Archive for June, 2011

NICARAGUA: AMBASSADOR MEETS NEW MINISTER OF ENERGY AND MINES

Wednesday, June 1st, 2011
ID
07MANAGUA788
SUBJECT
NICARAGUA: AMBASSADOR MEETS NEW MINISTER OF ENERGY
DATE
2007-03-23 21:06:00
CLASSIFICATION
UNCLASSIFIED//FOR OFFICIAL USE ONLY
ORIGIN
Embassy Managua
TEXT
UNCLAS MANAGUA 000788

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, EB/ESC

E.O. 12958: N/A
TAGS: ENRG EPET EMIN TBIO SENV EINV PINR VE NU
SUBJECT: NICARAGUA: AMBASSADOR MEETS NEW MINISTER OF ENERGY AND MINES

REF: A. MANAGUA 0640

¶B. MANAGUA 0196
¶C. 06 MANAGUA 2384
¶D. MANAGUA 0781

¶1. (SBU) Summary. The Ambassador called on the new Minister of Energy and Mines Emilio de Jesus Rappaccioli Baltodano on February 14 to introduce himself and discuss energy issues in Nicaragua. Rappaccioli summarized recent changes to energy sector governance, including the creation of the Ministry of Energy and Mines. He told the Ambassador that his primary focus will be to increase access to electricity for the poor, especially in rural areas, and the provision of power to productive sectors of the economy. In addition, Rappaccioli wants to “rehabilitate” Petronic, so that it can play a more collaborative role with Petroleos de Venezuela (PDVSA). Rappaccioli outlined his views on and Nicaraguan developments in the petroleum sector, biofuels, as well as hydroelectric, geothermal, and wind power. He welcomed the continuation of technical assistance on regulatory matters, but did not expressly commit himself. End Summary.

¶2. (SBU) The Ambassador called on new Minister of Energy and Mines Emilio de Jesus Rappaccioli Baltodano on February 14 to introduce himself and discuss energy issues in Nicaragua. Rappaccioli was joined by his Vice Minister Lorena Lanza Espinosa and Secretary General Donald Espinosa Romero. Earlier in her career, Lanza served in the Ministry of Trade, Industry, and Development in the Directorate of Hydrocarbons. Most recently, Espinosa served as the Director of Hydrocarbons at the Nicaraguan Institute of Energy. Rappaccioli told the Ambassador that his primary focus will be to increase access to electricity for the poor, especially in rural areas, and the provision of power to productive sectors of the economy. Rappaccioli outlined developments in the hydropower, biofuels, and wind generation. He envisions roles for both private and public sector investment in the energy sector. He did not talk much about mining, except to note that existing mines are primarily in private hands. (Note: Canadian-based Triton owns the rights to three small gold mines in Nicaragua, output from which is exported to the United States at 90-95% purity for refining.)

A New Ministry
————–

¶3. (SBU) Minister Rappaccioli opened the meeting with a brief summary of recent changes to energy sector governance. All functions of the National Commission on Energy (CNE) have been folded into the new Ministry of Energy and Mines (MEM), along with many of the functions of the Nicaraguan Energy Institute (INE), including the authority to grant permission for power generation, contract for power distribution, and award exploration and production concessions to mining ventures and oil and gas companies. The Ministry of Trade, Industry, and Development (MIFIC) will transfer its Directorate of Mines to MEM soon. When this occurs, MEM will bear responsibility for all policy as it relates to electricity, renewable energy, hydrocarbons, and investment in the mining and energy sectors. The power to regulate consumer prices on electricity and propane gas will remain with INE.

¶4. (SBU) Rappaccioli confirmed that Empresa Nacional de Electricidad (the state-owned national electric company, ENEL) and Petronic (the state-owned oil and gasoline distributor) will report to MEM. MEM will supervise the contract with Glencore (SWITZERLAND) for the management of Petronic, and the contract with Union Fenosa (Spanish) for the management of Nicaragua’s two power distribution companies, Disnorte and Dissur.

Making Way for Venezuela
————————

¶5. (SBU) Rappaccioli told the Ambassador that he intends to “rehabilitate” Petronic so that it can play a more collaborative role with Petroleos de Venezuela (PDVSA, the Venezuelan National Oil Company) on the importation and distribution of Venezuelan fuel, the construction of a Venezuelan proposed refinery and transithsmus pipeline, and perhaps oil and gas exploration in Nicaragua. Currently, Petronic is little more than a holding company, contracting the use of oil storage and offloading facilities as well as Petronic’s retail gasoline stations to Glencore. Since Petronic’s contract with Glencore remains in force until June 2009, Rappaccioli is looking to create some other entity in the interim to manage fuel purchases from Venezuela and serve as a counterpart to PDVSA. Rappaccioli believes that such an interim company could forge an arrangement with Glencore for the use of Petronic facilities to receive and store oil, diesel, and gasoline from PDVSA at the Port of Corinto for distribution to power producers, public transport companies, and businesses throughout the country — and even the ESSO refinery over the medium term.

¶6. (SBU) Under the Venezuelan scheme, Rappaccioli explained that 40% of the cost of the fuel would not come due for 25 years (Ref A). If Nicaragua imports $200 million worth of oil from Venezuela in 2007, for example, then as much as $80 million would be available to spend on health, education, and rural development programs. Rappacciolli expects that Nicaragua will conclude a contract for the supply of fuel through Corinto with Venezuela by April. (Note: In 2006, Nicaragua imported $656 million worth of petroleum products, $209 million from Venezuela and $191 million from Mexico.)

Oil and Gas Exploration
———————–

¶7. (SBU) The Ambassador inquired about progress on removing the injunction on exploration concessions off the Atlantic coast awarded to U.S. firms MKJ and Infinity (Ref B). He told the Ambassador that the companies had recently visited MEM, and that the ministry is reviewing their cases. He added that MEM had requested the contracts from INE, but INE had not yet done so. Rappaccioli added that “it is in the interest of the government to resolve the situation as quickly as and in the best form possible.” Contrary to claims supporting the injunction, Rappaccioli observed that the concessions appeared to be “external,” i.e., falling outside the purview of the autonomous regions on the Atlantic. Another positive development, he said, is that Foreign Minister Santos had taken an interest in the case. (Note: In a previous decision, INE had stopped the clock on the concessions to MKJ and Infinity, so that milestones missed as a result of the injunction will not jeopardize the ability of the companies to fulfill the terms of their concessions.)

¶8. (SBU) Rappaccioli did not mention the recent find of Canadian-based Norwood Resources, which has an onshore exploration concession along the Pacific Coast. On the day of this meeting (February 14), Norwood announced that it found gas, condensate, and light oil in separate zones in its exploration well at San Bartolo Rodriguez. The discovery was made below 6000 feet in various tubidite sands. Norwood said that it plans to drill another exploratory well into a similar geological structure located 11 kilometers away.

Biofuels
——–

¶9. (SBU) Rappaccioli said that he thought that Nicaragua could increase ethanol and biodiesel production either for export or domestic use, estimating the potential to substitute up to 30% of Nicaragua’s gasoline requirement in the near term. (Note: Nicaragua may be able to almost double the land under sugar cane production over the next five years, to 100,000 hectares (Ref C).) With more sugar cane production, Rappaccioli observed, power generated from bagasse would also grow. He noted that the Atlantic coast had started to produce biodiesel from African palm for export to nearby Costa Rica, and that there is the potential to produce much more.

¶10. (SBU) The Ambassador offered to bring a U.S. expert to Nicaragua to discuss the prospect for expanding biofuel production in Nicaragua. Rappaccioli tacitly approved of the idea, suggesting that Grupo Pellas also make a presentation on its ethanol production. Rappaccioli added that Pellas’ first shipment of ethanol recently sailed to Europe, and that the next shipment will go to the United States.

¶11. (SBU) Rappaccioli told the Ambassador that President Ortega would soon send a biofuels bill to the National Assembly. (Note: Since this statement, Ortega has joined President Chavez of Venezuela in publicly criticizing ethanol production and U.S. policy on biofuels, stressing food security and the need to keep food and fuel markets separate. In March, Ortega cancelled a trip to Brazil where he was supposed to sign a bilateral cooperative agreement to promote ethanol production. (Ref D))

Hydropower
———-

¶12. (SBU) Rappaccioli believes that Nicaragua has great potential to develop hydropower and hinted that a pipeline of feasibility studies is in the works. Rappaccioli said that ENEL is looking at constructing several small hydroelectric dams. (Note: ENEL has sought assistance from the U.S. Trade and Development Agency for a feasibility study for a 15 MW hydroelectric dam at El Barro). For some time, a group of investors comprising COPALAR has floated a proposal to construct a large hydroelectric dam on the Rio Grande of Matagalpa, which could generate as much as 900 MW and cost more than $1 billion to build. Legislation facilitating the project is pending before the National Assembly. Rappaccioli told the Ambassador that a decision on COPALAR would be made by the end of the year, adding that Mexican billionaire investor Carlos Slim had shown interest in the project during his recent visit to Nicaragua. (Note: Rappaccioli lists COPALAR as one of his consulting clients on his curriculum vitae between 1997 and 2006.)

¶13. (U) Note: Nicaragua currently sources 80% of its electricity from power plants that import oil for fuel. Installed capacity is roughly 650 MW, which meets current demand, but leaves no room for error and is inadequate in the context of projected rising demand. In fact, the lack of new investment in power generation presents a serious obstacle to investors, often raising the cost of a project. ITG Cone Denim’s $100 million denim plant under construction in Ciudad Sandino, for example, includes a $20 million power plant as part of its investment so that the assured supply of power is not an issue. End Note.

Geothermal Power
—————-

¶14. (SBU) Rappaccioli wants Nicaragua to further develop its potential to generate power from geothermal sources. He mentioned the Israeli (Ormat) Italian (ENEL), and Salvadorean investment in a geothermal plant at Momotombo which generates about 20 MW. He also mentioned the Canadian, U.S., and German investment at San Jacinto, now named Polaris, lamenting the fact that San Jacinto is only generating about 7.5 MW although it had the potential to produce 66 MW. As the President of INE eleven years ago, Rappaccioli said that he had signed the contract to develop San Jacinto and not much had happened since. He told the Ambassador that the government was reviewing Polaris’ concession. (Note: Shortly after this meeting, the Attorney General’s office announced its opinion that Polaris’ poor performance constituted sufficient grounds for the government to void its concession. Polaris has been fighting back, pointing out negotiated changes to its concession and work program with INE, and the company’s declaration of force majeure in 2004 as a result of the worldwide shortage of drilling equipment.)

Wind Power
———-

¶15. (SBU) Rappaccioli welcomed the recently launched wind generation project in the Department of Rivas, terming it a very positive development. The $80 million Amayo wind farm involves the erection of 19 wind propelled turbines manufactured in India by a Danish firm and installed by a Spanish firm. The previous day, Vice Minister Lanza attended the signing ceremony for Amayo’s power purchase agreement to supply up to 40MW to Union Fenosa. The project is the brainchild of U.S., Guatemalan, and Nicaraguan investors.

¶16. (SBU) Rappaccioli told the Ambassador that another wind farm similar to Amayo is under development for the Department of Chontales. The plan is to produce up to 20 MW for ENACAL, the state-owned water company. ENACAL will manage the pluses and minuses with Union Fenosa, and thus channel excess power to the grid.

¶17. (SBU) Rappaccioli described the prospects for generating wind power in Rivas and Chontales as excellent, especially during the dry season. Nevertheless, the nature of the enterprise is that sometimes power will not be available. Whatever power these two wind farms generate, he observed, they will be cost competitive, constitute a domestic energy source, and reduce the requirement for oil imports.

Technical Assistance: Energy Regulation
—————————————

¶18. (SBU) The Ambassador explained that before the change in government on January 10, USAID brought two energy experts to Nicaragua to consult with energy sector stakeholders and the government on Nicaragua’s energy regulatory regime, especially as it pertained to power generation and tariffs. Rappaccioli replied that he would welcome the continuation of such technical assistance, but did not expressly commit himself. (Note: A USAID consultant visited during the week of March 19 to explore the possibility of advancing technical assistance in this area.)

Biography: Emilio de Jesus Rappaccioli Baltodano
——————————————— —

¶19. (SBU) Emilio de Jesus Rappaccioli Baltodano returns to government after a hiatus of ten years. From 1979 to 1990, he headed the Nicaraguan Energy Institute under the Sandinista regime. During this time, Rappaccioli earned the nickname “Don Rapagon” (Sir Outage, with a play on the “R” in his last name), for his many power rationing schemes. Rappaccioli continued at the Nicaraguan Energy Institute during the administration of Violeta Barrios de Chamorro. From 1995 to 1997, he served as President of the state owned Nicaraguan Electric Company (Empresa Nicaraguense de Electricidad, ENEL). For the past 10 years, he worked as an international consultant. During this period, he served as President of the FSLN’s National Commission on Judicial and Ethical Affairs.

¶20. (SBU) Rappacciolli received his bachelor’s degree from the University of Central America in Managua and a master’s degree in civil engineering from Northeastern University in Boston, Massachusetts. In the early 1970’s, he taught engineering at the University of Central America and National University of Nicaragua. He remains an active member of the American Association of Civil Engineers, the Nicaraguan College of Engineers, and the Association of Engineers and Architects. He is 65 years old (DOB: 5/5/41), married, and has children.

TRIVELLI

HEADER
VZCZCXYZ0022
RR RUEHWEB

DE RUEHMU #0788/01 0822106
ZNR UUUUU ZZH
R 232106Z MAR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9600
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1025
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

XTAGS: XTAGENRG, XTAGEPET, XTAGEMIN, XTAGTBIO, XTAGSENV, XTAGEINV, XTAGPINR, XTAGVE, XTAGNU 07MANAGUA788

TAGS
ENRG EPET EMIN TBIO SENV EINV PINR VE NU
ADDED
2011-06-01 08:00:00
STAMP
2011-06-02 12:31:37
VOTE_POINTS
0
VOTE_COUNT
0
VOTE_RATING
0
PRIORITY
RR
TWEETS
0
MANUAL
N
SITELINK
ISNEW
Y
FINGERPRINT1
d4b8d7a0047fc460f4113ca1292494b5

http://www.wikileaks.ch/cable/2007/03/07MANAGUA788.html

ADDITIONAL SWISS INPUT REGARDING CALL FOR FREEZING NON-HUMANITARIAN ASSISTANCE TO NICARAGUA FOLLOWING FRAUDULENT ELECTIONS

Wednesday, June 1st, 2011
ID
09BERN57
SUBJECT
ADDITIONAL SWISS INPUT REGARDING CALL FOR FREEZING
DATE
2009-02-06 15:39:00
CLASSIFICATION
UNCLASSIFIED//FOR OFFICIAL USE ONLY
ORIGIN
Embassy Bern
TEXT
UNCLAS BERN 000057 

SENSITIVE
SIPDIS

DEPT FOR WHAT/CEN (A.KRAAIMOORE) AND EUR/CE (Y.SAINT-ANDRE)

E.O. 12958: N/A
TAGS: EAID PGOV PREL NU SZ
SUBJECT: ADDITIONAL SWISS INPUT REGARDING CALL FOR FREEZING NON-HUMANITARIAN ASSISTANCE TO NICARAGUA FOLLOWING FRAUDULENT ELECTIONS

REF: A. A. SECSTATE 132044
¶B. B. BERN 00655

¶1. (SBU) Further to reftel A request for Switzerland to freeze non-humanitarian assistance to Nicaragua following its fraudulent municipal elections of November 9, and reftel B interim response, Nora Kronig, Regional Coordinator for Central and South America at the SWISS Federal Department of Foreign Affairs (EDA), called Poloff on 28 January 2009 to provide the following input from her SWISS contacts concerned with this issue. Kronig said that EDA took note of the USG position and was interested to know where the U.S. stood in this regard. The GOS is, according to Kronig, aware of the risks associated with the Nicaraguan situation and is following the developments with great attention. Further, SWISS interlocutors are discussing the municipal elections and their consequences within the Donors Group of Nicaragua.

¶2. (SBU) Kronig added that Switzerland has expressed concern with the elections by way of a press communique and has also done so bilaterally with the GON. Given the exclusion of two political parties in this election, Switzerland has addressed its concern at the Minister of Foreign Affairs level between the GOS and GON.

¶3. (SBU) The Budget Support Group, which Kronig explained gives financial assistance to the Nicaraguan government to implement programs, differs from the development/humanitarian aid provided by Switzerland through the SWISS Agency for Development and Cooperation (SDC). Kronig stated that the Budget Support Group met in mid-January to assess the situation and discuss the continuation of providing assistance to Nicaragua, adding that the group decided that Nicaragua’s actions will “bear consequences,” and a suspension of budget support will not be excluded as a possibility. The GOS has, at this time, decided that programs and projects that have been supported by Switzerland for a long time will be maintained, but under increased vigilance.

¶4. (SBU) Kronig closed by explaining that Switzerland has always acted as a constructive partner and an honest broker in its relations with Nicaragua, and that the GOS will continue to opt for open and constructive dialogue. That said, she noted that Switzerland will voice critical views and encourage democracy, non-violence, human rights, and the rule of law, and will seek constructive solutions where problems arise.

CARTER

HEADER
VZCZCXYZ0006
PP RUEHWEB 

DE RUEHSW #0057 0371539
ZNR UUUUU ZZH
P 061539Z FEB 09
FM AMEMBASSY BERN
TO SECSTATE WASHDC PRIORITY 5641

XTAGS: XTAGEAID, XTAGPGOV, XTAGPREL, XTAGNU, XTAGSZ 09BERN57

TAGS
EAID PGOV PREL NU SZ
ADDED
2011-06-01 08:00:00
STAMP
2011-06-02 12:31:18
VOTE_POINTS
0
VOTE_COUNT
0
VOTE_RATING
0
PRIORITY
PP
TWEETS
0
MANUAL
N
SITELINK
ISNEW
Y
FINGERPRINT1
3b1ac13121ba599ff356e79b6e2f6200

http://www.wikileaks.ch/cable/2009/02/09BERN57.html

NICARAGUA: ORTEGA PRESSURES EXXONMOBIL TO BUY VENEZUELAN OIL

Wednesday, June 1st, 2011
ID
07MANAGUA2539
SUBJECT
NICARAGUA: ORTEGA PRESSURES EXXONMOBIL TO BUY
DATE
2007-12-07 21:18:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Embassy Managua
TEXT
C O N F I D E N T I A L MANAGUA 002539 

SIPDIS

SIPDIS

DEPT FOR EEB/ESC, EEB/BTA, WHA/EPSC, WHA/CEN/TLERSTEN
DEPT PLEASE PASS TO USTR AND OPIC

E.O. 12958: DECL: 12/06/2017
TAGS: EPET ENRG EINV ETRD NU
SUBJECT: NICARAGUA: ORTEGA PRESSURES EXXONMOBIL TO BUY VENEZUELAN OIL

REF: A. MANAGUA 2116
¶B. MANAGUA 2055
¶C. MANAGUA 2016
¶D. MANAGUA 1952

Classified By: Classified By: CDA Richard M. Sanders, Reason: E.O. 1295
8 1.4 (b) and (d)

¶1. (C) President Ortega announced on December 5 that he had instructed the Ministry of Energy and Mines and others “to quickly work out a proposal to nationalize the importation of oil.” Ortega wants Nicaragua to import all oil from Venezuela to take advantage of Hugo Chavez’ offer to contribute half of the resulting revenues to the Bolivarian Alternative (ALBA) Development Bank and Fund. As operators of the country’s only refinery, ExxonMobil supplies more than 70% of the country’s liquid fuel needs, including fuel oil used to generate electricity. ExxonMobil further imports the majority of refined product (gasoline and diesel) to supplement refinery supply. ExxonMobil is willing to discuss a supply contract to import Venezuelan crude oil, but wants to sign the fuel storage and sales agreement first, as was agreed in a memorandum of understanding in September. Talks on crude oil imports are supposed to be in parallel with discussions on a laundry list of tax charges lodged against ExxonMobil by the Ortega administration. Recently, Ortega has publicly referred to “transnationals that import oil” as members of a “mafia,” and castigated ExxonMobil for behaving like “true mercenaries (and) speculators” while “bleeding the Nicaraguan people.” On December 6, Foreign Minister Samuel Santos called CDA Sanders to a meeting with Minister of Energy Emilio Rappaccioli and Petronic President Francisco Lopez, who gave their version of events.

Ortega Appoints Study Commission
——————————–

¶2. (SBU) President Ortega announced at the closing session of the fourth National Security and Defense course for the Ministry of Defense and the Military on December 5 that he had instructed the Ministry of Energy and Mines (MEM), Nicaraguan Institute of Energy (INE), National Electricity Company (ENEL), and Albanisa (a joint enterprise between Petronic and the Venezuelan national oil company PDVSA) “to quickly work out a proposal to nationalize the importation of oil.” Ortega wants Nicaragua to import all oil from Venezuela to take full advantage of Hugo Chavez’ offer to contribute half of all resulting revenues to the Bolivarian Alternative (ALBA) Development Bank and Fund.

ExxonMobil and Glencore Primary Importers
—————————————–

¶3. (C) Currently, ExxonMobil (U.S.) and Glencore (SWISS) import almost all oil consumed in Nicaragua. As operators of the country’s only refinery, ExxonMobil supplies more than 70% of the country’s liquid fuel needs, including fuel oil used to generate electricity. ExxonMobil further imports the majority of refined product (gasoline and diesel). Glencore imports the rest under a contract with Petronic, the national oil company, that expires in 2009.

Ortega Administration Pressure
——————————

¶4. (C) Both ExxonMobil and Glencore have been subject to intense pressure by the Ortega administration to import Venezuelan oil. In April 2007, the Ortega administration challenged the legitimacy of Glencore’s 10-year contract. This resulted in Glencore importing essentially all of its refined product from Venezuela, i.e., about 4000 barrels per day. The Ortega administration then launched a host of questionable tax claims agaiNtDkuIQ\Mobil agreed to negotiate the use and eventual sale of the fuel storage facility that was seized. In each instance, once Glencore and ExxonMobil accommodated the Ortega administration, their near term legal challenges disappeared.

¶5. (C) More is at stake with ExxonMobil than with Glencore  and the road has been bumpier. ExxonMobil tells us that it has negotiated an agreement for the use and sale of the Corinto fuel storage facility, but that the Ortega administration is refusing to sign. Instead, the administration is demanding to negotiate the sale of Venezuelan crude oil to ExxonMobil’s refinery. ExxonMobil wants to sign the fuel storage and sales agreement first, according to the order of events set forth in September’s memorandum of understanding. ExxonMobil also wants to make progress on the laundry list of tax charges that the Ortega Administration has initiated. (Refs A, B)

¶6. (C) In November 2007, FSLN stalwart and Economic Advisor to the President Bayardo Arce replaced Francisco Lopez (Petronic President and former FSLN Treasurer) as point person for negotiations with ExxonMobil. Arce appears to be charged with getting ExxonMobil to agree to buy Venezuelan crude, and is not above using heavy-handed pressure tactics. This may explain why in recent weeks Ortega has publicly referred to “transnationals that import oil” as members of a “mafia,” and castigated ExxonMobil for behaving like “true mercenaries (and) speculators” while “bleeding the Nicaraguan people.” Ortega also charged ExxonMobil with being “uncooperative” and “totally negative” to the idea of “contributing to the Nicaraguan people.” “All this would change,” said Ortega at the December 5th event noted above, “if this transnational would change its attitude, as it had during period 1979-90….” ExxonMobil is scheduled to meet with Bayardo Arce on December 7.

¶7. (C) In the meantime, ExxonMobil has informed us that, in fact, it is amenable to negotiating the importation of crude oil from Venezuela. In the past two months (business confidential information), ExxonMobil has come to terms internally with the idea that Venezuelan ships could be used for transport, provided supply contracts stipulate prompt delivery, late charges, some supply flexibility, and vessels used meet ExxonMobil’s environmental and safety standards (i.e., double hulled tankers). This is because the company would rather not pay demurrage to Venezuelan ports while waiting for an unreliable PDVSA to load product.

CDA Meets with Key Administration Players
—————————————–

¶8. (C) On December 6, CDA was convoked to the Foreign Ministry to meet with Foreign Minister Samuel Santos, who was accompanied by Energy Minister Emilio Rappaccioli and Petronic President Francisco Lopez. Santos led off by saying that the meeting was being held at the instruction of President Ortega, and that he, Santos, wanted to make sure the USG — and especially the Secretary and WHA A/S Shannon — for whom he had high regard, had a “concrete” understanding of the GON’s situation with regard to ExxonMobil’s operations in Nicaragua. He noted the enormous problem which high energy prices present for Nicaragua and asserted that the GON had made “enormous efforts” to reach an agreement with ExxonMobil.

¶9. (C) Santos soon handed the meeting over to Rappaccioli, who briefly recounted his version of the events of the summer-fall of 2006 in which ExxonMobil’s unused storage facility had been seized and used to store a shipment of Venezuelan gasoline which entered Nicaragua. The crisis provoked by this act had been resolved with the signature of a joint memorandum that returned the plant to ExxonMobil, but which contemplated the import of Venezuelan crude into ExxonMobil’s refinery in Nicaragua, “parallel” to the negotiation of arrangements for the rental or eventual sale of the gasoline storage facility. The GON had since been trying to reach a commercial agreement setting forth terms which would actually the Venezuelan crude oil to enter Nicaragua, without success. The inability of the GON and ExxonMobil to reach an agreement was highly prejudicial to Nicaragua, which was unable to take full advantage of the favorable terms which Venezuela offered for its crude through “Albanisa” a joint Venezuelan-Nicaraguan oil-importation entity.

¶10. (C) Petronic President Lopez further elaborated, saying that Venezuela offered Nicaragua up to 27,000 barrels per day, but until now Nicaragua has only been able to import 4,000 barrels a day (in the form of refined products) brought in for Petronic by Glencore. As a result, Nicaragua had lost $230 million in savings from unused Venezuelan concessional funding. Lopez noted the great expense the GON is facing in subsidizing mass transit, and the crisis that the electrical power sector is facing. Lopez said that ExxonMobil had been offered extremely attractive terms on price, volumes, and payment schedules, and would be allowed to use its own ships (vice those of Venezuela state oil enterprise PDVSA). In the current circumstances, getting Venezuelan crude oil into Nicaragua was a matter of “national security.”

¶11. (C) Lopez suggested that the U.S. embassy consider taking part in future negotiations to assure a successful conclusion. Santos finished off the GON’s presentation by handing CDA a copy of a memo, dated December 4, from Lopez to the head of the Nicaraguan Energy Institute (the GON’s energy regulatory authority) entitled “Documentary Recapitulation of Efforts at Agreements with Esso.” Santos also said that as a “personal, not official” opinion, he wondered if ExxonMobihQY4klQ which was far better than taking impressions from the press. Their views would be transmitted to Washington immediately. That said, however, he added that public remarks by President Ortega calling for “nationalization” inevitably provoked concern in Washington. He assured Santos that the USG had no hidden agenda and would be happy to see the GON and ExxonMobil reach agreement. While he could not offer any analysis of why the two parties have not yet reached an agreement; he understood that ExxonMobil was also looking for resolution of the GON’s claims of large amounts of back taxes due from the company which were presented at the time of the earlier seizure of the gasoline storage facility. (Rappaccioli responded that he had heard that the Mayor of Managua had stated that claims for local taxes had been resolved; however, GON economic advisor Bayardo Arce had said that Exxonmobil had not presented needed invoices for taxes due to the central government for review). As to the idea of embassy intervention in the negotiations, CDA noted that at stake were complex commercial matters that seemed best left to the parties directly involved.

Comment
——-

¶13. (C) Comment: Santos seemed most interested in doing damage control following Ortega’s use of the term “nationalization,” which dominated local headlines the day before. Rappaccioli and Lopez’ spin-filled versions of the current state of play seemed aimed at getting the USG to pressure Exxonmobil to bring in the Venezuelan crude oil as soon as possible, under GON terms. ¶14. (C) The actions of the Ortega administration over the past 12 months provide compelling evidence of a lack of understanding of the oil sector, if not political incompetence. Readers may remember that during the 2006 elections, the FSLN created Albanica (now defunct and not to be confused with Albanisa) to import oil under a scheme with Venezuela that would allow FSLN mayors to derive profits. When a shipment of diesel finally arrived, Albanica scrambled to find tanker trucks to transport product to Managua, and then to distribute the product )- ostensibly to transport cooperatives and unions. After Ortega assumed power, Venezuelan President Hugo Chavez announced that PDVSA would build a $2.5 billion refinery in Nicaragua. Several months later, Chavez laid a cornerstone at a chosen site, only to leave the project to a feasibility study that had not been initiated. Between July and November, the Ortega administration forced Glencore to provide storage and to distribute shipments of Venezuelan product. When Glencore ran short of storage capacity in August, the Ortega administration charged ExxonMobil with failure to pay taxes. An administrative oversight was used as the pretext for seizing the storage capacity from ExxonMobil in time to offload a Venezuelan vessel. When members of the National Assembly and the IMF demanded transparency and on-budget accounting of Venezuelan funds derived from oil sales, the Ortega administration created Albanisa, a “private entity”
composed of stated-owned enterprises PDVSA (Venezuela) and Petronic (Nicaragua), to manage Venezuela oil sales off-budget.

¶15. (C) While Albanisa may be capable of importing Venezuelan oil through paper transactions, someone must eventually pay for it. Without the sales and distribution networks of ExxonMobil and Glencore, Albanisa cannot generate ALBA funds from Venezuelan oil. We believe that Ortega’s call to develop proposals to nationalize the importation of oil is the latest attempt to pressure ExxonMobil into monetizing Venezuelan oil. Before nationalizing the process, the Ortega administration will have to convince the National Assembly to revise legislation governing the sector. If a state-owned entity does the importing, then ALBA funds would be subject to National Assembly oversight, something that the Ortega Administration has been trying to avoid.

SANDERS

HEADER
VZCZCXYZ0010
RR RUEHWEB 

DE RUEHMU #2539/01 3412118
ZNY CCCCC ZZH
R 072118Z DEC 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1753
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1196
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

XTAGS: XTAGEPET, XTAGENRG, XTAGEINV, XTAGETRD, XTAGNU 07MANAGUA2539

TAGS
EPET ENRG EINV ETRD NU
ADDED
2011-06-01 08:00:00
STAMP
2011-06-02 12:31:32
VOTE_POINTS
0
VOTE_COUNT
0
VOTE_RATING
0
PRIORITY
RR
TWEETS
0
MANUAL
N
SITELINK
ISNEW
Y
FINGERPRINT1
a2512eb3db014d5b2571f190f217c6cf

http://www.wikileaks.ch/cable/2007/12/07MANAGUA2539.html

NICARAGUA: GOVERNMENT STILL CONTROLS EXXON FUEL DEPOT

Wednesday, June 1st, 2011
ID
07MANAGUA2016
SUBJECT
NICARAGUA: GOVERNMENT STILL CONTROLS EXXON FUEL
DATE
2007-08-31 00:06:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Embassy Managua
TEXT
C O N F I D E N T I A L MANAGUA 002016 

SIPDIS

SIPDIS

DEPT FOR EEB/ESC, EEB/BTA, WHA/EPSC, WHA/CEN
SAN JOSE FOR CS/JMCCARTHY
DEPT PLEASE PASS TO USTR AND OPIC

E.O. 12958: DECL: 08/29/2017
TAGS: EINV EPET ETRD NU
SUBJECT: NICARAGUA: GOVERNMENT STILL CONTROLS EXXON FUEL
DEPOT

REF: A. MANAGUA 1952
¶B. MANAGUA 1789
¶C. MANAGUA 640
¶D. MANAGUA 788

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

¶1. (C) Summary: Ten days after the government seized one of Esso/Nicaragua’s fuel depots at the Port of Corinto, it refuses to return the facility to Esso without preconditions. The government wants Esso to honor third party contracts involving the use of the depot; for safety and liability reasons, this is a non starter for Exxon. The implementation of a “peace plan” remains on the table, waiting for Energy Minister Rappaccioli to return from Brazil. Theoretically, Exxon is willing to purchase fuel from Petronic, the state-owned holding company, but will only negotiate a deal after the depot is returned. In return, Exxon wants government harassment, in the form of tax liens and accusations of nonpayment, to stop. While the stalemate continues, Petronic controls Esso’s facility. Petronic has already offloaded fuel from one Venezuelan vessel and is preparing to do the same with another. We believe that the government’s driving motivation for its treatment of Esso is an overwhelming desire to siphon ALBA funding from the sale of Venezuelan petroleum to Nicaragua to fund inter alia the creation of 17,000 citizens’ councils. End Summary.

¶2. (C) As reported in Ref A, the Government of Nicaragua seized one of Esso/Nicaragua’s fuel storage facilities at the Port of Corinto on August 17. The pretext for the seizure was a lien for the nonpayment of taxes, placed on the property by the Director General of Customs Roberto Zepeda. Zepeda charged that Exxon had failed to pay the value added tax on imported petroleum product.

¶3. (C) The issue first surfaced more than a year ago when the government noticed that Exxon had not filed the proper paperwork for an exemption from the value added tax. Industry insiders tell us that this is fairly common, as ships frequently arrive and are offloaded before all the paperwork is finished. Instead of seeking an administrative solution to an administrative problem, the government parlayed a paperwork glitch into something much grander to suit its purposes. Customs insists that Esso/Nicaragua owed as much as $3 million in unpaid value added tax.

¶4. (C) What makes the claim verifiably specious is that Nicaraguan law clearly exempts petroleum products from most normal taxes, including the value added tax. For this reason, no mechanism exists for Exxon to collect value added taxes along the supply chain. Instead, the industry essentially operates under its own tax regime, centered on the energy consumption tax. As the major supplier of refined products to Nicaragua, Exxon helps collect this tax from other fuel distributors on behalf of the government.

“We Pay Our Taxes”
——————

¶5. (C) At no time has Exxon accepted publicly or privately that the government’s charges of tax evasion are correct. Exxon spokesmen Alfredo Fernandez-Sivori and Milton Chavez have publicly stated Esso/Nicaragua has always paid its taxes and is a good corporate citizen, investing in Nicaragua to reliably and safely supply fuel to the country and importing technology. Indeed, as a high profile foreign investor and a major taxpayer, Esso/Nicaragua has long come under regular scrutiny by local tax authorities. Former Director General for Taxation Roger Arteaga was quoted in the press as having said that, in his experience, Esso/Nicaragua was meticulous about paying its taxes.

“I’d Like a Fuel Depot, Judge”
——————————

¶6. (C) As the demandeur, Director General for Customs Zepeda has the right to go to a judge in a district where an Esso/Nicaragua asset resides and demand that a tax lien be placed on it. Zepeda chose an out-of-commission Esso fuel depot called Corinto I.

¶7. (C) Nicaraguan law clearly states that custody of a
property subject to a lien “will be awarded to the owner of the property,” but this did not stop the Sandinista (FSLN) judge from Chinandega, Judge Socorro Toruno, from enlisting the assistance of armed local police to forcefully remove Esso/Nicaragua personnel from Corinto I and awarding custody of the depot to Zepeda. The mission all took place with clockwork precision shortly after close of business on Friday, August 17.

¶8. (C) Zepeda immediately used his ill-gotten authority to request Petronic to prepare Esso’s tanks to receive fuel from a Venezuelan vessel that had arrived in port the day before. The last Venezuelan vessel to call paid demurrage of $400,000, and the GON appeared determined that such a delay was not going to happen again.

Our Friends at Petronic
———————–

¶9. (C) Petronic is a state-owned holding company whose primary responsibility is to oversee a long-term contract with Glencore (SWISS) for the supply and distribution of petroleum products. In April, two months after Evo Morales nationalized Glencore’s mining assets in Bolivia, the Nicaraguan government tried to nullify its ten-year contract with Glencore in its eighth year, arguing that the government official who signed the contract was not authorized to do so. This charge soon devolved into negotiations with Glencore, the outcome of which is unclear. However, Glencore is now onboard with the idea of receiving Venezuelan product through Petronic.

¶10. (C) The local IMF Representative informs us that as a result of IMF negotiations restricting rapid growth in foreign debt, the Sandinista Government will no long siphon funds from the purchase of Petroleos de Venezuela (PDVSA) products through a discount financing scheme as reported in Ref B. Rather, 25% of the proceeds of a sale to Petronic will be deposited into a fund supporting a development bank and 25% into an ALBA Fund. To make this work, real companies with refining or distributive capacity like Exxon have to buy the fuel from Petronic.

Chico and the Man
—————–

¶11. (C) The President of Petronic is Francisco “Chico” Lopez, who despite some reports that he has resigned, apparently still functions as the Treasurer of the FSLN, whose headquarters serve as President Ortega’s official residence and office. As an accounting master with nimble fingers massaging the financial heart of the FSLN, Chico Lopez appears to be just the guy Ortega wants to manage his ALBA funds.

¶12. (C) We note that in a public scandal last April, Amcit Armel Gonzalez implicated Chico Lopez and FSLN Director for Organization Lenin Cerna in a $4.5 million extortion attempt involving a tourism development in the Department of Tola (Ref C). Although Gonzalez recorded the conversations on audio tape verified by experts, Gonzalez has been accused of creating false evidence.

Hard Day’s Night
—————-

¶13. (C) With free run of Corinto I as provided by Judge Toruno, Chico Lopez sprung into action. Within hours, local contractors showed up to perform welding and other metal work on Esso’s tanks to prepare Corinto I to accept 18,000 barrels of Venezuelan diesel, i.e., what remained of Venezuela’s 120,000 barrel shipment. The contractors welded all night. Reportedly, 40,000 barrels of diesel and 20,000 barrels of gasoline were offloaded to a depot managed by Glencore, and 30,000 barrels of diesel were offloaded to a depot managed by the Nicaraguan Port Authority.

¶14. (C) While contractors continued to weld, President Ortega appointed Minister of Energy Emilio Rappaccioli to act as point person for the government in talks with Exxon. Business Federation (COSEP) President Erwin Kruger offered his good offices to broker a deal, and helped Exxon reps to initiate discussions with Rappaccioli on August 21. (Ref D).

“What Do You Really Want?”
————————–

¶15. (C) Exxon soon discovered that the issue was not unpaid taxes. Rappaccioli freely admitted in private conversations and then publicly to the press that the government launched tax cases against Exxon to pressure the company into accepting Venezuelan product ) a bit like the government had pressured Glencore into accepting Venezuelan product last April. Exxon rep Augustin Fuentes (protect) told us that Rappaccioli also broached the possibility of organizing a buyout of Exxon’s refinery. While Rappaccioli had hinted at this possibility before, Fuentes paid closer attention this time.

¶16. (C) Talks with Rappaccioli continued through the week while other parts of the government tried to apply increasing pressure on Exxon. At one point, the government filed twelve claims of tax evasion within five hours. Exxon reps calculated that the government’s tax claims totaled $57 million, the approximate book value of Esso/Nicaragua’s refinery located near Managua.

Misdirection
————

¶17. (C) One of these claims of tax evasion involved the supposed nonpayment of corporate income tax over ten years. Director General of Taxation Walter Porras publicly stated that a company like Exxon should be paying the same income tax that everyone else pays. Under its investment agreement with the government, however, Exxon pays 25%. The general corporate tax rate has since been raised to 30%, but the law allows agreed rates to remain valid. At another point, Attorney General Estrada questioned whether an investment agreement signed by Arnoldo Aleman’s famously corrupt Director General for Taxation Byron Jerez should be honored. Exxon reps inform us Jerez did not sign the agreement, which dates back to Violeta Chamorro’s government, not Aleman’s.

All The News That Is Fit To Print
———————————

¶18. (C) Throughout, headlines raged and talk shows chatted storms. Minister of Finance Alberto Guevara, Director General of Taxes Walter Porras, and an assortment of Sandinista party hacks and diputados continued to rant that Exxon owed taxes — all kinds of taxes. Managua Mayor Marenco claimed that the city’s gasoline stations owed Managua $90 million for unpaid municipal business licenses over the last 10 years — the case just happens to be pending a decision in the Supreme Court. But the propaganda effort did not seem to carry much weight with the press. In front page headlines, La Prensa called the seizure “blackmail” and El Nuevo Diario questioned the ramifications of Exxon delaying its next shipment of fuel. Through it all, Ortega refused to comment much more than to say that that “the case is in the courts.” Exxon spokesmen kept repeating that the assertion that Exxon had failed to pay its taxes was patently false.

¶19. (C) At an August 23rd signing ceremony for a U.S. Trade Development Agency grant to develop a modern ports law, the Ambassador emphasized the importance of the rule of law, of trade and investment to growth and development, and what the United States is doing to help Nicaragua take advantage of CAFTA. He also mentioned how the Exxon case was detracting from the image that Nicaragua was a good place to invest. In comments to the press after the event, the Ambassador stressed the importance of the rule of law, respect for private property, and the need for the government to return Corinto I to Exxon. He continued to encourage both sides to sit down to settle their differences. The Port Authority held the signing ceremony at the hotel owned by Foreign Minister Samuel Santos and Chief Economic Advisor Bayardo Arce, neither of whom bothered to show. Santos was on the agenda, but sent his Vice Minister for Development who nervously mouthed a few words he had scribbled on a quarter piece of paper.

The Peace Plan
————–

¶20. (C) By August 25, it looked as if Rappaccioli and Exxon
had agreed to an orchestrated exchange of letters in a deal that read like an Israeli-Palestinian peace plan. The basics of the deal were pretty much the way Exxon had mapped it out a week before.

¶21. (C) In the first phase, Exxon would regain control of Corinto I as the result of the Director General of Taxation Zepeda’s request to Chinandega Judge Toruno to replace Zepeda with Esso/Nicaragua’s Corinto plant supervisor.

¶22. (C) In the second phase, Exxon would deliver a letter stating its intention to sell/rent the seven small tanks located in Corinto I, or to use them to receive Petronic product. Exxon also would deliver a letter committing to the purchase of 400,000 barrels of crude oil per month from Petronic, about 60% of refinery needs. Presumably, Petronic would source the oil from PDVSA at market prices and sell it to Exxon. Exxon would transport the crude on its own ships, something that Exxon had wanted to do all along because PDVSA is unreliable. In return, the government would commit to jointly reviewing all tax cases that it had thrown at Esso/Nicaragua, with a view to resolving any legitimate claims and dismissing the rest.

¶23. (C) In the third phase, negotiations on the commitments that each side had stated in their letters would take place, in parallel. Exxon’s goal is to extract itself from the government’s onerous tax cases and restore a good operating environment for its business. The government’s goal is to siphon off ALBA funds from the sale of Venezuelan petroleum.

The Conductor Taps His Baton, But No Orchestra
——————————————— –

¶24. (C) On August 27, Judge Toruno showed up at Corinto with an order to reinstate Esso/Nicaragua as the custodian of Corinto I. In a cooperative manner, Petronic and Esso/Nicaragua inspected the depot to make sure that its facilities had not been damaged, and to verify volumes of Venezuelan fuel. Exxon reps told us that there had been a few diesel spills. Before the transfer could proceed, Toruno asserted that the reinstatement of Esso/Nicaragua as custodian would be conditioned on Petronic’s continued control of the seven tanks filled with Venezuelan product.

¶25. (C) Exxon refused to allow its Esso/Nicaragua Corinto supervisor to sign the order. The deal broke down. Compounding the situation, Energy Minister Rappaccioli had had flown to Brazil on August 26. He was therefore unavailable to shepherd implementation of a deal he had brokered, leaving Vice Minister Lorena Lanza behind to answer the phone.

¶26. (C) On August 29, Judge Toruno unilaterally issued a revised order transferring custodianship to Esso/Nicaragua, but obligating Esso/Nicaragua to honor Petronic operations on its property. Exxon again rejected the order and refused to take control of Corinto I until all non-Esso personnel had vacated the premises. Exxon also refused to take responsibility for, or to honor, Petronic contracts that involved Petronic’s continued use of Corinto I. Exxon reps explained that their refusal is a matter of law, safety, and ultimately corporate liability. On August 30, Exxon spokesman Milton Chavez stood up at a press conference in front of a long list operational requirements that Exxon follows for safety and liability reasons, and are presumably ignored by the Petronic usurpers.

¶27. (C) Exxon continues to pursue a mutually acceptable solution with the government while it explores legal recourse. Exxon wants to replace the tax lien on Corinto I with a bank guaranty; such a guaranty would remove any claim that the government may have on Corinto I. On August 29, Chavez and others met with Vice President Jaime Morales Carazo, who in an impromptu press conference that followed, offered some support, saying that he thought that the asset should be returned to Esso.

Exxon’s Immediate Concern
————————-

¶28. (C) Of immediate concern to Exxon has been the safety and security of both its fuel depots at the port, Corinto I and Corinto II. Former Esso/Nicaragua General Manager Augustin
Fuentes explains that these tanks have been in disuse, some for considerable time, and are “not suitable for service” of the kind that Petronic is using them. They require constant vigilance, he said. Some of the tanks have been used recently to store lubricants, but not fuel. One Corinto I tank is larger, capable of storing 30,000 barrels of diesel, and still in use. It was in fact full with Exxon product when Petronic took management control of Corinto I. Moreover, Esso/Nicaragua’s fire fighting equipment for both Corinto I and II is located in Corinto I. This has caused Exxon to halt all operations at Corinto II for safety reasons.

At the Break of Dawn
——————–

¶29. (C) In the early morning ours of August 30, another Venezuelan vessel crept into the Port of Corinto with another 120,000 barrels of fuel. Petronic still controls Corinto I and is again preparing to offload Venezuelan fuel.

Comment
——-

¶30. (C) We strongly suspect that the Sandinista rush to received Venezuelan fuel is tied to FSLN financing needs, inter alia, the creation of 17,000 peoples’ councils, an initiative recently launched by President Ortega. Each Venezuelan ship offloded by Petronic translates directly into $5 million for the GON, given current ALBA financing terms. The level of interagency coordination demonstrated by the government’s assault on Exxon and pressure on Glencore reflects direction from the highest levels of Government and the FSLN, which, in this case, work out of the same office.

TRIVELLI

HEADER
VZCZCXYZ0000
OO RUEHWEB 

DE RUEHMU #2016/01 2430006
ZNY CCCCC ZZH
O 310006Z AUG 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1145
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1158
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

XTAGS: XTAGEINV, XTAGEPET, XTAGETRD, XTAGNU 07MANAGUA2016

TAGS
EINV EPET ETRD NU
ADDED
2011-06-01 08:00:00
STAMP
2011-06-02 12:31:35
VOTE_POINTS
0
VOTE_COUNT
0
VOTE_RATING
0
PRIORITY
OO
TWEETS
0
MANUAL
N
SITELINK
ISNEW
Y
FINGERPRINT1
167d7ffe84b9355da8a12168736bd926

http://www.wikileaks.ch/cable/2007/08/07MANAGUA2016.html

SWISS REACTION TO CALL FOR FREEZING NON-HUMANITARIAN ASSISTANCE TO NICARAGUA FOLLOWING FRAUDULENT ELECTIONS

Wednesday, June 1st, 2011
ID
08BERN655
SUBJECT
SWISS REACTION TO CALL FOR FREEZING
DATE
2008-12-23 16:30:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Embassy Bern
TEXT
C O N F I D E N T I A L BERN 000655 

SIPDIS

DEPT FOR WHA/CEN (A.KRAAIMOORE) AND EUR/CE (Y.SAINT-ANDRE)

E.O. 12958: DECL: 12/23/2018
TAGS: EAID PGOV PREL NU SZ
SUBJECT: SWISS REACTION TO CALL FOR FREEZING NON-HUMANITARIAN ASSISTANCE TO NICARAGUA FOLLOWING FRAUDULENT ELECTIONS

REF: SECSTATE 132044

Classified By: Acting POL/E Counselor Chris Buck; reasons 1.4(b) and (d
).

¶1. (SBU) Poloff shared reftel talking points with Nora Kronig, Regional Coordinator for Central and South America at the SWISS Federal Department of Foreign Affairs (EDA), and Mathias Domenig, South American Desk Officer for EDA, on December 22. In response to the USG call to freeze non-humanitarian assistance to Nicaragua following the fraudulent municipal elections of November 9, Kronig said that Switzerland had been concerned about the elections and that the GON should have allowed international observers to monitor them. She added that, because Switzerland now holds the rotating presidency of the Donors Group of Nicaragua, the GOS had sought dialogue with the GON regarding this issue. She did not offer results of this attempt for dialogue.

¶2. (SBU) Kronig stated that the allocation of SWISS budget support to foreign countries, including Nicaragua, was decided at the Federal Council (Executive Cabinet) level, and that policy recommendations in this regard were prepared by the EDA in collaboration with the SWISS State Secretariat for Economic Affairs (SECO).

¶3. (C) Given the high-level at which budget support decisions are made, Kronig was therefore unable to give a definitive answer regarding whether the GOS would freeze non-humanitarian assistance to Nicaragua. Off the record, however, Kronig said that she saw this step as unlikely, noting that the GOS prefers to address such problems through direct dialogue with the recipient country. Kronig added that the SWISS Agency for Development and Cooperation (SDC) also has a program focused on Nicaragua, and that she did not personally think that assistance would be halted by SDC either.

¶4. (U) Kronig said that she would advise poloff of the coordinated GOS response to reftel demarche once available, noting that she would not likely have an answer before January 2009. CARTER

HEADER
VZCZCXYZ0009
OO RUEHWEB 

DE RUEHSW #0655 3581630
ZNY CCCCC ZZH
O 231630Z DEC 08
FM AMEMBASSY BERN
TO SECSTATE WASHDC IMMEDIATE 5555

XTAGS: XTAGEAID, XTAGPGOV, XTAGPREL, XTAGNU, XTAGSZ 08BERN655

TAGS
EAID PGOV PREL NU SZ
ADDED
2011-06-01 08:00:00
STAMP
2011-06-02 12:31:56
VOTE_POINTS
0
VOTE_COUNT
0
VOTE_RATING
0
PRIORITY
OO
TWEETS
0
MANUAL
N
SITELINK
ISNEW
Y
FINGERPRINT1
889c6c9baf198ab5d6947a044beccb90

http://www.wikileaks.ch/cable/2008/12/08BERN655.html