    the FSLN, June 23, 2007)

    s. "The recent meeting of the Group of Seven plus one, in
    Europe, once again provides evidence of the inflexibility of
    those who continue defending an exhausted model ) a
    developmentalist, consumerist (one) that goes against the
    most vital interests of humanity.  And the opposition, the
    voice that raises concern, from countries belonging to the
    same exhausted global capitalist scheme, (is against) global
    capitalism that has imposed its rules throughout the years,
    that has established norms, and that talks of democracy
    without practicing democracy."  (Inauguration of the Regional

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    Conference on UN Coherence, June 25, 2007)

    t. "I think that the moment has arrived that, above all the
    countries of global capitalism, the empire (is the one who)
    controls the (International Monetary) Fund.  Really, the poor
    (workers at) the Fund are no more than an instrument, because
    we say here that the Fund is evil.  No.  What is evil is
    world economic order imposed by the countries of global
    capitalism, of the empire, which accumulate their capital at
    the cost of enslaving Africans for more than 300 years (and)
    exterminating indigenous people in Latin America.  This is
    the origin of their capital."  (Ortega's arrival at the
    airport on a state visit to Mexico, June 27, 2007)

    u. "In the sixteen years that they governed quietly, the
    model they imposed was global capitalism, the imperialist
    model.  What were the results?  They said (that) the country
    achieved take-off because a few became richer.  Because of
    this, they achieved take-off.  Those that became richer took
    off, but the immense majority of the people did not have any
    take off.  What they had was privatization of health care,
    education, the democratization of hunger, of unemployment.
    This is what they had.  This is the reason why we have
    (electricity) rationing )- our inheritance from
    neoliberalism.  To put it into simple language, the
    inheritance of 'savage capitalism.'  This is our
    inheritance." (Inauguration of the Zero Hunger Initiative in
    Estelli, July 7, 2007)

    v. "This is what the Europeans did.  All the Europeans who
    today present themselves as saviors of the world, this is
    what they did.  The primary capital for capitalism has its
    origins in these forms of exploitation, of theft, of plunder,
    of corruption, that they established throughout the African
    and American continent, and also in Asia.  They were
    accumulating this wealth which they later converted into
    power." (Closing of the 15th Congress of the Nicaraguan
    Student Union, July 18, 2007)

    w. "The situation is very simple.  Those that accumulated
    this capital, this wealth, with the plunder, the
    extermination, concentration camps, more than 300 years of
    slavery of the African population, they are very united, and
    they are searching a way to keep all of us divided, in order
    to dominate us, to better oppress us.  They practice this
    policy throughout the world: to divide people, nations, (and)
    governments.  And, each time governments make an effort to
    become closer, listening to the will of the people, the
    threats come with sanctions and everything that we already
    know.  But the world lives in a new time.  True that global
    capitalism, headed by the yankee empire, has enormous
    strength....  Global capitalism threatens destruction, not of
    the small people because it has already destroyed them, but
    rather of medium and large producers...." (Celebration of the
    28th Anniversary of the Sandinista Revolution, July 19, 2007)
    TRIVELLI

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