COSTA RICA: NORMALIZED RELATIONS WITH CHINA BRING

C O N F I D E N T I A L SAN JOSE 001173

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CEN, EAP/CM, CA AND PRM;
SOUTHCOM FOR FPA

E.O. 12958: DECL: 06/18/2017
TAGS: PREL PGOV PINR SNAR CVIS XK CS
SUBJECT: COSTA RICA: NORMALIZED RELATIONS WITH CHINA BRING
ECONOMIC AND IMMIGRATION CONCERNS

REF: A. SAN JOSE 01106 (NOTAL)

B. SAN JOSE 868 AND PREVIOUS (NOTAL)

Classified By: ADCM David E. Henifin per 1.4 (d).


1. SUMMARY (U) Costa Rica's June 1 recognition of the PRC and
consequent break in diplomatic relations with Taiwan (Ref A)
have brought worries about the financing of ongoing
assistance projects (previously funded by Taiwan) as well as
immigration concerns at a time when illegal Chinese traffic
is taxiing immigration authorities. Greater Chinese
involvement in Costa Rica may also bring Chinese drug
trafficking, a point we have raised already with FM Stagno.
While cabinet ministers (and President Arias) point to
prospective trade benefits, the Legislative Assembly
(Asamblea) is scrambling to replace the lost Taiwanese
funding. Immigration authorities expect increased arrivals
of Chinese nationals, and are concerned about possible
Chinese mafia involvement. The GOCR was clearly not prepared
to face the practical consequences of its political decision
to embrace China. END SUMMARY

NEW FRIENDS, NEW MONEY?
=======================


2. (U) Costa Rica's partnership with Taiwan included
financial aid such as low-cost, long-term financing, or
outright aid, such as capital costs for construction, police
equipment, vehicles, and motorcycles. As recently as May 30
(on the eve of the secret negotiations in Beijing which
sealed the PRC recognition deal),the GOCR had included in a
supplemental budget request to the Asamblea the amount of
7,792 million colones (USD 15,130,000) for construction of
the Naranjo-Florencia highway, which was predicated on
Taiwanese funding. Minister of Finance Guillermo Zuniga
pulled back the budget request on June 8. The Asamblea is
now scrambling to secure loans, or to transfer funds from
other sources to fill the gap.


3. (U) Zuniga has hinted publicly about a possible credit or
bond purchase from the Chinese, but cautioned that these are
only "options"; no firm details have been concluded.
Minister of Foreign Trade Marco Vinicio Ruiz announced that
the first Chinese-Costa Rican trade fair might take place in
October. President Oscar Arias stressed the trade prospects
with China, reminding an audience on June 8 that he had long
noted the importance of free trade agreements with Singapore
and South Korea, as well as China.


4. (U) Meanwhile, the PRC has moved quickly to fill the
diplomatic gap voided by Taiwan. Ambassador-designate Wang
Xiaoyuan arrived from his previous post, Montevideo, on June

13. Described by the local media as an excellent Spanish
speaker and a Latin American "expert" with experience in
Mexico, Brazil, Equatorial Guinea, and Spain, Wang is
expected to present a copy of his credentials to FM Bruno
Stagno on June 18. His official credentialing ceremony with
President Arias will come later.

OUR CONCERNS: TRAFFICKING IN DRUGS AND PEOPLE
============================================= =


5. (C) On the Costa Rican side, Stagno,s Chief of Staff,
Antonio Alarcon, was dispatched to Beijing to oversee the
embassy opening there (although we understand he will not
remain as ambassador). A confident-sounding Stagno told
Ambassador Langdale on June 11 that the Arias administration
expected the controversy about the sudden switch in relations
to die down in a few weeks. "The decision has been made," he
stressed. Stagno asserted that the recognition timing was
partly driven by regional dynamics. The GOCR was under the
impression that other Central American countries, including
Nicaragua, were considering recognizing China. Costa Rica
did not want to be in the position of "following Nicaragua"
on this issue. This was "not just about trade," According to
Stagno.


6. (C) While acknowledging Costa Rica,s right to recognize
China, the Ambassador noted two concerns. First, given the
history of Chinese trafficking in persons to and through
Costa Rica, normalized relations would likely increase that
flow. The GOCR should be vigilant to likely visa fraud.

Second, Chinese drug traffickers are active elsewhere in the
region, particularly in the methamphetamine trade. The GOCR
should be prepared for this as well. Stagno thanked the
Ambassador for these warnings.

GOCR CONCERNS: IMMIGRATION
==========================


7. (C) Immigration Director Mario Zamora told Pol/C and
Poloff on June 11 that he had no advance warning of President
Arias,s decision to recognize China. He immediately grasped
the potentially negative implications, given Costa Rica,s
recent history as a trans-shipment point for illegal
immigrants mostly seeking their way to the United States, and
as a destination for Chinese workers paid slave wages in
Costa Rica (Ref B). They arrive via land, air, or by boats
from Panama, Colombia, Ecuador and Peru. Any of the boats
are not seaworthy and, while they may not necessarily be
headed to Costa Rica (they prefer landingsin Guatemala to
continue their trip North) they re found in Costa Rican
waters or become disable here. Zamora said there are 72 PRC
citizens curently awaiting deportation (many of them were
arivals by boat while some were found in safehouses n Costa
Rica). According to Zamora, the GOC hasalready acceded to
pay for this group of illegalimmigrants to return (by air)
to China.


8. (C Zamora estimates there are at least 10,000 PRC
ationals legally residing in Costa Rica. This numbr could
easily double with the amount of undocumnted illegal
immigrants or in-transit Chinese. Te increase in illegal
Chinese arrivals during th four-month period earlier this
year when Colomba relaxed visa requirements for PRC citizens
was a troubling case in point. The influx of PRC citizns to
Colombia (with repercussions throughout th region) grew more
thanten-fold during that brief period, according to Zaora.
Showing us some passports, he added that 23of the Chinese
nationals currently waiting for dportation from Costa Rica
had legal entry stampsinto Colombia dated March 2007.


9. (SBU) Currenty, PRC travelers to Costa Rica are Category
4 aplicants, the most restricted requiring a limited(90-day) MFA-approved visa
to enter Costa Rica. Zaora
maintains this prerequisite will remain in efect, as it is
not based on the level of diplomatic relationship. Haiti and
Cuba, for example, ar in the same visa category. Zamora
anticipates hinese pressure to ease visa requirements (as
ha already appeared in the local media) and he seemsready
to stand firm. If the Chinese claim they need additional
business visas, he said, then CostaRica should see an influx
of genuine businessmenand investors from China. Zamora told
us he hasrequested a meeting with FM Stagno to discuss the
Chinese visa issue and other immigration implications from
recognition.

FRAUDULENT ID CARDS, CHINESE MAFIA ALSO WORRISOME
============================================= ===


10. (SBU) The illegal Chinese immigrant issue is exacerbated
by quality problems in the alien identification card issued
by the GOCR. Zamora said the original contract was awarded
to the local representative of a US-based firm, "Lasercard".
The end product did not meet the GOCR specifications or the
quality standards of the company resulting in rapidly fading
photos and vital data in the cards. (Zamora showed us
examples.) The faded cards are often passed to illegal
immigrants who place their photo and data on the same, while
the legal holder gets a legitimate replacement of his faded
card. The result is an active illegal market for these

identifications, which could easily be used by Chinese
obtaining seemingly legal cards to secure their status as
immigrants. Zamora added that the government is currently
addressing these problems and seeking redress from the
company.


11. (SBU) The potential involvement of Chinese mafia-type
smuggling organizations (such as the Han Garcia Clan of
Mexico) also concerns Zamora. Should these groups become
more active in Costa Rica, the result could be more violence
associated with trafficking. Zamora,s office is working hard
to identify such groups and/or attorneys involved in the
illegal immigration trade. Zamora is also well aware of the

lax passport procedures now in effect in Venezuela, which
could be exploited by Chinese or smuggling organizations
sending Chinese via airline service from Caracas. Zamora
added that in the past, secondary inspection by airport
immigration officers has been able to detect counterfeit
travel documents, resulting in exclusion and deportation of
the travelers.

COMMENT
=======


12. (C) The GOCR was clearly not prepared to face the
practical consequences of its political decision to embrace
China. Like Minister of Public Security Fernando Berrocal
(Ref A),Zamora was kept in the dark, despite his key
portfolio. He is painfully aware of the impending
immigration problems associated with China,s recognition and
seems determined to hold his ground. However, Zamora may be
unable to resist the political pressure to elevate China
eventually to a Category 3 country. This would permit Chinese
with US or EU visas to enter/transit Costa Rica without MFA
review and a Costa Rican visa, and would not be good news
from our perspective.

WEITZENKORN