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Nicaraguan President Urges Support for CAFTA Trade Pact

Nicaraguan President Enrique Bolanos Thursday appealed for Congressional support for the U.S.-Central America Free Trade agreement, CAFTA. The trade accord faces an uncertain fate in the U.S. House of representatives.

Mr. Bolanos used a signing ceremony for a new U.S. aid package to Nicaragua to make an emotional appeal for CAFTA, a trade accord years in preparation that is in danger of being voted down in the House of Representatives.

A major priority of the Bush administration,CAFTA would eliminate trade barriers between the United States, Dominican Republic and five Central American states, including Nicaragua.(EDS: Four others: Costa Rica, El Salvador, Guatemala, Honduras)

The Senate approved CAFTA by a nine-vote margin late last month. But its prospects are unclear in the House, where many members - mainly Democrats - oppose it on grounds that labor and environmental protections are inadequate.

Presiding with Secretary of State Condoleezza Rice at the signing of a $175 million U.S. Millennium Challenge aid package for Nicaragua, President Bolanos said CAFTA is of paramount importance to the region.

He said Nicaragua's leftwing former Sandinista President Daniel Ortega, still influential in Nicaraguan politics, opposes CAFTA precisely because of its promise as an instrument of prosperity, security and the rule of law.

Mr. Bolanos said CAFTA is more than an economic issue but also one of security, and said its defeat could roll back progress made in Nicaragua and neighboring states since the political turbulence of the 1980's:

"CAFTA will consolidate the gains made by our region during the past 15 years in stabilizing democracy, the market economy, and a safe neighborhood for the U.S," he said. "If Congress were to send a message that the U.S. is now turning its back on the Central American region by rejecting CAFTA, the negative economic, political, and security implications of such a message will be difficult to assess."

House Republican leaders Thursday predicted CAFTA would be approved before Congress begins an August break. Democrats, though, said the measure was in trouble, largely because it cannot deliver the benefits to the U.S. economy claimed by its sponsors.

Nicaragua became the fourth country, behind Madagascar, Honduras and Cape Verde to conclude a Millennium Challenge compact with the United States.

The cornerstone of the Bush administration's foreign aid strategy, the Millennium Challenge grants are made to low-income nations that commit to good governance, market reforms and action against corruption.

The five-year $175 million grant to Nicaragua aims to increase the income of farm families in poor areas by reducing transportation costs and improving access to markets.

Secretary Rice said the aid package will allow Nicaragua to build on market reforms that have already given it the highest annual economic growth rate in Central America, in excess of five per cent:

"Development aid works best when it goes to countries that govern justly, open up their economies and invest in their people," she said. "The awarding of Millennium Challenge development funds to Nicaragua testifies to Nicaragua's strong commitment to advance in all of these key areas."

The Millennium Challenge program, begun in 2002, has been criticized in Congress for being slow to take shape, and it has received considerably less funding than the five billion dollars a year the Bush administration had envisaged by this time.

The Nicaraguan grant raised to $600 million the amount of funds committed under the program thus far. More than 30 countries, mainly in Africa, Asia and Latin America have been declared eligible for the program.