AMBASSADOR'S POST MEMORANDUM: SAN JOSE

C O N F I D E N T I A L SECTION 01 OF 04 SAN JOSE 002882

SIPDIS

FOR INSPECTOR GENERAL FROM AMBASSADOR MARK LANGDALE

E.O. 12958: DECL: 12/16/2015
TAGS: ASIG AMGT CS
SUBJECT: AMBASSADOR'S POST MEMORANDUM: SAN JOSE

REF: STATE 210813

Classified By: CLASSIFIED BY AMBASSADOR MARK LANGDALE FOR REASON 1.5 (D
)

(A) STATE OF RELATIONS WITH GOCR
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1. (C) Relations between the United States and Costa Rica are
very friendly. Our countries share a strong commitment to
democracy and human rights. Costa Rica is the longest
continuous democracy in Latin America and serves as an
important example of how a long-term commitment to democracy
benefits a country. Costa Rica does not have formal
diplomatic relations with Cuba and is concerned about
attempts by the Venezuelan government to increase its
influence in the hemisphere. Although Costa Rica has no
military, its coast guard and police cooperate closely with
the U.S. Coast Guard, Navy, and Drug Enforcement Agency (DEA)
in narcotics interdiction. The domestic political situation
is paralyzed. Costa Rica is the only CAFTA country that has
not ratified the treaty. Attempts at fiscal reform are
stalled, as well. This void of leadership and political will
to tackle serious issues confronting the country has put a
cloud over the investment climate in the country 75% of Costa
Ricans believe that now is a bad time to invest in the
country. Some of the worst road infrastructure in Central
America, a rising violent crime rate, bottom quintile
standings with the World Bank in tax collection, contract
enforcement and investor protection reinforce this negative
investment climate. Until elections are concluded in the
spring of 2006, nothing is expected to change.


2. (C) U.S. economic assistance to Costa Rica has fallen
dramatically since 1995 when we closed our bilateral USAID
mission. There was an upsurge in U.S. military and counter
narcotics assistance with the signing of a Bilateral Maritime
Agreement in 1998, but that assistance has now been reduced
very substantially because of Costa Rica's reluctance to sign
an Article 98 agreement and a shift in priorities in the
State Department's Bureau of International Narcotics and Law
Enforcement Affairs (INL funding has declined from a peak of
$3.2 million in 2000 to $355 thousand this year). Failure to
sign an Article 98 agreement also has caused Costa Rica to be
ineligible for trade capacity-building funds to implement
CAFTA-DR. This decline in assistance, which is viewed as
"sanctions" by many in the GOCR and the press, unavoidably
diminishes U.S. influence in Costa Rica and affects the level
of bilateral cooperation in the areas of counternarcotics,
counterterrorism, and trade.


3. (C) We expect far more vigorous leadership if former
president and current front-runner Oscar Arias takes office
in May. Arias is much more committed to free-market policies
and CAFTA-DF than Pacheco, but with respect to some
international issues, such as the use of military force and
levels of economic assistance from rich to poor countries,
Arias likely will be at odds with the United States. Arias
is unlikely to embrace an Article 98 Agreement in any form.

(B) PRINCIPAL GOALS AND OBJECTIVES
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4. (U) The Mission's three principal goals summarized from
the MPP FY 2007 are:

(1) to encourage greater economic prosperity in Costa Rica;

(2) to assist and protect the growing legions of American
citizens visiting and living in Costa Rica

(3) to improve the domestic security of both Costa Rica and
the United States;

(4) to promote democratic ideals and a better understanding
of, and support for, American foreign policy objectives in
the region and the world.


5. (C) Trade and Investment. Ratifying and implementing
CAFTA-DR is the litmus test of cooperation on trade
liberalization and improving the investment climate in Costa
Rica. Though we exerted a tremendous amount of effort to
encourage the Pacheco administration to submit CAFTA-DR to
the legislature as soon as possible after completion of
negotiations in early 2004, it was not submitted until
October, 2005, where it remains in committee.
Improving the neglected infrastructure of Costa Rica will be
needed for the country to be able to reap the benefits of
freer trade. Because of a weak fiscal situation, this work
will need to be financed utilizing foreign concessions. Costa
Rica has not had a successful foreign concession in history.
Helping solve current concession disputes and helping Costa
Rica streamline and simplify the concession process is an
important priority of the mission. Another key priority of
the mission is to assist Costa Rica in instituting
responsible fiscal reform.
6.(U) American Citizens Services. Over 700,000 Americans are
expected to visit Costa Rica this year. About 30,000
American citizens live here permanently. Our mission
processes more stolen passport claims than any other embassy
in the world. We are also number four in processing
non-natural US citizen deaths. The consular section is
undergoing a remodel and expansion that should help alleviate
the consular backlog and help streamline American citizen
assistance.


7. (SBU) Domestic Security. We are seeking to improve Costa
Rica's track record against drug trafficking within the
current environment of minimum USG support. Significant
weaknesses in the monitoring of the sea and air ports of
Limon and Liberia have been identified and proposals for
rectifying are being generated. We are placing greater
emphasis on the arms-for-drugs trade in which Costa Rica is a
transit country and on money laundering activity. We also are
seeking to make Costa Rica a regional model for combating
child sex exploitation, with the ability to export
instructors and training to its neighbors. Crime is on the
rise on the country and the National Police Force and the
judiciary are struggling to respond. We are working with the
government to propose changes in the wiretapping laws and to
provide access to rudimentary equipment and training that is
currently not available. A lack of an Article 98 agreement
is a major impediment to providing any meaningful assistance.


8. (U) Diplomacy, both Traditional and Public. Costa Rica
loves democracy, and we often work together with the GOCR to
promote democratic principles, for example through the Summit
of the Americas process and in the UN. Costa Rica is a great
example for Latin America. It is vital that the country
serve this role in the current environment of change in Latin
America. We are working with the government and the private
sector on an anti-corruption and transparency campaign to
counteract the negative effect of three of their past
Presidents being under arrest or suspicion of taking bribes.
We are also actively promoting the charitable good works of
US companies and foundations in the country as well as
continuing and strengthening the Fulbright Scholars Program.

(C) GOAL ACCOMPLISHMENT
--------------


9. (SBU) Despite minimal U.S. material assistance,
cooperation in counternarcotics
intelligence-sharing and joint operations continues to be
excellent, based on our close working relationships with the
new head of the Costa Rican Coast Guard and the
long-time chief of the drug police. Over 10 tons of cocaine
has been seized this year. There have also been significant
successes in the apprehension and extradition of most wanted
offenders from Costa Rica to the United States. We have put
into place an excellent training program for prosecutors and
police in the area of sexual exploitation of children that
has resulted in an unprecedented level of cooperation with
positive results.


10. (SBU) Although Costa Rica is the only CAFTA country that
has not yet ratified the treaty, this is in large part due to
the success of the mission in insuring that the opening up of
the telecommunications and insurance markets is part of the
agreement. This has enraged the powerful monopoly and its
trade unions, which have made it a priority to stop CAFTA
implementation. The Econ and Political Sections have done an
excellent job in preparing the scene for a decisive move
beyond this historic impediment to growth. Another important
success in the economic arena was the resolution of the
Tepezcuintles expropriation case. This leaves only one
expropriation case remaining to be resolved in Costa Rica.


11. (U) With important national elections set for February
2006, the mission has had success in introducing important
ideas for reform. A year-long commission on anti-corruption
and transparency has presented its report and steps are being
taken to implement the recommended reforms. Experts on
fundamental fiscal reform were also brought from the United
States to help steer the domestic debate onto a more
productive path.

D) SUPPORT PROBLEMS
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12. (U) Our counternarcotics and law enforcement strategy has
been hampered by irregular, unpredictable, feast-or-famine
access to funds used for training and equipping our Costa
Rican counterparts. U.S. legislation to protect American
service members has cut off U.S. military assistance,
including EDA and IMET, as of fiscal year 2004. And INL has
drastically reduced its support for counternarcotics
programming in Costa Rica. The fall-off in U.S. training and
other assistance has resulted in a noticeable deterioration
of the seaworthiness of the still very dependent Costa Rican
Coast Guard fleet and a general degradation of Costa Rican
counternarcotics capabilities.


13. (U) The other major problems at post are resource based.
The management section requires both additional staff and
ICASS funding to maintain adequate service in the
face of increasing demands. For the last few years this post
has suffered from inadequate ICASS funding levels. This
year, in order to partially rectify the situation, we have
asked for a shift of program funds to ICASS to meet minimum
operational requirements. The RSO office and the Econ
section are also areas that are woefully understaffed
considering their workload and importance to the success of
the overall mission.


14. (U) Consular staffing and space are inadequate, but have
been addressed partially with the initiation of a consular
improvement program. Additional space is required before
staffing issues can be resolved. The renovation project is
set for completion in June/July 2006. At completion, the
Section will have adequate space for current, but not for
projected, needs. Additional staffing, both officer and FSN,
have been requested through Consular Packages, MRV funding
requests, and the MPP. These requests are critical.

(E) PERFORMANCE OF EACH SECTION
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15. (SBU) Political Section: This section handles its
responsibilities professionally. They include annual
reports, demarches, the INL portfolio, overseeing a major
U.S. Labor Department project in Costa Rica, attempts to end
the Article 98 deadlock, monitoring the CAFTA passage saga,
and regular political reporting on the February 2006 elections
including our expectations of the next government.


16. (SBU) Economic Section: The section has been very
effective in working with Costa Rican and U.S. elements to
coax the GOCR to move CAFTA-DR forward with the all important
telecom and insurance market openings intact. The Economic
Section's close and coordinated relationship with both the
Foreign Commercial Service and the Foreign Agricultural
Service is exemplary. This section has also conducted an
excellent speakers program on important topics of reform for
Costa Rica.


17. (U) Management Section: The Management Section has
experienced turnover in most of its 12 American positions
since summer 2004. During this time period the section
quickly melded together as a team, made an analysis of
ongoing operations, decided what operational changes were
needed and then has worked together to institute them. The
results have focused on better customer service and
information feedback, making smarter use of information
technology through e-documents and reduction of paper,
smarter and more efficient procurement practices, cost
containment and reduction and more transparent B&F
operations, an enhanced community liaison office, and
remodeling the Consular section workspace to make it a
healthier and more pleasant work environment. Lack of ICASS
budget resources this past year, resulting in a less than
adequate LE Staff wage increase has affected morale, and
various ongoing issues with the host government regarding tax
exoneration, customs and social security issues, have made
the working environment difficult at times.


18. (U) Environmental Hub: The Hub links regional
environment and science activities to our bilateral
priorities. Its range of contacts and expertise encourages
joint action with other sections on CAFTA-DR, health issues,
public outreach, and other opportunities


19. (U) Consular Section: The Consular Section has a heavy
federal benefits, passport, arrest, death, repatriation,
extradition and letters interrogatory caseload.
While immigrant visa caseload is relatively low,
non-immigrant visa applications increased 20% in FY05, and a
30% increase is expected for FY06.


20. (U) Regional Security Office: The RSO enjoys an
excellent collaborative relationship with Costa Rican
counterparts on matters focused on, but not limited to,
Embassy security, fugitive investigations, and major fraud
cases. They have had good success with some of the most
stretched resources at the mission.


21. (SBU) Public Diplomacy: The PD section is an integral
and integrated part of the Embassy team. The PAO and/or IO
participate actively in Country Team and other weekly
Embassy meetings, providing both public affairs insights and
substantive information on priority political and economic
issues in the news. PA officers and staff coordinate
program and press activities with other sections of the
Embassy.

OTHER AGENCIES
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22. (U) Drug Enforcement Administration: DEA provides
leadership and knowledge regarding U.S. drug law enforcement
and money laundering investigations, and coordinates closely
with other Mission elements involved in pursuing the
Mission's counternarcotics objectives. Host government
cooperation with DEA is superb.


23. (U) Peace Corps: Peace Corps Costa Rica pursues the
three goals of the organization through projects that respond
to the needs of the Costa Rican populace. Peace Corps
volunteers are working in projects focused on meeting the
needs of children at risk, to address the needs of rural
communities, and to help micro-enterprise development.


24. (U) Animal and Plant Health Inspection Service: APHIS is
developing early detection systems of injurious pests of
agriculture that could jeopardize the U.S. food supply and
is developing a novel approach to pest reduction in Costa
Rica that will also reduce pest risk to the U.S. APHIS works
closely with host government officials and industry to
develop a variety of cooperative agricultural programs
beneficial to both countries consuming publics.


25. (U) Foreign Commercial Service: The Senior Commercial
Officer is very effective at contact work and routinely
shares important information in the Mission. The mutual
provision of TDY assistance among all FCS posts in Central
America supports the Mission's goals of furthering regional
economic integration and maximizing opportunities for U.S.
business.


26. (U) Office of the Defense Representative: ODR is a key
player in the mission's counternarcotics efforts and works
effectively with other mission elements. The office has
contributed very substantially to maintaining U.S. contact
with Law Enforcement authorities in Costa Rica despite
resource constraints.

(F) PROBLEMS AND INNOVATIVE INITIATIVES
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27. (SBU) The lack of resources to support counternarcotics
cooperation with Costa Rica will have a growing and long-term
adverse impact on our efforts to combat drug
trafficking and to stem the flow of illegal narcotics to the
United States. It may eventually cause Costa Ricans to call
into question the value to them of the Bilateral
Maritime Agreement of 1998.


28. (U) The Economic Section faces potentially crippling and
permanent personnel shortages in the course of the next two
fiscal years. The section's OMS slot is a
one-time-fill-only DRI position that will disappear when the
current incumbent rotates out in the summer of 2006. The
section's second officer position, also a DRI slot,
faces a three-month gap early in 2006. When the future
incumbent rotates to the consular section a year hence, the
gap will become permanent without the authority we seek to
create a permanent position. Such reduced capabilities as
Costa Rica begins to implement its CAFTA-DR obligations will
diminish the Embassy's effectiveness in a crucial area.


29. (U) The Political Section instituted a program to combat
sexual exploitation of children in Costa Rica which
emphasizes both deterrence and punishment. Posters at the
airport and billboards at beach resorts now warn potential
sex tourists, and, thanks to U.S. training and equipment,
arrests and prosecutions are on the rise.


30. (U) The Public Affairs Section transparency and
anti-corruption program produced real results when concrete
suggestions for government procurement reform were presented
in November at a public ceremony. This process represented
an unprecedented commitment by a broad range of Costa Rican
society to make changes in the ingrained ways of doing
business and root out corruption.
LANGDALE