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Cablegate: Costa Rica -- Cafta Extension Request Likely

VZCZCXYZ0010
PP RUEHWEB

DE RUEHSJ #0031/01 0171740
ZNY CCCCC ZZH
P 171740Z JAN 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 9345
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 1577
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SAN JOSE 000031

SIPDIS

SIPDIS

DEPT FOR WHA, WHA/CEN, WHA/EPSC AND EEB; PLEASE PASS TO
USTR:AMALITO/DOLIVER

E.O. 12958: DECL: 01/17/2018
TAGS: CS ECON ETRD PGOV PINR PREL
SUBJECT: COSTA RICA -- CAFTA EXTENSION REQUEST LIKELY

REF: 07 SAN JOSE 2070 AND PREVIOUS

Classified By: Classified By: DCM Peter Brennan per 1.4 (d)

1. (C) SUMMARY: While the national legislature (Asamblea)
works at full speed to complete CAFTA implementing
legislation, GOCR officials (and the local media) are
openly speculating about a probable entry-into-force EIF
extension. In private, executive and legislative branch
contacts are almost unanimous: there is no way Costa Rica
can meet the March 1 deadline; at least another two months
probably will be needed. In public, President Arias and
Minister of the Presidency Arias are keeping pressure on
the legislature, but the President has acknowledged that
meeting the deadline is "unrealistic". The Arias
brothers are also making clear that should there be an
extension, the PAC-led opposition,s obstructionist
"legislative terrorism" would be to blame. With the public,
and much of the Asamblea eager to get beyond CAFTA to
other hot issues such as public security, the pro-CAFTA
G38 coalition working well in the Asamblea, and the PAC
under fire for its dilatory tactics (septel), Costa Rica
may at last build sufficient momentum to get the CAFTA
job done, although not on time. We anticipate
an extension request after the GOCR takes stock of
progress at the end of January. END SUMMARY.

===============================
LEGISLATURE AT FULL SPEED . . .
===============================

2. (SBU) Pro-CAFTA legislators returned to work seemingly
refreshed from their year-end recess and determined to make
progress on the implementing agenda. PLN faction chief
Mayi Antillon seemed pleasantly surprised by the G38,s
discipline and focus when she met with Pol/Econ Counselor
on January 9. Antillon sketched a timetable based on two
sessions a day, under fast track rules, that would grind
through legislation fairly swiftly (by Costa Rican
standards). Her goal is to move quickest (and in parallel)
on the two telecom laws and the UPOV law (which passed its
first plenary vote on January 14), in order to complete the
first vote on these politically controversial topics before
universities (full of potential protesters) resume class
in early February. She also predicted fast action on the
Budapest Treaty. The problematic Libertarian Party (ML)
is cooperating, Antillon added, assuaged by, among other
concessions, the PLN agreeing to form a new
legislative committee on public security (an ML and PAC
priority). Vice Minister of the Presidency Roberto
Thompson also gave an upbeat message to Pol/Econ
Counselor on January 10.

=========================
. . . BUT NOT FAST ENOUGH
=========================

3. (C) Antillon,s and Thompson,s best case scenarios,
however, predict the Asamblea approving (in 1st vote) no
more than 3-4 more items of implementing agenda by the end
of January, with all of these likely facing 30-day
Constitutional Chamber (Sala IV) review (forced by the PAC)
before becoming law. (The PAC has already asked that the
UPOV bill be sent to the Sala IV for review.) Even without
Sala-required revisions, these bills would not become law
until March, bringing the grand total of fully completed
items at that time to 6-10 (out of 13 total). Antillon
predicted she could finish all the legislation by April or
May, but this is contingent on maintaining the current
pace in the Asamblea and discipline in the G38. She added
that any extension in the Asamblea would have to be part of
a broader national strategy including a diplomatic
component with the USG and other CAFTA-DR parties, and a
public relations component, both domestic and
international.

4. (SBU) ML and PLN party staffers paint a similar
picture. Even with three-a-day and weekend sessions (which
the legislators are likely to resist and which Antillon
hopes to avoid), it is mathematically impossible, they say,
to complete all the implementing legislation by March 1.
ML calculations, in fact, suggest that a six-month
extension might be realistic, given the other work the
Asamblea wants to attend to and upcoming faction leadership
elections in May.

5. (C) COMMENT: We agree that an extension appears
inevitable. Under ideal conditions, the Asamblea could
complete the first vote on the seven items now in the
plenary o/a February 20. The 30-day Sala IV review would
still have to follow before the laws were enacted, however,
and the two implementation items not yet in the plenary --
the laws regulating insurance contracts and authors,
copyright protections - would lag even further behind. The
earliest completion date for all the implementing
legislation is therefore sometime in late March or April.
END COMMENT.

============================================
TESTING THEIR ARGUMENTS, TESTING THE WATERS
============================================

6. (C) Minister of Foreign Trade Marco Vinicio Ruiz echoed
these views during the Ambassador,s farewell call on
January 7. He opined that an EIF extension would be
required, although he acknowledged that public discussion
of such a request could dampen political momentum in the
legislature. Ruiz said he had already "reached out"
informally to other CAFTA-DR parties to gauge their
reaction to a possible extension request, and asked
rhetorically when would be the appropriate time to make
such a request. The Ambassador urged Ruiz to consult with
USTR on all aspects of the extension issue. (NOTE:
Confirming Ruiz,s comments about "reaching out," the media
here has run interviews with CAFTA-DR officials such as the
Guatemalan VM of Trade and the local Nicaraguan Ambassador
predicting that their countries would respond favorably to
a Costa Rican extension request.)

7. (C) The Minister suggested that the U.S. should deal
"differently" with Costa Rica, since the country has
specific characteristics that set it apart from its
neighbors; namely, the three-fold challenge of opening a
state telecommunications monopoly, opening a state
insurance monopoly, and a facing a constitutional review
of all CAFTA-related legislation. Ruiz fretted that the
Sala IV might not be able to handle multiple pieces of
complex, controversial legislation fast enough to complete
its review in the required 30 days.

===============
EXTENSION MANIA
===============

8. (C) Despite his caution with the Ambassador, Ruiz
later spoke to the press about an extension, predicting a
two- to four-week delay. His widely-reported remarks set
off a flurry of political and press speculation prompting
hasty spin control by the GOCR and its pro-CAFTA coalition
partners. An exasperated Antillon told Pol/Econ Counselor
that Ruiz had spoken prematurely and without
authorization. Antillon and PUSC faction head Lorena
Vasquez started a chorus of interviews, all stressing that
the G38 would continue to work based on the March 1
deadline. Vasquez and ML chief Luis Barrantes, however,
argued that should it appear that the Asamblea could not
make the deadline, the GOCR should then explore extension
options with the CAFTA-DR parties.

9. (SBU) In back-to-back statements released January 8-9,
Minister Arias stressed that the GOCR had not made any
official request, and would continue to view February 29
as the final day to complete legislative work in time for
the March 1 EIF deadline. He stressed the importance of
having CAFTA-DR enter into force, praised the Asamblea for
its hard work, and urged the PAC to respect the results of
the October 7 referendum by not obstructing work in the
legislature. In interviews, both Arias brothers (the
President and the Minister) said a possible extension
depended on the PAC. If that party (and its anti-CAFTA
allies) dropped their delaying tactics, the legislature
could move faster. The GOCR would have a better idea of
progress by the end of January, and if it had to request an
extension, it would do so after that.

10. (U) In an interview on January 16, however, President
Arias called the February 29 target date "unrealistic,"
and suggested that the an extension request might come
"in mid-February," depending on the legislative picture
then. He declined to specify how much more time would be
needed (although he had told the media on January 8 that
two more months would be sufficient.)

========
COMMENT:
========

11. (C) The specter of another legislative year frittered
away by CAFTA debate seems to have galvanized the GOCR and
the G38 into action. The Arias administration is fully
engaged, has a plan and is sticking to it. The increasing
public and political discussion of the post-CAFTA agenda
(e.g., criminal justice reform, fiscal and concession
reform, the so-called "development agenda," etc.) is a good
sign. Both sides, even the PAC, seem to be yearning
for life after CAFTA. Both sides also acknowledge that
CAFTA-DR will enter into force for Costa Rica at some point.
The questions are how and when. As to how, the GOCR appears
confident enough to rely on its G38 coalition, for now;
a deal with "moderate" PAC members is not in the cards.
As to the when, we should know more when the Arias team
takes stock in late January or early February.
We understand that the COMEX delegation currently in
Washington may raise the extension issue, but we do not
expect a formal, fully-authoritative approach until the
President -- or more likely Minister Arias -- weighs in,
perhaps via a letter to USTR or a visit to Washington.

LANGDALE

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