SCENESETTER FOR DAS MADISON VISIT TO COSTA RICA

UNCLAS SAN JOSE 000238

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR DAS MADISON, WHA/CEN, WHA/EPSC, WHA/PPC AND EEB
PLEASE PASS TO USTR DOLIVER/AMALITO

E.O. 12958: N/A
TAGS: CS ECON ETRD PGOV PREL SNAR
SUBJECT: SCENESETTER FOR DAS MADISON VISIT TO COSTA RICA

REF: A. SAN JOSE 0159

B. SAN JOSE 0232

C. 07 SAN JOSE 1946

D. SAN JOSE 0087

E. 07 SAN JOSE 1926


1. (SBU) SUMMARY. Embassy San Jose warmly welcomes DAS
Kirsten Madison. Your visit to Costa Rica is timely. We
should keep the pressure on the GOCR to pass CAFTA
implementation laws, encourage the GOCR to continue its close
cooperation on counternarcotics and law enforcement issues,
and urge the GOCR to address growing domestic security
problems, including narco-terrorism. The Arias
administration is making progress on all these fronts. All
the major parties in the legislature, including the
opposition, have agreed to move ahead on the CAFTA
legislation in the next few weeks. This follows the
entry-in-force extension granted on February 27, and Commerce
U/S Padilla's February 28-29 visit (Ref B). We should
reinforce his clear message that Costa Rica needs to finish
CAFTA implementation quickly and that the extension was "one
last opportunity" for Costa Rica. Deteriorating domestic
security and rising public concern about crime have finally
galvanized the GOCR to act more vigorously. Legislation to
reform the criminal justice system has been introduced to the
legislature and needs to move ahead. President Arias himself
asked Charge Brennan in January for USG assistance to address
the security challenges. In a recent development,
information uncovered by the Colombian attack on FARC leader
Raul Reyes' camp in Ecuador has uncovered FARC links to Costa
Rica. Meanwhile, invigorated coast guard leadership has
improved maritime cooperation and led to continuing CN
successes. The Merida Initiative, if approved, would go a
long way toward cementing our CN and law enforcement
partnership and beefing up Costa Rica's domestic security
needs. Suggested themes for DAS Madison's meetings with
President Arias, Minister of Public Security Berrocal, and
for her visit to Puntarenas on April 2, are noted below. END
SUMMARY.

========================================
CAFTA: STALLED MOMENTUM; NEW OPPORTUNITY
========================================


2. (SBU) The legislature had made more progress on CAFTA
legislation in the last four months than its predecessor had
in the previous four years, but momentum dissipated after the
EIF extension was granted (to October 1). The leaders of the
38-seat pro-CAFTA coalition (whom DAS Madison will meet) well
understood the urgency, but found it difficult to maintain
discipline within their ranks. Over the last month, one
member of the Social Christian Unity Party (PUSC) --
Bienvenido Venegas from Puntarenas -- stubbornly refused to
support the CAFTA legislation until his home province
received more attention and resources from the central
government. Coupled with the opposition's reluctance to
cooperate, this blocked quorum on a number of occasions,
stalling the legislation. Although Arias, VP Laura
Chinchilla and other cabinet ministers visited Puntarenas the
week of March 24, and despite GOCR pledges of additional
resources for the area, Venegas did not budge. His
stubbornness underscored his thinly-veiled true motive; to
back ex-President Rafael Calderon (PUSC),who is hoping to
overcome corruption charges to run again in 2010. Concerned
about further delay, the rest of the PUSC faction, which is
strongly pro-CAFTA, decided to work around Venegas and set
aside their visceral distrust of the opposition Citizens
Action party (PAC). They accepted an agreement, hammered out
by Arias's National Liberation Party (PLN) on March 25, to
move ahead on the implementing legislation. As its part of
the bargain, the GOCR agreed to begin discussion in the
legislature of social development, criminal justice and
electoral reform initiatives of interest to the PAC, the PUSC
and other parties. Although the PAC will not explicitly say
so, they have finally agreed to limited cooperation on CAFTA
because of their plummeting standing in the polls (see
below),consistent public pressure to get CAFTA done, and a
very effective private sector (and pro-GOCR) public relations
campaign criticizing their intransigence. On March 28, PAC
faction chief Elizabeth Fonseca implicitly acknowledged as
much to the media.


3. (SBU) Madison's message can thus be a simple "the USG is
watching; CAFTA remains important for Costa Rica, the region
and the United States; let's get it done." Her interlocutors
will also be interested in the state of play in Congress of
the Colombian FTA, and the general (anti-trade) tone in the
Congress and in the U.S. presidential campaign. Our pushing
now may help. Arias remains popular (with a 50 percent good

or very good rating in a UNIMER poll released March 24 and
the lowest negative rating -- 14 percent -- since taking
office. His PLN party received a 35 percent approval rating
in the UNIMER poll, highest of any political party, while the
PAC was rated most unfavorably with a 34 percent negative
score and national support at only 13 percent. In
particular, 43 percent of those polled did not support th
PAC's blocking the CAFTA legislation. The stats of the
CAFTA legislation is also promising at the moment. Five of
12 bills have been fully appoved, and two more should be
shortly. Two billsare pending review by the Supreme Court's
constiutional chamber (Sala IV),which thus far has not
found significant problems with any of the CAFTA legislation
it has reviewed, to the relief of the ro-CAFTA forces and
the consternation of the oppsition. Two bills are under
debate (on opening he insurance market and opening the
telecom sectr),and one has just been introduced (on IPR
reform). These last three will face tough debate, howeer,
and USTR-GOCR implementation review continue on all the
legislation.

=================
HAT IS AT STAKE?
=================


4. (U) Without CAFTA, the textile and the tuna sectors are at
risk due to the short-run possibility of the loss of
Caribbean Basin Trade Promotion Act (CBTPA) trade preferences
on October 1 and the long-run risk that Costa Rica will not
have permanent, tariff-free access to the U.S. market. For
Costa Rica, both risks would portend a competitive
disadvantage with its CAFTA neighbors. Business leaders
predict 20,000 jobs in the tuna and textile sectors are at
stake. Given that the fishing industry is a key component to
the economic health of Puntarenas, the loss of tuna
processing jobs would be a significant blow to the local
economy. The principal processor, Sardimar (1,300 employees,
$125 million in sales) which DAS Madison will visit on April
2, has said it will have to move to another country if
preferential access to the U.S. market is lost. Likewise, in
the intensely competitive textile industry, buyers want price
certainty which Costa Rican companies currently cannot
provide. Indicative of the uncertainty, the industry
contracted from $730 million in 2002 to $557 million in 2006.
The Costa Rican textile industry is heavily reliant on the
U.S. market and the preferential treatment it receives under
the CBTPA (Ref E). The U.S. accounted for 86 percent of its
total textile exports in 2006 and CBTPA lowers the U.S.
tariff from 18 percent to zero for most textile products.
Thus, without an implemented CAFTA, industry uncertainty has
reached critical levels as producers openly talk about moving
production outside of Costa Rica. DAS Madison will be able
to discuss this further with AMCHAM members during her visit.

============================================= =
DOMESTIC SECURITY: TOP GOCR AND PUBLIC CONCERN
============================================= =


5. (SBU) Responding to the direct request of President Arias
for USG security assistance, and hearing the clear clamor of
the Costa Rican people (who consistently list security as
their top concern in opinion polls),we are seeking ways to
increase our assistance/cooperation to keep Costa Rica and
the region free of the influences of narcotraffickers,
terrorists and transnational criminals. DAS Madison can
underscore that message. Information uncovered in the
Colombian attack which killed FARC leader Raul Reyes revealed
how far these influences extend. On March 14, the GOCR
raided a home in the San Jose area, netting $480,000 in cash
stowed there since the late 1990's and arresting a couple who
were apparently long-time FARC sympathizers, and who had
hosted a number of visiting FARC leaders over the years.
Although GOCR Attorney General Franciso Dall'enese quickly
ruled out the couple's extradition to Colombia (should that
be requested),Public Security Minister Berrocal has stressed
publicly that Costa Ricans cannot sympathize with the FARC
cause without also indirectly supporting their narcoterrorist
tactics. Because Berrocal also asserted (incorrectly) that
evidence from the March 1 raid on Reyes also showed links to
(unnamed) Costa Rican politicians, he will testify before the
legislature on March 31. This will keep the FARC issue on
the public's agenda during DAS Madison's visit, and perhaps
during her meetings with government officials.

==================================
EXCELLENT CN COOPERATION CONTINUES
==================================


6. (SBU) Our bilateral counternarcotics cooperation has
yielded impressive results over the past two years (Ref C).
In 2007 alone the GOCR interdicted more than 30 tons of
cocaine and 4.5 tons of marijuana. Second only to Panama
among Central American countries in the amount of cocaine
seized in 2007 and 2006, Costa Rica seized more cocaine than
Mexico in 2006. These impressive numbers represent, we
believe, merely the potential for even greater successes
against narcotrafficking if Costa Rica had more resources.
Due to heavy budgetary demands elsewhere, our INL funding and
cooperation has been limited to only $31K in support from
FY2007-2009. The Merida Initiative, if approved, could yield
far more impressive results and contribute to even better
cooperation and bilateral relations, not to mention seriously
damaging major trafficking organizations. GOCR interlocutors
will welcome DAS Madison's views on Merida and regional
security cooperation.


7. (SBU) DAS Madison will meet with the Minister of Public
Security, Fernando Berrocal, whose portfolio would equate to
those of Defense and Homeland Security in the U.S. He has
control over the regular police, special anti-drug police, a
small air surveillance wing, and the coast guard. During the
meeting with Berrocal, DAS Madison should underscore and
thank him for the positive cooperation that we have with
Costa Rica in security matters, especially counternarcotics.
Although he has in the past been somewhat prickly about
purely "military" assistance, Berrocal is fully on board with
our current level of cooperation across the military and
civilian spectrum and seeks more support. Berrocal, in
addition to possible Merida-funded resources, will likely ask
for more helicopters for his small air wing. While worthy of
this kind of support, we just have not had the resources to
fulfill this request the last few years. Helicopters are
also not currently part of the Merida package for Costa Rica.
As the recent lease of four U.S. helicopters to Guatemala to
combat narcotrafficking received considerable coverage in the
local press, Berrocal may well make note of this to DAS
Madison, and request some similar arrangement.

======================================
FOREIGN AFFAIRS AND REGIONAL RELATIONS
======================================


8. (SBU) Costa Rica's relationship with Nicaragua remains
strained due to long-standing differences over navigation
rights along the border-defining San Juan river, not to
mention a cool personal relationship between the two
Presidents. However, last November Nicaraguan President
Ortega said he would abide by the future decision of the
International Court of Justice to settle the river dispute
(Ref D). Although the river dispute was not a topic of
discussion at the March 14 meeting of the reestablished
"binational commission," Costa Rica and Nicaragua renewed
talks to reform immigration issues, the environment, and
development of tourism. Costa Rica enjoys close relations
with Colombia, and Arias is a strong supporter of President
Uribe. During the Padilla visit, Arias offered to do
whatever he could to help Uribe, Colombia and the pending
US-Colombia FTA.


9. (SBU) Outside the region, Costa Rica's relationship with
China has grown significantly since the two countries
officially established relations last June. Arias visited
China in October, which among other things, resulted in $20
million from Beijing for disaster relief in the wake of the
heavy 2007 rainy season. A large chunk of the $28 million of
additional Chinese assistance will fund the construction of a
new national stadium in San Jose. Costa Rica is playing an
active role in UN affairs, since returning to the Security
Council in January. The GOCR's priorities will be promoting
human rights, multilateralism, and disarmament. Despite
these consistent themes, Arias's foreign policy has been
somewhat disjointed at times -- among the first recognize to
Kosovo on the one hand, but also being the first to recognize
the "state" of Palestine, on the other. The Arias
Administration has established relations with eight nations
in the Middle East since 2006: Egypt, Bahrain, Jordan,
Kuwait, Lebanon, Oman, Yemen, and "Palestine." In August
2006, Costa Rica moved its embassy in Jerusalem to Tel Aviv,
a move that was probably also meant to improve its standing
among Arab nations.

============================
MEETING WITH PRESIDENT ARIAS
============================


10. (SBU) DAS Madison will meet with President Arias on April

1. He may ask again for increased USG security assistance in
addition to more general requests for assistance. In
addition, he will probably thank the U.S. for agreeing to the
CAFTA implementation extension. During the meeting, we
recommend that DAS Madison:

-- thank Costa Rica for its steadfast (yet quiet) support
for Colombia's Uribe Administration as well as his
government's principled policies towards promoting democracy
in Cuba and Venezuela;

-- congratulate Costa Rica for its record-breaking drug
seizures during his administration;

-- ask him how relations with Nicaragua are progressing in
the wake of the resumption of binational commission meetings;
and

-- inquire as to the state of free trade negotiations with
the EU.

==================
TRIP TO PUNTARENAS
==================


11. (SBU) DAS Madison's trip to Puntarenas will cover both
themes of this visit, CAFTA and security. For the
CAFTA-related portion of the trip, DAS Madison will visit the
Sardimar Tuna Factory, which employs over 1000 workers and is
positioned to benefit from CAFTA. The visit to Sardimar,
which will be covered by the local media, will be an
excellent opportunity to keep the spotlight on CAFTA
implementation. We have also invited some Puntarenas area
legislators (including Venegas) to accompany us for the day.


12. (SBU) After viewing Sardimar's operations, we will
refocus on security issues with a visit to the future
location of the main Costa Rican coast guard (SNGC) station
at the port of Caldera and then to the existing main SNGC
station at Puntarenas. DoD/SOUTHCOM Section 1004 funds will
help construct the new pier at Caldera as well as some
buildings for the SNGC. The SNGC commander, Martin Arias,
will accompany us for the visit. Arias is an
operationally-oriented commander and has truly "taken the
fight to the enemy," (narcotraffickers). At Puntarenas, you
will see a dilapidated coast guard station that has been
condemned for the past 15 years, mainly due to lack of
resources and mixed leadership. This station is where the
majority of Costa Rica's larger patrol boats are docked,
including two of their 82-foot patrol craft and their
105-footer, their largest. If the Merida Initiative is
approved, these patrol boats, along with several others
located at other ports on both the Pacific and Caribbean
Coasts, will be totally refitted and modernized to better
interdict drug-running operations off-shore.

BRENNAN