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Cablegate: Movement On Implementation Legislation Unlikely

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PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHSJ #1571/01 2342131
ZNY CCCCC ZZH
P 222131Z AUG 07
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 8726
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 1551

C O N F I D E N T I A L SECTION 01 OF 03 SAN JOSE 001571

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN, WHA/EPSC AND EEB; PASS TO USTR
AMALITO

E.O. 12958: DECL: 08/22/2017
TAGS: ETRD PGOV PINR PREL CS
SUBJECT: MOVEMENT ON IMPLEMENTATION LEGISLATION UNLIKELY
BEFORE CAFTA REFERENDUM IN OCTOBER

REF: SAN JOSE 830

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

1. (SBU) SUMMARY: The Arias Administration expects
little or no action on CAFTA implementing legislation
before the October 7 referendum. Pro-CAFTA coalition
in-fighting, coupled with stubborn stalling tactics by the
PAC-led opposition, have blocked quorums and buried the
GOCR,s legislative agenda in contentious wrangling. To
turn down the political heat (which could have a negative
impact on the pro-CAFTA referendum campaign) Minister of
the Presidency Arias ordered the implementing bills pulled
from this month,s extraordinary session of the Asamblea.
Action in September, during the next ordinary session, is
technically feasible but may be politically impossible,
with the referendum just five weeks later. The Arias
Administration is counting on a "Si" win on October 7 to
re-glue its fractured legislative coalition together and to
roll over enough CAFTA opponents to complete all the
required legislation by March 1, 2008. This may be a very
tall order. Mandatory Supreme Court legislative review,
likely final consultations on some issues with USTR, the
required annual budget debate in November, and end-year
holidays in December all stand between the referendum and
implementation. END SUMMARY.

--------------------------------------------- ------------
AS CAFTA CAMPAIGN HEATS UP, LEGISLATIVE ACTION COOLS DOWN
--------------------------------------------- ------------

2. (U) On August 15, Minister Rodrigo Arias made it
official. Ending speculation brewing since the start of
the August extraordinary session (which is controlled by the
Executive), he announced that the GOCR would not act on the
13 pieces of CAFTA-related legislation until the next
ordinary session, in September. Citing problems within
the government,s 38-seat coalition, in particular continued
friction with and within the six-member Libertarian bloc,
and criticizing the PAC-led opposition for refusing to
permit a quorum for any CAFTA-related debate, the Minister
said he did not want "to create more chaos" in the Asamblea
by forcing action on items that were not "politically
viable" at the moment. He also said the GOCR wanted to
"allow space" for the referendum to take place.

3. (SBU) In response to this GOCR "restraint" before the
referendum, Arias called on all parties in the Asamblea to
approve the implementing legislation after the referendum,
as a reflection of the "popular will," should the "Si"
vote win. Opposition leaders applauded the GOCR,s
"realistic" actions, but declined to make any pre-referendum
commitments. In exchange for their promise not to block
implementing legislation should the "yes" vote win, PAC has
insisted the GOCR agree to take no further action on
CAFTA-related legislation, should the "no" side win. The
GOCR has declined to make such a deal. This fundamental
disagreement, plus tight control by PAC faction leadership,
apparently torpedoed quiet GOCR-PAC negotiations on the
CAFTA implementing agenda in June and July.

-------------------------------------------
COMEX: LOOK FOR MOVEMENT BEHIND THE SCENES
-------------------------------------------

4. (SBU) On August 10, Director General of Foreign Trade
Gabriela Castro and Legislative Adviser Nelly Vargas of
COMEX told ADCM and Econoff the GOCR feared that
placing the implementing legislation on the legislative
calendar now might be seen as an attempt to move
ahead on CAFTA before the people have had their say on
October 7. The public reaction would be negative.

5. (SBU) The decision to postpone action is not all bad,
according to Castro and Vargas. While the PAC-led
opposition was boycotting plenary sessions (and taking full
advantage of their "free time" to campaign for the "no"
vote in the referendum), legislators in the GOCR,s
coalition wasted three weeks virtually chained to the
Asamblea building, trying to maintain a quorum for the
implementing legislation. Now, pro-CAFTA legislators would
also be able to skip sessions to campaign in their home
provinces. (NOTE: The pro-CAFTA coalition is exactly
two-thirds of the legislature and thus theoretically
sufficient to control the agenda, but only if all 38 members
are present for every key vote, every day.)

6. (SBU) Castro and Vargas did not completely rule out

SAN JOSE 00001571 002 OF 003


the GOCR reversing course and resuming pre-referendum
action on the CAFTA-related bills at some point, if the
political risk of doing so were deemed acceptable.
They also stressed that not all work on the legislation
is stalled. While little/nothing is happening in the
public eye, COMEX is continuing its discussions with USTR
on each of the bills to ensure that the draft legislation
meets Costa Rica,s CAFTA obligations. In addition, there
are a few regulatory decisions that must be made separate
from the legislation, such as which entity will serve as
the new telecom regulator. Vargas confirmed that eight
of the 13 bills on the GOCR,s implementing agenda are
posed for action in the Plenary, while the remaining five
bills are in committee.

-------------------------------------
THE LEGISLATURE: TIME IS RUNNING OUT
-------------------------------------

7. (C) On August 15, PLN faction chief Mayi Antillon
confirmed
to ADCM that the GOCR will not proceed with CAFTA implementing
legislation in August. She also predicted that movement
during the
regular session in September will be very difficult, unless
the Arias Administration can finally discipline the
Libertarians (ML). Without their six votes, the GOCR,s
38-seat, two-thirds majority is not guaranteed, with the ML
"tail" wagging the GOCR "dog".

8. (C) The faction was running in multiple directions,
Antillon explained. In early August, former faction head
Evita Arguedas began unsanctioned negotiations with PAC
party leader Otton Solis. Antillon was adamant that
the PLN did not want to grant any legitimacy or stature
to Solis by involving him in the implementing legislation.
Faction head aspirant Mario Quiros, a purist on
legislative procedures, continues to bog down progress by
myopic focus on process, according to Antillon. Current
faction head Luis Barrantes has been thin-skinned and
petulant about the criticism of his faction, she added.
Party leader (and 2010 presidential hopeful) Otto Guevara is
campaigning for the "Si" vote, but could or would do
nothing to rein in his party colleagues, Antillon said.

9. (C) Minister Arias was so angry, according to Antillon,
that he summoned Guevara for a series of meetings on August
15 to clear the air. It is time, says Antillon, for the
Libertarians (ML) to make up their minds and fall in (or
fall out) with the government once and for all on CAFTA.
Obviously exasperated, she thought it might be easier to
include a few moderate PAC members in a post-referendum
working coalition (assuming a "Si" victory) than to
continue babysitting the Libertarians.

-----------------------------
CAN THEY GET THERE FROM HERE?
-----------------------------

10. (SBU) On August 17, veteran Asamblea staffer Edel
Reales was pessimistic. With some careful
behind-the-scenes pushing, if the Libertarians were
on board, the GOCR could use the September session to
position all the CAFTA implementing legislation for action
as soon as possible after the referendum. In his view,
however, this was the absolute best case scenario;
possible, but not probable. Any real action more likely
will have to wait until after the referendum, and the few
months remaining pose a daunting challenge. Given the
likely recesses in September (for the referendum campaign)
and December (end-year holidays), the mandatory budget
debate in November, the required Supreme Court
(Constitutional Chamber) review of all legislation, and the
legislative rules which favor the minority (and
obstructionists), in Reales, professional opinion, the GOCR
will not be able to complete all the implementing
legislation by March 1.

11. (SBU) Antillon, ever the politician, was less categorical.
Implementation will be extremely difficult, in her view,
but she is withholding judgment until after the referendum.
She and Reales both acknowledged that if Costa Rica did not
make the Entry into Force deadline, the GOCR would have to
seek an extension from all CAFTA members, not just the USG.

-------
COMMENT
-------

SAN JOSE 00001571 003 OF 003

12. (SBU) Tactically, the GOCR,s actions may be
understandable. However, Costa Rica is going to be
extremely hard-pressed to get all of the legislation
passed by March 1 unless more progress is made before
October 7. The Asamblea,s historic inability to take
decisive action engenders little confidence. With
or without the Libertarians, the Arias administration
will need a decisive "yes" win in the referendum,
a resulting groundswell of public opinion to get CAFTA
done, legislator willingness to work together in response
to that groundswell, and skillful use of all the
legislative tools at its disposal to meet the March 2008
implementation deadline. For Costa Rica, this would
be an extraordinary combination of political factors.
Brennan

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