VZCZCXYZ0003
OO RUEHWEB

DE RUEHSJ #0238/01 0911503
ZNR UUUUU ZZH
O 311503Z MAR 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9552
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY

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