1. (SBU) SUMMARY: Costa Rican President Oscar Arias is
continuing calls for Honduran President Jose Manuel Zelaya's
return, and says that his government will only recognize a
democratically-elected government in Honduras. Costa Rica,
who played host to Zelaya immediately after he was forced out
of Honduras (reftel), finally joined its neighboring states
in recalling its Ambassador to Honduras, but has preferred
to avoid harsher measures. However, Arias has stated that he
will not consider economic sanctions at this time, and GOCR
officials criticized the temporary closing of the Guatemalan,
El Salvadorian and Nicaraguan borders with Honduras, in large
part due to domestic export interests. This tough words,
softer action approach may help him as he begins to act as
mediator in the conflict. The media in San Jose is already
reporting that talks could begin here as early as July 9.
END SUMMARY.



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ARIAS CONDEMNS COUP


--------------------------





2. (U) In a televised speech on July 2, President Arias set
out his position on the developments in Honduras by calling
for Zelaya's return to power, and a return to democratic
norms in that country. "I don't share all of the ideas of
the President of Honduras," Arias said, "and it is obvious
that I have ideological differences with him and with some of
his allies in Latin America. But I am a democrat by
conviction, not by convenience, and it is my duty to support
those governments elected by the people, regardless of their
personal plans or ideologies." Zelaya's expulsion from
Honduras "by a group of soldiers from the army
was...unjustifiable," according to Arias.



3. (U) Despite the president's strong rhetoric, Costa Rica
broke with the other Central American countries in not
joining the 48-hour trade embargo enforced against Honduras,
and calling for borders with Honduras and its neighbors to
remain open. The GOCR,s motives were not entirely
altruistic. The Costa Rican private sector, along with the
Ministry of Foreign Trade, loudly complained that even the
brief closure seriously affected trade flows along the
primary transport route for Costa Rican goods en route to
U.S., Mexican and Guatemalan markets. Costa Rica's exporters
association claimed that Costa Rican businesses had lost
"millions" due to the border shutdown.



4. (U) Earlier on July 2, in a press conference following the
weekly cabinet meeting, Arias told reporters that he hoped
for an "energetic reaction" from the USG (to resolve the
crisis in Honduras), adding that the solution would have to
come through the OAS. Arias also cited the "great influence"
the U.S. military had over its Honduran counterpart. Arias
reminded the media that he was the "first" regional leader to
have condemned the coup in Honduras, and he reiterated the
importance of standing firm "against the golpistas" in order
to avoid a regional "domino effect," i.e., "opening the door"
to future military actions against civilian leadership
elsewhere in the region. When asked if he would serve as
mediator in this conflict, Arias acknowledged that "this had
been suggested," because of his Nobel prize, but he would
only do so if both sides agreed.



--------------------------


EUROPEAN TRADE NEGOTIATIONS SUSPENDED


--------------------------





5. (SBU) SICA negotiations with the European Union on a free
trade and association agreement, which were initially
scheduled to recommence this week, have also been put on an
indefinite hold in light of the situation in Honduras. GOCR
officials have said that continuing the negotiations is
impossible without representatives from a democratically
elected government of Honduras. According to Linyi Baidal,
Deputy Director of External Policy at the MFA, the only
option to move forward would be to continue negotiations
without Honduras, and allow Honduras to re-join the
negotiations (with any proposed changes) after the
restoration of a democratic government. However the EU has
not yet signaled their desire to work in this two-tiered
fashion, without which Baidal says the negotiations are "at
the point of death". The European FTA is high on the list of
issues that Arias would like to focus on during the GOCR's
six-month Presidency of SICA, which began July 1, 2009.




--------------------------


MEDIA COVERAGE


--------------------------





6. (U) Costa Rican media coverage of the crisis fell
more-or-less in line with the GOCR's official response, with
editorial boards roundly condemning Zelaya's ouster, even if
a number questioned Zelaya's politics leading up to it. An
editorial on June 29 in La Nacion, Costa Rica's leading
daily, said Zelaya himself was principally responsible for
the coup, yet also categorically rejected the actions of
plotters as anti-democratic and called for Zelaya's return as
president. La Republica, Costa Rica's business-focused
paper, called for a return to democracy in Honduras but also
worried that an extended period of unrest would hurt Costa
Rican business interests. And Diario Extra, another popular
daily, called the coup a "step backward for democracy (which)
requires the immediate repudiation of all the world's
countries."



--------------------------


COMMENT


--------------------------





7. (SBU) Although Zelaya,s arrival here June 28 caught the
GOCR off guard, Arias clearly hoped he could take advantage
of Costa Rica,s current SICA presidency to reprise his
peacemaker role from the late 1980's and help forge a deal
that would help restore democracy in Honduras. Zelaya,s
exit on board a Venezuelan jet that night seemed to have
dashed those hopes, although Arias publicly left open the
door to his serving as mediator. Now, Arias is no doubt
delighted to have been asked by the Secretary (and evidently
approved by Zelaya and Micheletti) to play that role. The
media here is reporting that talks could begin in Costa Rica
as early as July 9.
HENIFIN