(CORRECTED COPY) ARIAS ACCEPTS FIRST RESIGNATION: TELECOM

UNCLAS SAN JOSE 002041 SIPDIS SIPDIS STATE PASS TO USTR FOR KSCHAGRIN E.O. 12958: N/A TAGS: ETRD EINV ECIN PGOV CS SUBJECT: (CORRECTED COPY) ARIAS ACCEPTS FIRST RESIGNATION: TELECOM MONOPOLY GETS NEW BOARD PRESIDENT ¶1. (U) SUMMARY. The Board President of Costa Rica's telecommunications monopoly, ICE, resigned on September 12 and was replaced almost immediately by a new head whose nomination improves CAFTA ratification and implementation prospects. Introduction of the long-promised telecom legislative package nonetheless will be delayed by a few weeks as the parastatal's leadership structure fully reorganizes . END SUMMARY 2.(U) President Oscar Arias has accepted the resignation of Jorge Gutierrez Gutierrez as head of the parastatal telecommunications monopoly known as ICE, which controls all telecommunications and electricity production and distribution in Costa Rica. Gutierrez, a 60 year old civil engineer and brother of Central Bank President Francisco de Paula Gutierrez, was appointed President of the ICE Board of Directors when Arias took office on May 8, 2006. Although the resignation was attributed to a heart condition, it has been rumored for some time that President Arias was not pleased with Gutierrez's less than enthusiastic attitude toward CAFTA. The resignation is effective September 15, 2006. ¶3. (U) The resignation comes in the midst of several very stressful months for ICE as the administration has informally floated various proposals to open the telecommunications sector to competition, as required by CAFTA. This past weekend the GOCR announced again that the telecom legislative proposals have been finalized and will be sent to the national legislature (the Asamblea) in approximately two weeks. ¶4. (U) Within hours of the Gutierrez resignation, President Arias's Council of Ministers announced his successor, Pedro Pablo Quiros, an electrical engineer who began his career in the 60's with ICE and has worked in the telecommunications industry for 40 years. In May 2006 Quiros was appointed to the Board of Directors by Arias and subsequently was unanimously elected Vice President of the ICE Board by fellow directors. ¶5. (U) President Arias will now have one additional appointment to make to the ICE Board of Directors after which the Board will select a new Vice President. ¶6. (SBU) The Minister of Foreign Trade, Marco Vinicio Ruiz, called EconOff to voice his opinion that this change was a very positive development for CAFTA. He said the tension on Gutierrez had been enormous and he simply was not up to it. He noted that the designated President of the Board, Mr. Quiros, had worked for AT&T in the U.S. and "is totally convinced about CAFTA." He said that this personnel change will slow slightly the GOCR's ability send draft telecom legislation to the Asamblea because the Board of Directors of ICE must first approve it. The Board cannot take such action until Arias names another board member and that person is sworn, which Min. Ruiz estimated would take two weeks. ¶7. (U) Comment: The telecommunications reforms are considered to be the most difficult hurdle to implementing CAFTA in Costa Rica. The ICE union, along with other public unions, has threatened a national strike for late October. ICE leadership, especially from the Board President, will play an important role in the months ahead as the country debates telecom reforms the Arias administration is now characterizing as modeled after those in Northern Europe, i.e. "based on solidarity and competition and not at all like previous Latin American privatizations." End Comment LANGDALE