VZCZCXYZ0000
OO RUEHWEB

DE RUEHSJ #0707/01 2422301
ZNY CCCCC ZZH
O 292301Z AUG 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0060
INFO RUEHGG/UN SECURITY COUNCIL COLLECTIVE PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0798

C O N F I D E N T I A L SAN JOSE 000707 
 
SIPDIS 
 
DEPT FOR WHA/CEN, NEA, IO AND IO/UNP 
 
E.O. 12958: DECL: 08/29/2018 
TAGS: CS EFIN IZ PGOV PINR PREL UNSC
SUBJECT: COSTA RICA STANDS FIRM ON OIL-FOR-FOOD 
 
REF: A. A) STATE 88209 
     ¶B. B) LINES-HENIFIN EMAILS OF 8/21/2008 AND 8/28/2008 
 
Classified By: Classified by DCM Peter Brennan per 1.4 (d). 
 
¶1. (SBU) SUMMARY: Despite an historic (for San Jose) 
collective P5 demarche on the issue, FM Stagno and the GOCR 
remain firm in their deep-seated opposition to shutting down 
the Oil-for-Food (OFF) Program.  Stagno and his team reminded 
us of Costa Rica,s long-standing concerns about Program 
irregularities, as described in the 2005 Volcker Commission 
report, and strongly counseled against closing OFF 
prematurely.  Under the circumstances, he said the GOCR 
strongly preferred the current practice (of periodic Working 
Group reports) instead of creating a new dispute mechanism or 
giving authentication responsibilities to the GOI.  Stagno 
said that the GOCR would review the current (and still 
&inadequate8) text of the proposed P5 letter, but he 
signaled that the GOCR would not/not accept a UNSC Resolution 
on the issue.  Worse than closing down OFF without correcting 
its irregularities would be to do so without Council 
consensus, he warned.  Stagno reprised many of these 
arguments for visiting IO A/S Hook on August 28, but in a 
much softer tone.  He agreed then to a Secretariat briefing, 
but did not drop Costa Rica,s objections.   END SUMMARY. 
 
------------------------- 
MFA HOLDS FIRM 
------------------------- 
 
¶2.  (SBU) In order to lay the groundwork for a broader and 
higher-level P5 demarche, we began at the senior working 
level.  On August 19, we delivered Ref A points to MFA UNSC 
Team Leader Adriana Murillo and Foreign Policy Coordinator 
for International Organizations Randolf Coto.  The two 
explained that Costa Rica continued to object to the OFF 
Program being closed down out of concerns over transparency. 
Automatic payments to suppliers after 45 days did not make 
sense in light of the well-known problems and payment 
irregularities highlighted by the independent investigative 
(Volcker Commission) report.  The GOCR strongly supported a 
different mechanism to ensure that goods are delivered before 
payment is made.  This responsibility should be neither the 
Iraqi government's alone, nor that of the companies involved. 
 One can't just take the word of a company that it had 
delivered goods, they insisted; appropriate documentation is 
needed.  Murillo and Coto compared it to an import/export 
transaction, where clear proof of delivery is required. 
 
¶3.  (SBU) When asked why they were objecting to ending OFF 
when even the Iraqis were not, Murillo and Coto replied that 
Costa Rica is "defending the good use of international 
resources and transparent mechanisms."  To the GOCR, the 
solutions in the P5 letter are "not viable."  The two 
officials would not predict how the GOCR would respond to a 
UNSC resolution to close OFF, if it came to that.  In the 
meantime, they indicated that Costa Rica would continue to 
urge that its letter of July 25 (circulated on August 4) be 
considered "officially" by the Council, along with three 
alternative mechanisms described in the OFF Working Group 
Report of June 30 (covered by the SYG,s letter of July 25). 
 
 
---------------------------------------- 
FM STAGNO HOLDS FIRMER 
---------------------------------------- 
 
¶4.  (SBU) Because our French colleagues here had been 
pressing for some weeks to join us in an OFF demarche on 
behalf of the P5, we scheduled a joint follow-on approach 
with them to Antonio Alarcon, FM Bruno Stagno,s COS, on 
August 21.  As a courtesy (and as suggested in Ref A), we 
alerted our British, Russian and Chinese counterparts.  All 
decided to join in what became the first-ever collective P5 
demarche to the GOCR.  (The Chinese had instructions to do 
so. The Brits and the Russians did not have explicit 
instructions, but believed their absence would weaken the 
message.  The Russians had initially told us that they 
preferred to leave this issue to their UN team to manage.) 
Collectively, we decided for a Counselor-level demarche, 
instead of involving DCMs or COMs.  (This proved to be a wise 
decision, see below.) 
 
¶5.  (SBU) Instead of just Alarcon, however, Stagno received 
us, along with most of the MFA,s UNSC team.  He listened 
politely as we noted the historic nature of our collective 
demarche, which highlighted our five governments, interest 
in finally closing down the OFF Program.  We also reiterated 
the points in Ref A, and urged Costa Rica to support the 
draft letter to the SYG. 
 
¶6.  (SBU) Then, Stagno let fly, in a passionate, even stern 
40-minute dissertation (without notes) explaining why the 
GOCR continued to oppose closing the OFF Program.  He 
reminded us that Costa Rica had long been deeply concerned 
about irregularities in the OFF Program, well before 
returning to the Security Council in 2008.  He reiterated 
Costa Rica,s strong support for the Volcker Commission,s 
report, complaining that the report had still to be 
circulated as an official UN document.  The Volcker Report, 
Stagno said, was a "lost opportunity," but at least it was a 
serious effort to begin to correct the flaws in the OFF 
Program.  Even the SYG had concerns about possible legal 
action if OFF were closed down prematurely, Stagno insisted, 
pointing to paragraph 17 in the Working Group,s report from 
June (which Stagno read to us, in Spanish). 
 
¶7.  (SBU) Given the continued irregularities in the OFF 
Program, Stagno strongly counseled &caution8 to avoid 
compounding the error by closing OFF prematurely, before a 
better mechanism was in place.  He implied that "commercial 
interests" in some UNSC member countries seemed to be driving 
the campaign to close OFF too quickly.  Under the 
circumstances, the GOCR strongly preferred continuing the 
current practice (of periodic Working Group reports to the 
Security Council) instead of creating a new dispute mechanism 
or giving OFF authentication responsibilities to the GOI (and 
the companies involved). 
 
¶8.  (SBU) Stagno frostily said that the GOCR would review the 
current and still "inadequate" text of the proposed P5 
letter, and he signaled that the GOCR would not/not accept a 
UNSC Resolution on the issue.  Worse than closing down OFF 
without correcting its irregularities would be to do so 
without Council consensus, he warned.  He concluded our 
meeting by providing a four-page non-paper (in Spanish) 
reviewing the GOCR,s concerns about the OFF Program since 
¶2005.  (Note:  Stagno provided the same non-paper, in 
English, to A/S Hook.  See below.) 
 
--------------------------------------------- ------- 
A/S HOOK HEARS SIMILAR MESSAGE: PRINCIPLE TRUMPS POLITICS 
--------------------------------------------- ------- 
 
¶9.  (SBU) Stagno reprised much of this presentation (in less 
confrontational terms) during IO A/S Brian Hook,s visit on 
August 28.  The Minister reiterated that OFF was a "personal" 
issue for him, which he had followed closely for a long time. 
 He had studied the Volcker report carefully, and had 
concluded that although it was imperfect, it remained the 
best baseline for correcting the OFF problems.  He and the 
GOCR therefore were "uncomfortable" by the pressure to close 
down the OFF program, when there were still many unanswered 
questions. 
 
¶10.  (SBU) The point was not the "minimal" amount of 
outstanding bills, Stagno stressed, but the principle.  The 
GOCR thus wanted to be "very careful" before supporting the 
OFF closure.  Stagno acknowledged that Costa Rica was "a bit 
alone" on the issue, but he reiterated that the GOCR would 
not acquiesce to shutting down OFF without a clearer picture 
of the way ahead, and he referred again to the SYG,s 
concerns as listed in paragraph 17 of the Working Group 
Report.  The GOCR had already received a number of Russian 
demarches on the issue, but these had not been persuasive. 
Stagno said the Russians offered "no solutions."  He 
concluded that Costa Rica might have to stand firm on 
principle, even in the face of a possible 14-1 UNSCR. 
 
¶11.  (SBU) Hook acknowledged that the Costa Rican concerns 
about the integrity of OFF contracts were "reasonable," but 
he stressed that the "political realities" were changing. 
Momentum was clearly building to close down OFF.  Now was not 
the time for "the perfect to become the enemy of the done." 
Stagno supported the idea of a Secretariat briefing, but in 
response to Hook,s questions, he did not offer detailed 
additional suggestions.  A lengthy contract-by-contract 
review (as under the old 661 Committee format) was a 
non-starter, according to Stagno, but the SYG had to be able 
to evaluate the OFF contracts in some way; the Council could 
not rely on GOI assurances alone.  For this reason Costa Rica 
favored continuing with the existing mechanism (periodic 
Working Group reports) as the &least worst8 option. 
 
------------------------------------- 
COSTA RICAN NON PAPER 
------------------------------------ 
 
¶12. (U) The operative concluding paragraph of the English 
language non-paper follows.    Full text emailed to WHA and 
IO on August 29: 
 
"Hold on (OFF) Programme Closure: 
 
Although we (Costa Rica) have been non-permanent members of 
the Security Council since January 1, 2008, it was not until 
very recently that we obtained a list of companies that still 
have unpaid letters of credit for goods or services offered 
under the Oil-for-Food Programme.  The coincidence between 
the companies on that list and those listed in Tables VII and 
VIII (Actual and Projected Illicit Payments on Contracts for 
Humanitarian Goods) of the Independent Investigative 
Committee,s report of October 27, 2005, makes it even more 
appropriate to undertake a detailed study of the eventual 
closure of the Programme.  Therefore, Costa Rica considers it 
timely to keep its hold on the definitive closure of the 
Programme while there is no full certainty that the payment 
of goods and services that have not been duly and promptly 
delivered pursuant to the contracts signed, or the payment of 
surcharges or commissions, are not being endorsed." 
 
--------------------------------------------- ----- 
COMMENT: BLASTED BY THE BEST 
--------------------------------------------- ----- 
 
¶13. (SBU) Our MFA contacts told us later that Stagno had 
decided at the last minute to receive our "historic" P5 
demarche himself.  Perhaps; but he and his team were 
certainly well prepared.  Even with the helpful background 
information provided by IO/UNP (Ref B), we were in no way 
equipped to tackle Stagno on this issue, and we were better 
"prepared" than any of our P5 colleagues.  We were 
eviscerated by a master, who knows this subject intimately, 
and has for some time.  Far from persuading Costa Rica to 
back down, in fact, our collective demarche may have 
stiffened the Ticos, resolve.  For future such demarches, we 
recommend having much more comprehensive preparation from 
Washington, or better still, that the Department and USUN 
work this sort of issue directly with the Costa Rican 
delegation in New York.  We readily acknowledge that we are 
not the experts on issues as arcane and deep-seated (to the 
GOCR) as oil-for-food. 
 
¶14.  (C) OFF clearly is a deeply-felt personal issue to 
Stagno and the GOCR, but there is more at work here, in our 
view.  Stagno was clearly frustrated (and he used that word a 
few times with the P5) that Costa Rica,s OFF concerns had 
not been taken seriously, and now the P5 were &ganging up8 
on Costa Rica.  This incident underscores what we have 
increasingly detected this year.  What the GOCR really wants, 
especially in the UNSC, is respect, genuine partnership and 
to be taken seriously in areas it has expertise and something 
to offer.  Costa Rica does not want to merely serve on the 
Council; it wants to improve it.   For better or for worse, 
we expect this will continue to shape Costa Rica,s stance on 
many UNSC issues. 
 
¶15.  (U) A/S Hook did not clear this message before departing 
Costa Rica. 
CIANCHETTE