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Cablegate: Arias Accepts First Resignation: Telecom Monopoly Gets New

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DE RUEHSJ #2037 2561844
ZNR UUUUU ZZH
R 131844Z SEP 06
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC 6089
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS SAN JOSE 002037

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STATE PASS TO USTR FOR KSCHAGRIN

E.O. 12958: N/A
TAGS: ETRDEINVECINPGOVCS
SUBJECT: ARIAS ACCEPTS FIRST RESIGNATION: TELECOM MONOPOLY GETS NEW
BOARD PRESIDENT

1. (U) SUMMARY. The Board President of Costa Rica's
telecommunications monopoly, ICE, resigned on September 12 and was
replaced almost immediately by a new head whose nomination improves
CAFTA ratification and implementation prospects. Introduction of
the long-promised telecom legislative package nonetheless will be
delayed by a few weeks as the parastatal's leadership structure
fully reorganizes. END SUMMARY

2.(U) President Oscar Arias has accepted the resignation of Jorge
Gutirrez Gutirrez as head of the parastatal telecommunications
monopoly known as ICE, which controls all telecommunications and
electricity production and distribution in Costa Rica. Gutirrez, a
60 year old civil engineer and brother of Central Bank President
Francisco de Paula Gutirrez, was appointed President of the ICE
Board of Directors when Arias took office on May 8, 2006. Although
the resignation was attributed to a heart condition, it has been
rumored for some time that President Arias was not pleased with
Gutierrez's less than enthusiastic attitude toward CAFTA. The
resignation is effective September 15, 2006.

3. (U) The resignation comes in the midst of several very stressful
months for ICE as the administration has informally floated various
proposals to open the telecommunications sector to competition, as
required by CAFTA. This past weekend the GOCR announced again that
the telecom legislative proposals have been finalized and will be
sent to the national legislature (the Asamblea)in approximately two
weeks.

4. (U) Within hours of the Gutirrez resignation, President Arias's
Council of Ministers announced his successor, Pedro Pablo Quirss, an
electrical engineer who began his career in the 60's with ICE and
has worked in the telecommunications industry for 40 years. In May
2006 Quirss was appointed to the Board of Directors by Arias and
subsequently was unanimously elected Vice President of the ICE Board
by fellow directors.

5. (U) President Arias will now have one additional appointment to
make to the ICE Board of Directors after which the Board will select
a new Vice President.

6. (SBU) The Minister of Foreign Trade, Marco Vinicio Ruiz, called
EconOff to voice his opinion that this change was a very positive
development for CAFTA. He said the tension on Gutirrez had been
enormous and he simply was not up to it. He noted that the
designated President of the Board, Mr. Quiros had worked for AT&T in
the U.S. and "is totally convinced about CAFTA." He said that this
personnel change will slow slightly the GOCR's ability send draft
telecom legislation to the Asamblea because the Board of Directors
of ICE must first approve it. The Board cannot take such action
until Arias names another board member and that person is sworn,
which Min. Ruiz estimated would take two weeks.

7. (U) Comment: The telecommunications reforms are considered by
most to be the most difficult hurdle to implementing CAFTA in Costa
Rica. The ICE union, along with other public unions, has threatened
a national strike for late October. ICE leadership, especially from
the Board President, will play an important role in the months ahead
as the country debates telecom reforms the Arias administration is
now characterizing as modeled after those in Northern Europe, i.e.
"based on solidarity and competition and not at all like previous
Latin American privatizations."
End Comment

LANGDALE

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