Paul Trivelli, US ambassador to Nicaragua, spoke with Adam Thomson, the FT’s correspondent in Mexico and Central America, in Managua on September 8 2006.

FINANCIAL TIMES: I’ve been reading with a lot of interest your comments during the election and it seems you have been pretty vociferous. From that, I suppose you can conclude that the US is taking these elections pretty seriously. Why are they important for the US?

AMBASSADOR TRIVELLI: Any democratic elections anywhere in the World, and particularly in Latin America, are important to us. In this particular case, there are several reasons. One, we have a very close relationship with Nicaragua. Half a million Nicaraguans live in the United States; we’re in Cafta [the Central American Free Trade Trade Agreement]; we are the biggest export market for them, the biggest investor for them; we have aid programmes so our interest here are very broad.

Secondly, elections here can also affect the fate of the entire Central American region. You only have to go back to the 1980s to see that problems here quickly spread to the rest of the region.

And I think, thirdly, over the last 15 years, there has been a lot of progress in Nicaragua and the region, both economically and politically. The economies are stronger, these are now democratic countries. In a situation where that were somehow rolled back I think would be enormously tragic.

Nicaragua is really poised to make dramatic progess. Between Cafta, the free-trade agreement, millennium challenge account, a lot of debt forgiveness, including the latest round with the G-8, again not to take advantage of all of those excellent opportunities would be, you know, tragic.

FT: But do you think that, in the event that Ortega and the Sandinistas get back into power, all of those things would automatically be put at risk?

TRIVELLI: Well, let’s think about what he has said publically. First, he has and continues to employ some very strong anti-American rhetoric in his campaign. But he has also said that he wants to reintroduce subsidies, forgive debt, control remittances from Nicaraguans living abroad, reintroduce a mixed economy. And those are things that would be worrisome to the private sector here, to Nicaraguans, to potential domestic, international and regional investors. He has been very clear. He has also said he would like to modify or repeal Cafta and look at the Bolivarian alternative, Alba.

So he has made it pretty clear what kind of model he would put in place. And I think that under those conditions, of the whole gamut of the relationship that I talked about between the US and Nicaragua would definitely be re-examined – and not only by the executive or the State Department or the White House but by the US Congress.

FT: You don’t see him in the mould of progressive leftwing governments like that of Chile, for example?

TRIVELLI: It is really not a left versus right issue. We have perfectly good relationships with a whole series of centre-left governments in the region: with Brazil, Chile, Uruguay with Argentina. It really is democratic versus anti-democratic and the amount of anti-democratic tendencies within the Sandinista party is really high.

What we have said publicly, and this goes back to when Robert Zoellick was here last October, is that these elections really represent an opportunity for Nicaraguans to leave behind the sort of strongman, non-democratic policies of the governments of the past and look towards new, democratic forces. It really is a democratic opportunity.

FT: You just said that there are many anti-democratic tendencies within the Sandinista party but would you say that Mr Ortega himself was anti-democratic?

TRIVELLI: [Pause] It’s one thing to be truly democratic. It’s another thing to do what the Sandinistas really have done, which is to distort and manipulate democracy for partisan and personal benefit and that is what has happened. The fact that he has been in charge of the Sandinista movement for 25 years or more gives you a clue about his democratic tendencies. And as recently as a couple of weeks ago, he criticised the electoral mission of the Organistion of American States, for example. So I think those tendencies, well, I think there is no doubt about that.

FT: It is no secret that Hugo Chávez and the Venezuelan government have also been very interested in these elections. What is your understanding of the extent of the Venezuelan government’s involvement in the campaign so far?

TRIVELLI: Certainly on the record, Daniel Ortega actually went to Caracas to be on President Chávez’s show, was warmly embraced by Hugo Chávez, who said that he hoped Daniel Ortega would win these elections. They also had a campaign – they delivered some fertilizer for the benefit of Sandinista agricultural co-operatives and they have also been trying to strike an oil deal that, while still cloudy, appears to be designed to favour exclusively Sandinista mayors and Sandinista transportation co-operatives. So I think that that involvement is really clear.

I would also note that as recently as last week, a building exploded here in town [Managua] that, at least on the outside, said Chamber of Commerce of Cuba and Venezuela, China and Russia and Vietnam, and it was filled with FSLN propaganda and apparently the explosive charges needed for these, what they call “morteros”, which are pipe bombs that are used here in the city.

FT: To clarify, on this oil deal, which I understand has already been signed, it’s a deal between PDVESA, the Venezuelan oil company, and the association of mayors here, isn’t it?

TRIVELLI: As I understand it and, again it is a little bit cloudy, but there was a sort of agreement in principle between PDVESA and the association of mayors, who again, as I understand it, formed sort of a paper, private company?

FT: But doesn’t that agreement then benefit all the mayors rather than single out just Sandinista-controlled areas?

TRIVELLI: Well, first of all the folks who went to Caracas to sign this were almost entirely Sandinistas, and all discussion of this deal, though nebulous, has been with folks who are Sandinista mayors, including the Sandinista mayor here in Managua.

FT: And do you see the other Venezuela-sponsored programmes here such as “Operacion Milagro [a Cuban-Venezuelan sponsored programme to provide free eye surgery to Latin America’s poor] as specifically orientated to supporting the Sandinistas in this election?

TRIVELLI: I would say two things. One, an oil deal like that if it were a purely commercial one if it were a purely commercial deal I don’t think anybody would have any quarrel with it. After all the US is a major importer and we import Venezuelan oil every day. But if it is to benefit the Sandinistas then that calls it into question.

The other thing is that because it is 40 per cent financed, it implies the accumulation of a large amount of debt over time in a country that has systematically reduced its foreign debt over the last 10 years and is now less than half the level that it was in 1990. So I don’t know what Nicaragua is going to do on this but I think that those are factors that have to be looked at.

In terms of things like Operacion Milagro there is no doubt that there is interest of Venezuela in proving its solidarity with Nicaragua and, particulary, with the Sandinista party. It is obviously designed for that.

FT: But what is your understanding of what Mr Chávez and the Venezuelan government want out of this? Do you see this as a strategy to promote its model in the region? Are they trying to gain a foothold in Central America?

TRIVELLI: That is absolutely right. Only last week Daniel Ortega said that one of the things he would immediately do would be to seek extensive co-operation with Cuba and Venezuela, including the introduction of doctors, teachers etc. So it’s pretty clear that what would happen would be the introduction of a Chávez model here on the Isthmus. That is pretty clear what the strategy is.

FT: Why, specifically, is that such a concern for the US?

TRIVELLI: We don’t feel competitive with Venezuela we just have different visions of what is going on here – what the vision should be for Latin America. In our view, and I think this is the view of most Nicaraguans, the model that has been chosen and the model that works is real democracy, market economies and security. And if those things work together we will finally have a prosperous, democratic and secure Nicaragua. The Venezuelan model is obviously different from that.

FT: But the case of Argentina is often quoted as a failure of just those policies that the US and other Western governments have tried to promote in the region. Argentina was the best student in the school and look what happened.

TRIVELLI: Well, there has been a lot of debate in recent months and years about economic models, and even the World Bank and the International Monetary Fund have concluded that all of those reforms that were prescribed in the 90s were good but people did lose sight of the social-investment side of it. If you do those, there is also a need to invest in education and health so that the entire population sees better the benefits of democracy and market economies. So there has been a shift over time and thinking and that is certainly what the US government advocates in terms of its assistance policies and the International Financial Institutions do as well.

FT: You have been accused by Mr Ortega, among others, as overstepping your role as ambassador in these elections and I would like you to explain exactly what you have been doing with the rightwing candidates and also to tell me whether those criticisms are well-founded.

TRIVELLI: Okay. We have here assistance programmes on democracy. In terms of the elections our assistance is directed towards things like civic eduction, get out the vote, training poll watchers, funding both international and domestic observers. I see nothing wrong with that. It is the sort of activity that us and other donors have been involved in in emerging democracies throughout the world.

In terms of the larger role, if the electoral machinery worked well and if the political landscape were level, the US ambassador, any other country, would sit on the sidelines and say: “May the best man win.”

In a country like Nicaragua that is obviously not the case. The democratic institutions have been hijacked by two undemocratic parties and manipulated in their favour, so I think our role and the role of the international community has really been to try to bring back that balance a bit in the political landscape and open space for democratic forces, and that is what we have been doing.

FT: But why isn’t the alliance between the two rightwing candidates working? That is what you have been trying to push, isn’t it?

TRIVELLI: That is a misperception. The reason that the two liberal parties – you know, this is a dispute between two branches of the liberal party [the Nicaraguan Liberal Alliance (ALN) and the Constitutionalist Liberal Party (PLC) – the reason that they are separate is because of the continuing existence of Arnoldo Alemán [the former president], who has been convicted of corruption and stealing tens of millions of dollars.

As long as he and his family and chief lieutenants still have control of that one branch, unification of those two parties is going to be very difficult if not impossible. In fact, one of those branch’s main premises is that it is anti-pact. Because what has happened here in recent years is sort of an unholy alliance between the Sandinista front and the PLC, one of the liberal parties, in order to control not only the National Assembly [the congress] but virtually every branch of government in their favour with the exception of the executive.

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