VZCZCXYZ0010
PP RUEHWEB

DE RUEHSJ #1427/01 1742221
ZNR UUUUU ZZH
P 232221Z JUN 06
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 5446
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY

UNCLAS SAN JOSE 001427 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CEN JASON MACK 
 
E.O. 12958: N/A 
TAGS: PREL ECON EFIN CS
SUBJECT: ARIAS TOURS EUROPE, CALLS FOR DEBT FORGIVENESS AND 
FREE TRADE 
 
REF: SAN JOSE 1251 
 
------- 
SUMMARY 
------- 
 
¶1.  (SBU) President Oscar Arias recently toured Europe for 13 
days, meeting with political and business leaders in three 
countries.  He once again brought forth his Costa Rica 
Consensus notion for debt forgiveness, and used several 
occasions to call for free trade and the elimination of farm 
subsidies.  He linked Costa Rica's development goals with the 
successful ratification of CAFTA.  With his strong advocacy 
of free trade and the benefits he believes it will bring 
Costa Rica, Arias managed to provoke grumbling among 
opposition members of the Costa Rican legislative assembly. 
Arias clearly enjoyed being back on the world stage, taking 
on developed nation farm subsidies and the Vatican's stance 
on contraception.  END SUMMARY. 
 
--------------- 
ARIAS IN EUROPE 
--------------- 
 
¶2.  (U) President Oscar Arias, in the first foreign trip of 
his current presidency, traveled to Switzerland, Germany, and 
Italy.  At his first destination, Switzerland, Arias spoke to 
the annual Conference of the International Labor Organization 
in Geneva.  He used this occasion to once again present his 
so-called "Costa Rica Consensus" (reftel) which entails more 
generous foreign assistance and a program of debt forgiveness 
for those middle-income countries that engage in good 
governance and decrease military spending.  He also made the 
first of several calls during this trip for the nations of 
the European Union and the U.S. to eliminate farm subsidies. 
 
¶3.  (U) On June 9, Arias and German Chancellor Angela Merkel 
watched Germany defeat Costa Rica in the inaugural match of 
the World Cup soccer tournament.  While meeting with German 
business leaders later, Arias predicted that Costa Rica will 
pass CAFTA and encouraged German foreign investment in Costa 
Rica.  A common theme for Arias at meetings with European 
business officials was how their investment in Costa Rica 
would give them greater access to U.S. markets because of 
CAFTA.  During an interview with the Costa Rican daily "La 
Nacion," Arias mentioned that he was considering ending the 
Costa Rican Petroleum Refinery (Recope) monopoly on the 
importation of petroleum products it has enjoyed since 1993. 
He reiterated plans to break the monopolies of the Costa 
Rican Energy Institute (ICE) and the National Insurance 
Institute (INS), repeating his belief that Costa Rica must 
break these monopolies as part of a strategy to accelerate 
economic growth to the 6% annual rate he desires. 
 
¶4.  (U) While speaking in Florence, Italy, Arias decried the 
"hypocrisy" of western nations for closing their markets to 
agricultural products from developing countries while 
demanding that developing countries open markets to their 
goods.  He repeated that "the developing world's farmers can 
compete with the farmers of the developed world, but not 
their treasuries."  While meeting with former German 
Chancellor Helmut Schmidt later, Arias conceded that he had 
little optimism that farm subsidies in the European Union and 
the U.S. could be reduced in the short term.  Italian 
business leaders expressed interest in business investments 
in Costa Rica, but stressed that this investment would only 
begin if Costa Rica approves CAFTA.  Arias also announced 
that within five to six months, the countries of Central 
America will have initiated free trade talks with the 
European Union and should have a deal within 18-24 months. 
 
¶5.  (U) The final leg of Arias's European tour brought him to 
the Vatican and a personal meeting with Pope Benedict XVI. 
Arias petitioned the pope to use his leadership to help 
promote the "Costa Rican Consensus."   Arias also requested 
that the church ease its stance against artificial 
contraception, and later explained that though he did not 
expect a change in the church's stance on the issue, he felt 
he needed to discuss the subject.  After the meeting with the 
pontiff, Arias met with the Vatican Secretary of State, 
Angelo Sodano, to solicit support for Arias's pro-CAFTA 
position, a move for which Arias has been criticized in some 
quarters.  According to Arias, Sodano promised to send a 
letter of support for free trade to Costa Rica's Catholic 
bishops, who have publicly raised concerns about CAFTA's 
possible negative effects on farmers, the environment, and an 
increase in social inequality. To date, no letter has come to 
light. 
 
--------------------------- 
OPPOSITION REACTION TO TRIP 
--------------------------- 
 
¶6.  (U) Arias's tour of Europe was a major story in the Costa 
Rican press throughout the 13-day trip. Elizabeth Fonseca, 
head of the Citizen Action Party (PAC), the second largest 
party in the legislature and strong CAFTA opponent, said that 
she would withhold comment until a full report of the trip 
was presented to the Legislative Assembly by Arias. Other, 
single-deputy party legislators were more negative, 
criticizing Arias for his numerous trips to museums and 
cultural sites.  More substantial was the criticism leveled 
by one deputy that Arias was "disrespectful" to the deputies 
with his strong promotion of CAFTA in Europe, questioning how 
Arias can guarantee the ratification of CAFTA in the Costa 
Rican Legislative Assembly.  Union leaders, not surprisingly, 
accused Arias of fondness for "carpets, palaces, and luxury" 
while failing to demonstrate one positive result from the 
trip. 
 
------- 
COMMENT 
------- 
 
¶7.  (SBU) President Arias reinforced to his international and 
domestic audiences his belief in free trade as a means of 
improving the economies of developing countries.  The allure 
of playing once again on the international stage was manifest 
throughout Arias's trip. He went beyond his usual strong 
support for free trade, provoked the opposition by 
practically guaranteeing passage of CAFTA, and added fuel to 
the fire with talk of breaking up state monopolies.  But the 
best indicator of renewed ardor for tilting at windmills was 
Arias's request that the Vatican ease its stance on 
contraceptives. 
LANGDALE