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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