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06SANJOSE131 2006-01-19 20:58:00 CONFIDENTIAL Embassy San Jose
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					  C O N F I D E N T I A L SECTION 01 OF 02 SAN JOSE 000131 



E.O. 12958: DECL: 01/17/2016

REF: 05 SAN JOSE 2279

Classified By: Ambassador Mark Langdale for reasons 1.4 (b) and (d)


1. (C) Both President Pacheco and Oscar Arias, frontrunner
to be the next president, said in separate meetings with
CODEL Burton that they expect a better political climate in
Costa Rica after the February 5 elections. Arias said that
Costa Ricans have reason to be annoyed with the political
class, a do-nothing government, and a fragmented legislature.
Pacheco, while defending his government's record, said that
the current legislature was "the craziest in the world" but
that the next one will be "more disciplined and intelligent."
Arias said that political parties in favor of the
U.S.-Central American-Dominican Republic Free Trade Agreement
(CAFTA-DR) will win at least 70 percent of the vote. Arias
criticized the USG for "unilaterist" positions on
international issues like the Kyoto Protocol and
International Criminal Court (ICC). He said he hoped the USG
would be "more supportive" of Latin America out of
self-interest, if not morality. Pacheco said Arias will be
an "imperial" president with tight control over every aspect
of governing, especially foreign affairs. End summary.

2. (SBU) During the visit of Representative Burton (R-IN) to
Costa Rica January 10-12, he and Ambassador paid calls on
President Abel Pacheco and former president Oscar Arias
(1986-90), who is likely to be reelected on February 5. The
discussions focused on the elections and on what can be
expected of the next government.

Oscar Arias's Views


3. (C) Oscar Arias, accompanied by his running mate for
first vice president, Laura Chinchilla, said the campaign was
physically draining. He said he was the target of attacks
from all the other candidates because he supports CAFTA-DR
and wants to do away with public monopolies. Arias knew that
Ambassador had visited Arias's principal opponent, Otton
Solis, and probed Ambassador on his impressions of Solis and
wanted to know what Solis had said about him (Arias).
Ambassador skirted the question. (Note: In fact, Solis said
Arias was corrupt, "probably" in league with
narcotraffickers, and hated the United States. See 05 San
Jose 2930) Arias told us that Solis was misleading voters by
telling them that CAFTA-DR can be renegotiated. Burton
commented that renegotiation was out of the question, though
"fine-tuning" of the treaty was possible after ratification.
Moreover, Burton said Costa Rica will not continue to be
eligible for benefits under the Caribbean Basin Initiative

4. (C) Arias said that Costa Ricans have reason to be
annoyed with the political class. Former presidents are
suspected of corruption, and the country has just lost four
years with a do-nothing government and fragmented
legislature. Though confident of victory in the February 5
elections, Arias pointed out that other Nobel
Laureates--Mikhail Gorbachev and Lech Walesa--were rejected
by voters. He is urging voters not to split their vote, i.e.
to vote both for him for president and for the National
Liberation Party (PLN) list for the Legislative Assembly.
Although he does not expect a PLN majority in the Assembly,
he does expect pro-CAFTA-DR political parties to win at least
70 percent of the vote. Chinchilla noted that the fate of
CAFTA-DR will be decided in the newly elected Assembly after
May 1; the most the current Assembly can do is vote CAFTA-DR
out of the International Relations and Trade Committee.
(Note: The chairman of that committee, Rolando Lacle, told
us the same thing. See San Jose 91) Chinchilla added that
Assembly rules do not permit closing out debate and that
there were no shortcuts on ratification, which she doubted
would be debated in the plenary before June or July. She
said there are currently 37 to 42 votes in favor of CAFTA-DR
in the 57-member unicameral Assembly.

5. (C) Arias said he hoped the USG would be "more
supportive" of Latin America out of self-interest, if not
morality. He said he had planned to send his brother Rodrigo
to Washington after the election to seek funds from the
Millennium Challenge Account. Ambassador pointed out that
those funds were for very poor countries and that Costa
Rica's per capita income was well above the cutoff. Arias
responded that Costa Rica desperately needed to make
investments in infrastructure and that, although the country
has been "somewhat successful" economically, it "should not
be punished" for that success.

6. (C) Arias criticized the USG for "unilateralist"
positions on international issues like the Kyoto Protocol,
the ICC, landmine bans, and non-proliferation. (Note:
Regarding the last, Arias was probably referring to his Arms
Trade Treaty proposal, which he has been lobbying for around
the world.) He said these were "moral issues for the good of
the world and for the good of everyone." Ambassador
responded that while we do not agree on everything, on the
key issues in Costa Rica and the region--namely consolidating
democracy and fighting poverty with more open economies--we
do agree and can work together.

President Pacheco's Views


7. (C) President Pacheco, accompanied by Foreign Minister
Roberto Tovar, and Ambassador to the United States Tomas
Duenas, began the meeting by enumerating his government's
accomplishments, including growth in Costa Rica's monetary
reserves, declining infant mortality, and increased
longevity. He said that because of his careful, go-slow
approach to CAFTA-DR ratification, now 70 percent of the
population supports the treaty; before, according to Pacheco,
80 percent were opposed. (Note: Embassy is not aware of any
poll showing that at any time a majority of Costa Ricans were
against CAFTA-DR.) Pacheco nevertheless expressed relief
that, in his words, there were only "117 days left" in his

8. (C) Pacheco complained that his administration was
hampered by constant attacks, many of which were from members
of his own party, the Social Christian Unity Party (PUSC).
He said that the legislature he had to work with was "the
craziest in the world" and that the peculiar rules of the
legislature allowed a small minority of deputies to block
fiscal reform for nearly four years and counting. He said it
was unrealistic to expect much progress on CAFTA-DR in the
Legislative Assembly this term because the deputies return
from vacation only on February 6 and have less than three
months left in their term, including Holy Week. Pacheco was
confident that there were sufficient votes in favor of
CAFTA-DR and that there would be even more in the next
Legislative Assembly. He said the next set of legislators
will be "more disciplined and intelligent."

9. (C) Pacheco said that Arias will be an "imperial"
president, not given to dialogue. He said Arias has already
burned his bridges to the public sector labor unions and
"will need me (Pacheco) to keep the country from bursting
into flames." Pacheco said Arias will keep the reins tight
over his ministers, especially the minister of foreign
affairs. Tovar said the rumors are that Bruno Stagno, a
young Arias protege and currently Costa Rican Permrep in the
UN, will head the MFA. Tovar and Pacheco both said that
Arias would be wise to keep Ambassador Duenas in Washington.
Duenas denied hearing anything from the Arias camp, implying
he might accept if asked.

10. (C) Representative Burton asked about any evidence of
meddling by Hugo Chavez in Costa Rica. Pacheco said he was
certain Chavez was funding labor unions and spreading money
around marginalized sectors of society, like indigenous
groups. As evidence, he cited a letter he received recently
from a Talamanca Indian chief of southeastern Costa Rica,
with the chief quoting from Simon Bolivar. "What do the
Talamanca people know about Bolivar?" Pacheco asked.
Pacheco said there were no signs of direct involvement by
Chavez in the Costa Rican elections, but he would not be
surprised to see Chavez supporting candidates in Nicaragua
and Mexico.



11. (C) We expect Pacheco's political career and influence to
end the day he leaves office on May 8. He is widely seen as
a failure and the reason why his chosen successor, Ricardo
Toledo, is polling under 5 percent. Pacheco made a good
point, however, about Arias's relationship with public sector
labor unions--Arias wants to get rid of the public monopolies
that are the source of the unions' strength. This does not
mean Arias will privatize; he will not. Instead, he will
gradually open up closed sectors of the economy like
telecommunications, insurance, and the extraction, refining,
and importing of hydrocarbons. The unions see such an
opening as the beginning of the end for the sweet deal they
have enjoyed over many years. The struggle between Arias and
the unions will be bitter and hard fought.